Wednesday, November 05, 2008

Meet the new Boss...... Same as the old Boss?

More Toll Roads Likely in US Future

Outgoing Transportation Department officials create office to lobby states over toll roads. Incoming president likely to continue effort.

Copyright 2008

Federal Highway Administration (FHWA) on Friday announced the creation of a new office whose primary goal will be to lobby state governments to convert their freeways into toll roads. While some congressional leaders expressed hope that the change represented by FHWA's new Office of Innovative Program Delivery would be reversed by the next administration, there is reason to believe that the incoming administration will continue supporting public private partnership (PPP) initiatives. For now, the toll road promotion office sits at the top of FHWA's organizational chart to emphasize its primary place within the federal transportation department.

"The Director of Innovative Program Delivery provides advice, guidance, and research support related to tolling and pricing initiatives and administers tolling authorities," Transportation Secretary Mary E. Peters wrote. "[The office also] promotes the development and use of techniques associated with providing transportation in terms of innovative and non‑traditional funding sources, innovative contractual processes, and changing roles and responsibilities involved in designing, constructing, operating, maintaining, financing, obtaining, and procuring highway facilities."

These innovative and non-traditional funding mechanisms have caused concern among local and federal representatives in the wake of the ongoing financial crisis. US House Transportation Committee Chairman James L. Oberstar (D) and Highways Subcommittee Chairman Peter A. DeFazio (D) yesterday wrote to Secretary Peters to oppose the single-minded focus on tolling.

"The financial crisis and the tightening of credit markets have raised serious questions over the governance structure and financial viability of firms involved in a number of PPPs," Oberstar and DeFazio wrote. "The dependence of these firms on debt and asset inflation rather than income or cash flows to finance acquisitions and pay dividends to shareholders has raised questions concerning the sustainability of this model. It also highlights the risks and consequences of rushing into long-term deals that are not structured appropriately or do not contain sufficient contingencies to address unanticipated crisis."

The two chairmen attempted in their election day letter to pin the blame President George W. Bush (R) for the excessive emphasis on tolling.

"The Bush administration's rush to embrace and promote PPPs and other innovative financing arrangements may hurt future efforts to positively harness private investment and innovation for the public good," the congressional leaders wrote.

This, however, is the same type of arrangement called for in the Infrastructure Bank Act that is a key part of the agenda of President-elect Barack Obama (D). Obama hopes to establish the bank to provide $60 billion for infrastructure projects with "a preference for projects which leverage private financing, including public-private partnerships" (view details). Moreover, Senator Obama in March endorsed New York City Mayor Michael Bloomberg's idea to charge a $9 toll on cars and a $22 toll for trucks that enter downtown Manhattan during working hours.

"I think Mayor Bloomberg's proposal for congestion pricing is a thoughtful and innovative approach to the problem," Obama told WNYC radio in March. "The basic notion that we should do what we can to reduce congestion, to reduce pollution, to reduce consumption of foreign oil and to then to reinvest dollars into our infrastructure in mass transit."

A copy of the Oberstar-DeFazio letter is available in a 130k PDF file at the source link below.

Source: PDF File Letter to Transportation Secretary Mary Peters (US House of Representatives, Transportation Committee, 11/4/2008)

© 2008

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