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Feds’ Record on Transport Public-Private Partnerships Prompts Skepticism

4:25 PM EDT on April 14, 2010

When it comes to creative transportation financing in an age of rising red ink, public-private partnerships (PPPs) are one of the most popular ideas on the table in Washington. Rail planners in Denver and Dallas are exploring the strategy to speed progress on new lines, and the White House's proposed $4 billion infrastructure fund could provide seed money for PPPs all over the country.

Denver_Union_Station_570x378.jpgDenver's Union Station, site of the FasTracks transit plan that is still in line for federal PPP funds. (Photo: Inside Lane)

But at a House transport committee hearing today, both lawmakers and witnesses raised questions about the success of existing federal involvement in PPPs, suggesting that more transparency and a streamlined process could be needed before a new infrastructure fund would be created to leverage private investment in infrastructure.

Rep. Pete DeFazio (D-OR), chairman of the committee's highways and transit panel, wondered aloud whether Congress should leave aside the Obama administration's $4 billion "I-Fund" and simply expand an existing U.S. DOT program that offers loans and lines of credit for local planners to sway more private funding -- the effort known as TIFIA, or the Transportation Infrastructure Finance and Innovation Act.

"Maybe all of it should just go into TIFIA right now," DeFazio said.

Chris Bertram, chief financial officer at the U.S. DOT, defended the I-Fund plan by noting that it could provide more up-front financing than TIFIA, which is now limited to covering one-third of any transportation project's total cost. 

Yet the hearing offered several examples of scattershot progress on existing federal PPP programs, including TIFIA. Eugene Conti, North Carolina's state transportation secretary, said his state had decided to move forward on its Yadkin River Bridge replacement using federal GARVEE bonds after winning a federal stimulus TIGER grant that covered only one-thirtieth of the project's total cost.

"We need to know what the rules are for this program ... we need a lot more transparency," Conti said.

Under questioning from DeFazio, Denver Regional Transportation District CEO Phillip Washington also acknowledged that while he believes he has satisfied the federal requirements to receive money from the U.S. DOT's transit PPP pilot program, the actual funds have yet to arrive -- nearly three years after his city was first selected to participate.

Washington told DeFazio that he anticipates federal aid arriving "in 2011, or whenever [a new federal transport] bill passes."

Rep. Chris Carney (D-PA) raised another concern, asking Bertram about the privately run San Diego toll road that filed for bankruptcy last month after winning $140 million in TIFIA loans. The South Bay Expressway, as it was known, is the first TIFIA recipient to become insolvent, and Bertram referred to "springing lien" language in the toll road's loan agreement that could put other private-sector creditors ahead in line for reimbursement.

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