Purpose
Tuesday, January 15, 2013
Caltrans and Metro to improve coordination on 710 Freeway study
http://www.pasadenastarnews.com/news/ci_22382461/caltrans-and-metro-improve-coordination-710-freeway-study
By
Posted:
01/15/2013 09:03:51 PM PST
Updated:
01/15/2013 09:08:40 PM PST
Vehicles exit California
Avenue in Pasadena Wednesday, November 18, 2009 as the 710 Freeway
extension ends after connecting with the 210. Caltrans has completed a
feasibility study showing the possible routes for a 710 tunnel.
State Sen. Carol Liu,
D-La Ca ada Flintridge, said Tuesday that transportation officials
charged with completing the 710 Freeway will be more transparent as the
environmental study process moves forward.
Liu had a meeting with Caltrans Director Malcolm Dougherty and
Metropolitan Transportation Authority CEO Arthur Leahy. Both assured
her that the agencies would work closely together as the freeway study
continues.
The project's three-year environmental study is set to be completed in 2014.
"Caltrans is ultimately responsible for ratifying the EIR, so
... they will be the people who sign off on whatever project Metro will
propose, but just practically speaking Metro has the money, the state
doesn't, so we'll see what happens here," Liu said.
She added that communication between the two agencies seems to
have improved based on her inquiries and questions from others
monitoring the study. Officials told her that various Metro and Caltrans
executives will have monthly meetings throughout the rest of the EIR,
she said.
In the letter to Liu, Dougherty and Leahy
said that Caltrans is the "lead agency" under state and federal
environmental law while Metro is conducting the "day-to-day" business of
the study.
Metro is set to release a report this month outlining the final
five options it will study for environmental impacts: "No build,"
traffic management solutions, light rail, bus and a dual-bore
underground freeway tunnel.
The letter, dated Jan. 10, was a response to a letter sent in
December by Liu, Metro Board Member Ara Najarian and mayors from South
Pasadena, Pasadena, La Canada Flintridge and Glendale. The letter sought
clarification on the relationship between Caltrans and Metro, and more
information about the possible sale of the more than 500 homes Caltrans
owns in the 710 corridor.
Leahy and Dougherty said Tuesday that "progress has been made"
toward selling some of the homes that are no longer in the freeway's
path.
Tuesday's letter to Liu was one of many sent recently between
elected officials and the transportation agencies on the long disputed
710 project.
Pasadena Mayor Bill Bogaard Tuesday posted a draft of a letter
he plans to send to the Metro Board outlining Pasadena concerns. The
letter comes after the City Council's Dec. 10 meeting at which council
members voiced objections to many aspects of the study but declined to
take a formal position.
The council's main worry, Bogaard said in the letter, is the
"ambiguity" of the purpose and need for the study; specifically, whether
the freeway is a goods movement route.
Metro will host three open houses, on Jan. 23, 24 and 26, to update the public on the study. For more information, visit www.metro.net/projects/ sr-710-conversations.
Liu had a meeting with Caltrans Director Malcolm Dougherty and Metropolitan Transportation Authority CEO Arthur Leahy. Both assured her that the agencies would work closely together as the freeway study continues.
The project's three-year environmental study is set to be completed in 2014.
"Caltrans is ultimately responsible for ratifying the EIR, so ... they will be the people who sign off on whatever project Metro will propose, but just practically speaking Metro has the money, the state doesn't, so we'll see what happens here," Liu said.
She added that communication between the two agencies seems to have improved based on her inquiries and questions from others monitoring the study. Officials told her that various Metro and Caltrans executives will have monthly meetings throughout the rest of the EIR, she said.
In the letter to Liu, Dougherty and Leahy said that Caltrans is the "lead agency" under state and federal environmental law while Metro is conducting the "day-to-day" business of
the study.
Metro is set to release a report this month outlining the final five options it will study for environmental impacts: "No build," traffic management solutions, light rail, bus and a dual-bore underground freeway tunnel.
The letter, dated Jan. 10, was a response to a letter sent in December by Liu, Metro Board Member Ara Najarian and mayors from South Pasadena, Pasadena, La Canada Flintridge and Glendale. The letter sought clarification on the relationship between Caltrans and Metro, and more information about the possible sale of the more than 500 homes Caltrans owns in the 710 corridor.
Leahy and Dougherty said Tuesday that "progress has been made" toward selling some of the homes that are no longer in the freeway's path.
Tuesday's letter to Liu was one of many sent recently between elected officials and the transportation agencies on the long disputed 710 project.
Pasadena Mayor Bill Bogaard Tuesday posted a draft of a letter he plans to send to the Metro Board outlining Pasadena concerns. The letter comes after the City Council's Dec. 10 meeting at which council members voiced objections to many aspects of the study but declined to take a formal position.
The council's main worry, Bogaard said in the letter, is the "ambiguity" of the purpose and need for the study; specifically, whether the freeway is a goods movement route.
Metro will host three open houses, on Jan. 23, 24 and 26, to update the public on the study. For more information, visit www.metro.net/projects/ sr-710-conversations.
California high-speed rail cost figures coming in, but no one will see them yet
http://www.pasadenastarnews.com/breakingnews/ci_22380751/california-high-speed-rail-cost-figures-coming-but
Posted:
01/15/2013 04:55:17 PM PST
Updated:
01/15/2013 05:55:11 PM PST
More
than four years after California voters approved a bullet train, the
biggest project in state history, sealed envelopes containing the actual
cost for the first leg of the high-speed rail line will finally be
hand-delivered to state offices this week.
But you won't see the
bid prices yet -- and neither will the officials planning the project.
They'll be filed away in sealed containers, with the supporting
documents locked up in fireproof cabinets.
Five major firms Friday
will submit their final bids to build the first 29 miles of train track
in the
Central Valley, an eagerly anticipated milestone as it will
provide the first gauge on whether the project is on pace to meet its
$69 billion budget and actually be completed.
But bullet train
officials say they will keep the price portion of the bids sealed in
separate envelopes, like at the Oscars, while they analyze the quality
of the proposals. That process, already delayed from November, could
take another two months and is meant to keep state officials from being
biased toward the firms with the cheapest bids.
Supporters point out that the practice is common for big projects around the nation.
"This
is a major milestone in moving high-speed rail forward and getting
underway this summer," Jeff Morales, CEO of the California High-Speed
Rail Authority, said in an emailed statement. "It is the industry
standard in design-build projects to open bid prices following initial
evaluations as not to skew the process. We are working hard to secure the best possible value for taxpayers."
But
some outsiders are questioning why the state is taking so long to look
at the price, particularly with so many taxpayer dollars on the line and
a groundbreaking just months away.
"The process is supposed to
be transparent," said state Sen. Mark DeSaulnier, D-Concord, chairman of
the Senate's transportation committee. "Once the bid is in, it's in the
public domain, and the public needs to (be able to see) what the bids
look like, especially on a project like this."
The rail authority
has budgeted $1.2 billion to $1.8 billion for the project's initial leg
between Madera and Fresno. But the actual prices submitted by firms will
prove whether that estimate is accurate -- and could set a precedent
for whether the $69 billion estimate is off the mark, as skeptics claim.
The
state does not have room to spare, possessing less than a fifth of the
money needed to build the full San Francisco-to-Los Angeles rail line.
Rail authority officials are going to great lengths to prevent prematurely revealing the bids.
According
to a 161-page instruction book given to the contractors, the detailed
price estimates must be "submitted in a sealed container" separate from
the rest of the proposal. Next to it must be another sealed envelope
with just one page displaying the price tag.
The supporting
documents that back up the price figures then must be submitted "in a
locked fireproof cabinet" and stored somewhere secure, "with the key
held only by the contractor." If any of the firms' proposals don't meet
the rail authority's quality standards, their envelopes with the actual
bids won't ever be opened.
The firms offering the best price stand
the best chance. To determine which of the five final firms are awarded
the five-year contract in June, the companies will receive a score
based 70 percent on cost and 30 percent on quality.
Each of the
finalists, announced last year, are joint ventures, with several of the
construction companies and design firms based as far away as Spain and
Sweden and as close as California, Nebraska and Texas.
Construction experts say the strategy to look at cost last is common for so-called "design-build" projects that require firms to come up with many of their own building plans. The federal transit and highway administrations use this tactic.
"It's
totally appropriate not to look at the price (first) and totally
appropriate to look at the technical aspect of it first," said Ken
Gibbs, a Los Angeles-based mediator on construction disputes and
co-author of a book on California construction law. "You may wind up
comparing apples to oranges if you're only looking at price."
Still,
bullet train opponents and open government advocates wonder what the
harm would be in simply releasing just the cost figures without linking
the numbers to the companies.
Terry Francke, general counsel for
the open government group Californians Aware, likened it to a house
hunter looking for quality and location first and worrying about the
price later.
"I don't think they're going to gain anything from
not opening the bids," agreed civil engineer Aaron Fukuda, who leads a
Central Valley group aimed at keeping the rail authority accountable.
It's another indication, he said, that the project "hasn't been very
well planned out."
More
than four years after California voters approved a bullet train, the
biggest project in state history, sealed envelopes containing the actual
cost for the first leg of the high-speed rail line will finally be
hand-delivered to state offices this week.
But you won't see the bid prices yet -- and neither will the officials planning the project. They'll be filed away in sealed containers, with the supporting documents locked up in fireproof cabinets.
Five major firms Friday will submit their final bids to build the first 29 miles of train track in the
Central Valley, an eagerly anticipated milestone as it will provide the first gauge on whether the project is on pace to meet its $69 billion budget and actually be completed.
But bullet train officials say they will keep the price portion of the bids sealed in separate envelopes, like at the Oscars, while they analyze the quality of the proposals. That process, already delayed from November, could take another two months and is meant to keep state officials from being biased toward the firms with the cheapest bids.
Supporters point out that the practice is common for big projects around the nation.
"This is a major milestone in moving high-speed rail forward and getting underway this summer," Jeff Morales, CEO of the California High-Speed Rail Authority, said in an emailed statement. "It is the industry standard in design-build projects to open bid prices following initial evaluations as not to skew the process. We are working hard to secure the best possible value for taxpayers."
But some outsiders are questioning why the state is taking so long to look at the price, particularly with so many taxpayer dollars on the line and a groundbreaking just months away.
"The process is supposed to be transparent," said state Sen. Mark DeSaulnier, D-Concord, chairman of the Senate's transportation committee. "Once the bid is in, it's in the public domain, and the public needs to (be able to see) what the bids look like, especially on a project like this."
The rail authority has budgeted $1.2 billion to $1.8 billion for the project's initial leg between Madera and Fresno. But the actual prices submitted by firms will prove whether that estimate is accurate -- and could set a precedent for whether the $69 billion estimate is off the mark, as skeptics claim.
The state does not have room to spare, possessing less than a fifth of the money needed to build the full San Francisco-to-Los Angeles rail line.
