Financing and Partnerships
The Vision
The transportation system will have a stable revenue stream capable of
handling the incredible growth in passenger and freight demand that is heading
our way. There will be a clear link between costs and revenues. The system will
be flexible as costs change and nimble when making adjustments required by its
customers. |
New Directions in Financing
and Partnerships
Shift Toward a New Model for Financing the U.S.
Transportation System
- Faced with
budget constraints and deficits, governments will need to turn further to
innovative financing mechanisms to meet many of their transportation
capital investment needs. The cost of ensuring infrastructure capacity and
system performance over the next two decades will be increasingly
expensive. New financing solutions will be sought nationwide.
- There is
overwhelming recognition that the U.S. needs a new model for financing the
National transportation system. The current gas-tax-dependent model does
virtually nothing to directly address the growing costs of congestion and
system unreliability. Revenues from airport passenger and user fees are
also lagging behind. Sole reliance on approaches from the past cannot
continue.
- Some of the
evolving financing mechanisms will fall entirely within the realm of
either the public or private sectors, but many will involve some form of
public-private partnership. These partnerships will allow the government
to draw upon private sector equity and expertise in the delivery,
operation, and maintenance of the transportation system.
Pathway to the Future
Expand Public-Private Partnerships: Reduce existing impediments and provide incentives to States willing to partner
with industry to develop transportation projects. Partnerships can supply a
vast amount of investment resources, add discipline to the project selection
process, and promote innovation.
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© istockphoto.com |
Direct Pricing of Road Use: Permit States and localities to implement direct, cost-based pricing of road
use on all highways. This can be achieved through tolling, metering devices,
and other innovations. The costs of congestion, maintenance, construction or
reconstruction, and environmental impacts can be considered when developing
pricing strategies. Revenues can be leveraged to fund major system improvements
and attract additional investment.
Simplify Programs and Increase Flexibility: Promote fewer, more focused Federal programs that simplify process requirements
and target congestion reduction and safety. Remove restrictions that add
limited value and simply frustrate States’ attempts to implement their own
transportation programs. Reward jurisdictions that are willing to use creative
approaches and new technologies to tackle congestion and highway safety.
Make Decisions Based on Merit: Federal funding priorities should be given to merit-based, cost-beneficial projects,
not pet political projects.
See figure: The U.S. Congestion Problem.
Realizing the Vision: Spotlight on Progress
Reducing Delays through
Congestion Pricing
Congestion pricing benefits society as a whole. It benefits drivers and
businesses by reducing delays and stress, by increasing the predictability of
trip times, and by allowing for more deliveries per hour.
It benefits mass transit by improving transit speeds and the
reliability of transit service, increasing transit ridership,
and lowering costs for providers.
It benefits State and local governments by improving the quality of
transportation services without tax increases or large capital expenditures, by
providing additional revenues for funding transportation, by retaining
businesses and expanding the tax base, and by shortening incident response time
for emergency personnel, thus saving lives.
All of us benefit from the reduction of fuel consumption and vehicle
emissions. Examples of effective congestion pricing
programs in the U.S. include:
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© istockphoto.com |
Tolling: Single-occupant vehicles
pay a per-trip fee each time they use the I-15 High Occupancy Toll (HOT) lanes.
Tolls vary with the level of traffic demand on the lanes. Half of the revenue
from the HOT Lanes in San Diego supports transit service in the corridor.
Bridge Pricing: On the Midpoint
and Cape Coral bridges in Lee County, Florida, travelers were offered a 50%
discount on their toll if they traveled during specific periods and paid their
toll electronically. The toll structure encouraged drivers to shift from peak
periods to off-peak discount periods.
Mileage-Based Pricing Test: The
State of Oregon is studying mileage-based fees and peak-period driving charges
designed to reduce traffic during the most congested periods while raising
revenue to replace existing fuel-based fees. Global Positioning System
(GPS)-based technology is being tested.
Expanding Public-Private
Partnerships
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© 2007 Metro Transit |
Public-private partnerships (PPPs) refer to
contractual agreements formed between a public agency and a private sector
entity that allow for greater private sector participation in the delivery of
transportation projects. Today, 23 States have some form of legislation that
authorizes PPPs in transportation.
Expanding the private sector role allows public agencies to tap private
sector technical, management, and financial resources in new ways to achieve
certain public agency objectives such as greater cost and schedule certainty,
supplementation of in-house staff, innovative technology applications,
specialized expertise, and access to private capital.
The private partner can expand its business opportunities in return for
assuming the new or expanded responsibilities and risks. Some of the primary
reasons for public agencies to enter into public-private partnerships include:
- Accelerating the implementation of
high-priority projects by packaging and procuring services in new ways.
- Turning to the private sector to
provide specialized management capacity for large and complex programs.
- Enabling the delivery of new
technology developed by private entities.
- Drawing on private sector
expertise in accessing and organizing the widest range of private sector
financial resources.
- Encouraging private
entrepreneurial development, ownership, and operation of highways and/or
related assets.
PPPs specify the roles, risks,
and rewards contractually so as to provide incentives for maximum performance
and the flexibility necessary to achieve the desired results.
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