Sponsors of four proposals have applied to a Federal Transit Administration pilot program that will assist up to three projects that can demonstrate the benefits of public-private partnerships — including long-term lease deals — in the transit area, an FTA official told a House panel yesterday.
One of the P3 transit projects is a 3.2-mile connection that would link the Bay Area Rapid Transit system to the Oakland International Airport. Another involves four corridors and a maintenance facility scheduled for development under the Denver Regional Transportation Authority FasTracks program. The other two applications include the development of four bus-rapid-transit, or BRT, corridors and an intermodal facility, which are part of a transit initiative known as Metro Solutions in Harris County, Texas, as well as a project in Georgia extending high occupancy vehicle lanes and implementing BRT on Interstate-75.
“Given the experimental nature of the pilot program, FTA intends to designate as pilot projects those projects that exhibit high ‘demonstration value’ ” of P3s in delivering transit projects, FTA chief counsel David B. Horner told the House Transportation and Infrastructure Committee’s highways and transit subcommittee.
After the hearing, Horner said the FTA intends to make on a decision as soon as possible on which projects to include in the pilot program, but could not give an exact date.
The FTA will look at criteria to determine which projects to include, such as the level of private involvement, the quality of risk allocation with respect to the cost and ridership of the project as set forth in the public-private agreement, the extent to which equity capital and development proceeds contribute to the project, and the terms under which such capital is contributed.
Meanwhile, Democratic lawmakers remained skeptical on whether the P3 transportation projects are superior to publicly financed projects.
“I am not convinced that the private sector has an inherent ability to provide goods and services more quickly, efficiently, or for less money than the public sector,” said Rep. Peter DeFazio, D-Ore., who is chairman of the subcommittee. “In addition, I have fundamental concerns about how we ensure the public interest is protected when public agencies contract out work to private companies.”
His comments came at the beginning of the hearing before several experts told the panel that innovations in transportation project contracting, including techniques which are used in P3s, have helped deliver roads and other transportation infrastructure quicker than traditional methods.
“In traditional Federal-aid highway construction contracting, cost is generally the one criterion that determines a winning bid,” said Federal Highway Administration acting deputy administrator and chief counsel James D. Ray. “In recent years, as state highway agencies strive to meet customer needs, factors other than cost have also emerged as important factors in awarding highway construction contracts. Quality, delivery time, social and economic impacts, safety, road user impacts, life-cycle costs, innovative construction and management techniques, and better use of improved technologies are all factors that states have considered. Innovative contracting techniques have provided states with greater flexibility to address these concerns and encouraged contractors to be more creative in addressing the states’ needs.”
“More flexible procurement arrangements are often a key part of public-private partnerships,” Ray added.
Fred Hansen, general manager of TriMet, the transit district for Portland, Ore., echoed Ray’s comments. TriMet and Bechtel Enterprises built a 5.5-mile light rail extension, known as the Airport Max extension, he said.
Using a P3 and design-build contracting, where one entity or team is responsible for most of the design and all of the construction, “allowed the project to be built years, if not decades, sooner than anticipated,” Hansen said.
