Maryland provides an unusual environment for public-private partnerships in toll financing. Unlike many of the states currently using PPP approaches to highway finance, Maryland has a long history of tolled highways. The MDTA is the sole entity empowered by state law to establish and collect tolls on state highway facilities. MDTA can issue revenue bonds secured by its system of highway toll revenues and operates its facilities as a unified financial system, thereby creating a pooled revenue fund for the operation, maintenance and enhancement of its highways.
According to its statutory mandate, MDTA "has those powers and duties relating to the supervision, financing, construction, operation, maintenance, and repair of transportation facilities projects, including toll highways." Executing this authority, MDTA adopted regulations on and is responsible for implementing PPPs (referred to as TP3) for MDOT and its affiliated agencies. All PPP projects must be consistent with and eventually incorporated into Maryland's Consolidated Transportation Plan (CTP) and must comply with all applicable federal, state, and local regulations. Eligible projects include capital facilities for airports, transit, and port facilities.
Proposals may come from any "person, corporation, Limited Liability Company, partnership, joint venture or other private business entity with a demonstrated ability to acquire, finance, construct or operate a new, economically feasible transportation facility of high quality." Financing arrangements may include the issuance of debt, equity or other securities or obligations, and sale and leaseback transactions. However, current regulations do not expressly permit unsolicited highway PPP proposals.
MDTA appoints a review committee for each project that includes representatives of the MDOT agency primarily responsible for the applicable type of transportation facility. Proposals are evaluated according to qualifications of the proposer, the project's ability to satisfy a public need, compatibility with state and local transportation plans, cost-effectiveness, and ability to result in the timely acquisition, construction, financing or operation of the facility. The review committee then presents viable proposals to the Secretary of Transportation for consideration.
In 2004, the transportation agencies of Maryland (MDOT, MDTA, and SHA) commissioned a study of current highway PPP practices. The study, conducted by KCI Technologies, aimed to explore the potential for and feasibility of using PPPs to finance, construct, operate and/or maintain highway facilities in Maryland. The state was particularly interested in the merits of using a PPP where the toll recovery is not expected to fully cover the project's capital costs, and of implementing toll lanes along selected existing routes. Maryland has already initiated limited studies into the feasibility of additional toll roads and "value-priced" managed lanes on several corridors including the Capital Beltway in Maryland (I-495/95). The study concluded that the Transportation Public-Private Partnership (TP3) program has the potential to enhance the state's transportation system and would enable the state to "meet its emerging transportation needs in a more timely and cost-effective manner than may otherwise be possible using traditional sources of public financing. Such arrangements may also offer sound economic investment opportunities for private firms and may promote business and employment opportunities for the citizens of Maryland."
Since MDTA is the sole entity empowered to operate toll facilities in the state, SHA has so far only solicited firms to complete 'detail-build' (a form of Design-Build) projects for some highways in the SHA system. In Maryland, SHA first requested proposals for Design-Build highways in 1998. To date, the state has issued sixteen highway Design-Build contracts, ranging in size from $2.7 million to $48 million, all of which have been financed using traditional highway construction sources and not toll facilities or highway-specific user fees. Additionally, two contracts of over $400 million each have been signed for the Inter-County Connector project. Furthermore, none of the projects has included contractor responsibility for right-of-way acquisition, railroad relocation, or long term-system preservation.24