Experts discuss Public-Private Partnerships during INDOT conference

Building I-69 by 2018 requires bold, creative action. In September, Governor Mitch Daniels announced that constructing the highway, between Evansville and Indianapolis, is critical to strengthening the state's economy and its transportation system. That's why more than 250 contractors, engineers, state legislators, transportation planner and other experts met Dec.12 at the Indiana State Museum to discuss Public-Private Partnerships (P3) and tolling, critical tools for making I-69 a reality.

With introductions by Indiana Department of Transportation (INDOT) Commissioner Tom Sharp, independent experts as well as federal and state transportation officials from Texas, Virginia and California spoke about their experiences with P3 projects. While each example was different, they all had a common theme: Utilizing P3 to help pay for vital transportation projects led to billions of dollars in new funding that allowed important highway projects to become a reality - while easing the burden on state budgets. Speakers included:

• Bob Poole, director of transportation for the Reason Foundation Cory Boock, partner, Nossaman Guthner Knox & Elliot, LLP J. Richard Capka, acting administrator, deputy administrator, Federal Highway Administration Tyler Duvall, acting assistant secretary for transportation policy, U.S. Department of Transportation Laurie B. Mahon, senior vice president, principle consultant, PB Consult Ed Pensock, director of turnpike corridor systems, Texas Turnpike Authority
• Barbara W. Reese, CFO, Virginia Department of Transportation

While Indiana officials are studying a variety of P3 funding options, a likely scenario for I-69 involves INDOT seeking proposals from private firms to design, build, maintain and operate the highway.  The private company, referred to as a concessionaire, contributes funds toward the construction of the roadway.  Once finished, the facility is owned by the state and leased to the private company.  Any P3 contract will require the concessionaire to meet specific state-designated requirements regarding construction, management - including setting tolls - and maintenance.
 
P3 arrangements of this kind are commonplace worldwide.  The funds used by concessionaires come from a variety of international sources, such as long-term pension funds, and other financial instruments that have a long investment horizon.  In fact, banks in the United States participate in P3 projects in other countries.  While the funding comes from a variety of sources, the expertise in constructing projects in this country comes primarily from U.S.-based companies.  These companies rely on local contractors and suppliers to build the projects. 

"This isn't some untested idea coming from left field. There is real precedent for P3 projects that work, and work well," Sharp said. "P3 can significantly close the new construction funding gap in Indiana and allow the state to build a superior transportation system that fuels our economy."

I-69 toll roads and P3
Innovative road funding and management tools are being used by states across the country to finance critical transportation projects. Indiana is investigating the possible use of two key methods of developing the I-69 highway in the fastest, most efficient way. By doing so, construction could begin as early as 2008. Take a look a the following FAQs.

Q: Why is the state going to make the I-69 extension from Indianapolis to Evansville a toll road?

Simply put, the state does not have enough money to build the I-69 extension. Without tolls, construction would begin in 2017 at the earliest with completion no earlier than 2035. By using tolling, construction will begin in 2008 with completion targeted for 2018 - about the same time construction would start without tolling. Tolling would also slash the state money needed to complete this vital economic development corridor for Southwest Indiana.

If the state is going to make the I-69 extension a toll road, why use a public-private partnership?

The use of a public-private partnership allows a private vendor to compress the construction timeline to complete the project. A private vendor will want the road constructed as quickly as possible to maximize its return on investment. A private partner will also be able to save money through more efficient operation - while maintaining state safety and maintenance standards.

Major Moves will move I-69 from drawing board to reality