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Tolling and P3 Trends in 2009 by Robert W. Poole, Jr. Director of Transportation Policy, Reason Foundation

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Presentation on theme: "Tolling and P3 Trends in 2009 by Robert W. Poole, Jr. Director of Transportation Policy, Reason Foundation"— Presentation transcript:

1 Tolling and P3 Trends in 2009 by Robert W. Poole, Jr. Director of Transportation Policy, Reason Foundation

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 StageValue ($B)Lane-mi Completed$40.03,900 Construction 17.81,734 Design/finance 19.41,887 Enviro review 23.32,266 Planning 60.55,900 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 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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