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The Second S T R A T E G I C H I G H W A Y R E S E A R C H P R O G R A M TRANSPORTATION RESEARCH BOARD WASHINGTON, D.C. 2015 www.TRB.org RepoRt S2-C12-RW-1 Effect of PublicâPrivate Partnerships and Nontraditional Procurement Processes on Highway Planning, Environmental Review, and Collaborative Decision Making Parsons Brinckerhoff with nossaman LLP hs PuBLic affairs
Subject Areas Finance Highways Planning and Forecasting
SHRP 2 Reports Available by subscription and through the TRB online bookstore: www.TRB.org/bookstore Contact the TRB Business Office: 202-334-3213 More information about SHRP 2: www.TRB.org/SHRP2 The Second Strategic Highway Research Program Americaâs highway system is critical to meeting the mobility and economic needs of local communities, regions, and the nation. Developments in research and technologyâsuch as advanced materials, communications technology, new data collection tech- nologies, and human factors scienceâoffer a new opportunity to improve the safety and reliability of this important national resource. Breakthrough resolution of significant transportation problems, however, requires concentrated resources over a short time frame. Reflecting this need, the second Strategic Highway Research Program (SHRP 2) has an intense, large-scale focus, integrates multiple fields of research and technology, and is fundamentally different from the broad, mission-oriented, discipline-based research programs that have been the mainstay of the highway research industry for half a century. The need for SHRP 2 was identified in TRB Special Report 260: Strategic Highway Research: Saving Lives, Reducing Congestion, Improving Quality of Life, published in 2001 and based on a study sponsored by Congress through the Transportation Equity Act for the 21st Century (TEA-21). SHRP 2, modeled after the first Strategic Highway Research Program, is a focused, time- constrained, management-driven program designed to com- plement existing highway research programs. SHRP 2 focuses on applied research in four areas: Safety, to prevent or reduce the severity of highway crashes by understanding driver behavior; Renewal, to address the aging infrastructure through rapid design and construction methods that cause minimal disruptions and produce lasting facilities; Reliability, to reduce congestion through incident reduction, management, response, and mitigation; and Capacity, to integrate mobility, economic, environmental, and community needs in the planning and designing of new trans- portation capacity. SHRP 2 was authorized in August 2005 as part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). The program is managed by the Transportation Research Board (TRB) on behalf of the National Research Council (NRC). SHRP 2 is conducted under a memo- randum of understanding among the American Association of State Highway and Transportation Officials (AASHTO), the Federal Highway Administration (FHWA), and the National Academy of Sciences, parent organization of TRB and NRC. The program provides for competitive, merit-based selection of research contractors; independent research project oversight; and dissemination of research results. SHRP 2 Report S2-C12-RW-1 ISBN: 978-0-309-27287-2 Â© 2015 National Academy of Sciences. All rights reserved. Copyright Information Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copy- right to any previously published or copyrighted material used herein. The second Strategic Highway Research Program grants permission to repro- duce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, or FHWA endorsement of a particular product, method, or practice. It is expected that those reproducing material in this document for educational and not-for-profit purposes will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from SHRP 2. Note: SHRP 2 report numbers convey the program, focus area, project number, and publication format. Report numbers ending in âwâ are published as web documents only. Notice The project that is the subject of this report was a part of the second Strategic Highway Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical committee selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical committee and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the second Strategic Highway Research Program do not endorse products or manufacturers. Trade or manufacturersâ names appear herein solely because they are considered essential to the object of the report.
