Public-Private Partnerships in Transportation by zyc19183


									Public-Private Partnerships in

  The Transit-Labor Point of View
              About ATU
• Largest labor organization representing
  transit workers in U.S. and Canada. More
  than 180,000 members in 270 local
  unions, 46 states, nine provinces. Public &
  private employers. Industry 90%
  organized. Urban, rural, fixed-route,

• Keys for Transit- Labor: Service, safety,
• 1) More $ needed for transportation
  system. Gas tax receipts will dwindle (fuel
  efficient cars). Reluctance to raise gas tax
  by policymakers.
• 2) More jobs, compliance with collective
  bargaining, labor agreements.
• 3) Unbiased decision making.
    Public-Private Partnerships
         (PPPs) in transit
Four basic forms:
• 1) Private contracting of transit service.
• 2) Joint development.
• 3) Turnkey procurements such as design-
  build or design-build-operate-maintain.
• 4) Innovative financing – Grant
  Anticipation Notes, bonds, SIBS, other.
            PPPs in Transit

1) Transit service under contract: primary
  type of PPP in transit.

• Municipal entity contracts for some or all of
  bus, rail or demand responsive service.
  U.S. transportation needs cannot be met
  by one mode alone, or by only one sector.
   Types of Private Contracting

• 1) Revenue service – Fixed-route, park & ride,
  peak hour express services. Emerging role of
  taxi & small van operations in paratransit
  service, meeting needs of seniors, rural
  residents, those on Medicare.

• 2) Vehicle maintenance – Engine and
  component rebuilds, rehabilitation services
  (body work), tires, routine vehicle servicing.
  Types of Contracting (con’t)
• 3) Non-vehicle maintenance – Fare collection
  equipment, radio, communication systems, data
  processing, intelligent traveler information systems.

• 4) Administrative & support services – Accounting and
  payroll, employee benefits management, marketing, risk
  management, auditing.

• 5) Systems Development – Planning, environmental
  analysis, architecture/engineering, construction.
   Private Contracting (con’t)
• Keys for labor:

• 1) Federal government should remain neutral, should not
  intrude on local decision making. Since beginning of federal
  transit program, all bills have provided that federal government
  should not be involved.

• Mandated or minimum provisions on competitive bidding without
  appropriate standards for decision making serves to reduce the
  standard of living for workers and diminish the transportation service
  provided to communities. Can result in turnover, safety, security
  Private Contracting (con’t)
• Keys for labor:

• 2) Not opposed to provision of transit
  services by private operators, so long as
  methodology & criteria for service
  selection & final decisions are left to local
  decision makers, consistent with
  applicable laws, collective bargaining
  agreements, other pertinent agreements.
  Private Contracting (con’t)
• Keys for labor:

• 3) Unbiased decision making. Avoid artificially
  imposed cost models & anti-labor motivations.
  Guard against job losses, ensure safe, efficient
  transportation services consistent with local
  policies and agreements. Need sound auditing.
  States like MA recognize that public is best
  served through legislation designed to ensure
  cost savings. Others like MD, bills need
              False Promises
• 1) Touted savings through PPPs in contracting are
  frequently based on questionable and at times false
  assumptions regarding competition, cost, and
  mechanisms used to calculate these and other matters.
  Careful scrutiny needed (Denver).

• 2) Conflicting goals: Primary goal of urban transportation
  policy should be to improve the speed, safety and
  convenience of metropolitan travel. But primary goal of
  privatization is to reduce tax money that publicly
  operated systems receive to transport transit-dependent
  people, regardless of effect on congestion, pollution, &
  economic efficiency of the city.
       False Promises (con’t)
3) Service Suffers:

• 2001 TRB report dispelled myth that private firms will
  respond to competitive market pressures and provide
  better service at lower cost. Report: Nearly 40% of
  transit properties that contract-out bus services
  reported that service quality and customer service
  are negatively impacted by privatizing services.
  Safety, maintenance concerns, and high employee
  turnover all contributed to this negative impact on service
  quality when services are privatized.
       PPPs in Transit (con’t)
• 2) Joint Development

• Use of public transit property acquired with federal
  dollars for transit-related development. Examples: Air
  rights above a station or use of land adjacent to station.

