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Prospectus Blog Auckland Eyes Deep-Tunneled Roadway, Public-Private Deal

From Wuhan to Barcelona to Pittsburgh, More Deep-Bored Tunnels Are On The Way
New Zealand’s finance minister Michael Cullen says a government-appointed steering group will investigate the feasibility of a public-private partnership to build a deep-bored tunnel for completion of an urgently-needed western ring road segment in metro Auckland. It would be part of a larger, 48-kilometer ring road network connecting major population and employment centers in the region, and could influence whether PPPs are used on other major road projects in New Zealand also facing funding gaps. The five kilometer long tunnel would cost an estimated NZ $2 billion ($1.6 billion U.S.), with private developers compensated for their up-front investment either through tolls or a government lease-back provision, over 35 years. More:

The Government wants the motorway tunnel, which it has called the Waterview Connection, to be completed by 2015…Cullen said the deep tunnel option was much less disruptive and not more much expensive than a tunnel built by cutting into the earth and then covering it back up again. “Once you take into account the cost of acquiring property. . . It is probably no cheaper and possibly more expensive than the deep tunnel option,” Cullen said….Cullen said one of the advantages of a public-private partnership was that much of the money to build the tunnel would come from the private sector. “It reduces the pressure on other roading projects not just in Auckland but around the country.”

Residents whose homes would be taken if an above-ground ground segment of the ring road were built are pleased with the tunnel option.
The Money Crunch
Many states, provinces, regional and local governments now find that funds required for top-tier road and transit projects significantly exceed funds available from current – and even recently-increased – transportation taxes. Washington state is a case in point, as two gas tax hikes (in 2003 and 2005) have helped but hardly kept pace with major project funding needs. That’s why our state’s Democratic governor is talking very straightforwardly about tolling major highway bridges in Puget Sound and in the I-5 Washington-Oregon border corridor to help pay for replacements addressing glaring safety or congestion problems.
Public-private transportation partnerships allow better financial risk sharing, and quicker timelines to beat ever rising prices tied to robust global competition for construction labor and materials. The payback to private investors occurs over time, sometimes via a government lease-back of the newly built facility; or via tolls, the amount of which can be pegged to traffic levels at time of use, and controlled by government rather than the private partners. Without accelerated completion under a PPP, planned projects can drag on for years as politically-driven funding gaps remain, and the costs of materials and labor climb ever higher.
Deep-Bored Tunnels – A Global Phenomenon
The Auckland deep tunnel PPP proposal hasn’t been greenlighted yet and could still be torpedoed. But the high-level attention from the feds is another indication – atop an impressive roster of completed deep-bored road and train tunnel projects in Europe and elsewhere – that today, such new tunnels are growing in popularity.

  • In Pittsburgh, a 450 ton deep-bore tunneling machine will punch two tunnels under the Allegheny River for the new, $435 million North Shore Connector link to Pittsburgh’s light rail system. Work has started and is scheduled for completion in 2011.
  • In Spain, a high-speed rail line running from Madrid to the French border will include a 5.64 kilometer tunnel under Barcelona’s city streets, excavated with a tunnel boring machine. Special measures will be taken during tunnel boring and construction to secure the foundation of Gaudi’s famous Sagrada Familia.
  • After reviewing bids from more than 30 companies, authorities in Wuhan, a central Chinese city of 8 million, have selected a Shanghai firm to supervise construction of a 27 kilmoter long, $2 billion (U.S.) tunneled subway line passing beneath the Yangtze River. Work is also progressing on a four-lane highway tunnel under the Yangtze in Wuhan, to be completed later this year.
  • In Vancouver, B.C., part of an ambitious $14 billion transit plan (which may yet require some private capital) is a deep-bored tunnel for part of an urban rail line through the city’s vibrant west side neighborhood of Kitsilano, to the University of British Columbia. Echoing the province’s transport minister, one merchant says:

    It should be tunnel boring, and not cut-and-cover. You don’t want to change the dynamics of the neighborhood.

