Another policy issue to be addressed by both sponsors and respondents to PPP project solicitations is whether the purpose of the project is to merely change the responsibility for taking care of existing infrastructure assets or to develop new infrastructure assets. The first category is called a "brownfield" project, in which a private consortium assumes responsibility for existing transportation infrastructure assets through a long-term lease agreement with a potential up-front payment to the agency sponsor/owner. Recent mega-transactions have been dominated by long-term leases of existing tolled assets, including the Chicago Skyway, Indiana Toll Road, and Pocahontas Parkway.
The key features of a brownfield project are listed below:
• Lower traffic, revenue, environmental, and construction risks;
• Opportunity to increase toll rates much more quickly that the public sector;
• Able to introduce new technology to eliminate tolling queues;
• Significant potential for public sector to undervalue asset to the benefit of the private concessionaire; and
• Limited number of candidate brownfield projects.
The second category of project is called a "greenfield" project, in which a private consortium uses a PPP approach to develop and operate new transportation infrastructure assets through a long-term contract. Early greenfield PPP projects occurred in California and Virginia. More recent greenfield PPP projects are taking place in California (South Bay Expressway near San Diego) and Texas (TTC-35).
Key features of a greenfield project include the following:
• Higher traffic, revenue, construction, environmental, and financial risks;
• Highly prized by transportation agencies seeking added infrastructure capacity;
• Opportunity to apply life-cycle asset management to significantly lower the total costs of the facility from concept to disposal; and
• Large number of potential greenfield projects, including adding congestion-priced new capacity to existing highways at lower risks than entirely new alignment.
The decision to pursue projects through unsolicited or solicited proposals, or as a brownfield or greenfield project, depends on the preference of the sponsoring agency, the opportunity presented by the specific project being considered, and the interest and willingness of private firms to join in a partnership with the public sponsor under any of these procurement approaches or project categories.