Greater Greater Washington

Time to overhaul Virginia's Public-Private Transportation Act

Virginia's Public-Private Transportation Act (PPTA) lacks adequate safeguards to protect the public interest as the state spends billions of taxpayer dollars and imposes decades of substantial tolls imposed, according to a new analysis.


Photo by VaDOT on Flickr.

The PPTA can be an innovative tool, allowing private entities to partner with the state or localities on transportation projects, and Virginia has been a national leader in pursuing public-private partnerships. Yet the report details how the PPTA has centralized decision-making, limited information given to the public, and often resulted in deals that allow private entities to earn high returns with little risks.

The report was prepared for the Southern Environmental Law Center by Jim Regimbal, a consultant with Fiscal Analytics, Ltd. and a former staff member to Virginia's Senate Finance Committee who has over 30 years of experience in state policy analysis.

It examines the PPTA's history and process, and highlights two recent projects for in-depth analysis: the I-495 Express Lanes in Northern Virginia and the Downtown Tunnel/Midtown Tunnel/MLK Extension in Hampton Roads. The study also analyzes the substantial policy issues the Act raises and offers recommendations for reform.

The PPTA authorizes private entities to build, maintain and/or operate "qualifying transportation facilities" under an agreement with state or local entities such as the Virginia Department of Transportation (VDOT). The intent was to reduce the up-front costs to government by attracting private sources of funding and to tap into private sector creativity and efficiency through competitive bidding to speed and improve building projects.

Since it was enacted in 1995, only four PPTA projects have been completed (Route 288 and Route 895/Pocahontas Parkway around Richmond, Route 199 around Williamsburg, and the new Beltway express lanes). Another 17 projects are partially completed or currently under construction, under contract, or under consideration.

The PPTA has expanded far beyond the General Assembly's original intent to supplement the traditional transportation improvements process. It is now the major method for constructing large new projects, and it concentrates decision-making in the Governor's office with little effective oversight.

Moreover, as the report notes, it "has evolved into a process in which large private-sector construction consortiums propose design/build/operate projects funded using as much state/federal funding and taxpayer-subsidized debt as can be negotiated with the state, coupled with toll revenues that are as secure and protected as possible."

There are significant differences between the PPTA agreements made between the Commonwealth and private entities. The I-495 Express Lanes project, for example, increases transportation capacity while still leaving existing toll-free transportation choices in place for the public. This agreement does not contain any "non-compete" clauses that limit future transportation improvements, although it does have a troubling provision that could increase taxpayer liability or dissuade high occupancy vehicle (HOV) use. The private partner is taking on true demand risk in return for its investment.

In contrast, the Downtown Tunnel/Midtown Tunnel/MLK project expands an existing free facility already once paid for and currently maintained by the state, but with no viable travel alternative for the public. There is little rationale for the amount of state subsidy provided and the contract allows for automatic toll escalation and penalties for creating competing transportation alternatives.

In another project, the proposed $1.4 billion new Route 460 between Petersburg and Suffolk, the state plans to provide $1.1 billion public in direct subsidies (tolls will cover the rest) to build a destructive highway that will parallel an existing, relatively uncongested route. This project is a much lower transportation priority than many others throughout the state, yet it is slated to receive the highest subsidy.

The report recommends a number of reforms to the PPTA, including:

  • Providing more information to the public (including the cost-benefit analysis), and requiring a public hearing at least 30 days prior to signing a comprehensive agreement;
  • Increasing the role of the Commonwealth Transportation Board, and other oversight boards, by requiring it to evaluate and approve a proposed comprehensive agreement before it can be approved, and giving the Board greater independence by limiting the ability of the Governor to remove members without cause;
  • Creating a greater role for the legislature in the process, such as requiring the findings of the cost-benefit analysis to be provided to the General Assembly prior to initiating a PPTA procurement process to ensure that the assumptions contained in the analysis can stand up to public scrutiny, and by requiring the Assembly to approve subsidy levels (particularly debt) and the use of toll facilities;
  • Ensuring greater competition by requiring more bidders; and
  • Adding conditions for prioritizing state PPTA subsidies.
These solutions will help ensure that the PPTA process is good at producing public benefits for as low a price as possible.

Recent PPTA deals show why the current debate over transportation funding needs to focus on ensuring that taxpayer funds are spent wiselyand not just on raising more revenues for transportation. The legislature needs to improve the PPTA before the state signs additional agreements or authorizes any additional funds for public-private transportation projects if we are to promote smarter transportation investments and adequately protect our communities and environment.

Trip Pollard directs the Southern Environmental Law Center's Land and Community Program, which works in Virginia and 5 other states to promote smarter growth and more sustainable transportation choices. 

