Kentucky and Tennessee Latest States to Explore Public-Private Partnerships for Transportation—Within Limits

Lawmakers in Kentucky and Tennessee have considered bills this session that would allow the states to enter into public-private partnerships (P3s) to enable transportation projects. But both would place limitations on what kinds of projects could be undertaken. I also have a variety of updates on P3s and tolling from around the country as well as details on how you can attend this summer’s most essential forum on the state of the P3 industry.

P3 Legislation in Kentucky and Tennessee

Kentucky lawmakers last month gave final approval to a measure that would provide a framework for the use of P3s to finance major public projects, including transportation projects, The Lane Report noted.

House Bill 309, sponsored by Reps. Leslie Combs and Sannie Overly, was the result of two years of work on the P3 issue. In 2014, then-Governor Steve Beshear vetoed P3 legislation.

The effort to authorize P3s in the state has become embroiled with the controversial question of whether the proposed $2.6 billion Brent Spence Bridge project in Northern Kentucky could be achieved with a P3 and paid for in part by tolling the new bridge facility.

The approved legislation includes a provision to specifically prohibit tolls for “any project involving the federal interstate system that connects the commonwealth with the State of Ohio,” which would include the Brent Spence project.

The legislation has been delivered to Gov. Matt Bevin for his signature.

Meanwhile, lawmakers in Tennessee are also considering legislation to allow private sector investment in transportation projects, The Tennesseean noted. The state Senate approved SB 2093, the Public-Private Transportation Act of 2016, on Monday. It would allow state and local governments to enter into contracts with private businesses related to mass transportation projects. State officials say transit projects are much needed to alleviate congestion in areas such as Nashville.

But the latest amended version of the bill would eliminate roads, bridges, tunnels and overpasses from being considered for public-private partnerships. Only mass transit projects would be eligible under the measure.

The measure now goes to the House for consideration.

Updates on Other States

  • Colorado: Gov. John Hickenlooper and other state leaders were in Dallas last month to speak at or attend a conference on public-private partnerships, The Denver Channel reported. Hickenlooper talked about lessons learned from the U.S. 36 P3 in his state: "The one thing we really learned was that you’ve got to keep all the legislators and the local communities in the process,” he said. “What we're really focused on right now is being transparent. I mean, every stage of the planning process, we want everyone involved in the community -- anyone connected to the community -- we want involved in that process."
  • Illinois: The state Senate is considering a bill that would expand the authority of public agencies in the state to enter into P3 agreements, Nossaman’s Infra Insight blog noted last month. SB 3277 would grant P3 authority to all public agencies in Illinois, including municipalities, local governments, school districts, universities, public building commissions and state agencies. The authority has been limited to the state department of transportation, state toll highway authority and, in some limited cases, local governments. The bill could allow P3s to enable social infrastructure projects like schools, hospitals and other buildings, transportation facilities of all varieties, water and wastewater facilities, energy facilities and other public assets and services. 
  • Maryland: Gov. Larry Hogan last month announced the team chosen to build the 16.2 mile Purple Line light-rail project in the D.C. suburbs, Progressive Railroading reported. Purple Line Transit Partners, which is comprised of Fluor Enterprises, Meridiam Infrastructure and Star America will design, build, finance, operate and maintain the 21-station line under a public-private contract. The state expects $1.36 billion in fare revenue and local and federal contributions to the project to bring the final cost to $3.3 billion over 36 years. The Purple Line, which is expected to open for service in six years, would be one of the largest P3 deals in the country and only the second U.S. transit project to include private financing, The Washington Post noted.
  • North Carolina: When a toll road operator in Texas declared bankruptcy recently, it prompted a visit to Texas by North Carolina Secretary of Transportation Nick Tennyson, The Charlotte Observer reported. That’s because Spanish company Cintra, who is partnering with North Carolina on a toll lane for Interstate 77, was also a partner on SH 130, the Texas toll road that failed to meet ridership and revenue expectations resulting in the bankruptcy. But Tennyson said while the bankruptcy might draw further scrutiny for the company, which has already weathered criticism from those in North Carolina opposed to tolls on I-77, it likely would not provide any basis for canceling the state’s contract with Cintra.   
  • Texas: James Bass, the Executive Director of the Texas Department of Transportation, said recently it would cost taxpayers on the order of $38 billion to pay off all the debt for more than 50 toll roads and bridges in the state and make them free to drivers, The Dallas Morning News reported. The legislature last year directed TxDOT to put together a report estimating the cost. An editorial in The Beaumont Enterprise describes a “classic vicious circle.” “Most drivers don't like toll roads,” the editorial reads. “But the state needs them to get Texans from Point A to Point B. So when new toll roads are proposed, lawmakers grumble ... but usually greenlight the projects anyway. And harried motorists use them because that's their best option - but they still don't like it. … There's probably no way to eliminate it in Texas or any other large state. But our Legislature can do this: It can start covering at least the annual needs for highway maintenance in our state plus a decent amount for new construction. … With better highway funding, Texas wouldn't need so many (toll roads).”
  • Virginia: The House and Senate have both passed HB 1069, a measure that deals with toll collection procedures, fees and penalties in the state. As The Virginian Pilot reported last month, the Senate version of the bill does not include a provision that would have given the General Assembly more oversight in implementing tolls 

Further Reading

  • Governing magazine had a piece in February on three common factors public project sponsors should consider in order to ensure the chances for success of managed lane P3 projects.
  • Last month, Governing looked at how the public sector might measure the value of infrastructure risk transfer in P3 deals.
  • A recent study of toll facilities by the International Bridge, Tunnel and Turnpike Association found that the number of trips driven on 31 facilities around the country rose 7 percent in 2015, USA Today reported. Ten facilities experienced double-digit growth, the study said.

InfraAmericas U.S. P3 Infrastructure Forum 2016

CSG this year will once again serve as a supporting organization for the InfraAmericas U.S. P3 Infrastructure Forum, which takes place June 15-16 at the Grand Hyatt in New York City. The forum brings together state and federal public officials with infrastructure developers, investors, financiers and regional transportation authorities for an essential conversation about the state of the P3 industry. Now in its twelfth year, the forum features informative panels and key networking opportunities. Speakers announced so far include Douglas Koelemay, the Director of Virginia’s Office of P3s, and Shailen Bhatt, Executive Director of the Colorado Department of Transportation. You can register to attend the event at this link. And for more of an idea of what to expect, check out my coverage of last year’s event.