MasterPlanning!: Lease the Land, Own the Road
by Tony Chavira
Governator Schwarznegger might be criticized for keeping (and eventually worsening) the California budget, but that certainly doesn’t mean that he’s a lazy jerk with no ambition or agenda. He has absolutely contributed to the rise of a sort of double-edged sword of innovative financing legislation we all know as the Public-Private Partnership, or P3. P3 legislation actually began way back at the onset of George Bush the Elder, in the year of our Lord 1989. Governor Wilson, following a few studies and proponents of at least attempting a real P3 pilot program, mandated that the California Department of Transportation (Caltrans) enter into four P3s to sorta see what happened, with at least one in the north and at least one in the south. The legislation authorized Caltrans to:
[…] lease rights-of-way in, and airspace over or under, state highways, to grant necessary easements, and to issue permits or other authorizations to enable private entities to construct transportation facilities supplemental to existing state-owned transportation facilities, and to lease those facilities to the private entities for up to 35 years.
This was 20 years ago. The next logical step was to jumpstart the program by extending private entities’ use of the land once they’ve leased it (conceding more of the public to the private), with AB 1467, which Arnold advocated for with rotating-chamber miniguns blazing. No surprise, in September 2006 (as he was trying to get AB 1467 put into effect), he then felt the need to pass a somewhat politicizing addition to AB 1467, which would essentially gave the legislature 60 days to approve of a P3. Some might argue that it overpoliticized the process of entering a P3, and I might be one of those people (but for now we’ll let the past be done). Given the ability to veto or approve projects based on however they felt about it, the legislature had no problem with AB 1467, and it took effect at the beginning of 2007.
Now fast forward to February 2009. Four more P3 projects had begun in California (two in Southern California), but naturally that was not enough. In light of the facts that our state had clearly run out of money, our budget for transportation was rapidly depleting, and news agencies were declaring California a failed state, Schwarznegger approved Senate Bill Second Extraordinary Session 4 (SBX2 4) Chapter 2, Statutes of 2009. Despite the exasperating length of this legislation’s name, it only does one vital thing to the P3 program: it allows California transit agencies to enter an unlimited number of P3s, and totally deletes restrictions for the number of P3s the state can enter in (which, if you remember, was a measly four). Every road project, every highway project, every rail project, every transportation project can now be a P3. The government will lease public property to private developers for 35 years at a time to try to make money and develop in any way they want.
What does this mean, exactly? Simple: that one day you’re going to wake up and corporations will own at least a percentage of each paved area you drive, bike, ride or fly on in California.
This doesn’t necessarily mean you’ll feel too bad about it. P3s are used to develop revenue to create beautiful street scenes, with smart roads that are comfortable, efficient, and easy to get around. Buses, trains, and bike lanes will be plentiful and will take you anywhere you need to go. Let’s reframe our mindsets momentarily: the more attractive and efficient a private company can make the bike lane, bus lane, or highway, the more likely an entire street scene will be maintained and beautiful to use. It will be easier to drive and easier to park around the city, until the lease is up (in theory anyway).
But the fact remains: a corporation will own the road. Including local streets, bridges, tunnels, and public transit projects. In fact, a bunch of corporations will own the road ... that’s just the direct outcome of these P3s. However, an awesome component of SBX2 4 is that it also provided the legislative authority for a demonstration program, which provides a total of up to 15 demonstration P3 projects, just to show the naysayers what-for. Up to five of these projects will be (have been) graciously bestowed upon local transportation agencies and up to ten (state highway, bridge, or tunnel projects in this case) to Caltrans.
Now, I’m not going to argue about the value of putting together P3s. At all. Thinking about corporations controlling a lease on public spaces in our cities might seem sucky, but where else are we going to get the money to revamp our public places? The government’s tapped out and no one really wants to pay more taxes. I mean, I know that most liberal types advocate paying taxes for services, but no one ever really feels better after writing a hefty check, no matter what you’re getting in return. I’m also not going to argue to keep public separate from private. As long as private knows that they’re essentially leasing land from the people, they’ll keep their greedy corporate ambition in line. Besides, I’m always 100% behind the idea that social justice, advocacy, and smart city planning should be lucrative ventures. I know that “feeling good after doing good” is a powerful motivation to many, but “making money for doing good” seems like such a better one, doesn’t it? Sort of like “helping people” +1! If investing in roads, trains, buses, and planes helps private companies to make money, all the better.
On the same point, at least private developers and investors are accountable to someone financially. To make a profit, they’ll have no choice except to make their transportation investments as attractive as possible to the public. Government officials, on the other hand, can invest in pet projects with money they didn’t earn, with little to no real blowback if things fall apart. In some ways, we need to be more afraid of the government than private investors when considering the P3 situation.
But the legislative damage has been done and P3s aren’t going anywhere. Complaining about them is counterproductive.
The plain and simple truth is that there are P3s that have worked and there are P3s that haven’t. The smart, successful P3s are smart and successful because they were well-evaluated projects that projected 35 years into the future, for as long as the private investor could retain the land lease. Reflect for a moment on the state of California: if you were a potential P3 investor, what would be the smart place to invest your money right now? Let’s break it down:
- Californians wants green transportation, especially green public transit.
- Californians want options. Express highways or high-occupancy toll roads (tolls for express lanes on busy freeways) might be a temporary answer, but the world can always find more single-rider cars to pack onto the most demanding roads ... and then the roads meant to alleviate the most demanding roads.
- The population of California is, though slowly, still growing. More importantly, we’re aging ... which will just mean more congestion and more people who know how to drive cars hogging up the road.
- Road maintenance is mighty expensive, and currently there’s just not enough cash from fuel taxes to cover the costs for all needed repairs.
- Building off of point 4, there’s an inherent Catch-22 when you try and make roads more efficient: the less fuel a car uses on the road due to efficiency, the less money the state will get from fuel tax. How will the multitude of heavily-used roads find money for maintenance if they don’t rely completely on private investment at that point? Not a very fair P3 relationship.
- Los Angeles passed Measure R and the Long-Range Transportation Plan, San Francisco’s BART has had a comprehensive and well-conceived system expansion plan for a while, and Proposition 1A brought on the possibilities for potential big-time P3s to develop the California High-Speed Rail.
So if the hints haven’t given my case away by now, let’s put all my cards on the table: P3s are perfect for public transportation projects. You expect to pay to get on the bus, on city trains, and onto trolleys. Same with high-speed trains and other intrastate transit. But add an expressway for a highly-dense urban area (like downtown L.A.), and you’ll get public uproar about the construction blight in that density and the fees to use the lanes. Add a toll to the existing freeways and you’ll absolutely get public uproar about fees. Add high-occupancy toll lanes and you’ll get public uproar about fees, with the added bonus of public uproar about the socio-economic disparity between those who can afford to use the lanes and those who can’t. Even if studies have shown that these things can technically work, Californians don’t want to pay fees out of pocket for things we feel we should be getting for free. Especially since we already pay taxes for roads.
We already have a long and terrible history of conceding too much when it comes to road P3s, including extending the leases for up to 50-plus years to the private entity making the most money from toll roads. On the other hand, public transportation is a system we each expect to be pay-for-use. We want the smart density, we want the public transit, and we want the P3 investment to work. We’ve got the policy in place and a forward-thinking objective, so when can we begin?
For a great (albeit really involved) discussion on how P3 has affected road and highway development, check out the National Journal’s Transportation Blog from last week. Their experts are right on the ball in most cases ... just don’t let the policy language make you pull your hair or eyes out. Here’s the link.
www.racaia.com | tony@fourstory.org
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