Dear Highway User,

At a recent Highway Users Breakfast Meeting, State Controller and Transportation Board member, Kim Wallin, gave a presentation on understanding Public-Private Partnerships, or P3s as they are known. Ms. Wallin indicated that P3s might only be useful for a small percentage of Nevada’s transportation needs, likely to be less than 10% of Nevada’s roads. In addition, Controller Wallin emphasized the importance of developing a plan to educate Nevada drivers about our transportation funding crisis.

Controller Wallin emphasized that P3s could allow private funding which is typically recovered through tolls after completion. She went on to say that Nevada still needs additional revenue sources to pay for Nevada’s roads.
Along similar lines, the U.S. Chamber of Commerce released a report this week highlighting the importance of high-performing transportation systems and their importance due to the Nation’s ever increasing and shifting population: http://www.uschamber.com/
publications/reports/
0804transportationchallenge

We will update you on the direction and results of P3s from throughout the Nation, as we continue to monitor the successes and/or failure of projects being operated and funded, and as more and more transportation-infrastructure projects come on-line.

Sincerely,
Nevada Highway Users Coalition

In an effort to better-explain how Public-Private Partnerships or P3s actually work, here are some basic pros and cons of this issue. A recent news article discussing whether P3s are indeed better ways to build roads is attached below. http://www.lvbusinesspress.com/articles/2008/04/09/news/iq_20696783.txt

What Are Public-Private partnerships?
Contractual agreements that allow private sector participation in public sector projects.

Pros
Utilizes strength of both public and private sector

• Reduces public spending
  • Allows public funds to be used on other projects
• Deep pools of investment capital looking to invest in assets for a very long period
  • Injection of equity capital to invest in other assets and access to funding outside municipal bond market
• Increases efficiency and innovation
  • Build it sooner
  • Government does not need money first
• Distributes risks by transferring it to private sector from the public
  • State not liable for debt

Cons

• Political cost – opposition for a variety of reasons
  • Public perception that critical “public” assets are controlled by private sector, often for very long periods, with related public safety and asset performance concerns
  • Need to charge user fees in environments and/or markets unaccustomed to such charges
  • Concerns that money goes to profit - not go back into maintenance
  • Concern that PPP projects - especially those involving railroads and dedicated truck lanes - properly protect the environment
• May not generate adequate revenues
  • Traffic may divert depending on tolling or revenue collection methods
• If tax exempt – lose tax revenue
• Contract issues
  • Private contractor may demand revenue guarantees
  • Revenue sharing formulas
  • How is risk sharing determined
  • Requests for non-compete – no improvement to parallel roads

Public-Private Partnerships Do Not Work If…

• There is a of lack identifiable revenue sources
• There is insufficient demand
• There is a lack of public support

State road funding plan advances in Missouri which is taking place concurrently with a proposed constitutional amendment that would dedicate a percentage of increasing state revenues to transportation projects.
http://www.landlinemag.com/todays_news/Daily/2008/Apr08/040708/

Microsoft Introduces Tool for Avoiding Traffic Jams
Microsoft announced plans to introduce a Web-based service for driving directions that incorporates complex software models to help users avoid traffic jams.
http://www.nytimes.com/2008/04/10/technology/10maps.html

Louisiana Roads Get Funding Increase
The new Louisiana Governor signed a transportation bill.
http://www.landlinemag.com/todays_news/Daily/2008/Apr08/040108/

Nevada's Gasoline Coffers Near "E"
Higher fuel prices push agencies to cut costs or get emergency aid. http://www.lvrj.com/news/17348014.html