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Rest Stop Privatization Stirs Controversey

Samuel Staley
June 29, 2010, 8:49am

Privatizing rest stops along highways would seem like a no brainer, but intense lobbying keeps it from happening. The primary opponent appears to be National Association of Truck Stop Operators, who fear that upgraded rest stops with restaurants and clean bathrooms will erode their business. Reason Foundation's privatization expert Len Gilroy has blogged about this issue and Ron Utt at the Heritage Foundation has written a nice policy study on its benefits.

The Washington Post has a interesting article exploring the political pitfalls and benefits of rest stop privatization. The article focuses on HMSHost, a US-based company that manages restaurants and shopping in 110 airports and 86 rest areas throughout the nation:

Indeed, HMSHost has been partnering with states on rest stop deals since the 1940s. As the operator of these sites, HMSHost secures franchise licensing agreements with brands such as Starbucks, paying a set fee. HMSHost employees then run the stores.

The renewed interest in these public-private partnerships stems from the current stress on transportation funds as well as municipal finances.

"This is one less expense that we have to manage," said Michael Williams, a spokesman for the Delaware Department of Transportation. "We wanted to renovate the site once the lease was up, and we did so without having to spend a dime."

A growing number of states, including Vermont, Louisiana and New Hampshire, have closed or announced plans to close rest areas to save money in the past two years. Last August, Virginia, to shed $9 million in annual expenses, shuttered 19 of its 42 rest stops, though all have since been reopened.

Importantly, rest stops are not really privatized. Rather, they are public-private partnership where land ownership remains with state governments and private companies lease the land to provide services to customers through what are called long-term concessions. The private company is responsible for managing the rest stops and negotiating leases for restaurants, shops, and other facilities at the stop. In Deleware's case, the rest area and travel center will be on a 35 year lease.


Samuel Staley is Research Fellow


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