NATIONAL CONFERENCE of STATE LEGISLATURES The Forum for America’s Ideas Evaluating PPPs for Transportation: An Analytical Approach for State Legislators Jim Reed Group Director – Environment, Energy and Transportation Presented to Fiscal Analysts Seminar, Seattle, October 2014
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NATIONAL CONFERENCE
of STATE LEGISLATURES
The Forum for America’s Ideas
Evaluating PPPs for Transportation:
An Analytical Approach for State
Legislators
Jim Reed Group Director – Environment, Energy and Transportation
Presented to Fiscal Analysts Seminar, Seattle, October 2014
NATIONAL CONFERENCE
of STATE LEGISLATURES
The Forum for America’s Ideas
Transportation Funding Crisis:
Changed Paradigm
Great Recession
State budget shortfalls since 2008
Declining gas tax revenues (less driving,
electric and hybrid vehicles)
Political reluctance to raise the gas tax
Previous underinvestment in infrastructure
Aging infrastructure
Uncertainty of federal program, less federal
funding going forward
$100 B new federal funding needed: CBO
NATIONAL CONFERENCE
of STATE LEGISLATURES
The Forum for America’s Ideas
Funding vs. Financing
Funding means revenue available to pay
for investment in transportation assets or
programs (from taxes, tolls, fees and the
like).
Financing means the use of financial tools
or techniques (like borrowing) to leverage
project revenues, accelerate project
development, and match the costs and
benefits of long-lived assets.
Source: Conference report of the Forum on Funding and Financing for Surface Transportation in the
Coming Decade, AASHTO, 2011
NATIONAL CONFERENCE
of STATE LEGISLATURES
The Forum for America’s Ideas
State Transportation Financing Options
General obligation or revenue bonds (44 states + DC + PR)
Design-build (authorized in 38 states + PR)
State infrastructure banks (SIBs) (34 states + PR)
GARVEE bonds (33 states + DC + PR)
Public-private partnerships (PPPs or P3s) (authorized in 33 states + PR)
TIFIA federal credit assistance (12 states + PR)
Private Activity Bonds (PABs) (6 states)
NATIONAL CONFERENCE
of STATE LEGISLATURES
The Forum for America’s Ideas
PPP Definition
“A public-private partnership is a contractual
agreement formed between public and private
sector partners, which allows more private sector
participation than is traditional. The agreements
usually involve a government agency contracting
with a private consortium to renovate, construct,
operate, maintain, and/or manage a facility or
system.” FHWA
PPPs cover a spectrum of a dozen types of
innovative contracting, project delivery and
financing arrangements between public and
private sector partners.
• Public sector retains ownership.
NATIONAL CONFERENCE
of STATE LEGISLATURES
The Forum for America’s Ideas
Procurement Models and Range of Risk
Transfer to Private Sector (FHWA)
NATIONAL CONFERENCE
of STATE LEGISLATURES
The Forum for America’s Ideas
33 States with Transportation PPP
Enabling Legislation
NATIONAL CONFERENCE
of STATE LEGISLATURES
The Forum for America’s Ideas
NCSL Resource: Public-Private Partnerships for Transportation: A State Legislators’ Toolkit
Provide nonpartisan, balanced, useful
materials to aid legislators’ PPP decision-
making, developed by bi-partisan task force
Includes:
– Context for understanding PPPs
– State gov’t roles in the PPP process
– Principles for good governance as applied to PPP