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achieve- ments of engineers. Dr. C. D. (Dan) Mote, Jr., is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Victor J. Dzau is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academyâs purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. C. D. (Dan) Mote, Jr., are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transportation Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisci- plinary, and multimodal. The Boardâs varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transporta- tion, and other organizations and individuals interested in the development of transportation. www.TRB.org www.national-academies.org
ACKNOWLEDGMENTS This work was sponsored by the Federal Highway Administration in cooperation with the American Asso- ciation of State Highway and Transportation Officials. It was conducted in the second Strategic Highway Research Program (SHRP 2), which is administered by the Transportation Research Board of the National Academies. The project was managed by Stephen J. Andrle, SHRP 2 Deputy Director. The research reported was performed by Parsons Brinckerhoff, with Nossaman LLP and HS Public Affairs. Benjamin G. Perez, AICP, Principal, Strategic Consulting with Parsons Brinckerhoff, was the Principal Investigator. The other authors of this report are Reno Giordano, Consultant with Parsons Brinckerhoff; Edward V. A. Kussy, Nancy Smith, Brandon J. Davis, and Carollyn B. Lobell, all Partners at Nossaman LLP; and Heidi Stamm, Principal, HS Public Affairs. SHRP 2 STAFF Ann M. Brach, Director Stephen J. Andrle, Deputy Director Cynthia Allen, Editor Kenneth Campbell, Chief Program Officer, Safety Jared Cazel, Editorial Assistant JoAnn Coleman, Senior Program Assistant, Capacity and Reliability Eduardo Cusicanqui, Financial Officer Richard Deering, Special Consultant, Safety Data Phase 1 Planning Shantia Douglas, Senior Financial Assistant Charles Fay, Senior Program Officer, Safety Carol Ford, Senior Program Assistant, Renewal and Safety James Hedlund, Special Consultant, Safety Coordination Alyssa Hernandez, Reports Coordinator Ralph Hessian, Special Consultant, Capacity and Reliability Andy Horosko, Special Consultant, Safety Field Data Collection William Hyman, Senior Program Officer, Reliability Linda Mason, Communications Officer David Plazak, Senior Program Officer, Capacity and Reliability Rachel Taylor, Senior Editorial Assistant Dean Trackman, Managing Editor Connie Woldu, Administrative Coordinator
F o r e w o r d Stephen J. Andrle, SHRP 2 Deputy Director Publicâprivate partnerships and nontraditional methods for procuring new highway capacity are being introduced in the United States to generate revenue through tolls and to reduce the cost of highway construction. There are numerous variants, such as designâbuild, designâ buildâfinance, designâbuildâfinanceâoperate, and designâbuildâfinanceâoperateâmaintain. If state law permits, public agencies can use some strategies directly, or the private sector can be engaged to provide financing and engineering services. Tolling need not be involved, but it often is. How these nontraditional procurement methods relate to the transportation plan- ning and environmental review process is not always clear, nor is it clear how public agencies can best plan to take advantage of these strategies. The objective of this project is to determine at which decision points in the transportation planning and environmental review process publicâprivate partnerships and nontraditional procurement methods can best be consid- ered. The report relates key decisions about the use of nontraditional procurement methods to the Decision Guide developed in other SHRP 2 work. The Decision Guide covers decision points in long-range planning, corridor planning, programming, and environmental review/ permitting. This report will be of interest to anyone involved with highway finance or delivery of new highway capacity. In addition to this report, the material from this project is available in the web portal Transportation for CommunitiesâAdvancing Projects through Partner- ships (TCAPP), now known as PlanWorks, at www.transportationforcommunities.com. This report focuses on opportunities to better integrate nontraditional procurement methods and publicâprivate partnerships into the public transportation planning process. To set the stage, it reviews the definitions of the various forms of nontraditional procurements and sum- marizes the applications of each type in the United States. It includes a discussion of some early experience in the 1990s, both positive and negative, and provides a list of all publicâprivate partnership projects in the United States that are either operating or under construction as of 2012. The report discusses legal issues such as state enabling legislation, federal statutes, and planning regulations. A significant issue with respect to publicâprivate partnerships is timing. Does the private sector become involved before or after completion of environmental review? It is more com- mon after environmental review is completed, because that reduces uncertainty for private investors. However, design and construction creativity may be restricted at this late stage in the process, and changes introduced by the private partners may require a supplemental envi- ronmental review. The private sector may become involved earlier in the planning process, often through the use of a predevelopment agreement. However, the private sector is not well positioned to engage in right-of-way procurement or environmental review. The report discusses the pros and cons. The report concludes that clear state and regional policies are critical. When states or regions have well-defined policies, such as the need to sustain a regional roadway system, it is possible to weave tolling and partnerships into a regional vision. This vision then leads to discussing publicâprivate partnerships and toll options in long-range and corridor planning and thinking strategically about where these options may provide the most public benefit. It is important for public and private sectors to realistically assess which potential highway projects are feasible for a nontraditional approach. There is no single way to approach a partnership or tolling project; whatever approach is used, it must be flexible.