Rail authority officials are going to great lengths to prevent prematurely revealing the bids.
According to a 161-page instruction book given to the contractors, the detailed price estimates must be "submitted in a sealed container" separate from the rest of the proposal. Next to it must be another sealed envelope with just one page displaying the price tag.
The supporting documents that back up the price figures then must be submitted "in a locked fireproof cabinet" and stored somewhere secure, "with the key held only by the contractor." If any of the firms' proposals don't meet the rail authority's quality standards, their envelopes with the actual bids won't ever be opened.
The firms offering the best price stand the best chance. To determine which of the five final firms are awarded the five-year contract in June, the companies will receive a score based 70 percent on cost and 30 percent on quality.
Each of the finalists, announced last year, are joint ventures, with several of the construction companies and design firms based as far away as Spain and Sweden and as close as California, Nebraska and Texas.
Construction experts say the strategy to look at cost last is common for so-called "design-build" projects that require firms to come up with many of their own building plans. The federal transit and highway administrations use this tactic.
"It's totally appropriate not to look at the price (first) and totally appropriate to look at the technical aspect of it first," said Ken Gibbs, a Los Angeles-based mediator on construction disputes and co-author of a book on California construction law. "You may wind up comparing apples to oranges if you're only looking at price."
Still, bullet train opponents and open government advocates wonder what the harm would be in simply releasing just the cost figures without linking the numbers to the companies.
Terry Francke, general counsel for the open government group Californians Aware, likened it to a house hunter looking for quality and location first and worrying about the price later.
"I don't think they're going to gain anything from not opening the bids," agreed civil engineer Aaron Fukuda, who leads a Central Valley group aimed at keeping the rail authority accountable. It's another indication, he said, that the project "hasn't been very well planned out."
Fighting for Change In LA
http://citywatchla.com/8box-left/4353-fighting-for-change-in-la
Written by Teresa Vallejo, 15 Jan 2013
STRENGTH IN UNITY … A 1ST PERSON ACCOUNT - In 1996 I began working at the Parent Center of Wilmington Middle School.
I quickly learned how students suffer from asthma, respiratory
deficiencies, malnourishment, cancer and autism. Many of these poor
health conditions are linked to the pollution and poverty of the area.
I decided to join the Coalition for Clean & Safe Ports, hoping to help clean our air and reduce disease in my community. Over the past several years we have made huge progress. I believe these accomplishments were possible because so many of us came together, from residents and community-based organizations to port truck drivers, lawmakers and unions. Although it is a cliché to say there is strength in unity, in this case it was true.
Today we are fighting to change the conditions of LA Port truck drivers – and we are still unified.
We believe that everyone who works should be valued by their employer. Port trucking companies, however, take advantage of drivers and deny them the rights that other workers have. They are only concerned with their bottom line and how the company will benefit.
These companies must be supervised by labor, human rights and environmental agencies. Right now they do whatever they want in our communities. They park their trucks without complying with city regulations. They drive through streets that are not designated truck routes, which puts residents in danger.
It is not the drivers who are at fault for these violations – they are following company orders.
Some port truck drivers have told me they fear losing their jobs because they have been threatened if they question or don’t want to follow the instructions given by the company. Drivers do not have a say and even less of a vote when it comes to the workplace. Even so, they have stood up to demand their rights.
Things are starting to change, however, because of the courage of the drivers. Many of us are supporting them through protests, petition drives and phone banks – and we will continue to do so until drivers see the full benefits of clean trucks.
We want this not only for the drivers but for the families of Wilmington.
We know that educating our community about the fight at the ports will result in improvements in our community and our environment, and then we will have good green jobs that we can be proud of in our harbor area neighborhoods.
Metro to redesign screen options on TAP card vending machines with feedback from focus groups
http://thesource.metro.net/2013/01/15/metro-to-redesign-tap-card-vending-machines-with-feedback-from-focus-groups/
Posted
Metro recently eliminated paper tickets in favor of TAP cards – the reusable card stores passes and money. This cuts down on waste and makes buying and validating tickets easier. It will also be necessary for entering the turnstiles at all Metro Rail Stations, which are scheduled to be latched later this year.
As part of this process, Metro is updating the software on its TAP vending machines (TVMs) to make it easier for customers to purchase and reload TAP cards.
Recent focus groups of infrequent rail riders were conducted by Metro Research for the TAP group in both English and Spanish. The participants found that the current TVMs are difficult to use for first-time Metro riders (think tourists and event-goers as well as new riders). Participants said that the initial screen had too many options and was confusing. They also said it was not clear how much the fare cost and that a reduced fare for seniors and disabled riders was actually offered on the machines. They also said it wasn’t clear when they could travel at a reduced rate.
The focus groups also previewed a couple of alternatives for a redesigned TVM screen. The mock-ups were designed by Metro Signage, a part of Metro’s award-winning design studio. The focus groups saw the new design flow as less confusing, more intuitive and more user-friendly than the current screens. Follow-up focus groups will interact with the new software once it is loaded onto test TVMs at Metro headquarters.
What do you like or dislike about our current ticket vending machines? What would you like to see changed about them?
Maybe Metro actually listens, though they don't reply to us. They didn't ask me to be a part of a focus group as an infrequent rail rider, but I did send them an email telling them that they need clearer instructions on the Tap card vending machines, that is, after three of us tried to figure out how to buy a Metro ticket and were only able to do this when someone else in line was able to figure it out.
Agenda 21 Alert: Glenn Beck’s Words to Watch
http://la.streetsblog.org/
by Brad Aaron, Tuesday, January 15, 2013
Sure, we know the movement for “sustainable” transportation and development is a front for Agenda 21, a.k.a. The UN Plot to End Private Property in the United States. But what to do?
As with any battle, the first step is identifying the enemy. Fortunately (and none too soon), Glenn Beck has published a “comprehensive list of key words and phrases that are often used at the local level when discussing Agenda 21 related initiatives.”
You no doubt know the biggies like “Climate Change,” “Global Warming,” and “Prosperity.” Here are less obvious dog-whistle terms to listen for at your next “town council” or “planning commission” meeting:
Greenways, High Speed Rail, Land Use Policies, Livable communities, Livable Communities, Local, Metropolitan Planning Organizations (this one is also kind of a biggie, actually), Mixed Use Development, Multi-Use Dwellings, Open Space, Parking Policy, Regional, Resilient Cities, Responsible development, Safe Routes to Schools (!!), Smart growth, Sustainable development, Traffic calming, Transit Oriented Development (TOD), Transportation Justice, Vehicle Mileage Traveled Tax, Vibrant Neighborhoods, Vision, Walkable CommunitiesOther watchwords include “Choice,” “Communities,” “Consensus,” “Fair,” and ”Common good.”
Above all, remember this: If you are in a “public meeting” or “public forum” and you hear the word “Outcomes,” resist! Scream and shout and don’t let up until the UN agents abandon their plot!
Click through for brother Glenn’s complete list, and be sure to buy his new book — essential reading to thwart responsible, vibrant tyranny!
Today in Foreign Policy: American Interests Demand Walkable Communities
http://dc.streetsblog.org/2013/01/15/today-in-foreign-policy-american-interests-demand-walkable-communities/#more-79820
by Tanya Snyder, Tuesday, January 15, 2013
If you’ve had your head stuck inside street design manuals or engineering guides – if you’ve been thinking at the level of the bulb-out or the bollard – I’ve got a present for you.
A new day rises over the Capitol.
Doherty names inequality, economic depression, resource depletion, and natural disasters as “the four horsemen of the coming decades.” A big contributor to those four horsemen was the suburban experiment of the post-war period and its ongoing perpetuation. Doherty asserts that today, “the country’s economic engine is misaligned to the threats and opportunities of the 21st century.” More highways and subdivisions, in other words, aren’t going to make America prosperous and secure.
So walkable communities should be at the center of a redefinition of American economic policy, Doherty writes:
Economists from Bernanke to New York Times columnist Paul Krugman agree that the predominant factor driving longterm unemployment is weakness in aggregate demand. Fortunately, due to large-scale demographic shifts over the past 20 years, the United States is sitting astride three vast pools of it. It is now imperative to design a new economic engine to exploit this demand while restoring America’s fiscal health.
The first pool of demand is homegrown. American tastes have changed from the splendid isolation of the suburb to what advocates are calling the “five-minute lifestyle” work, school, transit, doctors, dining, playgrounds, entertainment all within a five minute walk of the front door. From 2014 to 2029, baby boomers and their children, the millennial generation, will converge in the housing marketplace seeking smaller homes in walkable, service-rich, transit-oriented communities. Already, 56 percent of Americans seek this lifestyle in their next housing purchase. That’s roughly three times the demand for such housing after World War II.
The motivations are common across the country. Boomers are downsizing and working longer, and they fear losing their keys in the car dependent suburbs. Millennials were raised in the isolated suburbs of the 1980s and 1990s, and 77 percent never want to go back. Prices have already flipped, with exurban property values dropping while those in walkable neighborhoods are spiking. Yet legacy federal policies from transportation funding to housing subsidies remain geared toward the Cold War imperative of population dispersion and exploitation of the housing shortage, and they are stifling that demand.To do all this, the U.S. has to shake up its outdated governing institutions, Doherty writes. “America’s domestic departments are designed to support an economic strategy that is now weakening the country.” We’re getting well above my pay grade here, but given what we’ve seen recently out of our current governing institutions, I’d say a change would be quite refreshing, thank you very much. A civilian Office of National Strategy? Works for me, though without some cooperation from Congress, it’s going to be awfully tough “to author a bold and uncompromising future that remains prosperous, secure, and sustainable.”
SR-710 Tunnel Public-Private Partnership (P3) Question
In Darwin Bondgraham's article: "Highway Robbery. How "public-private partnerships" extract profit from public infrastructure projects" [see http://www.710studysanrafaelneighborhoodposts.com/2013/01/by-darwin-bondgraham-novemberdecember.html], he writes the following:
It did not take long for things to unravel. The SR-91 toll lanes did not unclog what local traffic reporters referred to as the “Corona Crawl,” so state and local officials sought to expand nearby highways to ease worsening congestion and improve safety. When transportation offices announced the improvement plans, CPTC unexpectedly filed a lawsuit, citing a non-compete clause in their contract to build and operate the toll lanes. The people of California were legally blocked from improving their highways because it could reduce private profits. In 2003, the Orange County Transportation Authority was forced to purchase the SR-91 toll lanes for $208 million to put an end to the fiasco.
With regard to the above, how much control will Metro/Caltrans have over a P3 contract? Who will be assigned to read over the entire contract to determine what it really says and what specific language in it will affect future transportation projects in Los Angeles County? The transportation officials above didn't do a very good job at this.
