Phoenix-to-Vegas on Interstate 11: Arizona PPP Toll Road Candidate?

As soon as Arizona modernized its legislation authorizing the state to utilize a variety of innovative, private sector finance tools to develop new transportation facilities (via public-private partnerships, or PPPs), the first thing industry professionals and observers wanted to know is what the potential candidate projects might be.

I suspect that it will take some time to sort out a full list given the intricacies of the work involved to see what’s feasible and what’s not. But given the state’s $160 billion transportation funding predicament and long-term growth projections, it’s not a question of if, but when, the state will unwrap and deploy its new procurement tools.

A feature story in today’s Arizona Republic by Sean Holstege offers a glimpse of one of the early candidate projectsââ?¬â?a new “Interstate 11” connecting the Phoenix and Las Vegas metros:

Few in the Valley have heard of Interstate 11, but support is gaining strength in two states to connect Phoenix and Las Vegas with what would be the first new interstate built in a quarter-century.

The route, fusing 225 miles of improved U.S. 93 with about 150 miles of new freeway around the Valley, would strengthen the link between two of the fastest-growing cities in the nation.

Supporters envision smoother Phoenix-area traffic and closer trade and tourism links between Phoenix and Las Vegas. With a major bypass around Phoenix, from I-10 near Casa Grande to U.S. 93 just north of Wickenburg, I-11 would become a prime freight route from Mexico to Las Vegas and beyond, promoters say. […]

The Phoenix-area bypass alone might cost up to $5 billion, and with no money in sight, a toll road is already being discussed. Decades of planning, studies and government approvals would be required. Even early decisions are years away. […]

“There isn’t a north-south corridor. It’s a very important corridor for the national and even international scene,” said Kent Cooper, assistant director of the Nevada Department of Transportation.

The article goes on to note several trends converging that are driving interest in this potential project, including highway improvements on either side of the Hoover Dam to relieve some major choke points, a need to enhance goods movement and relieve freight traffic, a robust flow of tourists between the two cities, and the state’s new PPP law:

Gov. Jan Brewer signed a law allowing ADOT to enter partnerships with private enterprise, a first step toward Arizona’s first toll road. The thinking is that an I-11 toll road would attract freight haulers willing to pay to avoid Phoenix congestion.

This is a certainly an ambitious project, and I suspect that some public subsidy might need to be involved to make such a costly project pencil out for private investors. But we know from states like Texas (which this year has either signed or is completing negotiations over $6 billion worth of Metroplex area PPP highway projects involving roughly 80-85% private sector financing) and Virginia (where the I-495 Capital Beltway is receiving its first major expansion with over $1 billion in private financing) that such partnerships are indeed feasible.

And though some suggest in the Republic article that it might take 40 years to deliver this project in the end, I’d suggest that using a PPP approach could potentially accelerate that by decades, if the experience of Texas, Florida and Virginia shows us anything. The major PPP highway projects in each of those states that have gotten underway over the last few years will all be financed, built and operational within the next decade (for most, even sooner).

That’s one reason why this is such a valuable new tool for Arizonaââ?¬â?PPPs are delivering projects faster, better and cheaper and freeing up resources for states to apply to a wider range of mobility needs. With tens of billions in unfunded needs and ongoing fiscal woes, it would be folly to think that the state be able to muster the “traditional” resources needed to meet the state’s future transportation needs.

Ã?” Reason Foundation’s Transportation Research and Commentary
Ã?” Reason Foundation’s Annual Privatization Report 2009