NMA E-Newsletter #261: PPPs—Brought to You by Your Shortsighted Legislator

A recent e-newsletter, #259: A Private Windfall, a Public Bust, described the pitfalls associated with Public Private Partnerships. It also prompted this thoughtful and informative response from North Carolina member KC Green, PE.

We need to increase the fuel taxsignificantly increase it—no matter what the price of gas or diesel is. (The federal fuel tax has not been raised since 1993 and currently stands at 18.4 cents per gallon.) Thousands of unfunded road improvement and maintenance projects across the nation sit on the shelf while we sit in our cars, staring at the bumper in front of us.

According to the American Society of Civil Engineers 2013 Highway Report Card, deficient roads cost each American driver $324 per year in extra repairs and operating cost. And that cost doesn’t include loss of productivity or the toll on your health. The phrase “penny-wise and pound-foolish” never seemed more appropriate.

There are all sorts of industry associations that represent my profession—ASCE being one of them—and nearly all have offices and/or lobbyists in Washington or state capitols. And they all lament the paltry amount we invest in our nation’s infrastructure—roads and bridges being the most prominent. Needless to say, they keep legislators well-informed. No legislator, on the state or national level, is unaware of the need for better roads. And most, if not all, legislators would willingly increase fuel taxes if it weren’t for one thing: political backlash.

Political backlash makes legislators waffle when they feel strongly one way, but most of their constituents feel a different way. Increasing the fuel tax is one such cookie. Despite its noble intent, it causes certain legislators to waffle, and in today’s world that waffle turns into a Public Private Partnership—the worst idea for road construction since the invention of traffic-calming devices.

PPP, in this context, means a private party will have a financial stake in the construction and operation of a road, and that’s a bad idea. With a PPP you can only raise funds for one project, and it needs to be a limited-access highway. It won’t work for surface streets.

Traditional financing, through a public agency, continues to be so much more efficient. You can increase the fuel tax (or other common tax) and it’s simple, with no extra bureaucracy and no conflict of interest, and the funds can be used on all types of roads.

I’m all for PPPs for schools, prisons, hospitals, golf courses and maybe even airports, but not roads. Not as we define PPP today. And really, public transportation agencies have been using private firms for years for a variety of functions (e.g., planning, design, construction, inspection, program management, surveying, etc.). Those are all “partnership” roles that work well (I’ve spent a lot of my career in those roles). But notice I didn’t mention financing. Financing is where things get unnecessarily complicated.

I live north of Charlotte, a mile from Interstate 77. I-77 north of Charlotte has been four lanes since it was built. With all the growth in the area it is now a clogged mess during the usual daily and holiday drive times, and even after minor accidents. Local residents are fed up and complain that other (less-deserving) areas of Charlotte have already realized major highway improvements. Despite huge traffic volumes on this section of I-77, it’s years away from being widened in the traditional procurement manner.

But, hold your horses. Now the local MPO (metropolitan planning organization) proposes to expedite things. Rather than await a re-prioritization of major road projects by the new governor, the MPO is going to force feed us the state’s first PPP highway project by adding two high-occupancy toll lanes in each direction along a 17-mile stretch. These lanes are better known by their acronym—HOT—and local folks are not happy about it.

HOT lanes and PPPs almost go hand-in-hand. (One exception comes to mind: HOT lanes within I-15 in San Diego. They are publicly-owned and the tolls go to a public agency.) For I-77, although the new lanes would be within public right-of-way, tolls would be established and collected by a private consortium. This is a bad arrangement that promotes conflict of interest and inefficiency.

A local grassroots organization in opposition to the I-77 proposal (and HOT lanes in general) arose last year and has gained considerable media attention. They’ve also compiled a wealth of information on the topic on their website: www.WidenI77.org. I encourage you to read up. It covers a lot more detail than I could ever hope to, including HOT/PPP procurement around the country, and a revealing look at the financial inefficiencies and ridership reluctance that emerge.

Lastly, there are physical issues. I don’t like having lanes of different types (except for busways) within the same corridor, especially a high-speed corridor. It makes things awkward and creates conflicts. When you combine toll lanes to existing free lanes you have to provide dedicated on- and off-ramps for each type of lane. In addition, as motorists approach the managed-lane section, there will be an inordinate amount of lane-jockeying, guided by impulsive decision-making (whether or not to cut across traffic and pay the toll to get to your destination faster).

As disgusted as I am with road PPPs, I do, however, see some benefit in the advanced technology HOT lanes use to collect revenue.  As alternative fuel vehicles have become more commonplace, fuel tax revenues have decreased. A new revenue mechanism will be needed to make sure these vehicles are paying their fair share, and these high-tech tolling systems could be adapted for that purpose.

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