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The state of Virginia will end up buying the 495 Hot Lanes back from Fluor within the decade. Its happened elsewhere, it will happen here. And we the tax payers will end up footing the bill for it.

The sickest part about it all is that before we could even tell how well it would work, governor bobby was already on his way to building it again on 95.

So far it is woefully under used and making NO impact to 495s traffic. Eventually we will sink 3 billion into it and it wont do 1/10th of what the silver line will for congestion alternatives.

by Tysons Engineer on Nov 28, 2012 1:50 pm • linkreport

Im not sure why the HOV provision is troubling. I believe VDOT has already said if they get high enough HOV share to trigger that, they would gladly pay - that would mean getting lots of HOVs into Tysons, relatively cheaply. Does anyone think the private partner could agree to free HOV use without some protection? Does anyone think the Commonwealth and/or FFX county were going to pony up the $$ for traditional HOV lanes?

@TE - we'll see. I've heard some people very satisfied using the new lanes. I'm not sure why more aren't using them yet - I suspect novelty and learning curves are more of a factor than low values for time. You have to commit to the lanes fairly early - until people are sure about the time savings, or have found better ways (iphone apps?) to tell the conditions before leaving home, they may be conservative.

Note - express bus service from Burke to Tysons using them begins in January.

by AWalkerInTheCity on Nov 28, 2012 2:07 pm • linkreport

Hm, express bus from Burke to Tysons sounds nice though its too late for me now. Would've been awesome a couple of years ago for me personally.

by drumz on Nov 28, 2012 2:15 pm • linkreport

Wasn't this the same article on streetsblog?

From what I can tell, there is little criticsm of the HOT lanes, and more of other projects.

As I said on Richard's blog, I suspect we'll see more slugging, although the lack of federal job sites in the HOV area will moderate the demand.

by charlie on Nov 28, 2012 2:22 pm • linkreport

Is there that much slugging to Tysons? Slugging in DC is largely successful because of the Metro (people can slug to Pentagon and downtown and take Metro to a final destination.)

by MLD on Nov 28, 2012 2:27 pm • linkreport

@MLD; no, I'd suspect almost zero now, but with the news lanes, maybe....

also, the slug lines are everywhere. But it does work best with military/USG employees....

by charlie on Nov 28, 2012 2:35 pm • linkreport

Public-private partnerships are inherently bad and should be avoided.

First of all, infrastructure is a basic government function. Government should just tax citizens for the cost. The choice for citizens is then easy. Pay tax and get infra, or don't pay tax and get nothing. The reason why governments like PPPs is that PPPs avoid that choice. However, citizens end up paying for the project anyway, not through taxs, but through tolls. Big deal, and less efficient.

Second, PPPs tend to end up favoring the private partners because they have the money to hire good lawyers and sneak in handy provisions into the contracts. The result: citizens pay even more.

In the end, it is short-sightedness of the public that allows this. They think that paying for infrastructure not through taxes makes it free. Of course it does not. You just end up paying tolls and usually more than the tax would have been.

by Jasper on Nov 28, 2012 2:48 pm • linkreport

@ Jasper

The public especially likes PPP and the tolls because citizens who don't live near new infrastructure (and in general citizens of the rural portions of the state who ask little more than routine pavement and snow removal) don't have to pay for the mega projects needed due to the density and sprawl in the urban areas. The tolls are a way of only charging those who use the facility. Having spent time in a conservative rural part of MD for a couple of my recent adult years, toll roads were very popular (of course because they were being put on DC/Baltimore.

I'm generally more pro-government and resource distribution oriented and do agree the governments job is to provide facilities, however I can sympathies for people in rural areas not wanting to pay for the urban centers needs. I'm more incline to suggest taxes (in this case a gas tax) be varied depending on jurisdiction, with the more urban areas paying a higher rate because they generate the higher demand. I know NOVA already pays a surcharge but it should be expanded to Richmond, Tidewater, Roanoke, and maybe to a lesser extent the Cities and surrounding County for places like Charlottesville, Winchester, Lynchburg, Danville ect.

by Gull on Nov 28, 2012 3:24 pm • linkreport

@ Gull:The public especially likes PPP and the tolls because citizens who don't live near new infrastructure (and in general citizens of the rural portions of the state who ask little more than routine pavement and snow removal) don't have to pay for the mega projects needed due to the density and sprawl in the urban areas.

Yet oddly, rural areas are way more expensive per citizen when it comes to infrastructure. It is excruciatingly wrong to suggested that suggest that routine pavement and snow removal are cheap. In rural areas those are way more expensive per citizen because every citizen needs more roads.

Having spent time in a conservative rural part of MD for a couple of my recent adult years, toll roads were very popular (of course because they were being put on DC/Baltimore.