• Generate ground rent, lease or other revenues for transit
  providers. Cost sharing arrangements with developers,
  who agree to perform certain functions such as station
  maintenance, security, or access control, in exchange for
  development opportunity.
   Joint Development (con’t)
• Example: WMATA air rights agreement in
  Bethesda, MD produces $1.6 million in
  rents annually. Also Moline, IL and
  Memphis, TN.

• Labor perspective: Joint development
  promotes increased ridership, more
  revenue for transit systems. Strongly
     PPPs in Transit (con’t)
3) Turnkey Development

• Rarely used due to pay-as-you go process
  – transit agencies dependent on annual
  appropriations. But some examples
  include Tren Urbano, Hudson-Bergen
  Light Rail, and Las Vegas Monorail
  (service issues).
      PPPs in Transit (con’t)
4) Innovative Financing

• Grant Anticipation Notes, Bonds

• Minimum guaranteed funding levels and mass
  transit account funding provide economic
  security that financial markets demand. Since
  1997, over $2.5 billion in GANs have been
  issued for transit – positive developments.
 Innovative Financing (con’t)
SIBS & and other innovative finance

• Innovative Financing: SAFETEA-LU expands
  SIB program to all states, providing up to $15
  billion in private-activity bond authority for
  transportation facilities projects. Establishes
  national surface transportation infrastructure
  financing commission to study alternatives to
  fuel taxes as revenue sources for the Federal
  Highway Trust Fund.
     Innovative Financing/SIBS
• Transportation Labor supports new innovative
  finance mechanisms for transportation projects,
  such as tax credits and SIBS, on the condition
  that both the direct recipients of federal dollars
  through SIBs and tax credits and projects funded
  through subsequent generation SIBs and tax
  credit funding comply with basic federal labor
  standards, including Section 13(c) of the Federal
  Transit Act and Davis-Bacon – providing
  economic and job security.
 Innovative finance/SIBS (con’t)
• The SIB program is indeed a Federal program
  and should be treated as such under the law.
  But for the Federal dollars that are responsible
  for the original and continued capitalization of
  the banks, the banks would not exist, as they are
  undeniably dependent on the initial federal
  infusion of capital. Since SIBs require Federal
  assistance for their inception, they are and will
  always remain Federal entities.
 Innovative finance/SIBS (con’t)
Sound policy:

• As long as federal labor standards are
  applicable, organizations that control
  billions of potential dollars in union
  pension funds may be willing to provide
  investment capital for transportation
  infrastructure projects.
 Innovative finance/SIBS (con’t)
• Davis-Bacon, Buy America, others have
  been enacted to advance important public
  policy goals protecting labor, the
  environment, other areas. Must maintain in
 Innovative finance/SIBS (con’t)
• Davis-Bacon

• Opponents contend that Davis-Bacon impedes
  the formation of PPPs due to additional costs
  being added to project. Labor’s view: Recent
  studies indicate that when workers’ skills and
  productivity justify higher wage rates, highways
  can be built at the same, or even lower cost per
  mile than when lower wage, lower skill workers
  are employed.
 Innovative finance/SIBS (con’t)
• Buy America

• Opponents also contend that Buy America
  impedes the formation of PPPs due to
  additional costs being added to project.
  Labor’s view: Need to protect American
  manufacturing jobs. Need to further bolster
  enforcement of Buy America.
      Keys to Success of PPPs:
         Planning Process
• Stakeholders: While SAFETEA-LU provided for
  increased participation by private entities in the planning
  process, innovative finance still rare in transit.

• ATU supports the diversification of MPO boards,
  requiring states to appoint private sector transit
  operators, transit workforce representatives, minority
  groups, transit riders, smart growth groups, businesses,
  and others with a direct stake in the provision of public
  transportation services to sit on such panels, with the
  right to vote.
    Keys to Success of PPPs
• 1) Early consultation

• 2) Build coalitions to facilitate assistance in

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