Cover Image

Not for Sale

View/Hide Left Panel
Click for next page ( 37

The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement

Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 36
26 F I NA NC I NG S U R FA C E TR A NSPOR TA TION IN T HE U NIT ED ST A T ES potential P3 projects during the NEPA process itself. This of the program will be funded by a combination of the approach requires the public sector to develop expertise government, toll revenue, support from multilateral such as analyzing individual projects for P3 suitability; com- agencies, market borrowings, and private investment. pleting preliminary engineering sufficient to secure priced The latter four phases will be contracted on a build bids; and issuing project-specific, competitive requests for operatetransfer basis leveraging toll proceeds, annui- proposals. Key examples of this approach include the North ties, and government support. To promote the use of P3 Tarrant Express and I-635 LBJ managed lanes in Texas and procurements and attract private investment, the govern- the Port of Miami Tunnel and the I-595 Improvement Proj- ment of India has established a framework for imple- ect (including high-occupancy toll lanes) in Florida. menting the program. All preparatory work will be the While this approach moves away from qualifications- responsibility of the government, which will also provide based selections and sole-source negotiations to capture capital grants covering up to 40 percent of project costs. some private innovation and create a true competition In addition, the government is providing private inves- among multiple bidders, project selection decisions are tors with 100 percent tax exemption for 5 years and 30 still made on an episodic basis after significant invest- percent relief for the next 5 years, which may be spread ments on the basis of conventional delivery. over 20 years. Concession periods of up to 30 years are With the third generation of P3 projects, sponsors are allowed. Private partners have the right to collect tolls on thinking about how to deliver a whole suite of projects. the highways and may import construction equipment This programmatic approach has included the follow- duty free. The government has developed a model con- ing initiatives: Texas Department of Transportation's cession agreement that standardizes government approv- P3 review of the statewide capital program; Georgia als and allows bidders to identify up-front payments for Department of Transportation's biannual P3 screening the concessions. of the State Transportation Improvement Program, LA The program has received an excellent response from Metro's P3 analysis of the Measure R Capital Program, the private sector, with 44 P3 projects awarded between and the Metropolitan Transportation Commission's (San 2008 and 2010 to develop a total of 3,890 kilometers Francisco Bay Area) P3 screening of the Express Lanes of highway with a construction value exceeding $19 bil- Network Master Plan. Making determinations on the lion, some 60 percent of which has been raised by private use of P3s early in the process helps to optimize the use investors. Nearly 2,200 kilometers of the program had of conventional and alternative delivery methods, avoid been construction as of September 2009. overengineering, and reprogram engineering and con- Moderator Sale commented that there are many par- struction funds away from projects and accelerate them allels between the use of P3s in India and in the United at the same time. The components of the programmatic States, in particular India's contribution of 40 percent approach include establishing screening criteria reflect- of capital costs. In the United States, the initial expecta- ing the public sponsor's key goals, identifying projects tion was that the private sector would be responsible for that are suitable for alternative delivery, and creating a contributing 100 percent of project development costs. dedicated team to guide and direct the process. Now there is more of a collaborative approach with con- tributions from both sides, as reflected by a number of P3 transactions that reached financial closure over the Overview of P3s in the Road Sector past year. This approach is also envisioned in the recent in India: The Largest P3 Program in P3 enabling legislation passed by the state of Arizona. the World Another parallel with India's approach is in the use of tax incentives. In the United States, we have also seen Bovin Kumar of Halcrow Consulting India Pvt., Ltd., that tax incentives can enhance P3 programs. discussed the use of P3s in developing new highway infrastructure in India. India's national highway sys- tem is highly underdeveloped, and much of it is made P3s: Lessons from Australia up of two-lane roads. In the face of exponential traffic growth--passenger traffic is growing at 12 to 15 per- Kevin Longenbach of Transurban observed that Austra- cent annually, while cargo traffic is growing at 15 to 18 lia has been a pioneer in the P3 industry, with a history percent annually--the need for new roadway capacity of delivering significant infrastructure in the education, outstrips the public resources available to build them. health, social, and transportation sectors. Australia con- Highway investment needs are $70 billion in the next 3 sists of seven states, each of which makes independent years alone. transport policies. The more populous states of New South To address its highway expansion needs, the govern- Wales, Victoria, and more recently Queensland have been ment of India has established a seven-phase National the most active users of this delivery method. Australia's Highways Development Program. The first two phases first P3 roadway project was the Sydney Harbor Tunnel,