Transportation Funding: Are Public Private Partnerships the Answer?

June 12, 2014 11:30 am

by Jon Richards · 8 comments

A few weeks ago, Eric the Younger wrote up a post describing the problems with the federal Highway Trust Fund. At this point, the Trust Fund is running out of funds, and is expected to stop sending money to the states the week of July 18th.

Congress is working on a new highway bill, known as the GROW AMERICA Act. That by the way is an acronym for Generating Renewal, Opportunity, and Work with Accelerated Mobility, Efficiency, and Rebuilding of Infrastructure and Communities throughout America. The bill would provide a total of $302 billion over four years, out of which $200 million would to go roads, with the rest to transit, rail and multi-modal projects. Prospects for the bill’s passage by the time current funding runs out, or even by the August Congressional recess, are cloudy. The upcoming resignation of Eric Cantor from GOP leadership is also seen as an impediment to passing the bill.

What does this mean for Georgia, and more specifically for metro Atlanta? After the TSPLOST was voted down two years ago, there have been few options for adding transportation infrastructure, largely because most of the federal funding the state receives goes to maintenance and debt service.

In their latest newsletter, the Council for Quality Growth outlines a possible solution: Public Private Partnerships. These partnerships, known by the acronym P3s, can fund transportation priorities through a combination of federal dollars, state or local matching funds, and private investment. Their newsletter highlights P3 projects in Denver for transit and in Dallas for road infrastructure improvements.

The Council suggests that P3s could be the solution to building projects in metro Atlanta.

The boom of P3 projects around the U.S. suggest that the model not only has a high propensity for success, but also reduces the burden of construction on the taxpayers and promotes partnerships across sectors to meet critical infrastructure needs. While the Atlanta area is ripe for reform and the Metro population recognizes the need for a solution, they have shown reluctance to bear the upfront cost of construction; the P3 model may be the best solution.

GDOT is expected to use a P3 for both the Northwest Corridor Managed Lanes project (HOT lanes on I-75) and the multimodal passenger terminal proposed for downtown Atlanta’s Gulch. In addition, the Council suggests that a P3 might be appropriate for Cobb County’s project to bring transit from Kennesaw to the Arts Center Station.

P3s are probably not the complete answer to the state and region’s transportation funding needs, but they can be a part of it. Or, as the Council says,

In examining the Metro Region’s current challenges and the success that other regions are experiencing, one this is clear: a unified commitment and collaboration across sectors and municipalities is needed to meet ongoing transportation infrastructure needs. By finding innovative funding sources and solutions to help overcome prohibitive upfront costs, the Metro Region’s projects are more likely to receive federal grants and funding, much like the funding awarded to Orlando and Charlotte. Public-private partnerships are another tool in the toolbox that the Metro Region needs in order to remain competitive and provide infrastructure that will sustain continued growth.

The PDF newsletter is below the fold.

Download (PDF, 1.74MB)

CJBear71 June 12, 2014 at 1:01 pm

Before we debate the merits, can we pause for a second to appreciate how freaking awesome the GROW AMERICA Act acronym truly is? Seriously, that’s some outstanding staff brainstorming there.

View from Brookhaven June 12, 2014 at 3:21 pm

Please. Give me a room of 1st graders and we could have come up with that in an hour.

The Last Democrat in Georgia June 12, 2014 at 3:40 pm

Another good column as you have been prolific today, Mr. Richards.

Public-Private Partnerships are most definitely the answer in this era of rapidly-declining funding from already-inadequate traditional sources such as motor fuel taxes, local sales tax referendums and subsidies from very-heavy borrowing.

Mr. Richards, you make an excellent point that Public-Private Partnerships are not the complete answer….That’s because P3s can mostly only be utilized to fund capital, maintenance and operational projects on pieces of transportation infrastructure that are capable of collecting a continued direct source of revenue (like tolls on controlled-access highways; fares and major external sponsorships on transit lines; real estate revenues on transit lines and roads, etc).

Unfortunately, state motor fuel taxes will also likely need to be increased and indexed to inflation so that they will cover as close to 100% of the cost of maintaining the state’s entire non-controlled access road network to make up for what appears will be the increasing absence of federal subsidies in coming years.

Though the blow of both implementing inflation-indexed tolls on almost all of the state’s controlled-access highways and increasing state motor fuel taxes can be softened substantially by sending periodic cash rebates (monthly, quarterly or yearly cash rebates) of tolls and increased motor fuel taxes to Georgia motorists.

Will Durant June 12, 2014 at 4:08 pm

DANGER Will Robinson, DANGER!

John Konop June 13, 2014 at 6:40 am

Will,

We need infrastructure spending to help grow the economy….This is how America has grown since William and Clarke, railroads, airports, electronic grid, Internet……The real issue is how we pay for it….It seems many want a free lunch….The only 3 sources are taxes/impact fees and or user fees….The money cannot come from the air…..Doing nothing will have a major impact….USSR lost cold war via lack of infrastructure spending in an arms race….

Dave Bearse June 13, 2014 at 10:36 am

Metro Atlanta may harder hit than most if federal funding is reduced. Beyond other reasons previously discussed on PP, the metro Atlanta is more overly reliant on interstates, its other than interstate arterial road network is lacking, and collector roads are inferior.

Harry June 13, 2014 at 11:28 am

When the money doesn’t have to come from the feds it means we get to forego the “DC cut”. That metro area already is far too wealthy.

The Last Democrat in Georgia June 13, 2014 at 1:55 pm

Yeah, Metro Atlanta’s arterial road network is crap, to put it nicely.

Metro Atlanta’s extremely poor non-Interstate arterial network further underscores the importance of private funding to our ailing multimodal transportation network.

We can’t build or operate anything helpful if we don’t have the money needed to do so.

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