  • Deep-Bored Tunnels In Seattle
    There are literally dozens of other major highway and train deep-bored tunnels completed around the world in recent years. One is in Seattle, through Beacon Hill for Sound Transit’s light rail line. Another such tunnel would be part of the planned extension of the line north from downtown to the University District. A major new deep-bored tunnel roadway is also possible in Seattle, as a replacement for the dangerously earthquake-prone Alaskan Way Viaduct on State Route 99 through Seattle’s downtown waterfront.
    The Viaduct replacement tunnel now being discussed – including at a December symposium sponsored by Cascadia Center – is an inland, deep-bored option that would be financed with private sector partners and perhaps tolls. Speaker PowerPoints at the bottom of our Web page on the event variously highlight: Seattle’s many tunnels; the impressive long term cost-benefit ratio for tunneled versus above-ground highways; huge advances in deep-bore tunnel technology; and successful deep-bore tunnel projects in Europe including Paris, Madrid and southern England.
    Cascadia Senior Fellow Glenn Pascall summarized the symposium and arguments for a deep-bored tunnel in this Puget Sound Business Journal op-ed.
    A state transportation department-led stakeholder group is to make a final recommendation by year’s end from among three current options – the committee holds a public forum in West Seattle Tuesday, February 12th. The final choice menu is: an elevated replacement; a so-called “surface-transit” option which would tear down the viaduct and funnel traffic onto surface streets while providing more and better transit service for Viaduct users; and an inland, deep-bored tunnel.
    Seattle Channel News Talk Show Examines Tunnel Option For Viaduct
    On Seattle Channel’s “City Inside/Out” recently, former Seattle Mayor Norm Rice told host C.R. Douglas, “I’m a tunnel guy. I think that’s the wiser choice to make.” Another guest, former Seattle Mayor Charles Royer, argued for the surface-transit option, saying that with traffic moving at a steady 35 miles per hour and well-calibrated traffic and pedestrian signals, it could be quite viable. Of the elevated replacement option, Royer said, it would be “big, disruptive, ugly and expensive.” (Watch the video here. You’ll need RealPlayer – download a free “basic” RealPlayer here).
    A week later on City Inside/Out, Seattle City Council Member Jan Drago made several points in support of a deep-bored tunnel replacement for the Viaduct, in an interview by Douglas. Drago stressed that huge international construction firms are building deep-bored tunnels all over the world; that the technology has improved greatly; costs are a relatively modest $100 to $300 million per mile; and that a deep-bored inland tunnel to replace the Viaduct in Seattle would be a quite different, less risky approach than the covered trench on the waterfront proposed by the city and rejected in a public advisory vote last year (along with an elevated replacement option).
    The Washington State Department of Transportation’s point man on the Viaduct replacement, Ron Paananen, told Douglas in the above-linked episode that the long period of disruption stemming from other alternatives is an important consideration, and that a bored tunnel is “definitely feasible.”He reiterated that no preferred option has been chosen yet.
    In his PSBJ op-ed, Cascadia’s Pascall argued that the surface-transit option and the inland deep-bored tunnel are complementary approaches – it’s not an either-or paradigm.

    …two alternatives have moved steadily along — the surface street option and a deep-bore bypass tunnel….the two approaches appear compatible since they would minimize disruption to the waterfront and downtown while connecting these two iconic parts of Seattle. The bypass tunnel assists the surface street option by providing a capacity solution for the 60,000 vehicles that use the Viaduct each day as a through route, taking this load off the design of a surface street plan. Some strategists are already talking about a tunnel finance plan that includes funds which could be applied to surface street and transit amenities.

    The choice of a Viaduct replacement option is at least 10 months off, if not a bit longer. As the process brews, it’s worth noting that a public-private partnership to limit taxpayer exposure for a deep-bored tunnel is hardly a far-fetched notion. A state statute, RCW 47.29.140, spells out the requirements for public-private partnerships, including articulation of how partners will share risk management and project costs, who is responsible for cost overruns, what are the penalties for non-performance by contractors, and what accounting and auditing standards will be used. Under RCW 82.44.195, private entities may deposit funds in the state’s transportation infrastructure account to help fund surface transportation projects considered critical to mobility. For every such private investment in a highway project, there must be a long-term payback, such as tolls – which state or regional entities would control. Under RCW 35.85.050, financing could also come from property owners within a designated tunnel improvement district.
    As that statute articulates, those who benefit from a tunnel can be assessed a special tax to help pay for it. And the environmental, recreational and economic benefits of opening up the downtown waterfront – while simultaneously establishing a swift, underground downtown bypass on SR 99 – would be considerable.