More privatization of public roads

Eric Jaffe takes a look at a recent trend: the privatization of public roads throughout the United States.

Public-private partnerships for infrastructure (often called PPPs or P3s) have been on the rise in recent years, and many experts believe the trend has yet to peak. If the activity of the past several weeks is any indication, they may be right. A billion-dollar PPP for the East End Crossing, in Indiana, was announced in late March. News of a $1.5 billion PPP overhaul of the Goethals Bridge, in New York City, came in April. The Pennsylvania D.O.T. placed an open call to private firms for PPP projects just last week.

PPPs provide a valuable public service while shifting the financial risk to private wallets. Advocates also mention efficiency: private developers, driven by an urgent push for profits, can keep costs lowers and complete work faster than the public sector. Supporters believe that in exchange for this revenue share they provide the public with the broader economic advantages of improved metro area mobility. Besides, states just don’t have the money right now to do these projects on their own…

The first “major” public-private road partnership of this new era was the E-470 tollway in Denver in 1989, says William Reinhardt, editor of Public Works Finance. That $323 million project, organized by a highway authority distinct from the state DOT, didn’t rely on public funding. In doing so it sent the country down a new road for new roads.

Since then the growth of private partnerships has been steady if not overwhelming. Twenty-four states plus Washington, D.C., have engaged in 96 public-private road partnerships worth about $54.3 billion. In 2011, PPPs accounted for roughly 11 percent of capital investment in highways, according to Reinhardt, and that’s with about 20 state legislatures yet to permit these types of deals. In a brief history of PPPs for a road builders association in 2011 [PDF], Reinhardt concluded that PPPs “will likely be the primary model for building new highway capacity in heavily congested urban areas in the decades ahead” — particularly for mega projects valued in the billions…

Still, as an urban scholar, Sclar is more frustrated that public-private partnerships tend to interfere with comprehensive approaches to city planning. He uses the example of State Highway 130 near Austin, Texas, a public-private toll road that made traffic worse because truckers chose to take the free I-35 through the city rather than pay the toll. The point is that seeing roads as individual profitable projects distracts from their role as part of the greater public network — capable of influencing everything from transport equity to urban density to environmental sustainability.

As I read through this overview, I’m struck by one thing: the biggest issue seems to be the lack of money available to governments to build roads. If they had such money, they likely wouldn’t choose privatization. But, in an era of growing infrastructure costs, privatization offers some up-front cash and moves the costs off the books for a while. This seems to be a matter of convenience rather than the preferred option for most governments.

Additionally, I don’t see much here about whether this helps or harms drivers. Again, governments are worried about their bottom lines and these certainly impact constituents and taxpayers. Roads aren’t really free. But, private firms want to make more money than perhaps governments might try to generate through roads. Do consumers come out ahead financially or in their experiences on these private roads?

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