South Carolina may become the latest state to enter the express toll lane boom across the Southeast under a newly inked transportation law that also opens the door to public-private partnerships.
Republican Gov. Henry McMaster Monday signed into a law
The ability to enter into transportation P3s "is a big change for South Carolina," said Justin Powell, the state's transportation secretary, speaking Tuesday at The Bond Buyer's Southeast Public Finance conference.
"We're going to look at it case by case, what makes sense for the state and what works for the project," he said. "Not every project is going to be a P3 project, but we're going to look at it."
The first step is setting up a P3 office, Powell said. "So, you'll see a lot more of us in that space."
Limited state funds and growing urban-area congestion have prompted more states to turn to managed lanes, also called express toll lanes or choice lanes — or, by critics, "Lexus Lanes" — where the driver pays a fee to avoid congestion, while those who do not choose to use the lane pay nothing extra but get stuck in traffic.
Managed lanes have evolved from a "boutique subsegment" to the fastest-growing sector in ground transportation due to their effectiveness in addressing congestion relief, Fitch Ratings said in a
In the Southeast, South Carolina joins Georgia, Tennessee, North Carolina and Virginia in creating the lanes. Most of them entered into P3s for the projects.
With its new law, South Carolina will benefit from advances made by its neighboring states, said Omri Gainsburg, partner and chief operating officer, Americas, at Meridiam, which led the consortium behind Georgia's
"The timing is great as SCDOT will benefit from lessons and innovation gained from other nearby states' procurements as well as increased market capacity," Gainsburg said.
The state's consideration of several potential managed lane corridors signals a "broader program," which "will help encourage stronger commitments from industry," Gainsburg said.
South Carolina is
The law allows the SCDOT to create toll lanes on existing highways and creates a statutory framework for the SCDOT to enter into P3s for planning, building, operating and maintaining the DOT's roads, bridges and other infrastructure, according to the bill's
No further legislative approval is needed for the choice lane projects, and the P3 contracts can last 60 years. The bill tasks the legislature's Joint Bond Review Committee with oversight and comment of solicitations prior to advertisements.
The department may also request the issuance of turnpike bonds, according to the fiscal analysis, with principal and interest payable solely out of the turnpike facility revenues.
"It's a big deal," South Carolina Policy Council Research Director Sam Aaron said. "This is one of the biggest changes to road repair other than just increasing funding that we've had in years."
The state, which boasts triple-A ratings from Moody's Investors Service and Fitch Ratings, more than doubled its transportation budget between 2013 to 2025, from $1.4 billion to $3.1 billion, Aaron said.
"We spent $1.7 billion more over the course of a decade to improve the roads, and yet when you look at the reports on national highway statistics, our percentage of roads in acceptable condition was decreasing," he said. "So it's not a money issue per se, it's more how you're actually getting the work done and determining what projects you're focusing on."
Across the U.S., 11 states have existing priced managed lanes: California, Colorado, Florida, Georgia, Maryland, Minnesota, North Carolina, Texas, Utah, Virginia and Washington, according to Robert Poole, co-founder and director of transportation policy at Reason Foundation.
With three choice lane projects lined up under
South Carolina is slightly different from the other states as it has no major urban areas facing congestion, Poole said.
"I see South Carolina as a breakthrough because it's not as heavily an urbanized state — this is not the typical state that's done it before," Poole said. "Though obviously there is some congestion in every state that has a strong economy."
Of the 32 managed lanes in the nation currently, 24 are publicly operated and eight are operated through a public private partnership, according to the National Council of State Legislators.
Georgia, whose $12 billion State Road 400 Express Lanes project
A future phase includes making an existing 285 express lane bidirectional and adding another six to 10 miles, Russell McMurry, commissioner of the Georgia Department of Transportation, said
Meanwhile, North Carolina's effort to
Infrastructure investors have the appetite to meet the "unprecedented" level of managed-lane activity, Meridiam's Gainsburg said.
"The choice lanes model has demonstrated long-term success to both investors and state governments across the country," he said. "For investors, we now have over a decade of experience that shows choice lanes can provide strong financial performance and protection against inflation while remaining resilient to economic shocks."
South Carolina has one toll road: the 16-mile Southern Connector south of Greenville, which opened in 2001. The quasi-public operator of the highway
South Carolina had another tollway, but the South Carolina DOT
