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Public-Private Partnerships

Footnotes

[1] PPPs are essentially contractual arrangements between the public and private sectors that allow a single private entity to assume significant control of, and risk for, multiple elements of a project, including design, construction, financing, operation and maintenance. A detailed definition is provided in Section III.

[2] The growing use of PPPs in the United States is detailed in Section IV.

[3] The I-635 Managed Lanes project, the North Tarrant Express, the DFW Connector, the I-69/TTC project, and portions of the TTC-35 project.

[4] The Port of Miami Tunnel project, the I-595 Improvements project, and the First Coast Outer Beltway.

[5] The Northwest Corridor project, the I-285 Northwest TOT Lanes project, the GA-400 Crossroads Region project, and the I-20 Managed Lanes project.

[6] The I-95/I-395 HOT Lanes project, the US Route 460 project, and the Midtown Corridor Tunnel project, which is expected to proceed with procurement upon receipt of authorization from the Virginia Department of Transportation's Chief Engineer.

[7] The Missouri Safe & Sound Bridge Improvement Project, in Missouri, the BART Oakland Airport Connector, in California, the Knik Arm Bridge, in Alaska, the Mid-Currituck Bridge, in North Carolina, the Airport Parkway, in Mississippi, the Greenville Southern Connector, in South Carolina, and the Denver RTD FasTracks Capital Program, in Colorado.

[8] State authorizing legislation is described in greater detail in Section IV.

[9] In January 2007, for example, the U.S. Government Accountability Office ("GAO") added transportation finance to its "high risk" program, which identifies serious weaknesses in areas that involve substantial resources and provide critical services to the public. GAO highlighted increasing congestion, funding shortfalls and the un-sustainability of the fuel tax, as important factors in its decision. In making its determination, GAO suggested that Congress and the U.S. Department of Transportation consider alternative sources of revenue and stimulate private investment. High Risk Series: An Update, U.S. Government Accountability Office (GAO-07-310), January 2007, pp. 16-20.

[10] These failures of traditional transportation policy, and how PPPs respond to these failures, are the subject of Section V of this report.

[11] Managing risks in PPPs is the subject of Section VI of this report.

[12] GAO recently reported that the concessionaires for the Indiana Toll Road and Chicago Skyway are actually held to higher standards of performance than the public operators of such roads were before them. Highway Public-Private Partnerships: More Rigorous Up-front Analysis Could Better Secure Potential Benefits and Protect the Public Interest, United States Government Accountability Office (GAO-08-44), February 2008, pp. 41-42.

[13] Infrastructure M&A, The Financial Times, December 30, 2007.

[14] Palter, Robert N., Walder, Jay, and Westlake, Stian, How investors can get more out of infrastructure: Opportunities to invest in public infrastructure will increase during the next few years, but so will competition for deals, The McKinsey Quarterly, February 2008.

[15] House Report 108-243 (2003) accompanying the FY 2004 Department of Transportation Appropriations Act requested that USDOT: (i) prepare a report identifying the impediments to the formation of large, capital-intensive highway and transit projects involving PPPs, and (ii) work with states and local entities to identify and eliminate existing impediments. In December 2004, USDOT provided a report to Congress that answered the questions posed by Congress and attempted to provide a resource document for states interested in using PPPs.

[16] The dominant form of procurement in the United States since the creation of the modern transportation system has been the design-bid-build ("DBB") approach. Under the DBB approach, the design and construction of a facility are procured separately. The public agency either performs, or contracts with an engineering firm to perform, the design work, and then separately contracts with a private construction firm through a competitive, low bid process to perform the construction work. In a DBB procurement, the public agency assumes the risk that the design work is accurate and complete. Typically, the public sponsor also assumes the risk and responsibility for the operation and maintenance of the facility and for funding or financing the project.

[17] The benefits of PPPs were described in Chapter III of the 2004 Report.

