Transportation corporations are public entities created to finance and, in some cases, implement transportation improvements. Governed by a board of directors under the oversight of a state transportation commission, these nonprofit corporations primarily focus on implementing or providing funding for major transportation projects - typically highway projects. Transportation corporations are generally created alongside funding mechanisms including tolls, tax increments, or dedicated allocations of public funds.
A Versatile Tool To Adress Different Needs
Transportation Corporations require authorizing legislation to specify powers and responsibilities. The powers and responsibilities of the different transportation corporations established to date in the U.S. differ from one another. Some TCs have been created as toll authorities with the responsibility to develop new toll facilities and issue bonds or other obligations. These corporations may also establish the framework for receiving cash donations and contributions of real property for a right-of-way. Some have responsibility to establish a local tax increment, while others operate as a state loan fund to or make loans to private infrastructure developers. TCs can serve as an alternative to P3 procurements with reduced financing costs achieved by leveraging the underlying credit strength of the state. Others have been set up to operated privately developed facilities whose sponsors have gone bankrupt.
The following descriptions demonstrate the diverse ways in which Transportation Corporations are being used in four different states.
- Florida Department of Transportation (FDOT) Financing Corporation: In Florida in 2016, the state Legislature created the FDOT Financing Corporation as an alternative source of financing for projects that would otherwise be implemented as availability payment design-build-finance-operate-maintain (DBFOM) basis. Officials with the Florida Division of Bond Finance, which issues debt on behalf of all state agencies in Florida, found that private partners on the state's three large availability payment P3 projects had assumed little or no revenue risk and had more expensive private commercial debt. Having the Financing Corporation as a conduit issuer would give the state the opportunity to determine whether to use public or private financing on future projects. In August 2017, the Financing Corporation sold $170.1 million of fixed rate, tax-exempt bonds in August 2017 and FDOT used the proceeds to provide the initial tranche of financing for a $500 million extension of the I-95 Express Lanes from Broward County north to Palm Beach. The bonds are secured by a service contract between the corporation and the FDOT, which makes debt service payments from the state transportation trust fund. These contractual payments are subject to annual appropriation by the state legislature. It is anticipated that the Financing Corporation will issue two additional tranches of debt to fund the remainder of the project in 2019 and 2020. Moving forward, FDOT could use debt issued by the Financing Corporation to fund other projects.
- Grand Parkway Transportation Corporation (GPTC): The GPTC is a public, nonprofit corporation created in March 2013 to finance, build and operate the northern half of the Grand Parkway, a 184-mile orbital highway extending across seven counties in the greater Houston area. The Texas Transportation Commission authorized the creation of the GPTC to act on its behalf complete the norther Grand Parkway, which includes seven out of 11 operating segments in Harris, Montgomery and Liberty Counties. The GPTC issues bonds to finance delivery of the Grand Parkway System and to fund predevelopment costs. The bonds are supported by a toll equity loan agreement with the Texas Department of Transportation. However, they are not obligations of the Commission. The GPTC has a three-member board of directors who are each employees of the Texas Department of Transportation.
- Highway 63 Transportation Corporation (H63TC): In Missouri. H63TC was formed to fund, promote plan, and construct two additional highway lanes on U.S. 63 from Macon to Kirksville in the north central portion of the state. lanes to of highway. It was formed at the initiative of the City of Kirksville in 1999 through a cooperative agreement between the city, the Missouri Highways and Transportation Commission, and Adair County. The H63TC helped garner approval of a 10-year half-cent percent sales tax in Kirksville that was dedicated to the implementation of the project. The tax increment extended from 2003 to 2013 and the project was constructed between 2003 and 2006. The H63TC continued to operate until all funds from the sales tax had been collected and all debts and other business had been finalized.
- Las Vegas Monorail Company (LVMC): In 2000, the nonprofit public benefit corporation, Las Vegas Monorail Company (LVMC) was formed to acquire a one-mile monorail system linking hotels on the Las Vegas Strip. The Las Vegas Monorail had originally been developed as a joint venture between MGM Grand and Bally's Hotel in 1993. Plans for expansion further along the Strip led to the State of Nevada's passing legislation in 1997 that enabled a private company to own, operate, and charge a fare as a public monorail system. LVMC operates the original Monorail system under a 50-year franchise agreement. LVMC entered into a management contract with Transit Systems Management LLC, for the construction, operation, and management of the project. The Monorail was upgraded and expanded to 3.9 miles with seven stops serving major hotels and casinos. The expanded Monorail opened in July 2004.
Grand Parkway (SH 99) Segments H-I - Houston Metropolitan Region, Texas
Las Vegas Monorail - Las Vegas, Nevada
US Route 63 Corridor Expansion - Macon County, Missouri