Are Metro/Caltrans and the various supporters of the 710 tunnel so gung-ho to see the project come to fruition and the Beat the Canal people so scared that we may lose some port traffic that they will be willing to sign away future projects in Los Angeles Country? For example, will an extension of the Gold Line from South Pasadena to Cal State LA be allowed to be built since it would take away potential car users of the tunnel? Another example, would new or improved freight rail lines from the LA/Long Beach ports directly to either Victorville's Inland Port or to the western entrance to the High Desert be allowed to be built since such rail lines would take away potential truck use of the 710 Tunnel?
Also, will China be chosen for the "private" or the public-private partnership so that it won't ship their goods to other ports? Is that why Doug Failing is trying to sell the tunnel to China: http://www.710studysanrafaelneighborhoodposts.com/2013/01/is-metros-doug-failing-attempting-to.html ?
Of course, China, who is the greatest user by far of the LA/Long Beach ports, can decide not to be the "private" of the public-private partnership and also can if they wish, perhaps because it will be cheaper for them, to move more of their goods directly through the Panama Canal, bypassing the LA/Long Beach harbors. So less cargo coming into the ports equals fewer trucks in the 710 tunnel equals less profit for the "private" part of the P3. What would be in the P3 contract to still make this a good investment--perhaps, the taking over of the expense of the maintenance of the tunnel by LA County taxpayers?
In Darwin Bondgraham's article: "Highway Robbery. How "public-private partnerships" extract profit from public infrastructure projects" [see http://www.710studysanrafaelneighborhoodposts.com/2013/01/by-darwin-bondgraham-novemberdecember.html], he writes the following:
It did not take long for things to unravel. The SR-91 toll lanes did not unclog what local traffic reporters referred to as the “Corona Crawl,” so state and local officials sought to expand nearby highways to ease worsening congestion and improve safety. When transportation offices announced the improvement plans, CPTC unexpectedly filed a lawsuit, citing a non-compete clause in their contract to build and operate the toll lanes. The people of California were legally blocked from improving their highways because it could reduce private profits. In 2003, the Orange County Transportation Authority was forced to purchase the SR-91 toll lanes for $208 million to put an end to the fiasco.
With regard to the above, how much control will Metro/Caltrans have over a P3 contract? Who will be assigned to read over the entire contract to determine what it really says and what specific language in it will affect future transportation projects in Los Angeles County? The transportation officials above didn't do a very good job at this.
Are Metro/Caltrans and the various supporters of the 710 tunnel so gung-ho to see the project come to fruition and the Beat the Canal people so scared that we may lose some port traffic that they will be willing to sign away future projects in Los Angeles Country? For example, will an extension of the Gold Line from South Pasadena to Cal State LA be allowed to be built since it would take away potential car users of the tunnel? Another example, would new or improved freight rail lines from the LA/Long Beach ports directly to either Victorville's Inland Port or to the western entrance to the High Desert be allowed to be built since such rail lines would take away potential truck use of the 710 Tunnel?
Also, will China be chosen for the "private" or the public-private partnership so that it won't ship their goods to other ports? Is that why Doug Failing is trying to sell the tunnel to China: http://www.710studysanrafaelneighborhoodposts.com/2013/01/is-metros-doug-failing-attempting-to.html ?
Of course, China, who is the greatest user by far of the LA/Long Beach ports, can decide not to be the "private" of the public-private partnership and also can if they wish, perhaps because it will be cheaper for them, to move more of their goods directly through the Panama Canal, bypassing the LA/Long Beach harbors. So less cargo coming into the ports equals fewer trucks in the 710 tunnel equals less profit for the "private" part of the P3. What would be in the P3 contract to still make this a good investment--perhaps, the taking over of the expense of the maintenance of the tunnel by LA County taxpayers?
Comments
http://www.newyorker.com/reporting/2012/10/22/121022fa_fact_osnos
www.newyorker.com
As last year’s high-speed train crash in Wenzhou revealed, the scale of temptation for members of China’s government is unlike anything encountered in the West.
- Do we really want China to build the 710 Tunnel? http://www.710studysanrafaelneighborhoodposts.com/2013/01/is-metros-doug-failing-attempting-to.html
Gender and Metro ridership: more women ride than men, with some exceptions
http://thesource.metro.net/2013/01/15/gender-and-metro-ridership-more-women-ride-than-men-with-some-exceptions/
Posted
The above chart is based on Metro’s 2012 Customer Satisfaction Survey and focuses on the issue of ridership by gender. The gist of it: more women than men overall ride Metro although there are notable exceptions: higher-income riders tend to be male, as are riders with a car available to them.
Recently, Transportation Nation reported the latest data from the U.S. Census Bureau’s American Community Survey which revealed a gender gap in transit ridership: Although women make up 47 percent of the workforce, 50.5 percent of transit riders are women.
“Higher income riders tend to be choice riders who chose to ride Metro even though they have access to a car” said Jeff Boberg, of Metro’s Research Department. “We have also found out, through focus groups and other surveys, that women tend to factor personal security higher than men. We have also found that people who ride on Metro buses and trains feel safer on the transit system than those who don’t. This could at least partially explain the gender gap at higher incomes.”
A greater proportion of Metro riders are in the lower income brackets, which accounts for the overall female percentage of 52%, despite much lower percentages in the higher income ranges.
Election forum set for Pasadena City Council, Pasadena Unified School Board candidates
http://www.pasadenastarnews.com/breakingnews/ci_22378294/election-forum-set-pasadena-city-council-pasadena-unified
Posted:
01/15/2013 11:47:52 AM PST
Updated:
01/15/2013 12:02:14 PM PST
PASADENA - A public forum for candidates running for seats on Pasadena City Council and Pasadena Unified School Board has been set for 7 p.m. Thursday at Pasadena City College's Crevelling Lounge.
All candidates have been invited to the forum, organized by the political group ACT, which will be moderated by John Buchanan, former mayor of Sierra Madre.
The Pasadena Community Network will film the forum for rebroadcast over the following weeks.
The District 3 candidates include Ishmael Trone, John J. Kennedy and The Rev. Nicholas Benson.
The District 5 candidates are incumbent Victor M. Gordo and Israel Estrada.
Councilman Terry Tornek is running unopposed in District 7 and will not speak at the forum.
School board candidates in the newly re-drawn districts are: Kimberly Kenne and Dean Cooper in District 1; Guillermo Arce, Tyron Hampton, Ruben Hueso and Deirdra Duncan in District 3; Elizabeth Pomeroy and Stella Murga in District 5; Scott Phelps and Luis Carlos Ayala in District 7.
Comments Wanted by Mayor Bogaard on his draft letter to Metro
Mayor Bogaard is asking for comments on his draft letter to Metro as follows:
Note: Link to a copy of the draft letter:
http://www.slideshare.net/slideshow/embed_code/16008372
Message from Mayor Bogaard
Ladies and Gentlemen:
The following information relates to the Environmental Impact Report/Environmental Impact Study being launched by Metro regarding the SR710 extension.
Below is a link to a draft letter p repared to reflect the City Council's views on the SR710 alternatives for submission to Metro as directed at the December 10, 2012 Council meeting (video link below). My intention is to complete the letter this week, taking advantage of any comments that are received from members of the public through Thursday, January 17.
BILL BOGAARD
Mayor
Here to his web page for another copy of the letter, a video of the city council meeting and COMMENTS regarding his draft > > > http://www.ci.pasadena.ca.us/SR710/
Mayor Bogaard is asking for comments on his draft letter to Metro as follows:
Note: Link to a copy of the draft letter:
http://www.slideshare.net/slideshow/embed_code/16008372
Message from Mayor Bogaard
Ladies and Gentlemen:
The following information relates to the Environmental Impact Report/Environmental Impact Study being launched by Metro regarding the SR710 extension.
Below is a link to a draft letter p repared to reflect the City Council's views on the SR710 alternatives for submission to Metro as directed at the December 10, 2012 Council meeting (video link below). My intention is to complete the letter this week, taking advantage of any comments that are received from members of the public through Thursday, January 17.
BILL BOGAARD
Mayor
Here to his web page for another copy of the letter, a video of the city council meeting and COMMENTS regarding his draft > > > http://www.ci.pasadena.ca.us/SR710/
This New Hybrid Train Cuts Energy And Emissions By 25%
http://www.fastcoexist.com/1681152/this-new-hybrid-train-cuts-energy-and-emissions-by-25#1
("In Germany, a new train with a system that uses the energy from braking is making rail travel even more efficient than it already was.")
There is a lot of debate
about whether rail really is greener than air or car travel. Some
researchers have said the environmental damage caused by railway
construction could offset the benefits, and that ridership needs to hit
relatively high levels--and encourage switching from other modes--before
the costs are worth paying. Still, on a per-passenger CO2-per-mile
basis, trains generally do better than the rest. And, it seems likely that trains will make faster efficiency improvements than airlines (the latter’s emissions targets stretch well into the century).
http://www.fastcoexist.com/1681152/this-new-hybrid-train-cuts-energy-and-emissions-by-25#1
("In Germany, a new train with a system that uses the energy from braking is making rail travel even more efficient than it already was.")
There is a lot of debate
about whether rail really is greener than air or car travel. Some
researchers have said the environmental damage caused by railway
construction could offset the benefits, and that ridership needs to hit
relatively high levels--and encourage switching from other modes--before
the costs are worth paying. Still, on a per-passenger CO2-per-mile
basis, trains generally do better than the rest. And, it seems likely that trains will make faster efficiency improvements than airlines (the latter’s emissions targets stretch well into the century).Would More Drivers Use Mass Transit if It Mimicked Private Cars?
http://www.theatlanticcities.com/commute/2013/01/would-more-drivers-use-public-transit-if-it-mimicked-private-cars/4391/
Emily Badger, January 14, 2013
In concept, an automated PRT vehicle would hold four people or fewer, mimicking the private, quiet ride of a car. Relative to all of our existing alternatives, there’d be very little emissions, no traffic congestion, no loud teenagers or offensive odors. It’s the kind of public transit – again, in theory – that holdouts in private single-occupancy cars on the highway might actually be willing to ride.
Researchers first began to advocate the concept in the 1960s (around the time of related monorail enthusiasm). But the expense always overwhelmed any serious efforts to build these things. The University of West Virginia in Morgantown has had a related system since the 1970s. O'Hare International Airport in Chicago floated one two decades later to no avail. "That was a big setback for PRT folks," says Wayne Cottrell, an associate faculty associate professor of engineering at National University in San Diego.
But the idea is still kicking around today with some renewed momentum, in part because PRT might be built more cheaply today than it could have been in the 1960s, and because it meets our more modern demand for energy efficiency. Futuristic pod cars might also be the solution that destigmatizes public transit for drivers who fear its unreliability. Advocates also, finally, have a few actual examples of its application: Heathrow Airport in the U.K. opened a PRT system in the summer of 2011, and the built-from-scratch supposedly net-zero community of Masdar City in the United Arab Emirates is planned around one as well.
"The concept was originally germinated as an alternative to the auto," Cottrell says. "Public transit was seen as being big and heavy and losing money, and unreliable. And we wanted something that would be more like the car, but that would be automated and safer."
