The Case for Public Private Partnerships

1
The Case for Public Private Partnerships

• Samuel R. Staley, Ph.D.
• Director, Urban and Land Use Policy, Reason
  Foundation
• (e) sam.staley_at_reason.org
• Presentation given to the
• Preserving the American Dream annual
  conference, San Jose, California
• 11 November 2007.

2
By 2030, 12 urbanized areas will have congestion
levels equivalent to todays levels in Los Angeles
3
The gas tax is not a viable funding
alternative(Decline in real value of the fuel
tax 1997)
5.00
4.00
3.00
Cents per mile
2.00
1.00
0
1950
1960
1970
1980
1990
2000
2010
Average
4
Where will the money come from?

• Public Private Partnerships

5
Are roads still public goods?
6
Transportations Brave New World

• Open road tolling
• Dynamic tolling
• Private equity
• Oregons charge per mile

7
Technology, pricing and the stages of road
privatization
1
2
3
8
Paris A86 Extension (1.5 billion)
9
Viaduc de Millau 536 million
10
What are PPPs?

• Agreements with private companies to design,
  build and operate roads and other infrastructure
• Lease, not sale of asset
• Source of new capital
• Typically raise more money than public agencies
• Upfront fees and/or toll revenue sharing
• Better management
• Life cycle management
• New infrastructure faster
• Minimize risks to taxpayers

11
How They Work

• Private firm designs, finances, builds, operates
  for N years
• Concession agreement protects public interest
• Length of lease
• Credible toll revenue streams
• Timeline for improvements
• Specify toll rate increases
• Competitive selection process

12
Concerns about PPPs

• Potential concerns
• Privacy
• Rent Seeking
• Efficient socialism
• Red herrings
• Property rights/Eminent domain
• Foreign ownership
• Monopoly pricing

13
Conclusion PPPs are an important step forward,
but they are not the end game