PRHTA and the Department of Transportation and Public Works are responsible for the construction, operation and maintenance of the island's transportation infrastructure. The large majority of investment in the island's transportation system is done by PRHTA due to its diverse sources of dedicated transportation revenue sources, including tolls. However, between 2005 and 2009, deteriorating economic conditions in Puerto Rico, reduced toll revenue, and rising investment and operational costs led to a funding crisis at PRHTA. During this time, PRHTA's bonds were downgraded, impeding the agency's access to financing through capital markets.
Both PR-22 and PR-5 were in need of capital improvements, including structural rehabilitation and improvements to the electronic toll collection systems. Due to PRHTA's downgraded credit rating and funding constraints, the agency could not fund these improvements or other capital needs around the island.
In June 2010, the Puerto Rico Public-Private Partnerships Authority (PPPA) published a "Desirability and Convenience Study" evaluating the feasibility of leasing existing public sector toll roads to private investors on a concession basis for a designated period of time. The study reviewed multiple facilities around the island and provided recommendations on how and when P3 lease concessions could be pursued. The study concluded that more investment in the island's highway facilities was needed to improve mobility and connectivity. It also recommended that PRHTA reduce its debt burden in order to make additional funds available to build new facilities to meet those needs. The study also recommended that PRHTA improve its maintenance program and reduce toll revenue leakage by implementing a new electronic toll collection system. Lastly, the study recommended that PRHTA pursue a phased program to lease existing toll road assets to private sector operator-developers in exchange for large upfront payments that would enable PRHTA to retire or "defease" its existing bond obligations, thereby easing the agency's financial burden.
The study recommended a four-phase P3 model to improve and expand Puerto Rico's highway system, beginning with "brownfield" leases of existing toll roads and ending with the development of new so-called "greenfield" projects. The lease of PR-22 and PR-5 were part of the first phase of the study recommendations. The extension of PR-22, in government plans since the 1970s, represents the fourth phase of the recommended P3 delivery model.
The lease of PR-22/PR-5 would require the private sector developer/operator to make needed repairs to improve traffic performance and safety. The upfront lease payments would also provide PRHTA with funding for other improvements in the region and reduce its debt obligations. This would improve its prospects of obtaining additional financing in the future to support other projects on the island.