The Federal Highway Administration yesterday denied the Pennsylvania Turnpike Commission's application to implement tolls on Interstate 80, a move that could encourage state lawmakers to consider an alternative transportation financing plan, a $12.8 billion concession agreement on the Pennsylvania Turnpike.

Tolling the 311-mile stretch was a way to sweeten Act 44 and generate more transportation funding for the state.

Act 44 allows for two scenarios, one being a public-public partnership where the PTC leases I-80 from the state's Department of Transportation, implements tolls on the interstate, and pays PennDOT annual lease payments.

In the second plan under Act 44, if the FHWA were to deny tolling I-80, PennDOT would continue managing the roadway. The PTC would still make yearly payments to PennDOT, but those annual amounts would decrease by $450 million in fiscal 2011, compared to the first scenario which includes tolling on I-80, according to Barry Ciccocioppo, spokesman for Pennsylvania Gov. Edward Rendell. It is that second plan that the state must look towards as the FHWA denied tolling I-80.

The FHWA said it rejected the PTC's tolling application because the commission's use of the toll revenue does not meet legal requirements. While toll revenue can be used for lease payments, the amount of the payment is required to be based on an objective market valuation, information that the FHWA said was missing from the PTC's application.

"There is simply no evidence that the lease payments are related to the actual costs of acquiring an interest in the facility," Tom Madison, administrator for the FHWA, said in a press release. "Although we are unable to move the application forward, we stand ready to assist the commonwealth in finding creative ways to address its transportation needs."

In a prepared statement, PTC chief executive officer Joe Brimmeier said the commission will continue making payments to PennDOT, but could not elaborate further on the FHWA decision.

"The [commission] is unable to comment until we are officially notified by the [FHWA] of the reasons for their decision," Brimmeier said via e-mail. "Up until now, we've only been made aware of this story by reports in the media. It is important to keep in mind that the [PTC] will continue to meet our financial obligations under Act 44 ... After we've had an opportunity to see and understand the FHWA's rationale, we certainly will have more to say on this important issue."

Even without tolling, the PTC will make its fiscal 2009 payment to PennDOT for $850 million, as well as next year's payment of $900 million. That amount would have increased by 2.5% annually thereafter, yet will drop as the PTC will not have toll revenues from I-80 to help fund larger payments.

As the state faces a $450 million annual funding gap beginning in 2011 in transportation funding, Rendell yesterday urged the legislature, which returns next week from recess, to pass legislation that would allow the state to enter into a public-private partnership with Citi and Abertis Infraestructuras, a joint consortium.

That agreement would allow Citi/Abertis to manage the 530-mile Turnpike for 75 years in return for a $12.8 billion up-front payment to the state.

In addition, the private company would finance Pennsylvania's $5.5 billion, 10-year capital program.

The Turnpike runs east-west along the southern region of the state from New Jersey to Ohio while I-80 runs parallel to the Turnpike through the state's central region.

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