northern borders ppp workshop detroit, mi dec 12-13, 2006 mr. prabhat a diksit fhwa resource center...

Northern Borders PPP WorkshopDetroit, MI

Dec 12-13, 2006Mr. Prabhat A Diksit

FHWA Resource Center

Exploring Public Private

Partnerships!

PPPs in the highway world!

In 2004 news of the “sale” of the Chicago Skyway burst upon an astonished highway world.

The handsome prices offered captured all of our attention.

Any question whether this was a unique, one-time event has certainly been laid to rest by subsequent concessions.

Indiana SkywayDulles Toll roadPocahontas ParkwaySH 130 in TX

New deals are proposed weekly it seems.

Understanding PPPs

As highway officials it behooves us to try to understand this new (to us) phenomenon.

Firstly,

It’s not such a new phenomenon!

Public Private PartnershipsA brief look back! Deja-vu for some!

Modern era for PPPs began in Britain under Margaret Thatcher in 1979.• Privatizations of State owned companies-- undoing past

nationalizations.– British Telecom, British Gas, British Steel, British

Airways, British Rail etc etc….& the Water and electricity industries.

• Privatizations spread all around the world in the 80’s & 90’s.

April 19, 2023

PPP in US under Reagan, 1980

At the National level• Limited government initiatives, & lowering of marginal tax

rates• De-regulation of airlines, telecoms, and rail industries

At the Local level-- “outsourcing”• Contracting out of services to private sector• Leasing of facilities• Concessions for long term operations

PPPs in the highway world

“Outsourcings”, the public private partnerships of the 80’s & 90’s, were in fields other than highways, and were for existing facilities:• Water & sewer facilities• Jails/schools & hospitals

It was not till the 1990’s that the PPP approach first hit the highway world

VA PPTA Act 1995CA AB 680 , 1989 (leading to the SR 91 & SR125 toll-roads)

Highway 407 PPP in Canada in 1999

And of course, it was with the proposed Chicago Skyway salein 2004 that national attention was really focused on highway PPPs.

So why consider PPPs?

Consider these two national problems:

1. Growing demand! VMT growth rate 2.5% annually (1993-2002) Additions of new capacity 0.2% annually

2. Insufficient funds! Capital outlays on existing capacity inadequate (8.3% below

par in 2002) Federal gas taxes 18.4 c since 1993. HUTF negative by 2009. Raising new revenues at all levels of government difficult.

Insufficient funds

Inadequate funds for new capacity Virtually all State monies go for upkeep and maintenance of

existing capacity.

Often insufficient funds for rehab & improvements

Sometimes Inadequate funding of operations and routine maintenance.

PPPs have broad scope….

Leasing and operation of existing capacity

Creation of new capacity: new toll lanes, road extensions, new highways

Funding and financing of major rehab. projects

Partnerships with governments for the funding of interchanges, ITS systems, or acquisition of right of way

Partnerships for maintenance or long term warranties of roadways

Approaches to limiting/ sharing risks and costs

And other creative ideas not yet considered……..

Over the next day and a half………

We will hear about the well known pioneering Canadian toll-road ETR 407 from Kim Lambert . An excellent project, (it’s 100% electronic tolling still excites American engineers ). But it has not always been smooth sailing ; and there are lessons to be learnt both positive and negative.

We will hear about the VA PPP program

VA, an early pioneer with its PPTA Act in 1995 is the home of several well known PPP projects such as the Dulles Greenway, & the Pocahontas Parkway.

It is also the home of interesting projects in progress: I-95/I-395 toll lanes, US 460 improvements

It too has had an interesting history; and its web site is one of the most comprehensive sources of information and experience.

Tom Pelnik from VaDot will speak about the VA experience.

New methods of financing

One of the strong points for PPP is that it brings to the table non-traditional financings: corporate equity & debt, investment from pension & hedge funds.

Later today speakers from JP Morgan , Macquarie & Goldman Sachs will bring their respective perspectives to this issue.

Legislation & legal issues

Legal issues governing PPPs are always crucial, given governmental involvement.

Only about half the States have specific legislation authorizing public private partnerships on their highway networks.

The presence of PPP legislation is deemed to be crucial to the smooth development of PPPs.

Ed Kussy from the FHWA, & Nancy Smith of Nossaman Guthner will address these issues later today.

Problems with the solution??

PPPs certainly are one solution to the problems that are aggravating highway systems---- but are there any problems with the solution?

Further, are there other issues regarding PPPs not yet considered?

Tomorrow Dan Reagan of PBS&J will discuss both the pros and the cons of PPPs-- from the perspective of an FHWA DA now in the private sector.

And the Roundtable Discussion later with the audience will further address these issues.

Roundtable discussion with guests

There are numerous issues for governments to consider in the actual implementation of PPPs, and hopefully the facilitated discussion tomorrow will bring them out:

Toll rates & their regulationStewardship & OversightProcurement methodsOwnership optionsAllowable rates of returnCustomer protection mechanismsSafety under private managementBi-national issues

We hope you will take back useful ideas and have a good time..

RC Innovative Finance Team RC Innovative Finance Team ContactsContacts

For Specific QuestionsFor Specific QuestionsThay Bishop

Atlanta, Georgia

Team Leader

Ph: (404) 562-3695 ; [email protected]

Keith Bishop

Baltimore, Maryland

Innovative Finance Specialist

Ph: (410) 962-0634; [email protected]

Prabhat Diksit

Lakewood, Colorado



Jim Hatter

Atlanta, Georgia



Jennifer Mayer

San Francisco, California



Frederick Werner

Atlanta, Georgia



mailto:[email protected]






northern borders ppp workshop detroit, mi dec 12-13, 2006 mr. prabhat a diksit fhwa resource center...

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