Joe Nathanson: Public-private deals may build our future

It used to be a no-brainer. You needed roads and bridges for your community’s economy to grow and prosper.

That was the view from corporate board rooms to main street merchants and from chambers of commerce to local union halls. And, to build and maintain those roads and bridges that benefit us all, directly or indirectly, you had to collect taxes.

The Greater Baltimore Committee’s recent forum on transportation funding highlighted how shaky that consensus is today. From the State House to Congress, elected officials can hardly utter the word “taxes.” The Grover Norquist cultists, those devotees of the president of Americans for Tax Reform, have signed pledges not to raise taxes of any kind under any circumstance.

At the GBC summit, Rep. Chris Van Hollen noted that Sept. 30 would mark the two-year anniversary of Congress’ failure to reauthorize the Surface Transportation Act, the federal program that funds construction and maintenance of highways and transit facilities.

The current proposal from the majority in the House would reduce current transportation spending by more than a third.

With the Senate having very different views, we are limping along with successive continuing resolutions. Spending on roads, bridges and transit along with the ability to continue to collect the federal gas tax has been authorized for another six months. The Federal Aviation Administration is authorized for only another four months.

Funding alternatives

One group that has not been bashful about discussing new revenues is Maryland’s Blue Ribbon Commission on Transportation Funding.

Of course, that is their mission. They were commissioned by the 2010 Maryland General Assembly to consider short- and long-term measures for providing the revenues for the state’s growing wish list of transportation projects.

The commission went beyond looking at traditional sources of funding — the gas tax, titling fees, sales taxes — which make so many elected officials skittish. Increasingly, officials are interested in examining public-private partnerships (P3) to pay for transportation improvements.

A member of the commission, Secretary of Transportation Beverly Swaim-Staley said Maryland has a stellar example of this approach to infrastructure funding.

The Maryland Port Administration entered into a landmark agreement with Ports America in 2010. This private entity, the country’s largest independent port operating company, is now the operator of MPA’s Seagirt Terminal.

In return for the revenue earned, the 50-year agreement calls for Ports America to construct a new container berth with a 50-depth. This will enable the Port of Baltimore to accommodate the largest container vessels afloat once the newly enlarged Panama Canal is operating at enhanced capacity in 2014. Beyond the Seagirt development, Ports America is committed to investing another $140 million for the state’s road and highway priorities.

Another member of the commission is Senate Majority Leader Robert J. Garagiola of Montgomery County. He suggested that action on transportation funding will have to come in the 2012 General Assembly session, and he also indicated an interest in looking at public-private solutions, referring briefly to an initiative in the Denver area.

Learning from Denver

Indeed, the Denver region has what might serve as a new national model in its Eagle P3 Project.

Denver Transit Partners, a private consortium of engineering and construction firms led by Fluor Corp. along with key investors, was awarded the project by the Regional Transit District in 2010.

The project entails the design, construction, financing, operation and maintenance of the East Rail Line between Denver Union Station and Denver International Airport and additional expansions of the regional rail system.

As the transit agency explains it, in this public-private partnership, the Regional Transit District “will retain all assets while shifting much of the risk of providing the projects to the private partner or consortium. In return, RTD would make lease payments to the private partner, allowing the agency to spread out large upfront costs over a longer period of time, much like a 30-year mortgage versus a 15-year mortgage.”

With the benefit of the experience of such partnerships, including one close to home, it may be time for our leaders to give serious attention to arrangements that can attract private capital for new infrastructure.

Without this, some major initiatives, from a new Howard Street rail tunnel to the Red Line light rail, may linger on the transportation wish list for many years to come.

Joe Nathanson heads Urban Information Associates, Inc., a Baltimore-based economic and community development consulting firm. He contributes a monthly column to The Daily Record. He can be contacted at [email protected].