2.2.1  Real Toll Concessions

DBFOM projects leveraging toll proceeds are commonly referred to as "real toll" concessions. With these arrangements, the private sector partner maintains the right to collect toll revenues during the concession period but bears the risk that toll proceeds may not meet forecasted levels. With real toll concessions, the private sector partner assumes the risk that the funds generated by the project may not be adequate to pay the underlying project loans and interest and make a fair return on its investments of time, expertise and equity. To protect the public sector interest in the event of robust revenue generation, some concession agreements include a revenue-sharing provision between the private partner and public sector if revenues exceed certain specified thresholds.

The real toll concession model has been used to develop three different types of projects in the U.S.

  Greenfield Toll Roads: these projects involve the construction of toll roads in travel corridors that did not previously have highway facilities. Because they lack established traffic volumes dating back in time, traffic and revenue risk is high with these projects. When they are developed on a P3 concession basis, this significant risk is transferred to the private sector partner.

  Waterbody Crossings: these projects consist of tolled bridge or tunnel waterbody crossings. They may involve the construction of crossings in entirely new corridors, or the expansion of capacity in existing crossing corridors. In some cases, these facilities may be built within a single jurisdiction; in others, they may join adjacent municipalities, states, or even countries. In cases with multi-jurisdictional crossing projects, there may be differing P3 legislation and policies that influence the procurement and financing of the project.

  Priced Managed Lanes: These facilities are designated lanes or roadways within highway rights-of-way where the flow of traffic is managed by restricting vehicle eligibility, limiting facility access, and collecting variably priced tolls. Toll rates may vary in real time based on actual traffic conditions or according to a fixed schedule. The toll rate is used to meter the flow of paying vehicles on the lanes in order to maintain a desired level of operation and predictable travel times. Traveling on priced managed lanes can provide motorists with significant travel time savings in congested urban and suburban commuter corridors. Traffic and revenue forecasting for these projects is complex and involves assumptions about the value of time under different circumstances. However, these projects tend to be built in established highway corridors where extensive information is available on historic traffic volumes.