Public Private Partnerships by dfhdhdhdhjr

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									        Public Private Partnerships


     FHWA
Northern Borders
  Conference          Indiana
  Chicago, Illinois
                      Perspective
   May 15, 2007




                                    Ryan A. Hoff
                                    May 15, 2007
Our Industry

   Capital Intensive

   $75 Billion in 2005

   Insatiable appetite for $

   Often Taken for Granted?
Setting the Stage - Nationally

   VMT: 100% 1980-2004

   Ton-miles Freight: 50% 1990-2003

   NAFTA Surface Trade: 80% 1994-2004

   US Population: 30% 1980-2004

   # Registered Drivers:  39% 1980- 2005

   # Vehicles:  55% 1980-2005
Setting the Stage - Nationally

VMT: 100% 1980-2004

Ton-miles Freight: 50% 1990-2003

NAFTA Surface Trade: 80% 1994-2004

US Population: 30% 1980-2004

# Registered Drivers:  39% 1980- 2005

# Vehicles:  55% 1980-2005
Traditional Funding

   Motor Fuel Taxation
    –   Department of Treasury:
            18.4¢/gal of gasoline
            24.4¢/gal of diesel
            8.0¢/gal of gasohol
    –   Department of Revenue:
            18.0¢/gal of gasoline
            16.0¢/gal of diesel
    –   Gasoline Range:
            Georgia low at 7¢
            Wisconsin high at 28.5¢
Funding History

   US Department of Treasury:
    –   Last increase: 1993.

   Indiana Department of Revenue:
    –   Last Increase: 2003.
            3.0¢/gal of gasoline but only 1¢ went to Highway Fund

    –   Before 2003:Last Increase: 1984
            1988: 1¢/gal of diesel
            1983: 1¢/gal of gasoline
Remedies?

   Timely Fuel Tax
    Increases/Indexing?
   Pay by the mile???
    –   GPS
    –   Annual plate registration with true-
        up at title transfer

   Other fees (ie. Taxes, Permits,
    Tolls)?
   Public Private Partnerships
Public Private Partnerships

   A Delivery Model which:
    –   Allows Private investment in the public sector
    –   Allocates risk and responsibility in new ways
    –   Uses other peoples’ money, other peoples’ equity
    –   Provides opportunities otherwise unavailable
The Common Thread

   Flow of Money, and
   The Allocation and
   Assumption of Risk
   Drives the Relationship…




  .. all defined in a long term lease agreement!
                 Preliminary




                                $
                 Feasibility

                 Legislative




                                $
                  Approval

                 Controlling
                                    $
                                            Project Value

                 Agencies

                Environmental
                                    $



                 Permitting
                                        $




                   ROW
                                                            Major Risk Elements




Risks Removed
                                        $




                Construction


                 Long Term
                                            $




                 O&M, Etc.

                  Traffic &
                                              $




                  Revenue
Indiana’s Experience

   Indiana Toll Road (Asset Lease)
    –   I80/I90 Northern Indiana. 152 Miles from OH to IL.
    –   75 year term, $3.8B up-front payment to Indiana
    –   Modernized toll rates established prior to closing
    –   Rate escalation limited over term
    –   Concessionaire’s ability to isolate risk
            50 years of operating history
            Limited Construction Risk
    –   Benefit: Fully funded 10 year transportation plan
Indiana’s Experience

     Interstate 69 Indianapolis to Evansville
          (Once considered as P3, now a freeway)

• NEPA Tier I: non-tolled version issued 2004
   • Revised to include tolling option
• Advisors engaged to assist in RFP development
• Decided to revert to the freeway model
• NEPA Law suit filed 10-2-2006
• Tier 2 permitting process underway
• Construction to begin June 2008
• $700M “in the bank”
Indiana’s Experience

   Illiana Expressway
   Joint project with IDOT
   70 Mile beltway around
    Chicago & NW Indiana
   Congestion Relief
   Economic Development
   Development efforts on portion East of I65 suspended
    3/24/07 due to public opposition
Indiana’s Experience

   Indiana Commerce Connector
   85 mile - partial outer beltway
   Up to 75,000 vehicles/day
   Economic development
   Congestion relief
   Development efforts
    suspended 3/24/07 due to
    public opposition
What We’ve Learned - Mechanics

   Do not underestimate effort required to
    create a P3 project
   The path from point A to point B looks
    perfectly straight from 30,000 feet

   A multi-disciplined approach. Seek help.
   Financial decisions trump technical merits
What We’ve Learned – Political

   Do not assume authority is forthcoming
   Education is key to, but not a guarantee of, success

   Project by project approvals difficult to obtain
   Project must be a solution to an identifiable problem
   Solid project information essential to convince public
    and decision makers of need and benefits
What We’ve Learned - Public

   Respect the Internet. Grass roots resistance mounts
    quickly.
   There is no limit to what the opposition will say in
    order to support their case.
   Supporters are intimidated at large public meetings.
   Opponents will offer any and all project alternatives
    to discredit your proposals.
   Elected and local leaders’ support often bends under
    constituent pressure.
Indiana – Supporting Information

   Information = Knowledge = Power

   Compile information and project estimates before
    unveiling your proposal

   Research in support of new highways

   Prepare to Debate - Never assume the obvious

   Interrelationship between economy & highways
    obvious to industry, but not to motoring public
Indiana – Economic Development

 –   2005-2006: IEDC closed on 327 new deals
 –   Represents $11B of new investment in Indiana
 –   37,000 new jobs
 –   80% located in counties with Interstate access
 –   Top 15 projects totaled $5.8B. Communities
     within 20 mi of Interstate received $5.0B of that
     investment
Interstates as Economic Catalysts

   Counties with Interstate access (51/41):
    –   2004 Per capita personal income 12% higher
    –   85% with PCPI over $30,000 have access
    –   Median household income 10% higher
    –   Assessed property value grew 4X faster
    –   Property value increased 2,000% or more
    –   Sales tax revenue 6x greater growth
    –   Poverty lower
    –   Unemployment lower
Indiana – Growth Projections

   By 2025, Central Indiana will add 300 sq. mi. of new
    urban area

   In 20 years, population in Central Indiana will
    increase by the equivalent of three counties

   Traffic has doubled on many of our major highways
    and Interstates
       Public Private Partnerships


     FHWA
Northern Borders
  Conference

 Chicago, Illinois
  May 15, 2007

                                     Contact:
                                    Ryan A. Hoff
                                Legislative Director
                       Indiana Department of Transportation
                                  (317) 232-5475
                                rhoff@indot.in.gov

								
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