Research Project Description

POLICY ISSUES IN U.S. TRANSPORTATION PUBLIC-PRIVATE PARTNERSHIPS: LESSONS FROM AUSTRALIA

Project Number: 2807

Research Project:The proposed research has broad relevance for current United States (U.S.) transportation policy. Many highways, roads, bridges and tunnels are at the end of their original design lives and require substantial renovation. Large sections of the original U.S. Interstate Highway System – begun in 1956 – suffer from decades of deferred maintenance. Meanwhile, economic expansion, population growth, and increased freight movements from rising global trade are placing fresh demands on Americas transportation system. The effects of rising demand and limited capacity manifest themselves through car and truck congestion, upward pressure on freight transportation prices, and less reliable trip times.

At the same time, the cost of system expansion and renovation is increasing. These combined factors have created an unprecedented need for investment in U.S. surface transportation infrastructure. The American Society of Civil Engineers estimated that U.S. basic infrastructure needs an infusion of at least $1.6 trillion simply to bring it into good condition.

These developments are prompting many transportation officials and policy makers to consider new approaches to funding transportation infrastructure. Chief among those is the public-private partnership (PPPs). PPPs facilitate private investment in the construction and renovation of infrastructure projects, but are important because they can raise additional capital, and introduce strong incentives for efficiency and innovation into the U.S. transportation system. There are, however, important challenges regarding the implementation of PPPs in both the construction of new transportation facilities (i.e. greenfield projects) and in the operation, refurbishment and expansion of existing facilities (i.e. “brownfield” projects).

Australias transportation financing situation is similar to that of the U.S., but leads by at least 15 years. This study endeavors to identify all the relevant lessons that can be learned from the Australian experience that may help improve the execution of PPPs in the U.S.

Principal Investigators:

Rick Geddes, Ph.D., Associate Professor, Department of Policy Analysis & Management, Cornell University

Team Members:

San Jose State University Faculty Member TBD

Institution:
Mineta Transportation Institute

Telephone Number:
(408) 924-7560
Email Address: mti@mti.sjsu.edu

Project Objective:

This study will examine lessons applicable to U.S. transportation public-private partnerships from Australias extensive experience in this area.

Project Abstract:

Faced with reduced fuel tax revenue, rising construction costs, and increasing demands on transportation infrastructure, many states and municipalities are exploring public-private partnerships (PPPs) as a financing alternative. There are, however, important remaining policy questions regarding the implementation of PPPs. The goal of this study is to identify lessons applicable to U.S. policy that can be gleaned from Australias extensive experience with transportation public-private partnerships (PPPs). The study will focus on four policy issues that are relevant for U.S. PPPs: (i) the nature and role of non-compete clauses in PPP contracts; (ii) the various types of risk inherent in PPPs and the allocation of those risks across contracting parties; (iii) the determination, role, and significance of concession length in PPP contracts; and (iv) the type of regulation used to address potential market power concerns. A thorough search of the literature relating to Australian PPPs will be conducted, and a subset of the more than 90 Australian PPP contracts that have been completed or are in process will be examined. The effectiveness with which Australian PPPs have dealt with each of the four key policy issues will be assessed in light of their experience. Two important results of this study will be identification of emerging Australian PPP best practices, and what lessons the Australian approach holds for those four issues in the United States.

Milestones Dates:

Task 1: Review and analysis of U.S. literature relevant to the four key policy issues

Task 2: Review and analysis of relevant Australian PPP literature

and assessment of available Australian PPP contracts

Task 3: Interview key partners and experts in Australia

and obtain additional contracts

Task 4: Analysis of interviews and contracts, synthesis of

results, and applicability to U.S. PPPs

Task 5: Report writing

Final completion date:

Total Budget: $54,320 (includes $9,450 for MTIs costs) 

Student Involvement:TBD

Technology Transfer Activities:

Upon publication, a pdf version will be available on the Mineta Transportation Institute site. The project experience and data will be available for community meetings. Authors are encouraged to submit articles based on the research to relevant journals and to present the information to end-users at conferences.

Potential Benefits of the Project:

Potential end users of the research findings include members of the public and private sectors, as well as policy analysts and transportation commentators. The findings are likely to be of immediate use to policy makers, administrators and others who are considering the PPP option as a financing alternative.

TRB Keywords:

Public-Private Partnerships; Contracting; Finance and Economics; Planning; Policy &Legal Issues

Primary Subject:

Public/Private Financing of Transportation Improvements

Goals:

To identify lessons applicable to U.S. policy that can be gleaned from Australia’s extensive experience with transportation public-private partnerships (PPPs).

Enabling Research:

Review and analysis of literature and related PPP documents; interviews with Australian policymakers; data analysis

Modal Orientation:

Public transportation, Highways