FHWA Acting Administrator Rick Capka
Remarks as prepared for delivery
American Road & Transportation Builders Association (ARTBA)
17th Annual Conference on Public Private Ventures in Transportation
October 7, 2005, Washington, DC

INTO THE MAINSTREAM

Over the past two years or so, Secretary Mineta, former administrator Mary Peters, and I have spoken often about Public Private Partnerships. For many people, the subject was a new one. We explained what it is, why innovative financing is a necessity, and emphasized that a few states are already trying it out.

Well, times have definitely changed. PPP is now part of the mainstream. All the evidence we need is in this room.

Your conference coordinator tells me that five years ago, there were under a 100 people at this annual conference. This year, nearly 300. We are particularly pleased that these participants represent all parts of the transportation industry, including government officials, transportation planners, designers, builders and system operators, and the financial folks who back them.

So, we're past the "What is it?" stage . . . past the stage when we tout just a few success stories.

Reaching the mainstream means public-private ventures are routinely considered and frequently the winning choice for a city, a state, or a region. It's an important milestone for the Bush Administration, U.S. DOT, and Federal Highways, and it's important for improving the surface transportation network to meet the needs of our growing economy.

SUPPORTING INNOVATIVE FINANCE

I want to touch on a two forward-looking topics.

• First, a look at how FHWA is advancing innovative finance.

• And then, some thoughts on the "Next Act" and how the next reauthorization must go even further to attract private sector capital, resources, and expertise.

Before I jump into the subject at hand, I want to talk briefly about the hurricane relief and recovery effort of the past several weeks. The Bush Administration, U.S. DOT, and FHWA are firmly committed to helping the ravaged areas recover as quickly as possible.

The I-10 Bridge in Pascagoula reopening more than a week ahead of schedule is a good example of progress. Federal Highways is working closely with our state and federal partners to help the people and economy along the Gulf Coast recover and rebuild from the devastation of Katrina and Rita.

As you know, SAFETEA-LU broadens the availability of federal financing initiatives such as TIFIA and State Infrastructure Banks. Other provisions give states more flexibility to use tolling to finance infrastructure improvements.

And of course the big one: As you heard at an earlier session, highway and surface freight transfer facilities are now eligible for up to $15 billion in tax-exempt Private Activity Bonds, and it will prove to be an extremely important financing tool.

Some of the changes in environmental provisions will improve cooperation between state and federal agencies that participate in the environmental review process. The 180-day statute of limitations on bringing legal action after Federal Register notice of final approval of a project will provide a level of comfort to private sector partners.

We have the SEP-14 and SEP-15 programs that encourage innovation in project development and delivery.

SAFETEA-LU changes in the area of design-build will also make innovative contracting procedures much more commonplace. Mississippi is using design build extensively during hurricane recovery.

There's much more detail on the Act's innovative finance provisions on the FHWA website.

To spread the message, we have sponsored conferences and workshops in conjunction with the National Council on Public-Private Partnerships around the country, and earlier this week co-sponsored a symposium on SEP-15 with ARTBA.

We are constantly updating our PPP website with helpful information including our excellent 2004 report to Congress, a summary of state PPP legislation, case studies, and a wealth of other information.

PPPs have become an integral part of the way we do business, and they will be even more crucial in the future. Trans Texas Corridor and the Oregon Innovative Partnerships Program are only the latest examples.

That's why we created a PPP office headed by Mike Saunders. The new office is a central point of contact for state and local transportation officials who want to explore new and creative ways to design, develop and deliver highways and bridges. I encourage you to take advantage of this new resource.

LOOKING TOWARD THE NEXT ACT

Over the past day and a half, SAFETEA-LU and its new or improved initiatives to support PPPs have been discussed in detail. Now is the time to start using these tools -- which many in this room have clamored for -- on needed projects which could not be achieved as readily without the changes.

Private Activity Bonds, increased flexibility for tolling, TIFIA loans, and State Infrastructure Banks are wonderful tools that will attract private sector investment and participation. The private sector has to be more involved in financing transportation infrastructure.

But as we consider what the near future holds, we also need to think of that "not too distant" future when we develop initiatives for the next reauthorization.

I think we all realize . . . at least subconsciously with all of the focus on the new Act . . . that the next bill is only four years away!

SAFETEA-LU expires September 30, 2009.

Think of it . . . less than four years to implement the requirements of SAFETEA-LU . . . AND prepare and enact the next legislation. We must use the time wisely.

The time is now to start working on a revolutionary "Next Act."

As Secretary Mineta has pointed out, SAFETEA-LU is evolutionary. It builds on the ideas of TEA-21 and ISTEA before it.

Don't get me wrong. We have and will continue to push the envelope to be as creative and open to new ideas as possible. SEP-15 is encouraging new approaches to public private partnerships. Our efforts in environmental stewardship and streamlining are finding common ground and getting projects moving forward. And we are making highways safer.

The two commissions authorized by SAFETEA-LU will provide much-needed food for thought on financing alternatives and on future needs of the entire surface transportation system.

In that "not too distant future," the commissions may struggle with such questions as:

• What is the proper role for the federal government, if, as expected, the percentage of federal funding relative to other sources, diminishes?

• How do we protect against further erosion of federal funds that occurs through earmarks and the proliferation of program categories, both of which work to limit a state's flexibility?

• Should the federal government's program shrink compared to state programs, with the feds more focused on areas that have national significance?

THINGS WE CAN COUNT ON

While the shape of the "Next Act" is almost certainly vastly different from SAFETEA-LU -- --

Looking ahead, there are a few things we CAN count on.

One of them is that we will face new and different transportation challenges. We'll have to be flexible and prepared for surprises -- such as devastation on the Gulf Coast from two enormous hurricanes.

Of course, many trends can be reasonably extrapolated. Safety and congestion concerns aren't going away.

We can be confident that -- --

• Increasing pressure on traditional sources of revenue will change the way user fees and taxes are collected.

• Technology will make fee collection ever easier, increasing opportunities for PPP projects.

• State and local transportation planners are only beginning to accommodate PPPs in a rigorous way when considering transportation improvements. This may change as public revenue sources become scarcer.

• Federal law still contains a bias against tolling for many roads. This may disappear, particularly if net revenue is dedicated to transportation.

With the tonnage of freight moved by trucks growing substantially, drivers of passenger vehicles may feel increasingly uncomfortable on some roads. This suggests there may be pressure to separate passenger and commercial vehicles, as the Trans-Texas Corridor project contemplates.

Changes in society -- perhaps a strong movement toward teleworking -- (not to mention the impact of $3 a gallon gasoline) . . . could transform work and travel behavior.

The list of trends and variables is almost endless.

The point is that transportation builders and providers, whether public or private, will have to stay nimble so that they can respond to changes as they occur.

A CRITICAL TIME

This is a critical time -- a crossroads -- for everyone involved in transportation.

There is so much going on near-term to implement SAFETEA-LU and to recover on the Gulf Coast . . . And long-term there are so many advances we must make to keep our economy on the move -- to ensure that drivers and freight can get to where they need to go, safely and on time.

FHWA and ARTBA are on the same team. In coming months and years, we mobility professionals have an opportunity to help shape our nation's future and move America toward a more prosperous future.

We're going to take some revolutionary steps and we're starting on that difficult path. I hope we continue on our transportation journey together.

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