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Innovations in Transportation Infrastructure Development: A Road Less Traveled. Perspectives of the Public Owner. Fuel Taxes. Vehicle Taxes. Tolls. General Fund. Other. Trends in State Highway Funding, National Historical Trend (1978 – 2004).
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Innovations in Transportation Infrastructure Development: A Road Less Traveled Perspectives of the Public Owner
Fuel Taxes Vehicle Taxes Tolls General Fund Other Trends in State Highway Funding, National Historical Trend (1978 – 2004) Facility pricing (tolls) a small – but growing – method of financing transportation in the United States Percent 100 90 80 70 60 50 40 30 20 10 0 1986 1988 1990 1992 1994 1996 2002 2004 1978 1980 1982 1984 1998 2000 Source: 2004 Highway Statistics, Table HF-10.
Current Transportation Funding Sources in Washington StateFiscal Years 2007 - 2009 Billions (Current Dollars) $5,000 TNB and Other Toll Revenue $4,535 Million $4,500 Ferry Fares $4,000 2005 Gas Tax Rental Car Tax $3,500 23¢ Gas Tax 5¢ Gas Tax $3,000 Federal Revenues Licenses, Permits, and Fees $2,500 Miscellaneous $2,000 Vehicle Sales Tax $1,500 Local Revenues $1,000 $400 Million $500 $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 SectorPrivate Sector Acquire Right-of-Way (ROW) DesignDesign Build FinanceFinance OperateOperate MaintainMaintain Own (reversionary)
“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** Total Borrowing $794 m Total Borrowing$711 m Mortgage Statement: Total Principal and Interest Over 34 Years Estimated at $1.908 billion* Mortgage Statement: Total Principal and Interest Over 24 Years Estimated at $1.572 billion *United Infrastructure Washington (UIW) Preliminary Financing Plan dated January 25, 2001. **Seattle Northwest Securities, assumptions as of May 10, 2005 (interest rates as of 5/10/2005 + 50 BP with CABs issues 7-9).
“…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.” Proposition Bet: what are the chances of being “right” about traffic revenue forecasts? Denver PostJune 1, 2006 Truth be tolled first in a three-part series Roads to riches Paved with bad projections
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 TollroadLaredo, TXProject Start: 1999 Project Complete: 2000Project 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?
