1 / 74

Privatizing Transportation Systems

The Problem with Highway funding. 2. Congestions cost America $168 billion a year. If not resolved then cities will die as centers of economic productivity, as centers of culture, and a pleasant place to live. Over half of interstate are congested and one fourth of bridges are rated deficient.The

telyn
Download Presentation

Privatizing Transportation Systems

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    1. Highways, Buses, Rail, water and airports: Literature Review 1 Privatizing Transportation Systems

    2. The Problem with Highway funding 2 Congestions cost America $168 billion a year. If not resolved then cities will die as centers of economic productivity, as centers of culture, and a pleasant place to live. Over half of interstate are congested and one fourth of bridges are rated deficient. The annual investment needed to maintain the current level of pavement condition using public funding is 8.3% short. In order to just keep pace with the growth in driving and truck usage, capital sending should be higher by 74% than current capital spending of $68.1 billion.

    3. Advantages of P3 in Transport 3 PPPs have been widely recognized over the last several years as an innovative approach to transportation funding and procurement that can reduce project costs, accelerate project delivery, transfer project risks to the private sector, and provide valuable, high-quality projects; but these benefits alone do not explain the growing number of PPPs that are being procured in the United States.  

    4. Reasons for P3 in transport 4 PPPs are being utilized at a record pace because:   PPPs respond to congestion and system unreliability by providing high-quality, well managed projects and better performance; PPPs address the demand for transportation investment by providing access to a vast amount of private capital available for investment in transportation; PPPs reduce the wasteful effects of political and special purpose spending by incorporating financial accountability for investment decisions into the transportation funding process;

    5. Reasons for P3 (continued) 5 PPPs help align the Nation’s transportation funding policy with critical energy and environmental policies by substituting private capital for fuel tax revenue; and  PPPs can significantly accelerate project delivery by providing upfront private capital for a project’s full cost.

    6. History of P3 Hwys in US 6 Prior to 2005 P3 were from DB to DFBOM. Since 2005, long term concession-based P3. Private sector assumes significant financial risk related to operation & maintenance, and for new projects risks related to design and construction. The private partner assumes greater financial risk. For existing hwys risks involved in operation & maintenance. For new projects: the design, and construction.

    7. Benefits of P3 7 P3 save 6-40% in construction cost, and limit potential overruns through fixed–price contracts. Private capital ease public debt. A good example is the Miami Port Tunnel project. The planners calculated $68M a year payments by FLDOT for design, construction, operation, and maintenance. The bidder selected required annual payment of just $33M. P3 are no riskier than procurement approaches. P3 can reduce public sector exposure by well structured concession agreements. Financial incentives to concessioners can assure high operation and maintenance standards. Proper allocation of risk between the two sectors can reduce overall risk, accelerate project delivery and reduce cost. A good example is P3 of VIDOT for I-95/Capitol beltway corridor where the concessionaire assumed the financial, technological and operational risks of implementing a variable toll rate based on congested (peak time) system. It assumed the risk for the expected return if the project is successful.

    8. Benefits of P3 8 P3 encourage innovations and greater introduction of IT at the construction stage to achieve lower DPV for the project. Life time savings in operation and maintenance costs. P3 shortens project completion significantly. Immediate availability of private capital accelerates the project that otherwise will be delayed until public resources become available. The concession for improving 800 bridges in Missouri was assigned to one private partner per bridge. It will take 5 years instead of 20 years to the public sector.

    9. Private Toll Roads in the US, 2008 9

    10. Long term (LT)Concessions of Existing HWYS 10 Chicago Skyway P3 Description: 1st LT concession of existing toll road in US. 7.8 miles. Connecting the Dan Ryan EXPWY in south Chicago with the Indiana toll road. Private consortium includes Spanish Cintra and the Australian Macquarie. Both toll roads developers. Terms: The Concessionaire paid upfront the City of Chicago $1.8B and will operate and maintain the toll road for 99 years, collect all revenues for the 99 years. Revenues will be used for operations, and maintenance, repay debt, and contribution to equity. Annual toll prices were preset through 2017, and capped thereafter at the greater of 2%, CPI, or Per Capita GDP. Chicago used the proceeds to fund several programs. Indiana Toll Road (ITR) Description: Competitive bidding to operate and maintain the east-west 157 miles road connecting the Chicago Skyway and the Ohio Turnpike. Again, Cintra and Macquarie won the contract.

    11. Chicago & Indiana P3 Toll Roads 11

    12. LT Concessions of Existing Hwys 12 ITR (cont. ) The concessionaire paid upfront $3.8 B. Again, BOT for 75 years. Unlike Chicago, Indiana invests all in the 10 years road improvement projects, and transportation projects for the IN counties. Evaluation: Both significant upfront private capital. Long term concession. Mature with existing customers. Pocahontas Pkwy No proven customer base for a large upfront pay by concessioner. 9 miles bypass, southeast of Richmond VI connecting I-95 with I-295. State funded through a non-for-profit entity that issues construction bonds. When opened no sufficient toll revenues to pay the debt. Vi decided to convert from non-profit to LT concession type P3. Terms: 99 years concession with an Australian toll road operator. Price Included debt, maintenance and repairs by VDOT and the transaction costs. Prices capped to provide necessary returns. If excess revenues result then shared with VDOT.

    13. PPP: New Highways 13 Impetus: Intermodal Surface Transportation Efficiency Act (ISTEA), 1991. Expanded toll facilities eligibility for Federal aid for construction (re), resurfacing, rehabilitation, conversion to toll roads. Allowed also State funding and shared responsibility with private sector. Exception: Interstate system.

    14. PPP new Highways: Principles 14 Always PPP where ownership shifts to public entities Always existence of non-toll alternative road

    15. Rt. 91 in Ca. 15 Description: 10 miles 91 express 4-lanes within the median area of SR 91. Connecting 55 Freeway near Anaheim to run east-west to the border of Riverside County. Affluent local population, 8% annual increase in traffic—high congestion.

    16. SR 91 16

    17. Rt. 91: Ca. Nature of PPP, Operation 17 BTO. CPTC Corp. built it, cedes ownership to State in exchange for 35 years lease to operate the road. Toll charged and 50% discount for 3+ people in car. Demand sensitive pricing by time of day and distance. Guaranteed 65 MPH otherwise money back Fully automated operation Immediate removal of non-operating vehicles. Results: Profitable from first year. Average occupancy 1.65 where 20% of which are carpoolers (3+) CPTC’s revenue increased 45% in its third year of operations, mainly because it was able to steeply increase average tolls. Vehicle trips rose 8% to 25.4k/day for the year.

    18. Dulles Greenway 18 Built as BOT in 1995 in Virginia. 15 miles from Dullas Intern’l Airport to Leesburg. 4 lanes and 250 ft right of way. Private consortium financed, built, and operates it. Connecting the Beltway near D.C. (I-495) with Dulles Airport. Special legislation to establish prerequisites for construction & operation of a private toll road A commission was set up to regulate applicants, supervise, control operators, and approve/revise prices. Total estimated cost $326M. $68M initial investment by partners; of which $22 equity and $46M guarantee against project risk. $202M by consortium of 10 lending institutions. http://americancityandcounty.com/mag/government_making_inroads_private/ http://americancityandcounty.com/mag/government_making_inroads_private/

    19. 19

More Related