Public-private highway projects costly to taxpayers, undermine public role

Richmond - The first comprehensive analysis of a 1995 law that allows private entities to build transportation projects in the Commonwealth shows the law is failing to live up to its promise of attracting private money to fund increasingly expensive projects. Instead, projects proposed under the Public-Private Transportation Act (PPTA) rely almost exclusively on tolls and/or taxpayer dollars, according to the analysis released today by the Southern Environmental Law Center. Moreover, the report finds that PPTA projects often circumvent the normal state transportation planning process, limiting public input and consideration of alternatives, and shifting transportation planning away from the Commonwealth Transportation Board.

The report is particularly timely, given recent budget proposals from Gov. Mark Warner and House of Delegates Speaker William Howell to earmark millions of taxpayer dollars during the 2005 General Assembly to jumpstart public-private transportation projects.

The report was written by Jim Regimbal, a principal with Fiscal Analytics, Ltd. with more than 20 years experience in state policy analysis, including serving on the staff of the Virginia Senate Finance Committee. The report examines the PPTA's purpose, explores critical policy issues it creates, discusses seven projects and proposals in detail, and makes numerous recommendations for reform, including:

• Provide for additional public input;
  
  
• Require that proposals be part of normal planning processes;
  
  
• Give the Commonwealth Transportation Board greater authority over proposals;
  
  
• Require private entities proposing a project to invest a certain amount of capital in a project;
  
  
• Require them to pay for independent verification of traffic and cost estimates.
  
  

"The report clearly shows that there is no free lunch with these projects," said Trip Pollard, director of the Southern Environmental Law Center's Land and Community Project. "Taxpayers are still on the line for many project costs, and the driving public is paying the rest through tolls."

The law allows private entities to enter into agreements with the state or localities to construct, improve, maintain, and operate transportation facilities. Some 14 public-private construction projects have been proposed or explored under the law, including the Pocahontas Parkway (the only project that has been completed), Route 288, I-495 and I-95 HOT Lanes, widening I-81, and the Hampton Roads Third Crossing.

"The law can be an innovative tool to tap into private sector creativity and efficiency to save time and improve transportation project delivery," Regimbal said. "But it has not attracted as much private money as expected, instead allowing large construction consortiums to come up with projects that primarily use taxpayer-subsidized revenue bonds backed by tolls or local taxes, as well as governmental transportation funds."

Further, Pollard said, the PPTA has created a shadow transportation planning process in which private entities come up with projects that are profitable to them but don't necessarily meet the transportation priorities identified by the Commonwealth Transportation Board, the official policymaking body for transportation in Virginia. "The danger is that our limited transportation dollars could be used on projects that benefit the corporate bottom line but don't relieve traffic congestion or protect our natural resources, including our open space and farmland," Pollard said.

The report identifies a number of other problems with the PPTA statute and projects:

• Proposed projects tend to contribute to sprawl development. Proponents have an interest in promoting rapid growth and greater driving to increase toll collections;
  
  
• Traffic and revenue projections have been erroneous or highly questionable;
  
  
• Major projects have been advanced before other alternatives have been fully studied;
  
  
• Competition may be reduced by making it more difficult for smaller contractors to get work and by demands from project proposers that the state limit improvements to other roads.
  
  

"Public-private partnerships can be beneficial, but as this report shows, there are serious questions about how effectively the current law serves the public interest," Pollard said. "The statute and guidelines need to be improved before additional projects are authorized to ensure that we are making smart transportation investments and that we are adequately protecting our communities and environment."

State construction projects proposed under PPTA

Pocahontas Parkway (Route 895) – Richmond region	Complete
Route 288 – Richmond region	Almost complete
Route 28 – Northern Virginia	Underway
Coalfields Expressway – Southwestern Virginia	Underway
Route 199 – Williamsburg	Underway
Route 58 – Hillsville to Stuart	Underway
I-81 widening – Western Virginia	Under consideration
I-495 High Occupancy Toll (HOT) Lanes – Northern Virginia	Under consideration
I-95 HOT Lanes – Northern Virginia	Under consideration
Third Crossing – Hampton Roads	Under consideration
Dulles Rail Extension – Northern Virginia	Under negotiation
Western Transportation Corridor – Northern Virginia	Request for information
Midtown Tunnel - Portsmouth and Norfolk	Request for information
Powhite Parkway Western Extension – Richmond	Returned to proposer