On a PRT system, you’d hop into your own pod, with one arriving every minute or even less at a station on a designated track. You could share one as you would a taxi, with someone heading to the same destination. Or, you’d ride it alone like a car. You’d then direct the vehicle to a specific destination within the system, to which it would travel without making any stops in between (and without fighting normal congestion). It would be almost like stepping into an elevator and pressing a button to the sixth floor. “But even an elevator isn’t necessarily personalized,” Cottrell says. So picture an elevator that makes no stops to collect anyone else on your way.
Everything about this scheme mirrors the personalized experience of a private car, on common public infrastructure like a set of train tracks.
"That was the original idea," Cottrell says. "Advocates have stuck to that over the decades: This is a great idea, we just need to convince somebody with money to invest in this."
Relative to building a new Bus Rapid Transit system, or simply staging more buses on an existing road, PRT would clearly be more expensive. But compare it to alternatives like the subway, and it looks a little less like a stretch. PRT could also be more efficient than driving four riders around in a 50-person bus.
"In really large cities, PRT probably won’t be successful because the demand is going to be too high and PRT won’t be able to handle moving a lot of people the same way a metro or subway can," Cottrell says. "But in smaller to medium cities, or in neighborhoods, connecting to the El [in Chicago], that’s where a PRT is going to come in most useful."
Simulations of the idea in European cities suggest that a sizable share of drivers – sometimes 10 percent of more – might shift to the mode, if it existed. Perhaps this is what we need to do to take more cars off the road: build more public transit that tricks people into feeling like they're
Transit group: Large majorities support public transportation
http://thehill.com/blogs/transportation-report/public-transit/276981-transit-group-large-majorities-support-public-transportation
By Keith Laing - 01/14/13
The poll result was released as part of the Washington, D.C.-based
APTA’s “State of Public Transportation.” It comes as Congress is gearing
up to consider a new Passenger Rail Investment and Improvement Act
(PRIIA), which includes, among other things, funding for Amtrak.
APTA’s
findings were focused specifically on public transportation, but the
group said the numbers showed support for intra-city railways and buses
was overwhelming.
“Eighty-one percent of respondents value
public transit’s affordable mobility; 79 percent believe public
transportation offers opportunity for every segment of the population;
while 76 percent of respondents favor increased public transit funding
to decrease our dependence on foreign oil and to improve America’s
economic security,” APTA said in a news release touting its polling.
Strip Down and Ride the Subway
http://www.theatlanticcities.com/commute/2013/01/strip-down-and-ride-subway/4392/
Postcard
Strip Down and Ride the Subway
Amanda Erickson
Jan 14, 2013
The mission started as a small prank with seven guys and has grown into an international celebration of silliness, with dozens of cities around the world participating each year. The idea behind No Pants is simple: Random passengers board a subway car at separate stops in the middle of winter without pants. The participants do not behave as if they know each other, and they all wear winter coats, hats, scarves, and gloves. The only unusual thing is their lack of pants.
(Go to the url above to see more photos.)
Research: BRT can truly be pricier than LRT
http://www.railwayage.com/index.php/blogs/lyndon-henry/research-study-brt-can-truly-be-pricier-than-lrt.html
Written by Lyndon Henry, Monday, January 14, 2013
In my last article (Research study: New light rail projects beat BRT), I summarized the general results of a research study, co-authored with my colleague Dave Dobbs, that I presented in mid-November to the 12th National Light Rail Transit Conference in Salt Lake City, a confab sponsored by the Transportation Research Board (TRB) and American Public Transportation Association (APTA).
As the article reported according to our study, "An array of new light rail transit (LRT)
projects came out ahead of new bus rapid transit (BRT) projects ...."
For example, for what we designated as "Minimal" installation projects
(less than 5% of route length involving heavy civil works), the average
cost for LRT came to $51.8 million/mile vs. $30.8 million/mile for BRT.
This seems to have raised some eyebrows. Originally, I'd intended to
focus on some other interesting details and findings from our study, but
for this installment in the saga, I'll focus a bit on the criticism.
How come BRT, which is touted as "just like light rail, but cheaper" —
supposedly down to a tenth of the cost per mile — comes out so expensive
in our study?Why? Because we focused on real BRT, and rejected the notion of "BRT Lite" — how can something running in mixed traffic like a regular bus be classified as "rapid transit," whereas light rail, much of which runs on reservations and private right-of-way, is not considered "rapid transit" in similar fashion?
We decided that , if you're going to compare two basically "guideway" systems, then you should compare the "guideway" portions, at least in terms of cost, which is what we did. We omitted systems that did not run on significant "guideway" alignments, and discounted the segments where buses departed from the "guideway" and ran basically just as buses on the street in mixed traffic. Lots of express and limited-stop bus systems do that, but I would not call them "BRT."
In essence, we fired a shot at what seems a kind of creeping deception (though we didn't call it that) — relabeling more or less ordinary bus operations as "rapid transit." This seems to be fooling some decision makers, and tries to fool the public. But I think the public will simply be somewhat disgusted and distrustful when they're promised any more such "rapid transit."
In any case, when you follow our methodology — accepted by the peer review and not challenged in the presentation — and price out the cost of just the "true" BRT mileage, you get the figures we presented.
Eyebrows went even higher at the average costs we found for what we called "substantial" installation projects (5% or more of route length involving heavy civil works). In this comparison, LRT came out at $79.8 million/mile, BRT at a whopping $451.7 million/mile. We were asked to identify a single project costing that much.
That's easy — the Boston Piers Transitway BRT (Silver Line), which had a cost of nearly $800 million/mile in 2012 dollars. Hey, people — it's all in a tunnel, under downtown Boston. OK?
When you average this with the $113.1 million/mile cost of Pittsburgh's West Busway — of which a significant segment runs in a refurbished tunnel — you get a pretty darn high average cost for these types of projects.
In my next article, I'll focus on more details from our study — including some of the amazing ridership gains we found for LRT, and more insight into the disparity between the relatively rigorous federal scrutiny of LRT projects vs. the comparatively facile approval of new BRT starts.
California high-speed rail plan is simply a Field of Dreams
http://www.bakersfieldcalifornian.com/opinion/hot-topics/x2088955699/California-high-speed-rail-planis-simply-a-Field-of-Dreams
By KEVIN McCARTHY and JEFF DENHAM
Monday, Jan 14 2013
A Dec. 14 editorial in The Sacramento Bee called our expressed concerns regarding the viability and cost of California's high-speed rail project "baffling." While we welcome a public debate over the merits of high-speed rail, our position is hardly "baffling" -- it reflects the concerns of our local communities and constituents.
Over the past few years, as the business plan has inflated and funding
estimates have swollen, the most recent plan by the California
High-Speed Rail Authority has been panned across the board by economic
and transportation experts alike. The California state auditor said the
plan was "increasingly risky." The Peer Group given the specific task of
reviewing the project advised the Legislature against approving funding
for construction, deeming the business model incomplete. The
Legislative Analyst's Office had similar concerns.
The most recent cost estimate of high-speed rail in California comes in at nearly $70 billion. That number shifted from $33 billion in 2008 to $98.5 billion in 2011, and the project's completion date keeps getting pushed into the future. The High-Speed Rail Authority estimates between 29.6 million and 43.9 million riders per year in 2040. In 2011, Amtrak reported it had over 30 million passengers nationally -- its highest total ever. When you look at the actual numbers, only a fraction of that number take a train or a plane in our areas currently. Do we really believe that California alone will surpass current estimates nationally?
Just as disconcerting is the project's funding -- really, the lack thereof.
A high-speed rail project this elaborate requires known and reliable funding sources, and both private and public investment in order to construct and operate it. When this plan was sold to Californians, we were told the private sector would invest in it because this project would be profitable. Private investment will always seek a good opportunity, and the absence of any committed private funding in this case should be a red flag that this project is simply not a good investment.
The current plan -- at the smallest level -- asks for an additional $38 billion from the federal government. This past year alone, California's deficit soared to $16 billion, the federal government has run over $1 trillion deficits for the past four years, and the national debt continues to exceed $16 trillion. We believe it is unrealistic for the California High-Speed Rail Authority to expect to receive even a fraction of the federal funds it is relying on to complete this project.
Rather than trying to force a square peg into a round hole, we believe it is time to cut our losses and focus on deficit reduction and improving current infrastructure. Californians expect us to get our fiscal house in order. Few things could baffle California taxpayers more than continuing to throw billions of dollars at a Field of Dreams-type project, potentially leaving all of us on the hook for a bad investment and saddling our future generations with the burden of paying off the costs of constructing and operating high-speed rail.
Rep. Kevin McCarthy, R-Bakersfield, represents California's 23rd Congressional District. Rep. Jeff Denham, R-Turlock, represents California's 10th Congressional District. They wrote this for The Sacramento Bee.
The most recent cost estimate of high-speed rail in California comes in at nearly $70 billion. That number shifted from $33 billion in 2008 to $98.5 billion in 2011, and the project's completion date keeps getting pushed into the future. The High-Speed Rail Authority estimates between 29.6 million and 43.9 million riders per year in 2040. In 2011, Amtrak reported it had over 30 million passengers nationally -- its highest total ever. When you look at the actual numbers, only a fraction of that number take a train or a plane in our areas currently. Do we really believe that California alone will surpass current estimates nationally?
Just as disconcerting is the project's funding -- really, the lack thereof.
A high-speed rail project this elaborate requires known and reliable funding sources, and both private and public investment in order to construct and operate it. When this plan was sold to Californians, we were told the private sector would invest in it because this project would be profitable. Private investment will always seek a good opportunity, and the absence of any committed private funding in this case should be a red flag that this project is simply not a good investment.
The current plan -- at the smallest level -- asks for an additional $38 billion from the federal government. This past year alone, California's deficit soared to $16 billion, the federal government has run over $1 trillion deficits for the past four years, and the national debt continues to exceed $16 trillion. We believe it is unrealistic for the California High-Speed Rail Authority to expect to receive even a fraction of the federal funds it is relying on to complete this project.
Rather than trying to force a square peg into a round hole, we believe it is time to cut our losses and focus on deficit reduction and improving current infrastructure. Californians expect us to get our fiscal house in order. Few things could baffle California taxpayers more than continuing to throw billions of dollars at a Field of Dreams-type project, potentially leaving all of us on the hook for a bad investment and saddling our future generations with the burden of paying off the costs of constructing and operating high-speed rail.
Rep. Kevin McCarthy, R-Bakersfield, represents California's 23rd Congressional District. Rep. Jeff Denham, R-Turlock, represents California's 10th Congressional District. They wrote this for The Sacramento Bee.
