Monday, September 9, 2013

Private roads a good idea

The Tampa Bay Times decided that private toll roads are a bad idea.
Pasco County needs better traffic flow between east and west, but the answer is not a privately owned toll road. After receiving an unsolicited bid from a private company in June to build a toll road along the State Road 54/56 corridor for 25 miles from U.S. 19 to Wesley Chapel, and potentially further east toward Zephyrhills, the Florida Department of Transportation sought additional proposals. The state should be wary of turning over its responsibility for building roads to private enterprise more interested in making a profit.
Under the plan, the state would sell or lease public right of way, allowing a private company to build new lanes in the median for uninterrupted travel and to charge tolls to recoup the projected $2 billion investment. Planners envision elevated, managed toll lanes for motorists and express buses.
The state already turns over responsibility for building and maintaining public goods and services to private companies interested in making a profit. Ever heard of power utility companies?  There are some that are publicly operated, but most are private, such as Tampa Electric and Duke Energy.
Pay the toll... but keep on driving
Does the Times believe that a company operating a toll road would not be subject to some public scrutiny and regulation, say like the power utilities, whose profits are regulated?
The push for private highways is a by-product of a smaller government, less-tax philosophy in a state unwilling to raise revenue to meet its transportation needs. The problem is exacerbated by Florida's role as a donor state on federal gas taxes, receiving 91 cents in federal road money for every dollar it sends to Washington. To public officials, the private road scheme has the allure of pushing the financial risk onto the private sector and saving state revenue for other highway construction. But the true risk remains with drivers, who face the prospect of pricey tolls to cover both the debt and a profit for the builder/operator.
As if the public sector has done a great job of meeting transportation needs. Yes, Florida is a donor state, subject to the whimsy of the politics up in DC.  We send them our gas taxes, they take their cut, take another 40% or so cut and give to transit projects, run it through the patronage mill in DC, and eventually, if we're lucky, we'll get 91% back. That's actually quite high for Florida compared to the past when it was closer to the 70% range for years.  Perhaps we should keep all our road money for our roads?  What does DC know about our needs anyways?

It's not as it this is an original idea. There are thousands of miles of private roads across the world.
Of the 11,000 kilometers of France's highways, 8,000 km are under private concession. 3,120 kilometers of Italy's highways (comprising 56% of the country's toll roads) are controlled by Autostrade Concessioni e Costruzioni Autostrade. According to Forbes, "Autostrade was an early Electronic Age entry, computerizing to its highway system in 1988".[7] The M6 Toll was the first private toll motorway in the United Kingdom.[8] The project was described by as a "27 mile [43 km] dual three lane (plus hard shoulder), £485.5 million motorway" with six toll stations.[9] 
Even the bureaucrats in France figured out a role for the private sector.

The Times has no idea how the private sector... or even roads, work.  A private toll road operator will have to provide a compelling service to survive.  If they charge too much, or don't maintain the roads, or have safety issues, they won't attract the ridership.  The Times obviously has an issue with the concept of "profit", and they also overlook the cost and bureaucracy of the State of Florida is not free.  Which is greater, a toll operators profit (likely to be regulated or fixed by contract by the state), or the cost of more government bureaucracy?

The private operator could potentially build the road much cheaper than the state. Why? The Davis-Bacon act.  The Davis-Bacon law requires federal contractors to pay workers at least the prevailing wages in the area where the work is conducted. It applies to federally funded construction projects such as highways and bridges. I know folks who've worked in contracting and payroll on large, federally assisted construction programs.  The unions are literally at their door every day, demanding anyone who picks up a hammer or a nail be classified at the highest paid journeyman carpenter rate, and requiring costly record keeping and compliance, thus artificially increasing the construction costs.  This could keep the costs down, and actually lower the tolls the drivers pay, making it more affordable for all drivers.

What are the risks?  The toll operator could fail, or go bankrupt.  What then?  The state could take over, and buy the remaining assets at a firesale price.  Odds are the state or another operator would then acquire the road at a much lower cost than if they were to develop it.  Then they could later sell it another operator or operate it like the other toll roads in the state.
The impetus for a new road now comes from Pasco County's long-range plan to funnel future growth into that corridor. Projections call for a 55 percent increase in population in that area, to more than 312,000 people, by 2035.
Private operators can be part of the solution.  It's had success in Indiana. Given the anticipated, growth, should we not look to new private sector solutions if they can improve the traditional public sector approach?
The result could be an undesirable two-tiered transportation network serving more affluent commuters with private roads and forcing everyone else onto the underfunded public highway network.
Actually, the result will more likely be a desirable situation whereby the drivers that can and want to pay the toll will do so, thus reducing traffic and congestion that would otherwise be on state roads, improving traffic flow and reducing future costly expansion. It's worked that way in South Florida on the I-95 Express Managed Toll lanes.
I-95 Express Managed Toll Lane in South Florida
Driving is not free.  We need to pay for our roads, and the anticipated growth in the region.  Toll roads and managed toll lanes will need to be part of the solution in the Tampa Bay area.  As long as we have transparency and some regulation to ensure safety, let's not keep the private sector out.

1 comment:

  1. Great response. The FDOT does not have enough money to maintain our roads much less build new ones. A toll road is a user tax, if you do not ride on it, it does not cost you anything.