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P3s IN TRANSPORTATION: How They Can Work In Our Region

P3s IN TRANSPORTATION: How They Can Work In Our Region. August 19, 2011 Presented by Alan F. Wohlstetter, Esq. LEARNING THE LESSONS OF HISTORY. Public-private partnerships or P3s have gained increasing acceptance as a way of accelerating private investment in transportation infrastructure

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P3s IN TRANSPORTATION: How They Can Work In Our Region

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  1. P3s IN TRANSPORTATION: How They Can Work In Our Region August 19, 2011 Presented by Alan F. Wohlstetter, Esq.

  2. LEARNING THE LESSONS OF HISTORY • Public-private partnerships or P3s have gained increasing acceptance as a way of accelerating private investment in transportation infrastructure • SR-91 in Orange County opened in 1993 with a non-compete clause, forcing the repurchase of the $126 million road for $207 million • Efforts by Governor Rendell to lease the Turnpike for 50 years to the Spanish firm Abertis for $12.8 billion in a public-private partnership could not receive legislative approval • The collapse in the financial markets hit P3s hard, since the ability of the private parties to obtain 50 to 75-year loans all but disappeared • But the Transportation Opportunities Act and P3 legislation in Harrisburg provide an opportunity …

  3. THE OPPORTUNITY • The opportunity is for P3 proposals that shift construction, operational, maintenance and/or financial responsibility from government to the bidding team • A P3 shifts the risk to the private party best able to mitigate the risk • For such arrangements to be legal, state legislation must create a procurement process that is transparent and accountable • And there must be clear guidance from the FHWA on which tolling projects will be approved so that the fate of Interstate 80 is not repeated

  4. SENATE BILL 344 • Senate Bill 344 creates a procurement process for P3s in transportation with PennDOT and the Pennsylvania Transportation Commission approving all decisions • Amendments proposed by the Governor would allow the process to be used to lease the Turnpike, and would require that all funds raised from all P3s be applied to the Commonwealth’s General Fund • Senator Rafferty is leading efforts to ensure that Senate Bill 344 facilitates regional public-private partnerships

  5. CHANGES REQUIRED FOR REGIONAL PROJECTS • Control over regional projects must stay at the regional level • Toll revenues for regional projects should be spent in the region on its transportation priorities • Regional tolling authorities should have the authority to apply for Federal tolling authority and have the discretion to set toll levels

  6. THE TRANSPORTATION OPPORTUNITIES ACT ■ As the Federal Government debate the reauthorization of transportation funding, there seems little sentiment for an increase in gas tax ■ Tolling is left as a viable option for funding transportation infrastructure ■ The Transportation Opportunities Act does away with the old regime of tolling pilot projects which worked poorly under SAFETEA-LU

  7. THE TRANSPORTATION OPPORTUNITIES ACT (cont.) • The Act includes two new options that provide more flexibility to finance new construction or capacity • The Metropolitan Congestion Reduction option permits State and local governments to impose tolls on existing Interstate and non-Interstate facilities to improve or reduce congestion in metropolitan areas with populations over 1 million or more • Must use electronic tolling • Excess revenues may be used for Title 23 purposes

  8. THE TRANSPORTATION OPPORTUNITES ACT (cont.) • The Interstate System Improvement option permits States and local governments to impose tolls to initially construct Interstate facilities or add lanes if the facility could not otherwise be constructed without the collection of tolls • It permits tolling existing interstates for the purpose of constructing one or more lanes • Must use electronic tolling

  9. US 422 CORRIDOR IMPROVEMENT PROJECT • Improving mobility in the 40-mile US 422 Corridor by exploring ways to finance capital costs for US 422 as well as the extension of commuter rail service from Norristown to Reading • 15-mile back-ups daily on the expressway at Valley Forge as well as diversion onto parallel local roads • Structurally deficient bridges as well as a 25 to 50- year old roadbed

  10. US 422 CORRIDOR IMPROVEMENT PROJECT (cont.) • Transit with minimal local area service in older towns and newly developing areas • Non-existent commuter service which could be a green alternative to automobile use

  11. A PLAN OF ACTION • Only with appropriate changes to Senate Bill 344 and adoption of the Transportation Opportunities Act will regional projects like the 422 Corridor Improvement Project be able to involve the private sector appropriately • Together, ITS members can help can transform a P3 transportation project into an enterprise opportunity that can increase property values and economic development, leveraging the transportation investment for the improvement of our communities

  12. Contact Information Alan F. Wohlstetter, Esq. (215) 299-2834 awohlstetter@foxrothschild.com

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