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Prospectus Blog A Discriminating View Of Public-Private Partnerships

Not all forms of public-private partnerships received an unreserved endorsement at the19th annual Conference on Public-Private Ventures in Transportation, staged recently by the American Road and Transportation Builders Association. Long term leases of existing toll roads, as exemplified by the Chicago Skyway and Indiana Toll Road, were viewed with skepticism by some speakers. Coming in for particularly severe criticism were leases whose proceeds would be dedicated to non-transportation purposes.
“If the motivation for a P3 project is to generate upfront cash that can be used to solve statewide budget problems or finance other expenditures not related to transportation, we will oppose that deal,” announced AAA’s Robert Darbelnet in a luncheon address. However, “public private partnerships are certainly one of the options, and I am here to say that AAA believes that these partnerships have a role to play.”
Opposition to Chicago Skyway-type deals was also expressed by Jack Schenendorf, Vice Chairman of the federal commission on transportation policy and revenue, who cited the potential diversion of cash raised from long-term assets leases as a reason why the public and Congress are questioning the wisdom of letting out toll road concessions to private operators.
The current targets of this criticism — proposals to lease the New Jersey Turnpike and the Pennsylvania Turnpike — were absent from the program after having been prominently featured in past conference programs. Was this a subtle sign that the P3 community wishes to distance itself from these initiatives or at least to represent them as outside the mainstream of private sector involvement? That would be the hope of those who contend that the true purpose of public-private partnerships is to share in the risks (and rewards) of investing in new capacity-enhancing “greenfield” projects.
Confusing “monetization” of existing public assets with public-private partnerships sends a wrong message about the true purpose of the P3 process, and could lead to a withdrawal of congressional support from public-private ventures, or to the promulgation of restrictive congressional guidelines governing their use.
To Tax Or Not To Tax?
Many speakers voiced skepticism about the prospect for increased gasoline taxes and doubted that a small tax increase would make a dent in the infrastructure deficit. In sum, the consensus was that public resources will never be enough and complementary private capital will be needed to accomplish public purposes. A small increase in the fuel tax would be a band-aid solution, and with oil prices predicted to push past the $100-a-barrel mark, the prospect of Congress and state legislatures approving major increases in fuel taxes is remote.
Congressional reluctance to increase gas taxes was underscored by the news, made public on the eve of the Conference, that Rep. Jim Oberstar (D-MN) chairman of the House Transportation and Infrastructure Committee, bowed to political reality and withdrew his proposal for a 5-cent-a-gallon federal gas tax increase to fund his bridge reconstruction program. Oberstar’s proposed tax hike was vetoed by the Congressional leadership and received little support from rank-and-file Democrats as well as Republicans. A gas tax increase faces bleak prospects heading into an election year, Oberstar acknowledged.
Discussions in the breakout sessions revealed a growing sophistication with the concepts of public-private ventures and a more cautious assessment of the rate of their penetration of the infrastructure market. Setbacks, such as the Texas moratorium, have moderated the initial “irrational exuberance,” and the tendency now is to shift focus from high profile megadeals and long-term asset leases to more modest ventures, such as the public-private concessions in Mississippi and Georgia. New financing techniques such as “availability payments” that are tied to performance, and “shadow tolling” are emerging as alternatives to the first generation concession model.
TECHNORATI TAGS: <a href="http://technorati.com/tag/PUBLIC-PRIVATE PARTNERSHIPS, TOLLING, REVENUE USE, CONCESSIONS, GAS TAX, TRANSPORTATION FUNDING, JAMES OBERSTAR, JACK SCHENENDORF, ROBERT DARBELNET, AAA, CHICAGO SKYWAY, PENNSYLVANIA TURNPIKE, NEW JERSEY TURNPIKE"rel="tag"PUBLIC-PRIVATE PARTNERSHIPS, TOLLING, REVENUE USE, CONCESSIONS, GAS TAX, TRANSPORTATION FUNDING, JAMES OBERSTAR, JACK SCHENENDORF, ROBERT DARBELNET, AAA, CHICAGO SKYWAY, PENNSYLVANIA TURNPIKE, NEW JERSEY TURNPIKE