Tax Advice


Sponsored By:

   The Nation  |  Business  |  Equipment  |  Features


Report: Va. public-private act can't protect public interests

The new Interstate 495 express lanes project is one of four Public-Private Transportation Act partnerships complete since the law was passed in 1995. (The Trucker file photo)

The Associated Press

11/27/2012

RICHMOND, Va. — A new report on Virginia's Public-Private Transportation Act (PPTA) warns that the act lacks adequate safeguards to protect the public interest, says the Southern Environmental Law Center (SELC).

While the number of PPTA projects has risen sharply, allowing private entities to partner with the state or localities on transportation projects, the report says the PPTA has centralized decision-making, limited information given to the public and often resulted in deals that allow private entities to earn high returns with little risks.

The report, “An Analysis of the Virginia Public-Private Transportation Act of 1995,” provides a comprehensive analysis of the PPTA and was prepared for the SELC by Jim Regimbal, a consultant with Fiscal Analytics Ltd. and a former staff member to the Senate Finance Committee.

The SELC’s website says that for over 25 years, the SELC has leveraged the power of the law to protect the environment of the Southeast.

It claims that under Virginia’s PPTA, billions of taxpayer dollars are being spent and decades of substantial tolls imposed.

The SELC says the report examines the PPTA's history and process, and highlights two recent PPTA projects for in-depth analysis (the I-495 Express Lanes in Northern Virginia and the Downtown Tunnel/Midtown Tunnel/MLK Extension in Hampton Roads).

The study also analyzes the substantial policy issues the Act raises and offers practical recommendations for reform.

"The PPTA has grown far beyond the General Assembly's original intent to supplement the traditional transportation improvements process.  The Act is now the major method for constructing large new projects," Regimbal said. "Although it can be an innovative tool, adequate safeguards need to be in place to ensure that public interests are protected."

"The PPTA is flawed, and this report raises significant doubts about how effectively it serves the public interest," said Trip Pollard, leader of the SELC Land and Community Program.  "Taxpayers are footing the bill for many PPTA project costs, while the public picks up the rest of the tab through tolls.  All too often, the deals that have been cut allow profits to be put ahead of sound transportation planning."

According to SELC, since it passed in 1995, only four PPTA projects have been completed (Route 288, Route 199, Route 895/Pocahontas Parkway, and the new I-495 Express Lanes).

Another 17 projects are partially completed or currently under construction, under contract, or under consideration.

“The agreements made between the Commonwealth and private entities under the PPTA reflect some of the troubling policy differences in various deals,” the SELC said. “The I-495 Express Lanes project, for example, increases transportation capacity while still leaving existing toll-free transportation choices in place for the public.  This agreement does not contain any ‘non-compete’ clauses, although it does have a troubling provision that could increase taxpayer liability or dissuade high occupancy vehicle (HOV) use.  The private partner is taking on true demand risk in return for its investment.”

In contrast, the report said the Downtown Tunnel/Midtown Tunnel/MLK project expands an existing free facility already once paid for and currently maintained by the state, but with no viable travel alternative for the public.

“There is little rationale for the amount of state subsidy provided and the contract allows for automatic toll escalation and penalties for creating competing transportation alternatives,” the report said. “In other projects, such as the proposed $1.4 billion new Route 460, the state is proposing to provide $1.1 billion public in direct subsidies, and tolls will cover the rest, to a project that is a much lower transportation priority than many others throughout the state.

The report recommends a number of reforms to the PPTA and implementation guidelines, including:   

• Providing more information to the public (including the cost-benefit analysis) to create a more transparent process, and requiring a public hearing at least 30 days prior to signing a PPTA comprehensive agreement;

• Increasing the role of the Commonwealth Transportation Board prior to signing a comprehensive agreement and giving the Board greater independence;

• Creating a greater role for the General Assembly in the PPTA process, including a role in approving subsidy levels (particularly debt) and the use of toll facilities;

• Ensuring that bidding is done in a competitive environment; and

• Adding fairness considerations that include conditions for (1) prioritizing state PPTA subsidies; and (2) state responsibility for operation and maintenance of a PPTA facility.

"Taken together, these solutions will help ensure that the PPTA process is good at producing public benefits for as low a price as possible," said Regimbal.

"Recent deals have highlighted the PPTA's shortcomings and show why the debate over transportation funding needs to focus on ensuring that taxpayer funds are spent wisely-and not just on raising more revenues for transportation," Pollard said. "The statute needs to be strengthened before any additional agreements are signed or any additional funds for PPTA projects are authorized if we are to promote smarter transportation investments and adequately protect our communities and environment."

Amer. Truckers Legal