Project in Conjunction with the National Council for Public-Private Partnerships
Background: The Capital Beltway (I-495) is the main artery that services commuters in the VA/MD/DC metro area. The Beltway has exceeded intended capacity and is now at the center of a growing regional transportation crisis. According to the most recent Texas Transportation Institute report, commuters in the area experience the second-worst congestion in the United States. The need to reduce congestion, increase capacity, offer travel choices, and improve safety is paramount to the successful future of this transportation infrastructure, and the economic vitality of the region. In order to facilitate timely improvements to the Capital Beltway, Virginia has entered into a public-private partnership while Maryland is still studying its available options.
Problem Definition: In response to this growing crisis, Virginia is partnering with Fluor-Transurban, a private sector company, to develop High Occupancy Toll Lanes (HOT) on its side of the Beltway. Under this public-private partnership (PPP), Virginia will retain ownership and oversight of the lanes, while Fluor-Transurban will construct, operate, facilitate maintenance and provide the bulk of financing for the project. Many officials in VA have expressed satisfaction with this approach, studies have found cost savings, and PPP projects have typically spurred additional economic activity and freed up valuable state resources for other transportation needs. Maryland has conducted extensive research on congestion pricing for its highways and has thoroughly reviewed the feasibility of partnering with the private sector to finance highway construction projects. Maryland plans to introduce Express Toll Lanes (ETL) in various parts of the state but intends on using its existing highway financing methods to improve, maintain, and build highway infrastructure. As of now, Maryland does not have any approved construction plans for its side of the Beltway.
Research Questions: The research team's mission is to study and examine the issue in an objective fashion, providing key findings and recommendations to the National Council for Public Private Partnerships (NCPPP). The team will address the following research questions:
1. To what extent and how have Virginia and Fluor-Transurban satisfied NCPPP's six criteria for a successful public-private partnership with their effort to add capacity to the Capital Beltway? What areas do they need to improve on, if any?
2. What are the key challenges and obstacles Maryland faces for building additional highway lanes on their portion of the Capital Beltway?
3. If Maryland decides to pursue widening the Capital Beltway, do the conditions exist for Maryland to use a public private partnership to finance, build, maintain and operate the additional lanes? If not, what are the necessary conditions in Maryland for a public private partnership to be a viable option?
Criteria: We will use NCPPP's criteria for successful public-private partnerships to analyze the extent to which Virginia and Flour-Transurban have worked together for the benefit of the Commonwealth and citizens.
1) Political Leadership
■ Is there commitment from "the top" of the organization?
■ Does the state governor support PPPs? Is he/she well informed?
■ Does the legislature support PPPs?
■ Is there a statutory foundation for the implementation of a PPP?
2) Public Sector Involvement
■ Does the public sector remain actively involved in the project?
■ How often do the partners manage the performance of the partnership?
■ Is this specified in the business plan?
3) A Well Thought-Out Plan
■ Does each side know what to expect of the partnership beforehand?
■ Did an outside expert help develop the plan?
■ Does the contract clearly detail the responsibilities of the public and private partner?
■ Is there a method for dispute resolution?
■ The state will effectively monitor and evaluate the project; deter cost-overruns, delays and takes corrective action, when required
■ Who is bearing the main financial risk for the project?
o Is there an understanding of who has that risk?
4) A Dedicated Income Stream
■ Is there a means of repayment of the investment over the long term of the partnership
■ What is the source of the income stream?
■ Is the income stream assured for the length of the partnership?
5) Communications with Stakeholders
■ Who are the stakeholders?
■ Do both partners communicate openly and candidly with the stakeholders to minimize potential resistance to establishing a partnership?
6) Selecting the Right Partner
■ Is the selected partner offering the "best value"?
■ What is the private partner's experience in the area of PPPs?
Methodology and Data Analysis - At the request of the National Council for Public Private Partnerships, the team will conduct academic research and consult with stakeholders in order to obtain the necessary information to complete the project. The research team will utilize the following data collection techniques:
Literature Review - Collect and analyze literature available from a wide variety of sources including but not limited to periodicals, academic databases, historical bodies of academic work and relevant agency data.
Interviews/Visits - Reach out to current and formal officials in both Virginia and Maryland state governments with a special interest in transportation department management. Seek out the opinions and insight of advocacy groups on both sides of the issue. We may report our analysis of information gleaned from the interviews, but none of the information will be attributed.
Survey - The research team is considering surveying Virginia and/or Maryland legislators to supplement the interviews.
Results and Recommendations - The research team will collect the necessary quantitative and qualitative data in order to answer the proposed research questions, present key findings, and make recommendation to NCPPP on how to proceed with promoting highway related public- private partnerships in Maryland. The team will exhibit its results through a comprehensive and analytical research paper. The final product will objectively assess Virginia's PPP with Flour-Transurban and analyze Maryland's options to finance the expansion of the Beltway. The team will present its final product and make an oral presentation to the NCPPP staff in December 2007.