[18] See, for example, (i) Current Practices for Public-Private Partnerships for Highways, Draft Report, submitted by KCI Technologies, Inc., in cooperation with the Maryland Transportation Authority, the Maryland Department of Transportation, and the Maryland State Highway Administration, June 22, 2005 (the "Maryland Report"), (ii) Surface Transportation Funding Options for States, National Conference of State Legislatures, May 2006 (the "NCSL Report"), (iii) Report to Congress on the Costs, Benefits, and Efficiencies of Public-Private Partnerships for Fixed Guideway Capital Projects, USDOT, November 2007 ("USDOT Transit PPP Report"), (iv) PFI: Construction Performance, UK National Audit Office, Report by the Comptroller and Auditor General, HC 371 Session 2002-2003, February 5, 2003 ("UK NAO Report"), and (v) Performance of PPPs and Traditional Procurement in Australia: Final Report, The Allen Consulting Group, November 30, 2007 ("Australia PPP Report").

[19] 2004 Report, pg. 2.

[20] See the NCSL Report, pg. 49, which states that "[b]ecause the private entity wants to make a profit, it has greater incentive to reduce costs, improve efficiency and shorten completion time."

[21] Miami Port Tunnel, Maximum Availability Payment Opened, Port of Miami Tunnel Project, Media Advisory, Revised April 12, 2007.

[22] 2004 Report, pg. 48. See also the Maryland Report, pg. 22. The Maryland Report explains that using traditional funding sources States are often forced to choose between funding an expensive mega-project and funding smaller urgent projects. Using non-traditional sources of funds made available through PPPs, expensive mega-projects and smaller urgent projects can be completed simultaneously.

[23] See Note 20 above.

[24] Gov. Blunt Signs Bill to Dramatically Improve 153 Bridges in St. Joseph Area, Missouri Governor Matt Blunt, Press Release, September 5, 2007.

[25] 2004 Report, pg. 59. See also the Maryland Report, pg. 32.

[26] 2004 Report, pg. 62. USDOT Transit PPP Report, pp. 9-10.

[27] The UK NAO Report, pp. 7-8, which asserts that "[b]y designing and building the asset to a standard that will reduce maintenance costs throughout the contract period the consortium can reduce its long term costs while ensuring that it meets the department's service requirements."

[28] USDOT Transit PPP Report, pg. 19. The Largo Metrorail Extension was a Design-Build project, not a long-term concession, but this project demonstrates the cost savings and innovations that result from the combination of multiple project elements in one entity, a key component of the PPP structure.

[29] http://www.in.gov/indot/2276.htm (last visited July 7, 2008)

[30] http://www.in.gov/indot/2276.htm (last visited July 7, 2008)

[31] Northwest Parkway and Brisa/CCR Sign Final $603 million, 99-year Leasing Concession Agreement, Northwest Parkway Public Highway Authority, News Release, August 29, 2007.

[32] Summary of Northwest Parkway Concession and Lease Agreement, Northwest Parkway Public Highway Authority.

[33] Southern Connector Toll Road: Request for Toll Road Concessionaire Qualifications, September 27, 2007, available at: http://www.southernconnector.com/pdfs/SCTR_RFQ2.pdf (last visited July 7, 2008)

[34] Connector 2000 Association Seeks Firm to Prepare Investment Grade Traffic and Revenue Study, Southern Connector, Press Release, May 7, 2008.

[35] See The 63-20 Not-for-Profit Contrivance, TOLLROADSnews, originally posted December 8, 1997 (http://www.tollroadsnews.com/node/2326 (last visited July 7, 2008)).

[36] Countries around the world are entering into similar transactions. For example, France accepted bids in 2005 worth $17.7 billion for the sale to private companies of controlling stakes in its three major toll road operators. Vinci, a French construction company, purchased Autoroutes du Sud de la France (ASF), which operates toll roads in the south of France , for $10.9 billion. Eiffage, a French construction company, and Macquarie, an Australian toll road operator, purchased Autoroutes Paris-Rhin-Rhone (APRR), which operates toll roads around Paris and the west, for $8.3 billion. Abertis, a Spanish toll road operator, purchased Societe des Autoroutes du Nord et de l'Est de la France (Sanef), which operates toll roads in northern France, for $6.3 billion.

[37] Pennsylvania Turnpike Lease Would Boost Funding For Roads, Bridges, Transit; $12.8 Billion Payment Would Produce More Funding at Lower Cost to Drivers; Cancel Need for I-80 Tolls, Governor Rendell, Press Release, May 19, 2008.

[38] Florida Governor Crist Considering Toll Concessions on Three State TRs and Bridge, TOLLROADSnews.com, September 22, 2007.

