PPPs can restrict use of the highway right-of-way for any purpose other than how it is used now, as a toll road. While this may not seem like a problem today, it is difficult to predict how the corridors now served by highways may be best used in 20, 50 or 99 years. Perhaps a lane devoted to bus rapid transit will be necessary, along with stations and related infrastructure. Along the highway, expanded multimodal options might benefit the public most, such as park-and-ride facilities, or new car sharing facilities. If a PPP agreement prevents these new facilities from being built, it will have a lasting, and potentially negative impact on land use in a state already suffering from the effects of sprawl. There are also opportunities currently open to the public sector that may be lost under a PPP. For example, the Turnpike Authority may have the ability to install cell towers, wind or solar energy production facilities along the highway. A PPP may change who controls these assets and what uses are allowed, potentially producing a sizable opportunity cost for the State.
A PPP may also determine how and when the highways are widened. There are currently plans to widen the Turnpike and Parkway. A PPP agreement could put the private sector in control of decision-making about this. A PPP might include terms that ensure road widening will only be pursued if it is shown to be more cost-effective than contracting for improved public transportation, ridesharing, and taxi services in the corridor and investing in other travel demand management strategies, including time-of-day tolls. Or the public might lose its ability to influence the proposed widening because of a PPP.
A PPP may also restrict certain land uses in other parts of the state. This was the case when the private sector invested in Route 91 in Orange County, California. Route 91 was an existing highway in a congested section of southern California. In 1995, a private firm won a contract to build a 10-mile High Occupancy Toll lane (HOT lane) on the existing highway. It agreed to operate the HOT lane and collect tolls on it. The firm paid $126 million for the right to collect tolls. The contract included a non-compete clause precluding the State DOT from building or expanding competing freeway lanes. Public pressure forced the State to make improvements on other SR 91 lanes. To do so, the State had to buy back the HOT lane for $208 million in 2003. (The HOT lane itself is a success, with traffic volume and revenue steadily increasing.)17 Since the SR 91 buyout, few public agencies have been willing to agree to the type of rigid non-compete clause included in the original SR-91 contract. On certain types of projects, the 2005 federal SAFETEA-LU transportation law Section 1604(c) would bar such non-compete agreements. Nonetheless, this remains an issue of which the public should be aware.
In addition, a private firm operating a single highway may not consider the network effects of its road pricing: its toll schedule may be set up to increase its profits while moving some traffic on to local roads, costing the State and localities more in the long run due to increased local congestion and damage done by trucks to local roads.
To avoid tying the hands of government with respect to investing in roads or transit facilities, a PPP should permit future alternative uses for the right-of-way and avoid any overly-restrictive non-compete agreements. It should specify whether the private entity gains any development rights along the highway. These features may result in less windfall revenue for the State in the short term, however it is in the best public interest in the long term.