CHICAGO — Ohio hopes to issue a request for proposals by the end of the year to privatize its highway rest areas, one of several public-private partnerships being eyed by Gov. John Kasich’s administration.
The administration’s highest-profile P3 project, a long-term lease of the Ohio Turnpike, is expected to advance later this week, when officials announce the firms that will make up its advisory team, said Greg Murphy, chief of staff for the Ohio Department of Transportation at the Bond Buyer’s Transportation/P3 conference here.
The state is also considering entering into a P3 for the Brent Spence bridge, an aging span that served as a backdrop for President Obama’s September announcement of his jobs bill, as well as other assets.
“Similar to the rest of the country, Ohio has a problem with financing and funding [infrastructure projects] as well as risk transfer,” said Murphy, one of several panelists who spoke as part of a discussion on “The Uncertain P3 Landscape.”
Kasich, who took office in January, spent much of his first year pushing legislation that would allow the state to lease or sell its assets to private firms. The current two-year budget bill enables the state to evaluate a long-term lease of the Turnpike and requires General Assembly approval of a final request for proposals.
One of the administration’s first projects is a possible lease of rest areas that are not connected to the interstate system. Ohio has 59 such spots, which range in size from 40 acres to four acres, Murphy said.
A tentative plan would have the state lease the land to a private firm or developer for between 30 to 50 years, he said.
“We would turn over the land and they can bulldoze it and put up a McDonald’s,” he told the audience.
The state now spends about $50 million a year operating and maintaining the rest areas.
A long-term lease would include certain provisions, such as a requirement that rest rooms remain open 24 hours and that the number of car and truck parking spaces remain the same, Murphy said.
But a private firm would likely have flexibility with the green space, he added. “We don’t believe we need 40 acres of green space for people to walk around in with their dogs.”
Public employees do not staff the rest stops. The state currently contracts with a firm that hires special needs workers to clean the rest stops — as well as other state facilities — and Murphy said the state would likely work with a private partner to try to retain that contract.
Officials are leaning toward structuring the deal as a long-term annuity, with an annual return from the private partner, as opposed to an up-front cash payment, but no final decisions have been made, Murphy said in an interview.
Murphy said the state is moving cautiously toward its first P3 project. “We’re very conscious in Ohio of our first project,” he said. “We don’t want it to crash and burn, because we would have the legislation stripped from us very quickly.”
A state panel called the Transportation Review Advisory Council approves all transportation projects in the state, and is currently underfunded by about $2 billion worth of projects through 2017, Murphy said.
Without alternative financing methods such as P3s, the state could push back some of those projects until 2035, he said. “That’s really starting to resonate with the Ohio electorate, that there really is no money.”
