Public-private road projects run into bumps - The Daily Progress: Opinion

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Public-private road projects run into bumps

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Posted: Sunday, December 2, 2012 12:46 pm

Used to be if Virginia government needed goods or services — cop cars, canned peaches for prisoners, an office building or highway — it put an ad in the newspaper, asking for bids by a certain date. When the big day came around, the bureaucrats looked over the competing proposals and, more often than not, picked the one with the lowest price.

Sometimes, Virginia — where being labeled cheap can be a badge of honor — got what it paid for: underwhelming construction, underperforming products.

Procurement, however, has been turned on its head, particularly for pricey transportation projects. Virginia can’t afford them because of a troubling trend: More people means more development, creating greater demand for services that consistently is not matched by cash flow to the state treasury.

One solution is to transform ordinary steel-and-asphalt projects into lucrative investment-and-return opportunities for big business. Even supporters of this remedy, loftily known as a public-private partnership, say it’s creating a problem: It can cost taxpayers more — a lot more than traditional funding.

“I’m beginning to sour on them, because they’re becoming an excuse for not raising taxes,” says Dick Saslaw, the business-friendly Senate Democratic leader who’s unsuccessfully pushed for higher fuel taxes for highways for nearly a decade.

Complain as they might, legislators are largely helpless to do much.

That’s because, in adopting the framework for privately built transportation projects — it was a 1995 initiative of Republican George Allen — they ceded virtually all authority for these deals to the governor.

Stuck in the General Assembly is a GOP proposal to make the process more transparent. Suffolk’s Chris Jones, a member of the House Republican leadership, wants to create a special panel to vet offers, giving the public a bigger say in an exercise that is usually complex and often confidential.

This would be a first step toward second-guessing the governor.

And the current chief executive, Bob McDonnell, isn’t about to surrender an iota of power. It would make it tougher for him to take another baby step toward a fiscal fix for roads before his term ends in 14 months. As an anti-tax Republican — one who has milked campaign contributions from giant contractors — McDonnell crows that these collaborative arrangements make dollars and sense.

The record, however, is mixed.

Since Virginia enacted the Public-Private Transportation Act 17 years ago, only three projects have been completed. One, the Pocahontas Parkway just southeast of Richmond, struggles despite extra handouts from the state. Another, a west-of-Richmond stretch of the Virginia 288 bypass, nearly depleted the region’s share of the state road-building fund. Eighteen other projects are under construction or partially completed.

The just announced $1.4 billion upgrade of U.S. 460 through western Tidewater is becoming a poster child for what’s wrong with the PPTA.

Saslaw and others say the project is a rip-off. Virginia has to front $900 million, nearly half of it debt. And while the road is supposed to ease congestion into the Port of Hampton Roads, projections suggest otherwise.

Perhaps an additional 5,000 to 6,000 vehicles per day would course the new highway. Saslaw grumbles that four times as much traffic barrels through some subdivision streets in his Fairfax district.

According to the National Conference of State Legislatures, at least 29 states have programs under which the private sector can construct and operate public roads. They are often paid off over decades with tolls that potentially mean big profits for investors, typically financial firms, retirement funds and foreign corporations.

Or big headaches.

Witness: the Pocahontas Parkway and similar roads in Colorado and South Carolina.

“The question is whether the PPTA process is good at producing public benefits with as low a price as possible; that is fair to the traveling public; that adequately considers external factors such as the environmental impacts, and that is consistent with Virginia’s long-term transportation goals,” Jim Regimbal, a public finance consultant, says in a report for one of the toughest critics of public-private partnerships, the Southern Environmental Law Center.

To the SELC, the PPTA is an excuse for Virginia to pave over environmental protection with the debatable promise of economic expansion. But even a green sees in the fight an opportunity to save some.

The Regimbal report echoes the concerns of Saslaw and Jones about costs. It urges greater legislative oversight, steps to promote competition for projects and, perhaps, tying profits to performance — much as regulators do utilities. That would assure toll-paying motorists they’re getting their money’s worth.

Beats low bid.


Jeff Shapiro is a writer for the Richmond Times-Dispatch.

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