[39] TxDOT's PPP website is: http://www.dot.state.tx.us/services/texas_turnpike_authority/pub_priv_ partnerships.htm (last visited July 7, 2008)

[40] The TTC website is: http://ttc.keeptexasmoving.com/default.aspx (last visited July 7, 2008)

[41] The TTC website, at: http://ttc.keeptexasmoving.com/about/guiding_principles.aspx (last visited July 7, 2008)

[42] Transportation Commission Picks Developer for Texas Portion of I-69, Press Release, Texas Department of Transportation, June 26, 2008

[43] Letter from J. Richard Capka, Administrator of FHWA, to Michael W. Behrens, P.E., Executive Director of TxDOT, dated August 16, 2007.

[44] See letter from Janice W. Brown, Division Administrator, to Amadeo Saenz, Jr., P.E., Assistant Executive Director of TxDOT, dated August 21, 2007.

[45] VDOT's PPP website is: http://www.virginiadot.org/business/ppta-default.asp (last visited July 7, 2008)

[46] High-occupancy toll lanes, or "HOT lanes", are lanes that are open to buses and high-occupancy vehicles, just like traditional high-occupancy vehicle and carpool lanes, or "HOV lanes", but which are also available to single-occupant vehicles that pay a toll. Tolls charged in HOT lanes can be variable, meaning they are reduced when there is little or no traffic and they are increased when there is more traffic. Variable tolls encourage people to travel when there is less traffic and ensure that a reliable travel time is always available for drivers willing to pay a toll. HOT lanes implemented in the U.S. include the 91 Express Lanes in Orange County, California, the I-15 HOT Lanes in San Diego, California, the I-394 HOT Lanes in Minneapolis, Minnesota, and the I-25 HOV/Express Toll Lanes in Denver, Colorado.

[47] The Safe & Sound Bridge Improvement Project's website is: http://www.modot.org/safeandsound/ (last visited July 7, 2008)

[48] An availability payment is a periodic payment made to a concessionaire by a public authority for providing an available facility. Payments are reduced if the facility is not available for a period of time or not being maintained in satisfactory condition. Using an availability payment structure eliminates the need for the concessionaire to assume any traffic risk and protects the interests of the public by giving the concessionaire a financial incentive to maintain the facility in satisfactory condition and operating at a specified level of performance.

While an availability payment structure eliminates traffic risk, it does create some risk that increasing costs of operation and maintenance will partially erode the concessionaire's financial margins. See Global Toll Road Rating Guidelines, Fitch Ratings, Global Infrastructure and Project Finance, Criteria Report, March 6, 2007, pp. 2-3.

[49] The BART OAC website is: http://www.bart.gov/about/projects/oac/ (last visited July 7, 2008)

[50] Draft Procurement Schedule available at: http://www.rtd-fastracks.com/main_91 (last visited July 7, 2008)

[51] FasTracks Focus: Public-Private Partnerships, Fall 2007 Public-Private Partnership Brochure available at: http://www.rtd-fastracks.com/media/uploads/main/FTfocusPPPweb_2.pdf (last visited July 7, 2008)

[52] The Port of Miami Tunnel website is: http://www.portofmiamitunnel.com/ (last visited July 7, 2008)

[53] The I-595 Project website is: http://www.i-595.com/default.aspx (last visited July 7, 2008)

[54] The First Coast Outer Beltway website is: http://www.fdotfirstcoastouterbeltway.com/index.asp (last visited July 7, 2008)

[55] Florida Governor Crist Considering Toll Concessions on Three State TRs and Bridge, TOLLROADSnews.com, September 22, 2007.

[56] GDOT's PPP website is: http://wwwb.dot.ga.gov/ppi07/html/all/home.htm (last visited July 7, 2008)

[57] GDOT signs first-ever Public Private Initiative Developer Services Agreement for Northwest Corridor, Georgia Department of Transportation, Press Release, May 18, 2006.

[58] KABATA's website is: http://www.knikarmbridge.com/ (last visited July 7, 2008)

[59] 23 U.S.C. 145

[60] USDOT has prepared model PPP legislation to provide States with an example of what basic elements to address in PPP legislation. The model legislation should not be considered a recommendation by USDOT that States include particular provisions in their PPP legislation. Rather, the model legislation highlights the types of issues that a State should consider when pursuing PPPs for transportation projects. The model legislation is available at: http://www.fhwa.dot.gov/PPP/legis_model.htm (last visited July 7, 2008).

