Asset Recycling

Asset recycling is a value capture mechanism in which public entities derive revenue from the value of the existing infrastructure assets to invest in new infrastructure by leasing or selling a government-owned asset to private sector investors. In the transportation sector, these assets are most often toll highways or bridges or excess right-of-way. In addition to generating new revenue typically in the form of an upfront lease payment, asset recycling projects also require private sector investors to make capital improvements or expand the capacity of the leased facilities or make improvements to unrelated transportation facilities or services. The upfront lease payments can be used to pay off project debt invested in a new but currently unfunded project or program of projects.

Asset recycling has seen modest use to date in the U.S. In the highway sector, five toll highway and bridge facilities have been leased to private entities since 2004. While several initial private sector investors have been challenged to realize expected returns from their investments in the near-term, public sector sponsors have generally benefited from their long-term lease transactions. Even with several changes in lease ownership, no impacts on facility users or project sponsors have resulted since the provisions of the original agreements, including commitments to operate and maintain the roadways, to follow established methods for toll rate increases, and to share excess profits still stand.

Beyond highways within the transportation sector, asset recycling has been applied to airports, seaports, parking facilities, intermodal transit facilities, healthcare facilities and prisons.

Asset recycling has been used extensively in Australia, where the national government established a AU$5 billion incentive program in 2013. The Australian program provides state governments with an additional 15 percent in national funding of the capital raised from recycled assets. Between 2013 and 2016, a total of AU$15 billion was raised in Australia from recycling existing transportation power generation assets. The state of New South Wales also created Infrastructure NSW to act as an independent body in overseeing the asset recycling process. Infrastructure NSW has funded three new highway projects using revenue generated by its asset recycling program: Newal Highway, a AU$78.8 million 28-kilometer facility in an important freight corridor; a 9.8-kilometer AU$52.5 million extension of Princess Highway, and the 12-kilometer AU$30.4 million New England Highway bypass route.

Colorado's Innovative Asset Recycling Program

Colorado has used an innovative asset recycling application where state-owned prisons and health facilities have been sold to private investors to generate revenue for transportation improvements and then leased back to the state. Senate Bill 17-267 (SB-267) allows the state to enter into $2 billion in lease-purchase agreements over four years beginning in 2018. The state issued its first series of certificates of participation in September 2018, when it collateralized 25 state-owned buildings, including 12 prisons. The 20-year transaction raised $545,475,455, which was nearly 10 percent above the expected amount.

SB-267 specifies that $120 million from the initial lease purchase agreement be used to create a $120 million maintenance fund for state buildings. The remainder of the proceeds is credited to the State Highway Fund and may be used to fund high priority, Tier 1 projects included in Colorado's Strategic Transportation Project Investment Program. In addition, at least 25 percent of the proceeds must be used in rural counties with populations of 50,000 or less, and at least 10 percent of proceed must be used for transit projects. In subsequent years, the Department of Transportation will receive 100 percent of the lease purchase agreement proceeds.

The state will make annual lease payments of $37.5 million on the 2018 certificates of participation over a 20-year period using monies from the General Fund and money controlled by the Transportation Commission that would otherwise be used for highway construction and maintenance. The four-year lease purchase program is anticipated to generate $2 billion in transportation funding. SB-267 requires that annual lease payments for the four-year program do not exceed $150 million. The first $9 million in interest and principal payments will come from the General Fund. The next $50 million in payments will come from Transportation Commission funding, and all remaining payments will be paid from the General Fund or other state funding.

The 2018 certificates of participation have provided $342 million in funding for the following projects:

  • I-25 North: SH 402 to SH 56 (Segment 6) - $165 million
  • I-25: Colorado Springs-Denver South - $25 million
  • U.S. 550/160 Connection - $54 million
  • I-70 East: Failing Pavement - $33.1 million
  • SH 13 Reconstruction - $30.5 million
  • Westbound PPSL - $20 million
  • SH 9: Frisco North - $9.5 million
  • Other - $4.5 million


Amesbury Landfill Solar Plus Storage Project - Amesbury, Massachusetts

Chicago Skyway - Chicago, Illinois

Cline Avenue Toll Bridge - East Chicago, Indiana

Eastern Michigan University (EMU) Parking Concession - Michigan

Indiana Toll Road - Indiana

New Jersey Landfill Solar Power Plant - Borough of Hopatcong, NJ

Northwest Parkway - Denver Metro Region, Colorado

Puerto Rico PR-22 & PR-5 Lease - Northern Puerto Rico

Puerto Rico Toll Roads Monetization Project (PR-52, PR-20, PR-53, and PR-66)

Seagirt Marine Terminal - Baltimore, Maryland

Sooner Subdivision Freight Line - Sapulpa and Midwest City, Oklahoma

The 11th Street Bridge Park - District of Columbia

The Cincinnati Southern Railway (CSR) - Ohio

The Closed Landfill Solar Project - Milwaukee, Wisconsin

Transform 66 - Outside the Beltway - Fairfax and Prince William Counties, Virginia


Asset Recycling Fact Sheet

View Resources on Asset Recycling