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Tolling and P3 Trends in 2009

Tolling and P3 Trends in 2009. by Robert W. Poole, Jr. Director of Transportation Policy, Reason Foundation www.reason.org/transportation bobp@reason.org. Overview of Presentation. Financing after the credit crunch State-level interest and activities Project opportunities

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Tolling and P3 Trends in 2009

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  1. Tolling and P3 Trends in 2009 by Robert W. Poole, Jr. Director of Transportation Policy, Reason Foundation www.reason.org/transportation bobp@reason.org

  2. Overview of Presentation • Financing after the credit crunch • State-level interest and activities • Project opportunities • Political issues and opportunities

  3. Credit crunch impacts • Miami port tunnel: delayed, team restructured, financed Oct. 14, 2009. • Midway airport: cancelled; might be revived. • Mississippi airport toll road: on hold, might be revived. • I-95/395 HOT lanes: on hold, likely to be revived.

  4. Deals that are getting financed are far less leveraged • Global Via purchase of Chile toll roads: 41% equity. • Portugal Baixo Alentejo toll road: 31% equity (but partly availability payments). • Abertis bid for PA Turnpike—reported to be 50% equity. • Florida I-595 rebuild—only16% equity (but funding is via availability payments, hence no revenue risk).

  5. Lots of equity available in infrastructure investment funds • Probitas estimates $84.5B as of end-2008, and another $92B being sought in 2009. • Prequin estimates $115B as of early 2009; 94 funds seeking additional capital. • U.S. pension funds now following the lead of Canadian and Australian funds. • Problem is relative dearth of deals, not lack of capital.

  6. States continue passing P3 enabling legislation Enacted in 2009 so far: • Alabama • Arizona • California • Massachusetts • Puerto Rico Pending (and likely): • Michigan • Pennsylvania

  7. U.S. toll projects, 1992-2008 Stage Value ($B) Lane-mi Completed $40.0 3,900 Construction 17.8 1,734 Design/finance 19.4 1,887 Enviro review 23.3 2,266 Planning 60.5 5,900 Totals: $161.0 15,687 Source: FHWA, 2009

  8. Types of projects (1): urban congestion relief • Rebuilding inadequate freeways (I-595) • Adding Managed Lanes (LBJ, NTE, Beltway in northern Virginia) • Building/operating Managed Lanes networks (Atlanta, San Francisco) • Port-related toll truckways (Los Angeles, Miami, Tampa)

  9. Types of projects (2):bridge repair & replacement • MO, NY bridge rehab programs • VA—Jordan and Dominion bridges • CA—two LA port bridges • NY—Tappan Zee, Port Authority bridge replacements • MI—new Detroit River crossing

  10. Types of projects (3):new and aging Interstates New routes (tolled): • Las Vegas to Phoenix • I-69 Texas to Indiana Rebuild with tolls + added capacity: • Key long-haul truck routes • Missing links in LCV network (see map)

  11. Long-haul, multi-state TTWs

  12. Debates over P3 concessions • Both national commissions said this tool should be encouraged. • NCHRP synthesis 391: how to protect the public interest in P3s. • Pew Center report: lessons learned from failed PA Turnpike lease. • TX Legislative Study Committee report.

  13. Federal surface transportation reauthorization House bill (Oberstar) provisions include: • Federal regulation of all toll roads, public and private. • Federal emphasis on reduced driving, increased transit. • Possible new goods-movement program.

  14. Need for P3 process reforms • Best practices, value-for-money • Separate entities, as in Australia, Canada: • California’s Public Infrastructure Advisory Commission • Michigan’s new P3 office • Puerto Rico’s new P3 agency • Principles for concession agreements • Project selection via Public Sector Comparator

  15. Assessing Value for Money via PSC • Basic methodology • Develop conceptual framework • Estimate costs and revenues • Identify and analyze risks • Assess uncertainty around the inputs to arrive at risk-adjusted values • Develop financial model and calculate net present value • Perform sensitivity analyses

  16. Conclusions • Credit crunch has slowed deal closure; debt less available and more costly. • State interest in P3 continues to grow. • Large backlog of project needs: • Urban congestion relief • Bridge replacement • Interstate modernization • Need to address political challenges via process reform and best practices.

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