[61] Mississippi Code, Section 65-43-3.

[62] Utah Code, Section 72-6-201 (Public-Private Partnerships for Tollways Act).

[63] Indiana Code, Sections 8-15, 8-15.5, 8-15.7, 8-23-7-22 through 25.

[64] Missouri Code, Section 227.107.

[65] Missouri Code, Sections 227.600 through .669 ( Missouri Public-Private Partnership Transportation Act).

[66] West Virginia Code, Section 17-27-1 through 17-27-18 (Public-Private Transportation Facilities Act).

[67] California Streets and Highways Code, Section 143.

[68] Texas Code, Section 223.201.

[69] The moratorium took effect immediately and ends on September 1, 2009.

[70] Florida Code, Section 334.30.

[71] Florida Turnpike Enterprise toll roads are excluded from this legislation.

[72] Title 23 U.S. Code, Section 301. Non-Interstate highways that receive Federal-aid may be tolled as part of a construction project pursuant to Section 129 of Title 23 if revenues are used for debt service, a reasonable return on private investment and O&M costs. Excess revenues can then be used for any purpose eligible for Federal aid under the Federal highway laws.

[73] 2006 Status of the Nation's Highways, Bridges, and Transit: Conditions & Performance, USDOT, Federal Highway Administration, Federal Transit Administration, 2006, pg. 3-8. The report indicates that roads classified as "Interstate" have the largest percentage of vehicle miles traveled ("VMT") per lane mile.

[74] Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU); Opportunities for State and Other Qualifying Agencies To Gain Authority to Toll Facilities Constructed Using Federal Funds, Federal Register, Vol. 71, No.4, January 6, 2006 ("Tolling and Pricing FR Notice").

[75] South Carolina to Begin Plans to Build I-73 Under A New Pilot Program for Tolling Interstates, USDOT, August 16, 2007.

[76] Notice to Parties Interested in Public-Private Partnerships for Design/Build Development and Financing of an Interstate Highway (http://www.dot.state.sc.us/doing/pdfs/I73_Announce.pdf (last visited July 7, 2008)).

[77] Tolling and Pricing FR Notice.

[78] Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU); Value Pricing Pilot Program Participation, Federal Register, Vol. 71, No.4, January 6, 2006

[79] 23 U.S.C. 166.

[80] Tolling and Pricing FR Notice.

[81] Title 23 United States Code (23 U.S.C.) Section 129 Toll Agreements, available on the FHWA website at: http://www.ops.fhwa.dot.gov/tolling_pricing/toll_agreements.htm (last visited July 7, 2008)

[82] FHWA's SEP-15 authority is derived from Section 502 of Title 23 of the U.S. Code, which allows the Secretary of Transportation to test any process thereunder to identify impediments in current statutory and regulatory procedures that impede the development and implementation of innovative project delivery methods for financing, constructing, operating and maintaining Federal-aid facilities. FHWA may permit States to deviate from the legal requirements under title 23 on a case-by-case basis. FHWA may not authorize States to deviate from legal requirements under other portions of the U.S. Code (for example, a portion codifying environmental laws).

[83] U.S. Department of Transportation Names Six Interstate Routes as "Corridors of the Future" to Help Fight Traffic Congestion, USDOT, Press Release, September 10, 2007.

[84] This summary of Penta-P was adapted from the summary included in Appendix A to USDOT's Report to Congress on the Costs, Benefits, and Efficiencies of Public-Private Partnerships for Fixed Guideway Capital Projects released as of November 2007.

[85] Request for Information Regarding Public-Private Partnerships for LACMTA Transportation Projects, available at http://www.metro.net/projects_studies/ppp/images/ppp_rfi.pdf (last visited on July 18, 2008).

[86] LA Receives 12 Presentations for P3s, P3Americas.com, July 14, 2008, at http://www.p3americas.com/newsdetails.asp?iNID=11949&TempID=5 (last visited on July 18, 2008).

[87] Transportation Finance in Massachusetts: Volume 2, Building a Sustainable Transportation Financing System, Recommendations of the Massachusetts Transportation Finance Commission, Massachusetts Transportation Finance Commission, September 17, 2007 (the "Massachusetts Report").