Highway Trust Fund: Pilot Program Could Help Determine The Viability Of Mileage Fees For Certain Vehicles
U.S. Government Accountability Office
http://www.gao.gov/assets/660/650863.pdf
A
Compendium Of Best Practices And Lessons Learned For Improving Local
Community Recovery From Disastrous Hazardous Materials Transportation
Incidents
Hazardous Materials Cooperative Research Program
http://onlinepubs.trb.org/onlinepubs/hmcrp/hmcrp_rpt_009.pdf
Hazardous Materials Cooperative Research Program
http://onlinepubs.trb.org/onlinepubs/hmcrp/hmcrp_rpt_009.pdf
Burbank Airport Studying Land Use, Transit Options
Study includes identifying use for former Lockheed Skunk Works property.
http://scvnews.com/2013/01/14/burbank-airport-studying-land-use-transit-options/
Press Release, Monday, Jan. 14, 2013
The Burbank-Glendale-Pasadena Airport Authority has voted to approve
retaining two firms, AECOM, Inc. and STV, Inc., to conduct studies
focusing on improving multi-modal transit connections to and from
Burbank Bob Hope Airport and to begin planning for potential land uses
in and around the Airport, including the B-6 property, site of the
former Lockheed Martin “Skunk Works.”
The Airport Land Use Working Group (ALUWG), comprising staff members from both the Airport and the City of Burbank, will provide oversight and direction for the studies.
The technical studies represent the next steps in a joint Authority and City process to develop a consensus plan for the future of Bob Hope Airport. The studies’ scopes include:
1. Engaging in a consensus-based planning process with community involvement to identify future transportation options.
2. Assisting the Authority in evaluating and integrating concurrent transportation planning activities, such as improving connections to the North Hollywood Red Line Station and to the Gold Line in Pasadena.
3. Assisting the City in identifying acceptable land use development opportunities at the Airport and nearby rail stations.
4. Developing strategies that minimize environmental impacts of Airport-related development.
In 2011 both the Authority and the City agreed to extend a 2005 Development Agreement until March, 2015. Extending the Agreement allows the City and Authority time to work closely with the community to explore options for future use of the land in and around the Airport and the transit systems serving the Airport.
The preliminary schedule calls for the public involvement in the studies to begin next spring. The selected firms, AECOM, Inc. and STV, Inc., have extensive transportation and land use planning experience. The studies will take approximately fourteen months to complete at a cost of $4.6 million, being covered through a grant from the federal government with additional funding from the Los Angeles County Metropolitan Transportation Authority.
The Airport Land Use Working Group (ALUWG), comprising staff members from both the Airport and the City of Burbank, will provide oversight and direction for the studies.
The technical studies represent the next steps in a joint Authority and City process to develop a consensus plan for the future of Bob Hope Airport. The studies’ scopes include:
1. Engaging in a consensus-based planning process with community involvement to identify future transportation options.
2. Assisting the Authority in evaluating and integrating concurrent transportation planning activities, such as improving connections to the North Hollywood Red Line Station and to the Gold Line in Pasadena.
3. Assisting the City in identifying acceptable land use development opportunities at the Airport and nearby rail stations.
4. Developing strategies that minimize environmental impacts of Airport-related development.
In 2011 both the Authority and the City agreed to extend a 2005 Development Agreement until March, 2015. Extending the Agreement allows the City and Authority time to work closely with the community to explore options for future use of the land in and around the Airport and the transit systems serving the Airport.
The preliminary schedule calls for the public involvement in the studies to begin next spring. The selected firms, AECOM, Inc. and STV, Inc., have extensive transportation and land use planning experience. The studies will take approximately fourteen months to complete at a cost of $4.6 million, being covered through a grant from the federal government with additional funding from the Los Angeles County Metropolitan Transportation Authority.
HIGHWAY ROBBERY
BY DARWIN BONDGRAHAM | November/December 2012
http://dollarsandsense.org/archives/2012/1112bondgraham.html
It did not take long for things to unravel. The SR-91 toll lanes did not unclog what local traffic reporters referred to as the “Corona Crawl,” so state and local officials sought to expand nearby highways to ease worsening congestion and improve safety. When transportation offices announced the improvement plans, CPTC unexpectedly filed a lawsuit, citing a non-compete clause in their contract to build and operate the toll lanes. The people of California were legally blocked from improving their highways because it could reduce private profits. In 2003, the Orange County Transportation Authority was forced to purchase the SR-91 toll lanes for $208 million to put an end to the fiasco.
In 2004, California’s state legislature halted the experiment in privatizing highways. But that did not stop other states from pushing forward with privatization. In Virginia and Texas, several major privatized freeways were built in the 2000s. Then, in 2009, things came full circle. California once again authorized so-called public-private partnerships to procure highways and other public goods. Although privatization of transportation projects has a tarnished record, owing much to California’s costly experiments over a decade ago, all across the United States major highway and other infrastructure upgrades are once again being handed over to private investors, now under the moniker of “public-private partnerships,” or P3.
P3 is at least three things:
It is a rebranding of privatization. The phrase purposefully evokes a win-win scenario involving equal “partners” working toward a common goal. Government leaders have been sold this new kind of privatization as a solution to declining tax revenues and borrowing capacity, while private companies claim to be offering their expertise and capital in a spirit of public service.
It is the result of a long ideological campaign against public-sector unions and “big government,” which conservative think tanks, pundits, and politicians blame for growing deficits and crumbling infrastructure. This worldview, meanwhile, hails private companies and the private profit motive as the bearers of efficiency and fiscal discipline.
Finally, P3 is obviously a money-making opportunity. It is propelled by an infrastructure-industrial complex composed of global construction corporations, investment banks, private-equity firms, and elite law firms organized as vertically integrated consortiums. Allied through their own trade associations, they are actively pressing for new laws to expand the types of public infrastructure from which they can extract profits, and in recent years they have been quietly succeeding.
Privatization of transportation infrastructure under the P3 model is different from what we usually think of as privatization. Most people define privatization as the actual private ownership of roads, bridges, ports and other goods used by the public. The P3 version of privatization stops short of allowing investors to legally own a highway, instead offering private companies varying degrees of monopoly control (depending on the deal) over different parts of a project. Under the P3 model, investors can exercise greater control over the design, financing, construction, and maintenance of a public good, allowing them to extract profits from public infrastructure, without actually needing to literally own the asset.
---------------------------------------------------------------------------------------------------------------------------
South Bay Expressway:
PRIVATE INTEREST:
Macquarie Infrastructure
(originally Parsons-Brinckerhoff)
TOTAL COST:
$658 million
PRIVATE FINANCING:
•Bank debt: $340 million
•Investor equity: $130 million
PUBLIC FINANCING
•TIFIA loan: $140 million
•Donated right of way: $48 million
San Diego’s South Bay Expressway (SBX) was the second privatized highway authorized for construction in the United States after California passed the nation’s first P3 legislation in 1989. The SBX was to be financed, built, maintained, and operated under a 35-year contract between California and the Parsons Brinckerhoff company.
Although P3s are said to transfer risks from the public to a private partner, which supposedly can better manage risk and reduce costs, the SBX is an example of how P3s create and multiply risks. Parsons Brinckerhoff spent much of its time fighting environmental and community opposition to the SBX, finally selling the nearly finalized plans to Macquarie Infrastructure Partners, an Australian investment bank, in 2003. During construction Macquarie also quarreled with the contractors, Fluor and URS Corp., two global construction giants, over cost overruns and delays. To make matters worse, the housing bubble was already showing signs of bursting in southern California; few of the homes planned along the toll highway were ever built, leading to far fewer drivers along the route than earlier projections.
No sooner did the toll road open to traffic than the Macquarie shell company that legally owned the road filed for bankruptcy, due to continuing disputes with construction contractors who had sought to recoup their losses, as well as the lower-than-expected traffic. This ended up costing the project’s private creditors and the federal government tens of millions of dollars. As a result of the bankruptcy, the U.S. Department of Transportation was forced to cut its claims against the company by about $80 million, a huge “haircut” for taxpayers.
---------------------------------------------------------------------------------------------------------------------------
A major source of profit is the suppression of market competition. The typical bidders on a P3 project are consortiums that include global construction companies, investment banks, private-equity firms, and engineering firms. Together, they can fulfill the design, finance, construction, operations, and maintenance obligations that P3 contracts require. Unlike the traditional infrastructure procurement process, the P3 model eliminates competitive bidding from later phases of a project. The consortiums only have to compete against a handful of other multi-billion dollar construction firms and investment banks to secure the initial contract for the entire project. The size and complexity of P3 contracts means that many smaller, more specialized companies are eliminated from bidding. P3 contracts therefore usually have few bidders and, as a result, a higher price tag.
By unifying a project under a single contract, moreover, P3 also provides significant authority to the private consortium to cut its own costs. P3 contractors can squeeze higher profits out of a project by altering its design, by using non-union subcontractors, or by paying lower wages.
Another source of profits derives from the byzantine financial arrangements at the heart of a typical P3 contract. Unlike traditional infrastructure projects, P3s involve the use of private equity and debt, along with public loan subsidies, to construct a highway. P3 projects depend on several sources of private financing. The so-called “equity” investment, usually drawn from the consortium partners’ own internal operating funds, gives them a small stake in a project’s construction phase. P3 proponents say that, with their own money at risk, the private partners have an incentive to deliver a project on time and below cost.
The main source of project financing, however, comes from investment banks that lend to the consortium partners. P3 proponents claim that this private financing source is a solution to the budgetary constraints of governments that face huge backlogs of deferred infrastructure investment. A recent Congressional Budget Office (CBO) report, however, shows the flaw in this argument: “The case is sometimes made that using funds from private capital markets to finance roads can increase the resources available to build, operate and maintain roads,” the report notes. “But the sources of revenues available to pay for the cost of a highway project —whether it uses the traditional financing approach or a public-private partnership—are the same: specifically, tolls paid by users or taxes collected by either the federal government or by state and local governments.”
The ultimate source of project financing, then, is always the public, either through tolls or taxes. Why then allow private banks, drawing from private capital markets, to serve as intermediaries? Private financing simply permits the insertion of the financial interests of investment banks and private-equity funds into the long-term wealth-producing potential of public infrastructure. By allowing private investors to fund the construction of a project, the state allows these parties to impose their monopolistic claims on future flows of tax or toll revenues.
Sources of risk include everything from changes in interest rates to labor strikes, and they can (and occasionally do) conspire to drive up a project’s cost. Proponents of the P3 model claim that, by handing a project’s finance, construction, and other phases over to a private consortium for a pre-determined price, the public transfers over these risks as well. The extra money the state must pay the P3 consortium—the private investors’ profits—are therefore justified because the private investors are now shouldering these risks. The state is said to obtain “value for money,” the value being less risk for an extra sum.
The P3 industry, however, has worked hard in recent years to make sure its members are, in fact, exposed to very little risk. For P3 projects built in California, Texas, Virginia, and Florida in the 1990s and early 2000s, industry profits were largely extracted from the public through tolls. Tolls, however, did not always produce the revenue necessary for the private companies to turn a profit. Several early P3 toll highways failed miserably after assumptions about traffic flows failed to pan out, causing bankruptcies, and leaving the public to foot much of the bill.
