A 2007 report by the Federal Highway Administration set out a number of factors critical to the success of a concession deal. Stakeholder involvement, consultation and support-openness during the deal-making process-are paramount. Strong political leadership, if well-informed, can minimize misperceptions surrounding a concession deal.56
Transparency in concession negotiations does not necessarily mean sharing every piece of information with everyone interested in it at all times. For example, a group representing the trucking industry might want to know details of negotiations over proposed toll increases to lobby more effectively against a lease. The state might withhold some information to protect bidders' company secrets or decline to share additional information with eliminated bidders.
Balancing stakeholders' needs for information with the state's own needs to protect its negotiating stance is delicate and sometimes difficult for states to achieve, but it is important for policy makers to remember that a lack of transparency- even a perceived one-can weaken the proposal's chances. In 2003, Texas enacted legislation authorizing public-private partnerships to build the Trans-Texas Corridor, and construction began. Just four years later, a two-year moratorium on all public-private partnerships was passed after the legislature charged that the state's transportation department had withheld information about the deals.57
States considering public-private partnerships should have clear, data-driven answers to the following questions: |
• Did the state complete appropriate due diligence prior to proposing a lease of the roadway? • If tolls will be increased, what is the likely effect on traffic patterns? If increased tolls on the leased road lead to more traffic on alternative roads, will the government have to spend additional funds to improve the non-toll roads? • Will safety on the statewide transportation network be adversely affected if travelers avoid the tolls by using alternative roads? • Is it unfair that current users get to enjoy the transportation system that future generations will be paying for through higher tolls? • Is one group of individuals being asked to finance the majority of the state's transportation needs? Is that equitable? • What are the economic and business implications for the state if the concession is allowed? • How does the proposal take into account the potential impact on congestion, pollution and land use? • Was the bidding process fully competitive? • What are the transaction costs associated with the deal? Are they reasonable? • What provisions for flexibility are written into the lease? Can the government and the private operator make choices related to level of service, maintenance, etc., to reflect changing circumstances? • What risks do the public and private sectors bear in the deal? Does the financial structure of the lease account for risks borne by the state or the private operator? • Does the party bearing the risk also have control that allows it to fix problems that arise related to that risk? • If the lease is awarded, can the state still build competing and/or complementary roads or transportation routes? If not, what are the long-term implications? • Is the process adequately and appropriately transparent, with sufficient involvement from the public and other stakeholders? • Do both the executive and legislative branches have access to the information they need to make a sound decision? |