[88] The Massachusetts Report, pg. 1.

[89] A group of 57 individuals convened by the Idaho Transportation Board consisting of representatives from public agencies, transportation service providers, stakeholders, elected officials and citizens.

[90] A Forum on Transportation Investment, Report & Recommendations, January 2006, pg. 3.

[91] A Forum on Transportation Investment, Report & Recommendations, January 2006, pp. 9-13.

[92] A Forum on Transportation Investment, Report & Recommendations, January 2006, pg. 16.

[93] State of Michigan, 94th Legislature, Regular Session of 2007, Act No. 221.

[94] See Maryland Report, pg. 19, which asserts that "States around the country face serious funding gaps between the level of highway service demanded by citizens and businesses and the funding available to finance, construct, operate, and maintain the highway system."

[95] The 2007 Urban Mobility Report, Texas Transportation Institute, The Texas A&M University System, September 2007, Exhibit 3.

[96] Trends in Public Spending on Transportation and Water Infrastructure, 1956 to 2004, Congressional Budget Office, August 2007, Supplementary Table W-7 (Total Public Infrastructure Spending by Federal, State, and Local Governments, 1956-2004 (in millions of 2006 dollars)).

[97] Surface Transportation: Strategies Are Available for Making Existing Road Infrastructure Perform Better, United States Government Accountability Office, Report to the Ranking Member, Committee on Environment and Public Works, U.S. Senate, July 2007 (GAO-07-920) (the "GAO Congestion Report"), pg. 28.

[98] GAO Congestion Report, pp. 33-34.

[99] Report on the Value Pricing Pilot Program Through March 2004, USDOT, FHWA, March 2004, pg. 32.

[100] See Performance and Accountability: Transportation Challenges Facing Congress and the Department of Transportation, United States Government Accountability Office, Statement of Patricia A. Dalton, Managing Director Physical Infrastructure Issues, March 6, 2007, pg. 4, which states that "[f]inancing mechanisms for the nation's transportation system are under stress" and that "[r]evenues to support the Highway Trust Fund [] are eroding."

[101] See (i) GAO Congestion Report, pg. 7, which states that an "increasing proportion of available funds is being spent to preserve existing infrastructure, and (ii) the Massachusetts Report, pg. 1, in which the Massachusetts Transportation Finance Commission "conservatively" estimates that Massachusetts has a $15 billion to $19 billion funding gap over the next 20 years, "which only includes maintaining the present system without enhancements or expansion."

[102] Transportation Investment Moves the Economy in the 21st Century, Iowa Department of Transportation, http://www.iowadot.gov/time21/images/RUTF_booklet.pdf (last visited July 7, 2008).

[103] Meeting The Texas Transportation Challenge, Texas Department of Transportation, pg. 5, http://www.dot.state.tx.us/publications/government_and_public_affairs/state_agenda.pdf (last visited July 7, 2008).

[104] Mid-Session Review, Budget of the U.S. Government, Fiscal Year 2008, Office of Management and Budget, July 11, 2007, Page 5.

[105] In 2006, USDOT estimated that if optimal congestion pricing were imposed on congested roads in the United States the cost to maintain those roads could be reduced by $21.6 billion per year from $78.8 billion to $57.2 billion. 2006 Status of the Nation's Highways, Bridges, and Transit: Conditions & Performance, USDOT, FHWA, FTA, 2006, pp. 10-5 and 10-6.

[106] 2007 International Survey of Public-Private Partnerships, Public Works Financing, Volume 220, October 2007 ("PWF International Survey"), pg. 4.

[107] PWF International Survey, pg. 6.

[108] See The Rise of Infra Funds, Project Finance International, Global Infrastructure Report 2007.

[109] CalPERS Approves Infrastructure Investment Program and Pilot Inflation-Linked Asset Class, CalPERS Press Release, September 10, 2007. The CalPERS Investment Committee Chair said that "CalPERS could become a major player in solving some pressing public policy problems related mainly to energy and transportation."

[110] Infrastructure M&A, The Financial Times, December 30, 2007.

[111] Palter, Robert N., Walder, Jay, and Westlake, Stian, How investors can get more out of infrastructure: Opportunities to invest in public infrastructure will increase during the next few years, but so will competition for deals, The McKinsey Quarterly, February 2008.

