Revenue sharing usually comes at the cost of a lower up-front payment. But, the public sector does benefit from future profit-sharing revenue, which can offset the reduction in up-front payment. A respondent in our interested parties' survey recommended the provision of policy that allows for sharing of upside revenue on toll lease (particularly for "brownfield"), and that such policy should be flexible enough that it can be tailored for each individual project. Texas's State Highway 130 and Virginia's Pocahontas Parkway PPPs provide examples of revenue-sharing agreements. Both include tiered revenue sharing that depend on the equity return and internal rate of return of each of the projects, respectively (AECOM 2007b). However, given the high return thresholds, it is unlikely the public partners will share significant revenues under these agreements (Page 2008).
Opinion/Comment from "Other Individuals/Interest Groups" Survey: There should be strong consideration for policy provisions that require the governmental entity to share in the upside revenue on the lease of toll roads. This should not be overly prescriptive, but give the flexibility needed for each state to work within an overall policy and then apply this based on the specific situation. |