C o N T e N T S ix Acronyms and Abbreviations 1 Executive Summary 10 CHAPTER 1 Introduction and Orientation 10 Overview 10 Problem Statement 10 P3s: Current Context 12 Overview of the TCAPP Decision Guide 12 Structure of the Report 13 CHAPTER 2 P3s: Definitions and Applications 13 P3 Definitions: A Spectrum of Delivery Options and Risk Transfer 17 The Evolution of U.S. P3 Highway Procurements 19 The Attraction of P3 Projects 22 CHAPTER 3 Legal and Financial Issues with P3 Implementation 22 Legal Issues with P3 Projects 24 State DOT and MPO Planning Requirements 27 P3s and Project Finance 29 CHAPTER 4 Managing Challenges with Implementing P3s 29 Challenges Associated with P3 Implementation 34 Overcoming Challenges and Achieving Public Acceptance 39 CHAPTER 5 Timing and Implementation of P3 Projects 39 P3 Consideration Versus P3 Procurement Decision 40 P3 Procurement Decision Before or During NEPA 44 Procuring the P3 Following NEPA 47 CHAPTER 6 Encouraging and Facilitating Early Consideration of P3s 47 Incorporating Tolling and P3s in State and Regional Planning 50 Incorporating Tolling and Other Alternative Funding in NEPA 53 Aligning Project Definition with Revenue Potential and Available Funding 55 Managing the NEPA Process to Afford Greater Speed and Flexibility 59 Other Strategies to Afford Flexibility After NEPA 60 A Vision for Enhancing the Decision Guide Process to Consider the Potential for P3 Development
62 CHAPTER 7 Integrating P3s into the Decision Guide 62 P3s and Long-Range Transportation Planning 65 P3s and Programming 67 P3s and Corridor Planning 69 P3s and Environmental Review/NEPA Merged with Permitting 72 References 74 Appendix A. Glossary 79 Appendix B. Literature Review and Additional P3 Resources
A C r o N y m S A N d A b b r e v i A T i o N S ATCs alternative technical concepts AASHTO American Association of State Highway and Transportation Officials BOO buildâownâoperate BOT buildâoperateâtransfer Caltrans California Department of Transportation CPTC California Private Transportation Company CTV California Transportation Ventures, Inc. CE categorical exclusion CEQ Council for Environmental Quality DBF designâbuildâfinance DBFOM designâbuildâfinanceâoperateâmaintain DBOM designâbuildâoperateâmaintain DEIS draft environmental impact statement DOTs departments of transportation EIS environmental impact statement EPA Environmental Protection Agency FDOT Florida Department of Transportation FEIS final environmental impact statement FHWA Federal Highway Administration FTA Federal Transit Administration FONSI finding of no significant impact GDOT Georgia Department of Transportation HOT lanes high-occupancy toll lanes LEDPA least environmentally damaging practicable alternative LRP long-range plan LRTP long-range transportation plan MAG Maricopa Association of Governments MLSP Atlanta Regional Managed Lane System Plan MPO metropolitan planning organization MTP metropolitan transportation plan NCHRP National Cooperative Highway Research Program NEPA National Environmental Policy Act NCTCOG North Central Texas Council of Governments OTP3 Commonwealth of Virginia Office of Transportation PublicâPrivate Partnerships P3 publicâprivate partnership PAB private activity bonds PDA predevelopment agreement PPP publicâprivate partnership PPTA Commonwealth of Virginia PublicâPrivate Transportation Act PSC public-sector comparator ix
ROD record of decision SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users SANDAG San Diego Association of Governments SDELP San Diego Expressway Limited Partnership SEP-15 Special Experimental Project 15 SHRP 2 Second Strategic Highway Research Program SIP state implementation plan SRC selection recommendation committee STIP state transportation improvement program TCAPP Transportation for CommunitiesâAdvancing Projects through Partnerships TEA-21 Transportation Equity Act for the 21st Century TIFIA Transportation Innovation Finance Innovation Act TIP transportation improvement program TPB National Capital Region Transportation Planning Board TRIP II Toll Road Investors Partnership II TxDOT Texas Department of Transportation U.S. DOT United States Department of Transportation VDOT Virginia Department of Transportation VfM value for money WSDOT Washington State Department of Transportation