• Use of Proceeds-Policy makers and interested groups have expressed concern that upfront resources generated through the leasing of transportation infrastructure assets may be spent on other (non-transportation) government purposes, representing a diversion of resources away from meeting mobility and other transportation system needs. Government entities can and should mitigate this diversion by conditioning approval of an asset monetization transaction on the restriction of the use of proceeds to surface transportation purposes or even to a specific set of projects, corridor, or region. While this concern is not exclusive to long-term concessions (for instance, tax revenues presumptively dedicated to transportation or public-sector Pond proceeds from existing toll revenues also can be rerouted to other projects, to balance budgets, or for other government purposes), it is a heightened concern in this new set of circumstances, including potentially longer terms.
• Generational Equity-Elected officials considering private-sector partnerships must thoughtfully examine the impact on future users and consider intergenerational equity concerns. Transferring the capital cost burden over time-or to future generations-is not unique to private-sector financial participation structures. Public-sector financing also transfers costs, although perhaps over relatively shorter time frames based on common debt terms, while pay-as-you-go structures place the funding burden wholly on current payers relative to future beneficiaries. Private participation structures can mitigate the impact of undue transfer to future generations either by ensuring that upfront payments are spent to benefit future populations or that capital improvements themselves benefit future populations and/ or through mechanisms that share revenues over time. A mitigating strategy, currently used in Texas, involves the private-sector partner sharing revenues with the public-sector project sponsor over time in addition to, or in lieu of, an upfront payment. In using this approach, Texas policy makers concluded that they could afford deferring more capital investment now so as to allow greater capital investment later in the asset's life. Policy makers should give careful consideration to such potential mitigating measures.
• Toll Rates-Some policy makers have voiced concern that private-sector participation will result in higher tolls for what are essentially monopoly services, with adverse consequences for passenger and commercial users and with potential public spillover costs if traffic is diverted to non-tolled alternatives. While market pricing for roadway use is an admittedly complicated issue, toll rates should always remain under the ultimate control of the public sector through contract terms and toll regulation.