Yeah, but the reason that all PPPs are near big cities is that private partners would never be stupid enough to deal with rural projects. Which underlines my previous point.

I'm more incline to suggest taxes (in this case a gas tax) be varied depending on jurisdiction, with the more urban areas paying a higher rate because they generate the higher demand.

But they don't. Urban areas are cheaper per citizen because people travel shorter distances and live closer together. The price amounts are higher, but that's only because so much infrastructure is needed and so many people live closely together.

I know NOVA already pays a surcharge

Which is ridiculous because most of VAs tax money comes from NOVA, not from the rural areas. And yet the rural areas consider it somehow fair that NOVA pays more than they do. Speaking about moochers and payers...

by Jasper on Nov 28, 2012 4:01 pm • linkreport

I really like the beltway HOT lanes. Actually I hope they stay relatively empty because I just love cruising along while the outside lanes are not moving.

by downeaster on Nov 28, 2012 4:22 pm • linkreport

@ Jasper

I don't disagree with any of your points in reality. I know infrastructure costs more to maintain in rural areas, and I know it does not actually make sense for taxes to need to be higher in urban areas, but try convincing most Americans of your points. I'm just stating why people in general support the PPP model for transportation funding.

I suppose my slight bias toward charging urban people a higher tax rate also stems from wanting to lump money for transit and other alternative infrastructure in the pot (example, finding funding for the Purple and Red line light rails in MD), which I do see as an expense that generally required subsidies to run.

by Gull on Nov 28, 2012 5:15 pm • linkreport

I personally like the HOT lanes but when I see that the only new highway infrastructure NOVA has gotten in the 23 years that I've lived in this region (13 is Reston) are privately-owned toll roads, HOT lanes, and HOV for a relative few, it makes me wonder what on earth is happening to the billions in taxes that NOVA residents have been paying all of those years.

The Richmond area has excess road capacity. Tidewater/Hampton Roads gets new highways that EVERYONE can use, mostly toll-free. NOVA gets scraps and "spot improvements" that the majority can't use. Something is wrong with that picture.

by ceefer66 on Nov 28, 2012 5:49 pm • linkreport

I suppose the Springfield Interchange project, Woodrow Wilson Bridge project and 66 & 495 widening are spot improvements, but the Express Lanes aren't much more than lanes next to existing lanes also.

by selxic on Nov 28, 2012 9:11 pm • linkreport

Claiming that 460 is irrelevant implies a certain degree of unfamiliarity with the extent of truck traffic in and out of the ports of Hampton Roads. If I were the commonwealth, I'd rather have funded that than be stuck with ensuring Transurban's profits on an ill-considered HOT lane project, which is the likeliest outcome from 495 so far.

by J.D. Hammond on Nov 28, 2012 10:10 pm • linkreport

@Ceefer

We certainly agree here! Richmond is an absolute joke, the amount of excess capacity they have, while Nova has next to none is ridiculous. 295 is four lanes wide there, and moves at 75 miles an hour during rush hour. For the amount of traffic it has, for 295 to be four lanes wide, it would be the equivalent of 495 in VA being something like ten lanes wide on each side.

Northern Virginia definitely takes it on the chin from the rest of the state, and it is a shame. You have to wonder how much economic activity has been lost by the rest of the state due to congestion. How many people here would have enjoyed a summer weekend trip to Virginia Beach, but have simply stayed at home, knowing it will take 8 hours to get there on Friday night?

by Kyle-W on Nov 29, 2012 8:55 am • linkreport

I will say, I have watched with glee as southside VA loses their mind over the possibility of tolls on 95. My favorite comments are something along the lines of "One area of Virginia shouldn't have to suffer to pay for things elsewhere in the state!"

I guess it is awesome when another area (Nova) suffers, but it isn't so fun when it happens to your community.

by Kyle-W on Nov 29, 2012 8:58 am • linkreport

@ Gull:I suppose my slight bias toward charging urban people a higher tax rate also stems from wanting to lump money for transit and other alternative infrastructure in the pot (example, finding funding for the Purple and Red line light rails in MD), which I do see as an expense that generally required subsidies to run.

In contrast to those 'simple repavement and snow removal' actions that rural people want, right? Cuz those happen for free at not cost to anyone? It's just magic mountain dwarfs that do the work there. No tax-payer money/subsidy involved.

What is so hard about the concept of maintenance? Roads require maintenance, transit needs maintenance. Infrastructure is not as simple as building and forgetting.

Furthermore, I'd like to point out that transit users pay a daily 'toll' to use transit. Road users do not.

by Jasper on Nov 29, 2012 9:02 am • linkreport

How did the VA-199 PPP work? There are no tolls on that road.

by andrew on Nov 29, 2012 11:26 am • linkreport

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