Category: P3 Center in the Media

A March 14 story on urban planning graduate programs with a focus on transportation featured Mason’s Transportation Policy Operations and Logistics (TPOL) master’s degree program among DC-area offerings for transportation professionals seeking a role in the arena’s dynamic future.  Student Christopher Gomes’ experience was highlighted in a section showcasing how a TPOL “studio” class advised Fairfax County on pop-up development that helps anchor transportation infrastructure improvements like new Metrorail stations.  The highly successful food truck picnic and entertainment space known as The Boro was a product of students’ work with the County and the Tysons Partnership.  Read the full article.

The Washington Post quoted Center Director Jonathan Gifford in a March 12 article on the $5.6 billion 36-year contract that would create the Purple Line light rail system in Maryland.  Aptly titled “Determining if the Purple Line contract is a good deal isn’t easy,” the article focuses on the proposal as the Maryland Board of Public Works prepares for a vote on April 6.

The Purple Line is designed to run two-car trains along primarily local streets between Bethesda in Montgomery County and New Carrollton in Prince George’s County, inside the Capital Beltway.  Twenty-one station stops are planned.  If approved, the public-private partnership would be one of the most expensive and ­longest-term contracts awarded in Maryland.  The Purple Line would also be only the second U.S. transit project to rely on private financing.

Gifford’s comments included how hard it is to determine how well public-private partnerships work on U.S. transit projects because “we have a pretty short track record” with them. He says that the best ones allow the government to assume only the financial risks it can best handle.

To read the full article, click here.

To the editors:

The Post’s recent article on the Midtown Tunnel project is one-sided, and wrong on several counts. The increase in Virginia’s contribution to the $2.1 billion project from $308 million to $581 million was done at the state’s behest in order to reduce the tolls on users. There has been no cost overrun, and the $2.1 billion project is on schedule to open in 2017.

While it is true that Virginia’s contribution is more than twice the $220 million equity contribution from Macquarie and Skanska, the funds at risk for the project are $1.41 billion. This includes $675 million in bonds and $463 million in federal loans that were premised on careful review of the project, as well as an additional $51 million required from Macquarie and Skanska if needed (the contingent equity). The funds at risk are 240% of the state’s contribution. Moreover, the state bears zero risk if the project fails – no risk of paying for cost overruns, and no risk if toll revenues fall short of expectations.

The article states incorrectly that Skanska and Macquarie are “entitled to large government payouts if Virginia builds or expands other bridges and tunnels nearby.” First, it is not an entitlement. Second, it is not a payout to Macquarie and Skanska. If the government builds a competing facility, the project company, Elizabeth River Crossings OpCo LLC, has the right on behalf of the U.S. Department of Transportation and the bondholders (the lenders to the project), as well as Macquarie and Skanska, to demonstrate that their revenues have been impaired by the competing project. There is compensation only if harm can be proved – no harm, no compensation.

Think about it. Would you lend money or invest in a toll project if the government had the right to build a competing free facility right next door?

Public-private partnerships (PPPs) such as this are not a panacea. Every government has a right – and indeed a responsibility – to look hard at its contractual agreements to find where the public interest can be served most effectively and efficiently. That includes infrastructure contracts.

PPPs have the potential to improve the value America gets for our limited infrastructure dollars. The benefits of PPPs include on-time, on-budget delivery along with high standards of maintenance and operation extending over decades. Since 2011, more than $10 billion in highway and transit projects in Virginia and across the country have been delivered on time and on budget by using PPPs.

Our Center for Transportation Public-Private Partnership Policy at George Mason University is dedicated to advancing objective consideration of PPPs for infrastructure renewal and development. We are supported by contributions from private industry and the Commonwealth of Virginia.

Thank you,
Jonathan Gifford, Professor
Director, Center for Transportation Public-Private Partnership Policy
School of Policy, Government, and International Affairs
George Mason University

To view the original article in its entirety, please click here https://www.washingtonpost.com/local/trafficandcommuting/agreement-for-new-submerged-tunnel-in-norfolk-leaves-virginia-underwater/2015/10/17/f03b68f4-566b-11e5-8bb1-b488d231bba2_story.html

Graduate Research Associates Zhenhua Chen and Nobuhiko Daito, and Center Director Jonathan L. Gifford collaborated on a paper, entitled “Data Review of Transportation Infrastructure Public-Private Partnership: A Meta-Analysis,” which was published in Transport Reviews. The paper highlights the need for policy-makers to require continuing disclosure of P3 performance for validating the effectiveness of the procurement model and to improve the practice. Click here to read the entire paper.

Center Director Jonathan Gifford was quoted in a June 3, 2015 Governing Daily article titled “Virginia Discovers P3 Projects Might Not Always Save Money.”

Click here for the full article: http://www.governing.com/topics/finance/gov-virginia-public-private-partnership-setbacks.html