Law allows companies to help with road repairs
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A new transportation law lets private companies help fix and maintain ailing bridges, roads and other infrastructure -- a necessary step, proponents say, for a state that boasts nearly 5,000 structurally deficient bridges and 8,000 miles of poor roadway.
The legislation, approved July 5 by Gov. Tom Corbett, allows the state to partner with private consortia to improve and expand infrastructure, responding in part to a 2010 State Transportation Advisory Committee study that found that Pennsylvania needs $3.5 billion more a year to meet its infrastructure needs.
Several firms already have expressed interest in financing transportation projects in Pennsylvania, said the bill's primary sponsor and chairman of the House Transportation Committee, state Rep. Rick Geist, R-Altoona.
But officials from the Pennsylvania Department of Transportation said it's too early to know what projects, if any, these firms might take on.
In a public-private partnership, known as a P3, the state retains ownership of the bridge or road while contracting with a private firm to develop, manage or finance a project.
Firms receive a fixed return on their investment over time, most commonly through tolling, and any money collected above the agreed amount goes to the state for other transportation projects. Pennsylvania joins 32 other states and Puerto Rico in allowing these partnerships.
"The Pennsylvania Department of Transportation is in woeful financial shape," Mr. Geist said. "Public-private partnerships are used all over the world as a method of financing transportation, and I think they will be a smashing success here."
Under the new legislation, transportation project proposals must be approved by an independent Public-Private Transportation Partnership Board consisting of the secretary of transportation, the secretary of the budget, four legislative appointees and one gubernatorial appointee.
Department of Transportation officials say it is too soon to identify what these proposals might look like or what local projects might attract private investment. Officials still need to determine guidelines the proposals should follow, said Greg Grasa, legislative research analyst at the House Transportation Committee, adding that it may be about two years until any projects are under way.
"Now that we can legally look at private entities that might be interested in investing in our infrastructure, we need a process to identify projects, put out a prospectus, predict annual returns," said PennDOT spokesman Dennis Buterbaugh. "This legislation is a baby that still needs to grow, but it is, significantly, another tool in our toolbox."
In the meantime, the state of Pennsylvania's infrastructure remains increasingly grim, with thousands of miles of deteriorated roads and bridges.
Dan Cessna, a PennDOT executive for District 11, which includes Allegheny County, said there are many local projects that need reconstruction and repair work, including Interstate 376, Parkway North and several bridges. Mr. Geist said something must also be done about the severe congestion on Parkways East and West.
"The parkways are essentially parking lots," Mr. Geist said. "It takes a long, long time to get into Downtown, which amounts to lost productivity. There haven't been improvements to congestion for years and years."
These projects may or may not end up being candidates for public-private partnerships, Mr. Cessna said, adding that PennDOT has not yet been approached by any companies interested in financing them.
In 2008, the Pennsylvania Turnpike Commission solicited interest from private companies to build the incomplete sections of the Mon-Fayette Expressway and Southern Beltway projects near Pittsburgh. The project required $5.2 billion for 50 miles of new expressway, but Turnpike spokesman Carl DeFebo said the high price tag stalled the process before any proposals were submitted.
Now that the new legislation has been passed, Mr. DeFebo said the commission may decide to revisit the possibility of public-private partnerships. The expressway, which opened a section connecting Uniontown and Brownsville Monday afternoon, still needs to expand 24 miles to Pittsburgh -- a price tag of about $3.8 billion.
"At this point, we are still evaluating the new law," Mr. DeFebo said. "It is premature to say we will absolutely pursue a P3, but it could be a good option for us. And now we also have a large continuous operating section of the highway that we did not have four years ago."
Potential investors may remember former Gov. Ed Rendell's attempt in 2007 to lease the entire turnpike to a private operator -- a $12.8 billion plan that failed to pass the Legislature amidst fears that a private operator would increase turnpike tolls. Few wanted the state to relinquish control of its major highway for 75 years, the length of the proposed lease.
But D.J. Gribbin, managing director of Macquarie Capital, a company that advises firms that invest in infrastructure, said potential investors that are turned off by the turnpike's shaky privatization history may be encouraged by the strong legislative and gubernatorial support of the new law.
"Pennsylvania's joining the P3 fraternity is a very encouraging sign," he said.
First Published July 18, 2012 12:00 am