[112] STAA: Surface Transportation Assistance Act of 1982; ISTEA: Intermodal Surface Transportation Efficiency Act of 1991; TEA-21: Transportation Equity Act for the 21st Century; SAFETEA-LU: Safe Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users.

[113] Wall Street Journal, "Bridges to Somewhere", August 4, 2007, Page A6. This article reported that in 1992 64 percent of the money earmarked in the 1987 reauthorization bill remained unspent, and that in 1997 55 percent of the money earmarked in the 1991 reauthorization bill remained unspent. The Wall Street Journal did not report comparable numbers for the 1998 and 2005 highway bills "because the federal Transportation Department stopped disclosing the figures, lest it embarrass Members of Congress."

[114] Highway and Transit Investments: Options for Improving Information on Projects' Benefits and Costs and Increasing Accountability for Results, United States Government Accountability Office, Report to Congressional Committees, January 2005 (GAO-05-172) ("GAO Accountability Report"), pg. 23.

[115] GAO Accountability Report, pg. 27, stated that "[t]hirty-four state DOTs said that political support and public opinion are factors of great or very great importance in the decision to recommend a highway project, whereas only eight said that the ratio of benefits to costs was a factor of great or very great importance."

[116] GAO Accountability Report, pg. 25.

[117] GAO Accountability Report, pg. 35.

[118] Shirley, Chad and Winston, Clifford, Firm Inventory Behavior and the Returns from Highway Infrastructure Investments, Journal of Urban Economics, Volume 55, Issue 2, March 2004, pp. 398-415. The authors conclude that large investments in a mature highway system during the 1980s and 1990s may have generated low returns because they were, in part, undermined by inefficient highway pricing and investment policies, and that if these inefficiencies are inevitable for public investments, "the time may have come to investigate the benefits of greater involvement of the private sector in highway provision."

[119] Contractor Performance Assessment Report, FTA, September 2007. Forecasted costs refers to costs forecasted at the completion of the Alternatives Analysis and Draft Environmental Impact Statement.

[120] Pickrell, Don H., Urban Rail Transit Projects: Forecast Versus Actual Ridership and Costs, DOT-T-91-04, Office of Grants Management, Urban Mass Transportation Administration, Washington DC, October 1990.

[121] Federal Register, January 19, 2007, Volume 72, Number 12, pg. 2583-2591

[122]Australia PPP Report, pg. 1.

[123]UK NAO Report, pg. 3.

[124]UK NAO Report, pg. 3.

[125] Annual Energy Outlook 2007, Energy Information Administration, February 2007

[126] Highway Statistics 2005, Federal Highway Administration, Table VM-1: Annual Vehicle Distance Traveled in Miles and Related Data.

[127] Energy Independence and Security Act of 2007, Public Law No: 110-140.

[128] The Role of Tolls in Financing 21st Century Highways, Reason Foundation, May 2007, pp. 14-15.

[129] Evaluating the Performance of Environmental Streamlining: Development of a NEPA Baseline for Measuring Continuous Performance, Federal Highway Administration, 5.1 Conclusions. According to this study prepared for FHWA, in a sample of projects over the course of 30 years the mean length of time it took to get a road from planning stages to completion was 13.1 years.

[130] Private Cash Sets Agenda for Urban Infrastructure, The New York Times, January 6, 2008, by Louis Uchitelle.

[131] Growth in Highway Construction and Maintenance Costs, Federal Highway Administration, Report Number CR-2007-079, September 26, 2007, Figure 5. See also, the GAO Congestion Report, pg. 8, which states that rising diesel and asphalt prices have caused the significant increase in the price of construction materials over the last few years.

[132] A recent report by Jeffrey N. Buxbaum and Iris N. Ortiz of Cambridge Systematics, Inc. explores many of the policy concerns that have been raised with respect to PPPs and discusses potential strategies for protecting the public interest. Buxbaum, Jeffrey N. and Ortiz, Iris N., Protecting the Public Interest: The Role of Long-Term Concession Agreements for Providing Transportation Infrastructure, U.S.C. Keston Institute for Public Finance and Infrastructure Policy, Research Paper 07-02, June 2007.

