Public-Private Ventures Answer to Gridlock

Budget mess stops current projects

The transit strike has made highway congestion even worse, but even after the strike ends, San Fernando Valley commuters will still be stuck in traffic. The political process that funds highways will make sure of that.

Highway funding is like rush-hour traffic — it stops and starts, stops and starts, and just when you think you’re making progress, it stops again. And like rush-hour traffic, the prospects for new highway projects get worse each year.

California’s budget mess has stopped highway projects in Los Angeles and all over the state. In their desperation to tame the wild budget deficit, legislators diverted billions in transportation funds to the general fund. And there’s no telling when the projects will start again. Some of the Southern California projects in political purgatory include:

  • Building on-ramps for I-405/Highway 101.
  • Replacing concrete on I-5.
  • Widening I-215.

The combined cost for just these three projects is over $70 million, and the total project backlog is expected to exceed $1 billion by December.

And even good news turns bad. The doubling of fuel efficiency in the last 30 years means road-supporting gas tax revenues have slumped. Add to that the demise of Proposition 53’s promise of more infrastructure funds, and the fact that Uncle Sam is suffering from his own deficit woes, and it starts to seem like no one has any money for roads.

Scratch that, no government has any money for roads.

With the right legal framework, private firms could finance highways. Los Angeles is home to our nation’s most notorious gridlock, a swelling population and a road system hurting for maintenance. This vision looks unspeakably bleak to commuters, but to private firms, it looks like opportunity.

Under a public-private partnership, a competitive bidding process would yield a long-term private franchise holder. The firm or consortium would design, finance, build and operate the new road project. If the project makes economic sense, the private capital markets will provide the construction funds upfront, in exchange for long-term revenue bonds and in some cases equity in the company.

Tolls administered under government oversight provide cash flow to pay off the bonds, provide for maintenance, operating costs, and, yes, a bit of profit. Typically, the state provides the right-of-way and either does, or assists with, the environmental clearance. Moreover, toll roads don’t mean tollbooths — most new toll projects use electronic toll collection technology that allows motorists to pay tolls at full speed.

Billion-dollar public-private highway, bridge and tunnel projects are operating or under construction in countries like Australia, Canada, Italy and France. States like Colorado, Texas, Florida and Virginia have developed similar projects.

Los Angeles could use public-private partnerships for major projects, such as new expressways in rapid growth areas, and for adding truck-only lanes or high occupancy toll (HOT) lanes to sluggish freeways. By using a variable toll that rises during peak hours and drops during off-peak times, HOT lanes keep traffic moving briskly even during rush hour. Commuters trapped in gridlock would always have a free-flowing escape route, and HOT lanes could also accommodate buses and van pools.

Moreover, private funding for construction would allow gas taxes to go toward sorely needed highway maintenance.

The Southern California Association of Governments recently proposed building HOT lanes between the Moorpark Freeway and the 170-134 interchange. Los Angeles could expand on this proposal by constructing a network of HOT lanes — for while the city has the nation’s worst traffic, it also has the most HOV lanes. A Reason Foundation report outlines how L.A. could create a HOT network by converting underperforming HOV lanes into HOT lanes.

Too often we commuters sit in gridlock and grind our teeth at the guy in the car next to us. If it weren’t for the likes of him, we grumble, we wouldn’t have all this traffic. It’s easy to blame the other motorists who clog our commute, but it’s more valuable to take a broader view and realize that what stands between us and improved mobility isn’t a growing population or a lack of money, it’s politics.

Our personal schedules don’t stop and start to accommodate the political process, so the less we rely solely on government to fund transportation projects, the more we will be able to escape congestion. Public-private partnerships can give Angelenos greater freedom from the political stops and starts that have kept us stranded in gridlock for so long.

Ted Balaker is the Jacob—s Fellow at Reason Foundation.