The South Bay Expressway in California, a private toll highway owned by the Australian investment bank Macquarie Capital, went bankrupt in 2010. A bankruptcy judge forced U.S. taxpayers who had subsidized the project with federal loans to take a 42% loss. The Camino Colombia Toll Road in Texas also went bankrupt after lower-than-expected traffic flows failed to produce toll revenues to repay investors. Camino Colombia was auctioned off in 2004. The road’s main creditor, John Hancock Life Insurance, purchased Camino Colombia for $12 million and then turned around and resold it to the Texas Department of Transportation the next year for $20 million.
Even though the public ended up footing much of the bill for failed toll-funded projects, the P3 industry’s lobbyists have pushed for a new, sure-thing revenue system. They have rewritten state laws in Alabama, Arizona, California, Florida, Georgia, Illinois, Louisiana, Oregon, and Texas to shift toward an “availability payment” model. Availability payments are akin to lease payments, whereby the state pays the private developer of a highway to maintain the road for public use. Rather than collecting tolls from drivers who use the route, the state pays the private developer directly from general state revenues collected through a gasoline tax or other taxes. Availability payments protect P3 developers against the risks associated with toll-road financing because the road’s owners no longer have to estimate future traffic flows, or rely on macro-economic trends beyond their control, like regional housing bubbles. They simply are guaranteed payments directly from the state over a span of several decades.
Although P3s are advertised as tapping the power of private capital markets to invest in public infrastructure, the reality is that P3 investors enjoy large public subsidies. For example, private companies building P3 highway projects now routinely expect states to grant them authority to issue qualified private activity bonds (PABs). Unlike most lending in private capital markets, interest payments on PABs are exempt from federal taxes (because the cash proceeds are expected to be put to use building goods with broad public utility, rather than projects that solely benefit private parties). Since the bonds are not taxed, they allow the borrower to obtain cash at less cost. This form of financing, then, is essentially a tax cut for the investment banks and corporations with the P3 contract. The U.S. Department of Transportation also routinely grants Transportation Infrastructure Finance and Innovation Act (TIFIA) loans to P3 developers. TIFIA loans provide companies with much cheaper interest rates and more flexible terms than anything available in the private capital markets—again because the public subsidizes them.
P3 companies, in short, are now virtually guaranteed returns on their investments. The shift away from tolls and the growing use of availability payments means P3 investors no longer need worry about traffic flows. Guaranteed lease payments, together with the low interest rates of federally subsidized loans and tax-exempt bonds they use to pay for construction, mean sure profits.
Meanwhile, P3 arrangements create a whole new set of risks for governments and the public. Complex contractual obligations, designed to protect private profits, hand over discretionary power to private companies while tying the hands of state officials. A recent report on P3s from the California Legislative Analyst Office notes that, by allowing private corporations to possess a financial interest in public infrastructure, the government incurs the “greater possibility for unforeseen challenges,” while its “flexibility” to respond to these challenges is limited.
----------------------------------------------------------------------------------------------------------------------------
Presidio Parkway:
PRIVATE INTEREST:
Hochtief: a German construction company operating nine privatized toll roads in Greece, Germany, Austria, and Chile. Hochtief also has contracts to build and operate 123 schools in Canada, Germany, Ireland and the UK, and to build and operate 18 police stations in Canada, examples of what the company calls “social infrastructure” development. Meridiam Infrastructure: a French private equity fund owned and operated by the Credit Agricole bank. Meridiam has “equity” stakes in private highways and railways in Canada, France, the UK, Poland, Slovakia, and Finland. In the United States Meridiam is behind the P3 North Tarrant Expressway toll road in Texas and the Port of Miami Tunnel in Florida.
PRIVATE FINANCING:
Investor equity: $44.5 million
TAX-EXEMPT (SUBSIDIZED) PRIVATE FINANCING:
Private activity bonds: $150 million
PUBLIC FINANCING:
IFIA loan: $150 million
In 2010, the outgoing Republican administration of Gov. Arnold Schwarzenegger moved fast to select a project intended to prove the merits of P3 development. They chose Presidio Parkway, a 1.6 mile stretch of road running from the edge of downtown San Francisco to the iconic Golden Gate Bridge.
When it was first planned by the state as a traditional design-bid-build project, Presidio Parkway had a price tag of $499 million. By switching to a P3 contract, under which a private partner would finance, build, operate, and maintain the road for 30 years, the up-front construction cost dropped to roughly $173 million. However, the state would have to make availability payments of at least $30 million a year for 30 years upon the road’s completion 2015. These availability payments are estimated to total between $1.1 and $1.4 billion, but no one can say exactly what they will cost the state because the actual payments must be calculated from a complex formula measuring the contractor’s compliance with a variety of performance measures.
Two state agencies opposed conversion of Presidio Parkway into a P3 project. Staff members of the California Transportation Commission (CTC), the state’s ultimate authority on infrastructure matters, complained that use of availability payments “would effectively establish and endorse a means of committing state transportation funds that bypasses state programming procedures designed to ensure statewide funding accountability and equity.” California’s Legislative Analyst Office (LAO) also opposed privatization of the roadway on these grounds. Most recently, the LAO analyzed the project’s financing, concluding that Presidio Parkway is probably costing taxpayers an extra $140 million as a P3.
The Professional Engineers in California Government, a union of state employees, filed suit to block the use of availability payments to finance the Presidio Parkway, calling the project “wasteful,” but a state judge ruled against the union.
--------------------------------------------------------------------------------------------------------------------------
Elite law firms shop around legislation for P3 authorization in numerous state capitals. For example, the Los Angeles law firm Nossaman, LLP, straightforwardly explains on its web site that, “our PPP model legislation offers local, regional, and state lawmakers a valuable blueprint for authorizing legislation.” A big slice of Nossaman’s income comes from advising private investors and construction companies bidding on P3 contracts, so the firm has a lucrative material stake in passing P3 laws in as many states as possible. With support from major P3 contractors, the American Legislative Exchange Council (ALEC), a conservative, pro-corporate organization focused on pushing “model legislation” in statehouses nationwide, is now backing public-private partnerships. The group has endorsed a model state law, the “Establishing A Public-Private Partnership (PPP) Authority Act,” introduced by a vice president of the Australian investment bank Macquarie Capital. Macquarie is a corporate member of ALEC.
Some current government officials speak frequently at industry conferences to promote P3. For example, in October 2012, José LuÃs Moscovich of the San Francisco Transportation Authority lectured attendees of the Bond Buyer’s West Coast Finance Conference about the Presidio Parkway road, privatized under a 30-year contract with the German construction company Hochtief and French investment bank Meridiam. Former government officials are also involved in P3 promotion, both working for private companies and think tanks. For example, Dale Bonner, head of the state Business, Trans-portation, and Housing Agency under ex-California governor Arnold Schwarzenegger, now works as the principal partner of Cal-Infra Advisers, Inc., a lobbyist and consultancy that works with P3 developers seeking contracts. Bonner also promotes P3 policy from his position as a senior advisor at the Milken Institute. The Reason Foundation, arguably the intellectual home of P3 privatization, helped write California’s first P3 law in 1989. Since 2009, its vice president for policy has sat on California’s Public Infrastructure Advisory Commission, the state board tasked with identifying highway projects to privatize. The Reason Foundation has also been a corporate member of ALEC.
P3 investors have even created their own national trade association, the National Council for Public Private Partnerships (NCPPP), which has developed “tool kits” for state legislators. The NCPPP also circulates a press kit that attempts to dissuade reporters from thinking that “when the private sector is involved... citizens will eventually have to pay more for services” or from asking whether “private companies take short cuts in providing services in order to increase pro?ts.” Existing trade groups like the American Road and Transportation Builders Association have supported P3 privatization by hosting events such as the annual Public-Private Partnerships in Transportation Conference, a national gathering of major contractors, law firms, banks, and lawmakers.
In spite of these barriers, privatization’s advocates have scored significant victories in Texas, Virginia, Florida, Illinois, and most recently California. In California, the Professional Engineers in California Government, a union of state engineers, sued to block conversion of the half-billion dollar Presidio Parkway into a billion-plus dollar P3 project. Even though the union’s legal argument was echoed by two state agencies, which doubted that California’s 2009 P3 law authorizes the use of availability payments, a judge ruled against the union, and allowed the project to proceed.
California’s Legislative Analyst Office (LAO) criticized transportation officials who approved Presidio Parkway’s P3 conversion, saying in a November 2012 report that privatization of the road likely cost taxpayers an extra $140 million, but this analysis went virtually unreported in regional newspapers. Besides the union and the largely toothless LAO, there has been no other opposition from the public or watchdog groups. As California officials plan to privatize as many as four more freeways in the Los Angeles area, there is little sign of organized resistance to these plans.
The Ohio Public Interest Research Group (PIRG) recently issued a study critical of plans to privatize the Ohio Turnpike, a 241-mile publicly owned and operated toll road, debunking the rationale that doing so would generate dollars to immediately invest in other state roadways. PIRG researchers are posing questions that similarly confront privatization plans in other states: If cost-savings measures can generate savings, why can’t the state introduce the same measures a private operator would? How might a contract with a private operator constrain the state’s ability improve parallel public roadways? What downsides might there be if motorists seeking to avoid the increased tolls end up crowding onto nearby roadways?
For whatever reason, though, organized opposition to public-private partnerships across state lines and on a national level, confronting the national infrastructure-industrial complex that P3 proponents have assembled, does not exist today. Opposition to privatization of infrastructure in the United States is piecemeal and inconsistent, so that P3 projects often proceed without any critical analysis.
Perhaps this is because of the relatively early and small scale of P3 projects, with only an estimated 377 ever completed in the United States, compared to tens of thousands of traditionally financed roads. Only a tiny fraction of transportation infrastructure in the U.S. has ever been handed over to private investors. The complexity of P3 deals may also explain the relative lack of opposition: contracts involve multiple bank creditors, private-equity investors, multiple legal and technical advisers, hundreds of pages of binding obligations, and strange formulas determining payments due over the term of a concession.
Finally, many officials and the public may be sold, at least partially, on the notion that the solution to government budget shortfalls is to tap private capital to build infrastructure. Whatever the reason may be, as various states move ahead with privatization plans for highways and other infrastructure, controversies are likely to erupt over the financial terms, new risks to the public, and the fact that P3s do not actually alleviate budget constraints, and may indeed exacerbate them.
