Transcript Innovations in Transportation Infrastructure Development

Innovations in Transportation
Infrastructure Development:
A Road Less Traveled
Perspectives of the Public Owner
Facility pricing (tolls) a small – but growing – method
of financing transportation in the United States
Percent
Trends in State Highway Funding, National Historical Trend (1978 – 2004)
100
90
80
70
60
50
40
30
20
10
0
1978
1980
Fuel Taxes
1982
1984
1986
1988
Vehicle Taxes
Source: 2004 Highway Statistics, Table HF-10.
1990
1992
Tolls
1994
1996
1998
General Fund
2000
2002
Other
2004
Current Transportation
Funding Sources in Washington State
Fiscal Years 2007 - 2009
Billions (Current Dollars)
$5,000
TNB and Other Toll Revenue
Ferry Fares
$4,535 Million
$4,500
$4,000
2005 Gas Tax
Rental Car Tax
$3,500
23¢ Gas Tax
$3,000
5¢ Gas Tax
Federal Revenues
Licenses, Permits, and Fees
$2,500
Miscellaneous
$2,000
Vehicle Sales Tax
$1,500
Local Revenues
$1,000
$500
$400 Million
$176 Million
$49 Million
$0
Direct User
Fees
Indirect User Fees
Special Taxes
General Taxes
Tacoma Narrows Bridge
TNB under construction: 6th largest D/B project in the world (as of 2005)
Realigning the traditional roles:
Tacoma Narrows Bridge project
Public Sector
Private Sector
Acquire Right-of-Way (ROW)
Design
Design
Finance
Build
Finance
Operate
Maintain
Own (reversionary)
Operate
Maintain
“Cost Savings” by reversing the financing
of TNB
It is estimated that toll-payers will save at least $336 million over 24
years. But there is a price associated with these savings: more risk.
Original TNB “Private Public Partnership”: 63-20 financing
Traditional State Bond Financing**
$100.0
$90.0
$80.0
Total Borrowing
$711 m
Total Borrowing
$794 m
$100.0
$70.0
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$0.0
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
$90.0
$80.0
$70.0
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$0.0
2007
Mortgage Statement: Total Principal and Interest Over
34 Years Estimated at $1.908 billion*
*United Infrastructure Washington (UIW) Preliminary Financing Plan dated January 25, 2001.
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
Mortgage Statement: Total Principal and Interest
Over 24 Years Estimated at $1.572 billion
**Seattle Northwest Securities, assumptions as of May 10, 2005
(interest rates as of 5/10/2005 + 50 BP with CABs issues 7-9).
Proposition Bet: what are the chances of
being “right” about traffic revenue
forecasts?
Denver Post
June 1, 2006
Truth be tolled first in a three-part series
Roads to riches
Paved with bad projections
“…A review of 23 new turnpikes nationwide shows that a clear majority are failing to meet revenue
projections to justify their costs.
Even with adjustments for the break-in period in the opening years, 86 percent of new toll roads in
states failed to meet expectations in their first full year.
By year three, 75 percent – 15 of the 20 that have been open that long – remained poor performers.”
Revised policy (and political)
considerations in PPP deals
• Subsidy level from statewide tax sources (no longer
“lowest tolls possible”)
• Amount of funds raised relative to discount paid (no
longer lowest cost of borrowing)
• Ownership of facility by private sector
• Willingness to “fail”
Camino Columbia Tollroad
Laredo, TX
Project Start: 1999
Project Complete: 2000
Project Cost: $90,000,000
Traffic only 10% of forecast
Defaulted on debt; sold at auction for 13 cents on the
dollar
BUT: State purchased and operates as toll road – with
much lower cost basis. Failure, or success?