[133] Global Toll Road Rating Guidelines, Fitch Ratings, Global Infrastructure and Project Finance, Criteria Report, March 6, 2007 ("Fitch Report"), pg. 9, which asserts that "[w]hile Fitch believes the profit motive provides private [operators] an incentive to keep the road in good operating condition, it is important that legal documents adequately align those incentives."

[134] Highway Public-Private Partnerships: More Rigorous Up-front Analysis Could Better Secure Potential Benefits and Protect the Public Interest, United States Government Accountability Office (GAO-08-44), February 2008, pp. 41-42.

[135] Save Our State: Financial Restructuring and Debt Reduction, Town Hall Presentation, February 2008, available at: http://www.state.nj.us/frdr/facts/index.html (last visited July 7, 2008)

[136] For example, on the Capital Beltway HOT Lanes project in Virginia, which is described in Section IV, the toll rate is not capped. Rather the concessionaire is charged with implementing congestion pricing in order to maintain free flow conditions of traffic. The toll rate reflects traffic conditions.

[137] For example, there has been a significant shift in the U.S. telecommunications industry away from rate or return regulation towards regulation that focuses more on controlling the prices charged by the regulated firm. See Price Regulation, by D.E.M. Sappington, Chapter 7 of The Handbook of Telecommunications Economics, Volume I: Structure, Regulation, and Competition, edited by M. Cave, S. Majumdar, and I. Vogelsang, Elsevier Science Publishers, 2002, pp. 225-293.

[138] Congestion Pricing, A Primer, Federal Highway Administration, Office of Transportation Management, December 2006 (http://ops.fhwa.dot.gov/publications/congestionpricing/index.htm (last visited July 7, 2008)).

[139] The white paper is available at: http://www.upa.dot.gov/resources/lwincequityrpi/index.htm (last visited July 7, 2008)

[140] Recommendation of the Traffic Congestion Mitigation Commission, New York City Traffic Congestion Mitigation Commission, January 31, 2008, which indicates that "[t]he vast majority of City residents of limited income will benefit from short and long-term transit improvements that revenues generated by the plan will make possible."

[141] Evaluating Alternative Scenarios for a Network of Variably Priced Highway Lanes in the Metropolitan Washington Region, Metropolitan Washington Council of Governments, Final Report, February 2008.

[142] See Fitch Report, pg. 7

[143] 2006 Status of the Nation's Highways, Bridges, and Transit: Conditions and Performance, USDOT, FHWA, FTA, 2006, pp. 6-11 and 6-12.

[144] Transportation Finance in Massachusetts: Volume 2, Building a Sustainable Transportation Financing System, Recommendations of the Massachusetts Transportation Finance Commission, Massachusetts Transportation Finance Commission, September 17, 2007.

[145] "Current Toll Road Activity in the U.S. : A Survey and Analysis", August 2006, page 2, available at: http://www.fhwa.dot.gov/ipd/pdfs/toll_survey_0906.pdf.

[146] California's legislation is discussed in Section IV(C).

[147] For example, the Project Agreement for the SH-121 Toll Project between the Texas Department of Transportation and the North Texas Tollway Authority, dated as of October 18, 2007, states that TxDOT, in its consideration of any project that might affect the SH-121 project, "shall make best efforts to minimize or avoid any adverse impact on the [SH-121] Project and its operation." The agreement includes exceptions for projects with safety, maintenance or operational purposes and certain other identified projects, including those on long-range transportation plans.

[148] In Texas, each of the TTC-35, SH-121, US-281/Loop 1604, and SH-161 projects was initiated through an unsolicited proposal.

[149] In July 2006, shortly after the Indiana Toll Road concession closed, Honda Motor Company announced that it would build a $500 million plant employing nearly 4000 Indiana residents in Greensburg, Indiana. Honda cited Indiana's commitment to infrastructure as a deciding factor in locating its plant. See www.in.gov/indot/2276.htm (last visited July 7, 2008).

[150] See Daley's Way, Not Skyway: Money From Lease Won't go for Bailout, Chicago-Tribune.com, October 25, 2007, which reported that "[r]educing debt and creating the long-term reserve prompted all three major credit rating firms -- Moody's Investors Service, Standard & Poor's and Fitch Ratings -- to improve the city's bond rating. The result has been lower interest rates and cost savings on borrowings."

[151] http://wwwb.dot.ga.gov/ppi07/html/ppi_overview/faqs.htm (last visited July 7, 2008)

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