BY DARWIN BONDGRAHAM | November/December 2012
http://dollarsandsense.org/archives/2012/1112bondgraham.html
In 1995, California granted a private company the
right to construct express toll lanes along the State Route 91 freeway
in Orange County, a region inhabited by millions, with some of the
heaviest traffic flows in the nation. This was the first modern
privatized highway in the United States. The California Private
Transportation Company (CPTC), a partnership of three corporations—Level
3 Communications, Granite Construction, Inc., and the French toll
operator Cofiroute SA—completed the project with $130 million in mostly
privately sourced money. To recoup this expense, and to make a profit,
CPTC was given a 35-year concession to operate the toll route. State
leaders promised that the private company would provide greater
efficiency and savings, and that the public would benefit from clear and
safe roads, even during a time of government budget constraints.
It did not take long for things to unravel. The SR-91 toll lanes did not unclog what local traffic reporters referred to as the “Corona Crawl,” so state and local officials sought to expand nearby highways to ease worsening congestion and improve safety. When transportation offices announced the improvement plans, CPTC unexpectedly filed a lawsuit, citing a non-compete clause in their contract to build and operate the toll lanes. The people of California were legally blocked from improving their highways because it could reduce private profits. In 2003, the Orange County Transportation Authority was forced to purchase the SR-91 toll lanes for $208 million to put an end to the fiasco.
In 2004, California’s state legislature halted the experiment in privatizing highways. But that did not stop other states from pushing forward with privatization. In Virginia and Texas, several major privatized freeways were built in the 2000s. Then, in 2009, things came full circle. California once again authorized so-called public-private partnerships to procure highways and other public goods. Although privatization of transportation projects has a tarnished record, owing much to California’s costly experiments over a decade ago, all across the United States major highway and other infrastructure upgrades are once again being handed over to private investors, now under the moniker of “public-private partnerships,” or P3.
P3 is at least three things:
It is a rebranding of privatization. The phrase purposefully evokes a win-win scenario involving equal “partners” working toward a common goal. Government leaders have been sold this new kind of privatization as a solution to declining tax revenues and borrowing capacity, while private companies claim to be offering their expertise and capital in a spirit of public service.
It is the result of a long ideological campaign against public-sector unions and “big government,” which conservative think tanks, pundits, and politicians blame for growing deficits and crumbling infrastructure. This worldview, meanwhile, hails private companies and the private profit motive as the bearers of efficiency and fiscal discipline.
Finally, P3 is obviously a money-making opportunity. It is propelled by an infrastructure-industrial complex composed of global construction corporations, investment banks, private-equity firms, and elite law firms organized as vertically integrated consortiums. Allied through their own trade associations, they are actively pressing for new laws to expand the types of public infrastructure from which they can extract profits, and in recent years they have been quietly succeeding.
A New Kind of Privatization
To understand the P3 privatization model, it is best to start with the basics of the traditional public model of infrastructure development. In the United States, this is known as the “design-bid-build” process. Take, for example, a state highway. State engineers usually design a project, sometimes by contracting out work to engineering firms. With blueprints ready, the state department of transportation allows companies to bid against one another for the construction contract. Meanwhile, the state borrows money by selling bonds, usually at low cost, because banks compete to serve as underwriters. The state then uses the bond proceeds to pay the lowest-bidding construction company to build the project. Bond holders are paid back over a longer period, usually from gasoline taxes or other tax revenues dedicated to infrastructure funding. The entire process is characterized by the monopoly power of the state (assumed to be acting in the public interest) forcing private companies to compete against one another, and so to drive down costs.Privatization of transportation infrastructure under the P3 model is different from what we usually think of as privatization. Most people define privatization as the actual private ownership of roads, bridges, ports and other goods used by the public. The P3 version of privatization stops short of allowing investors to legally own a highway, instead offering private companies varying degrees of monopoly control (depending on the deal) over different parts of a project. Under the P3 model, investors can exercise greater control over the design, financing, construction, and maintenance of a public good, allowing them to extract profits from public infrastructure, without actually needing to literally own the asset.
---------------------------------------------------------------------------------------------------------------------------
South Bay Expressway:
A Failed P3
PRIVATE INTEREST:
Macquarie Infrastructure
(originally Parsons-Brinckerhoff)
TOTAL COST:
$658 million
PRIVATE FINANCING:
•Bank debt: $340 million
•Investor equity: $130 million
PUBLIC FINANCING
•TIFIA loan: $140 million
•Donated right of way: $48 million
San Diego’s South Bay Expressway (SBX) was the second privatized highway authorized for construction in the United States after California passed the nation’s first P3 legislation in 1989. The SBX was to be financed, built, maintained, and operated under a 35-year contract between California and the Parsons Brinckerhoff company.
Although P3s are said to transfer risks from the public to a private partner, which supposedly can better manage risk and reduce costs, the SBX is an example of how P3s create and multiply risks. Parsons Brinckerhoff spent much of its time fighting environmental and community opposition to the SBX, finally selling the nearly finalized plans to Macquarie Infrastructure Partners, an Australian investment bank, in 2003. During construction Macquarie also quarreled with the contractors, Fluor and URS Corp., two global construction giants, over cost overruns and delays. To make matters worse, the housing bubble was already showing signs of bursting in southern California; few of the homes planned along the toll highway were ever built, leading to far fewer drivers along the route than earlier projections.
No sooner did the toll road open to traffic than the Macquarie shell company that legally owned the road filed for bankruptcy, due to continuing disputes with construction contractors who had sought to recoup their losses, as well as the lower-than-expected traffic. This ended up costing the project’s private creditors and the federal government tens of millions of dollars. As a result of the bankruptcy, the U.S. Department of Transportation was forced to cut its claims against the company by about $80 million, a huge “haircut” for taxpayers.
---------------------------------------------------------------------------------------------------------------------------
Extracting Profits
P3 legislation reorganizes the infrastructure- procurement process to allow private investors to extract profits from various phases of a project.A major source of profit is the suppression of market competition. The typical bidders on a P3 project are consortiums that include global construction companies, investment banks, private-equity firms, and engineering firms. Together, they can fulfill the design, finance, construction, operations, and maintenance obligations that P3 contracts require. Unlike the traditional infrastructure procurement process, the P3 model eliminates competitive bidding from later phases of a project. The consortiums only have to compete against a handful of other multi-billion dollar construction firms and investment banks to secure the initial contract for the entire project. The size and complexity of P3 contracts means that many smaller, more specialized companies are eliminated from bidding. P3 contracts therefore usually have few bidders and, as a result, a higher price tag.
By unifying a project under a single contract, moreover, P3 also provides significant authority to the private consortium to cut its own costs. P3 contractors can squeeze higher profits out of a project by altering its design, by using non-union subcontractors, or by paying lower wages.
Another source of profits derives from the byzantine financial arrangements at the heart of a typical P3 contract. Unlike traditional infrastructure projects, P3s involve the use of private equity and debt, along with public loan subsidies, to construct a highway. P3 projects depend on several sources of private financing. The so-called “equity” investment, usually drawn from the consortium partners’ own internal operating funds, gives them a small stake in a project’s construction phase. P3 proponents say that, with their own money at risk, the private partners have an incentive to deliver a project on time and below cost.
The main source of project financing, however, comes from investment banks that lend to the consortium partners. P3 proponents claim that this private financing source is a solution to the budgetary constraints of governments that face huge backlogs of deferred infrastructure investment. A recent Congressional Budget Office (CBO) report, however, shows the flaw in this argument: “The case is sometimes made that using funds from private capital markets to finance roads can increase the resources available to build, operate and maintain roads,” the report notes. “But the sources of revenues available to pay for the cost of a highway project —whether it uses the traditional financing approach or a public-private partnership—are the same: specifically, tolls paid by users or taxes collected by either the federal government or by state and local governments.”
The ultimate source of project financing, then, is always the public, either through tolls or taxes. Why then allow private banks, drawing from private capital markets, to serve as intermediaries? Private financing simply permits the insertion of the financial interests of investment banks and private-equity funds into the long-term wealth-producing potential of public infrastructure. By allowing private investors to fund the construction of a project, the state allows these parties to impose their monopolistic claims on future flows of tax or toll revenues.
Public Risks, Private Profits
Because privately financing and operating public infrastructure is actually more expensive than doing so through a public authority, the concept of risk becomes central to how P3 proponents justify infrastructure privatization. P3 advocates argue that the traditional design-bid-build model including public ownership, operation, and maintenance of a highway, exposes the state to risks that threaten to inflate the cost of a project.Sources of risk include everything from changes in interest rates to labor strikes, and they can (and occasionally do) conspire to drive up a project’s cost. Proponents of the P3 model claim that, by handing a project’s finance, construction, and other phases over to a private consortium for a pre-determined price, the public transfers over these risks as well. The extra money the state must pay the P3 consortium—the private investors’ profits—are therefore justified because the private investors are now shouldering these risks. The state is said to obtain “value for money,” the value being less risk for an extra sum.
The P3 industry, however, has worked hard in recent years to make sure its members are, in fact, exposed to very little risk. For P3 projects built in California, Texas, Virginia, and Florida in the 1990s and early 2000s, industry profits were largely extracted from the public through tolls. Tolls, however, did not always produce the revenue necessary for the private companies to turn a profit. Several early P3 toll highways failed miserably after assumptions about traffic flows failed to pan out, causing bankruptcies, and leaving the public to foot much of the bill.
The South Bay Expressway in California, a private toll highway owned by the Australian investment bank Macquarie Capital, went bankrupt in 2010. A bankruptcy judge forced U.S. taxpayers who had subsidized the project with federal loans to take a 42% loss. The Camino Colombia Toll Road in Texas also went bankrupt after lower-than-expected traffic flows failed to produce toll revenues to repay investors. Camino Colombia was auctioned off in 2004. The road’s main creditor, John Hancock Life Insurance, purchased Camino Colombia for $12 million and then turned around and resold it to the Texas Department of Transportation the next year for $20 million.
Even though the public ended up footing much of the bill for failed toll-funded projects, the P3 industry’s lobbyists have pushed for a new, sure-thing revenue system. They have rewritten state laws in Alabama, Arizona, California, Florida, Georgia, Illinois, Louisiana, Oregon, and Texas to shift toward an “availability payment” model. Availability payments are akin to lease payments, whereby the state pays the private developer of a highway to maintain the road for public use. Rather than collecting tolls from drivers who use the route, the state pays the private developer directly from general state revenues collected through a gasoline tax or other taxes. Availability payments protect P3 developers against the risks associated with toll-road financing because the road’s owners no longer have to estimate future traffic flows, or rely on macro-economic trends beyond their control, like regional housing bubbles. They simply are guaranteed payments directly from the state over a span of several decades.
Although P3s are advertised as tapping the power of private capital markets to invest in public infrastructure, the reality is that P3 investors enjoy large public subsidies. For example, private companies building P3 highway projects now routinely expect states to grant them authority to issue qualified private activity bonds (PABs). Unlike most lending in private capital markets, interest payments on PABs are exempt from federal taxes (because the cash proceeds are expected to be put to use building goods with broad public utility, rather than projects that solely benefit private parties). Since the bonds are not taxed, they allow the borrower to obtain cash at less cost. This form of financing, then, is essentially a tax cut for the investment banks and corporations with the P3 contract. The U.S. Department of Transportation also routinely grants Transportation Infrastructure Finance and Innovation Act (TIFIA) loans to P3 developers. TIFIA loans provide companies with much cheaper interest rates and more flexible terms than anything available in the private capital markets—again because the public subsidizes them.
P3 companies, in short, are now virtually guaranteed returns on their investments. The shift away from tolls and the growing use of availability payments means P3 investors no longer need worry about traffic flows. Guaranteed lease payments, together with the low interest rates of federally subsidized loans and tax-exempt bonds they use to pay for construction, mean sure profits.
Meanwhile, P3 arrangements create a whole new set of risks for governments and the public. Complex contractual obligations, designed to protect private profits, hand over discretionary power to private companies while tying the hands of state officials. A recent report on P3s from the California Legislative Analyst Office notes that, by allowing private corporations to possess a financial interest in public infrastructure, the government incurs the “greater possibility for unforeseen challenges,” while its “flexibility” to respond to these challenges is limited.
----------------------------------------------------------------------------------------------------------------------------
Presidio Parkway:
California’s Latest P3 Experiment
PRIVATE INTEREST:
Hochtief: a German construction company operating nine privatized toll roads in Greece, Germany, Austria, and Chile. Hochtief also has contracts to build and operate 123 schools in Canada, Germany, Ireland and the UK, and to build and operate 18 police stations in Canada, examples of what the company calls “social infrastructure” development. Meridiam Infrastructure: a French private equity fund owned and operated by the Credit Agricole bank. Meridiam has “equity” stakes in private highways and railways in Canada, France, the UK, Poland, Slovakia, and Finland. In the United States Meridiam is behind the P3 North Tarrant Expressway toll road in Texas and the Port of Miami Tunnel in Florida.
PRIVATE FINANCING:
Investor equity: $44.5 million
TAX-EXEMPT (SUBSIDIZED) PRIVATE FINANCING:
Private activity bonds: $150 million
PUBLIC FINANCING:
IFIA loan: $150 million
In 2010, the outgoing Republican administration of Gov. Arnold Schwarzenegger moved fast to select a project intended to prove the merits of P3 development. They chose Presidio Parkway, a 1.6 mile stretch of road running from the edge of downtown San Francisco to the iconic Golden Gate Bridge.
When it was first planned by the state as a traditional design-bid-build project, Presidio Parkway had a price tag of $499 million. By switching to a P3 contract, under which a private partner would finance, build, operate, and maintain the road for 30 years, the up-front construction cost dropped to roughly $173 million. However, the state would have to make availability payments of at least $30 million a year for 30 years upon the road’s completion 2015. These availability payments are estimated to total between $1.1 and $1.4 billion, but no one can say exactly what they will cost the state because the actual payments must be calculated from a complex formula measuring the contractor’s compliance with a variety of performance measures.
Two state agencies opposed conversion of Presidio Parkway into a P3 project. Staff members of the California Transportation Commission (CTC), the state’s ultimate authority on infrastructure matters, complained that use of availability payments “would effectively establish and endorse a means of committing state transportation funds that bypasses state programming procedures designed to ensure statewide funding accountability and equity.” California’s Legislative Analyst Office (LAO) also opposed privatization of the roadway on these grounds. Most recently, the LAO analyzed the project’s financing, concluding that Presidio Parkway is probably costing taxpayers an extra $140 million as a P3.
The Professional Engineers in California Government, a union of state employees, filed suit to block the use of availability payments to finance the Presidio Parkway, calling the project “wasteful,” but a state judge ruled against the union.
--------------------------------------------------------------------------------------------------------------------------
The Infrastructure Industrial Complex
Given the magnitude of profits to be made, powerful companies have invested considerable time and resources to push P3-authorization laws through more than 30 state legislatures. The handful of global construction companies, investment banks, and private equity firms that dominate the P3 market today spend millions each year lobbying lawmakers in key U.S. states. Besides shopping around bills to authorize highway privatization, they are now expanding into the privatization of public-building projects (like court buildings), parking garages and metering systems, and other so-called “social infrastructure.”Elite law firms shop around legislation for P3 authorization in numerous state capitals. For example, the Los Angeles law firm Nossaman, LLP, straightforwardly explains on its web site that, “our PPP model legislation offers local, regional, and state lawmakers a valuable blueprint for authorizing legislation.” A big slice of Nossaman’s income comes from advising private investors and construction companies bidding on P3 contracts, so the firm has a lucrative material stake in passing P3 laws in as many states as possible. With support from major P3 contractors, the American Legislative Exchange Council (ALEC), a conservative, pro-corporate organization focused on pushing “model legislation” in statehouses nationwide, is now backing public-private partnerships. The group has endorsed a model state law, the “Establishing A Public-Private Partnership (PPP) Authority Act,” introduced by a vice president of the Australian investment bank Macquarie Capital. Macquarie is a corporate member of ALEC.
Some current government officials speak frequently at industry conferences to promote P3. For example, in October 2012, José LuÃs Moscovich of the San Francisco Transportation Authority lectured attendees of the Bond Buyer’s West Coast Finance Conference about the Presidio Parkway road, privatized under a 30-year contract with the German construction company Hochtief and French investment bank Meridiam. Former government officials are also involved in P3 promotion, both working for private companies and think tanks. For example, Dale Bonner, head of the state Business, Trans-portation, and Housing Agency under ex-California governor Arnold Schwarzenegger, now works as the principal partner of Cal-Infra Advisers, Inc., a lobbyist and consultancy that works with P3 developers seeking contracts. Bonner also promotes P3 policy from his position as a senior advisor at the Milken Institute. The Reason Foundation, arguably the intellectual home of P3 privatization, helped write California’s first P3 law in 1989. Since 2009, its vice president for policy has sat on California’s Public Infrastructure Advisory Commission, the state board tasked with identifying highway projects to privatize. The Reason Foundation has also been a corporate member of ALEC.
P3 investors have even created their own national trade association, the National Council for Public Private Partnerships (NCPPP), which has developed “tool kits” for state legislators. The NCPPP also circulates a press kit that attempts to dissuade reporters from thinking that “when the private sector is involved... citizens will eventually have to pay more for services” or from asking whether “private companies take short cuts in providing services in order to increase pro?ts.” Existing trade groups like the American Road and Transportation Builders Association have supported P3 privatization by hosting events such as the annual Public-Private Partnerships in Transportation Conference, a national gathering of major contractors, law firms, banks, and lawmakers.
The Public Interest
Despite the P3 industry’s influence, privatization of public infrastructure is anything but assured in the United States. The numerous problems with, and sordid history of privatization undermines public acceptance and official support. P3 procurement costs more. It generates as many new risks for the public as it supposedly eliminates. Additionally there is the matter of institutional inertia; state and local transportation agencies have procured infrastructure through the public design-bid-build method for over a century now. Shifting to the P3 model requires complex changes in the law and transformations of government procedures, as well as whole new skill sets for state officials, none of which simply happens without enormous time and effort to change the culture of government. P3 faces resistance for these and other reasons.In spite of these barriers, privatization’s advocates have scored significant victories in Texas, Virginia, Florida, Illinois, and most recently California. In California, the Professional Engineers in California Government, a union of state engineers, sued to block conversion of the half-billion dollar Presidio Parkway into a billion-plus dollar P3 project. Even though the union’s legal argument was echoed by two state agencies, which doubted that California’s 2009 P3 law authorizes the use of availability payments, a judge ruled against the union, and allowed the project to proceed.
California’s Legislative Analyst Office (LAO) criticized transportation officials who approved Presidio Parkway’s P3 conversion, saying in a November 2012 report that privatization of the road likely cost taxpayers an extra $140 million, but this analysis went virtually unreported in regional newspapers. Besides the union and the largely toothless LAO, there has been no other opposition from the public or watchdog groups. As California officials plan to privatize as many as four more freeways in the Los Angeles area, there is little sign of organized resistance to these plans.
The Ohio Public Interest Research Group (PIRG) recently issued a study critical of plans to privatize the Ohio Turnpike, a 241-mile publicly owned and operated toll road, debunking the rationale that doing so would generate dollars to immediately invest in other state roadways. PIRG researchers are posing questions that similarly confront privatization plans in other states: If cost-savings measures can generate savings, why can’t the state introduce the same measures a private operator would? How might a contract with a private operator constrain the state’s ability improve parallel public roadways? What downsides might there be if motorists seeking to avoid the increased tolls end up crowding onto nearby roadways?
For whatever reason, though, organized opposition to public-private partnerships across state lines and on a national level, confronting the national infrastructure-industrial complex that P3 proponents have assembled, does not exist today. Opposition to privatization of infrastructure in the United States is piecemeal and inconsistent, so that P3 projects often proceed without any critical analysis.
Perhaps this is because of the relatively early and small scale of P3 projects, with only an estimated 377 ever completed in the United States, compared to tens of thousands of traditionally financed roads. Only a tiny fraction of transportation infrastructure in the U.S. has ever been handed over to private investors. The complexity of P3 deals may also explain the relative lack of opposition: contracts involve multiple bank creditors, private-equity investors, multiple legal and technical advisers, hundreds of pages of binding obligations, and strange formulas determining payments due over the term of a concession.
Finally, many officials and the public may be sold, at least partially, on the notion that the solution to government budget shortfalls is to tap private capital to build infrastructure. Whatever the reason may be, as various states move ahead with privatization plans for highways and other infrastructure, controversies are likely to erupt over the financial terms, new risks to the public, and the fact that P3s do not actually alleviate budget constraints, and may indeed exacerbate them.
SOURCES: California Department of
Transportation, “State Route 91 (91 Express Lanes)” (dot.ca.gov);
Jennifer Gress, “Public-private partnerships (PPPs): just
compensation,” Analysis of SB 528, California State Senate
Transportation and Housing Committee, May 12, 2009; Congressional Budget
Office, “Using Public-Private Partnerships to Carry Out Highway
Projects,” January 9, 2012 (cbo.gov); California Legislative Analyst
Office, “Maximizing State Benefits from Public Private Partnerships,”
November 8, 2012 (lao.ca.gov); “Relating to Public-Private Partnerships
for Public Infrastructure,” model legislation, Nossaman LLP, 2009
(nossaman.com); Reason Foundation, “Reason Foundation Experts: Adrian
Moore” (reason.org); National Council for Public Private Partnerships,
“A Resource on Public Private Partnerships: Press Kit for the National
Council for Public Private Partnerships” (ncppp.org); Darwin BondGraham,
“Global Corporate Powerhouses Ramp Up to Privatize California’s
Roadways,” Sacramento News & Review, November 8, 2012
(newsreview.com); Istrate, Emilia and Robert Puentes, “Moving Forward on
Public Private Partnerships,” Brookings-Rockefeller Project on State
and Metropolitan Innovation, December, 2012.
Subscribe to:
Posts (Atom)