The media promotion of a public-private partnership (P3) begins for Interstate 11 with last week's article, "Has I-11 hit a dead end?" Despite lobbying efforts, federal and local funding is nonexistent for this interstate connecting Phoenix with Las Vegas, so officials are looking into other options for financing, the article explains.
"Here’s how they work: States borrow a couple hundred million dollars from a private company to start construction right away but pay the loan back slowly over many years with interest. It’s the transportation version of a mortgage, Larkin Thomason said."Promoted as "innovative financing tools," public-private partnership deals for infrastructure are essentially privatization with a bit more oversight on the part of the government and paid for with future tax dollars and/or tolls, in the case of roads.
“The odds are that the only way that this project is going to get built in the next 30 years is if it is done as a public / private partnership... What they need is private capital to build the facility and then do this as a public / private partnership. That is the plan," stated John McGee, Executive Director for Planning and Policy for the Arizona Department of Transportation in 2011 about I-11 (Source p 10).
Officials were fairly certain that the Boulder City Bypass, which has been incorporated into the plans for I-11 and is referred to as the I-11 Loop, was going to be built with a P3. A 2012 article stated,
"The first three miles of the bypass will be funded by NDOT, but the next 12 miles, costing between $350 and $450 million, will have to come from an outside company in a public-private partnership... The bypass could become part of an even bigger project - Interstate 11... Portions of I-11 could become public-private partnerships, according to Rosenberg, meaning additional toll roads.In more recent news, a public-private partnership was abandoned for the bypass in favor of a gas tax increase (source), despite a toll-road being studied, and the option having been legislated (Source).
Tolls look to be the fastest option to getting both projects built" (Source).
Interstate 11 is a piece of transportation infrastructure meant to facilitate NAFTA trade, pushed by congress onto Nevada and Arizona (and beyond) yet the feds can't pay for it. Conveniently, P3s are a way around this obstacle that also benefit many of the same private interests that gain from NAFTA, such as corporations and banks.
Because most of us don't want to have to pay tolls nor a gas tax increase, especially for something intended mainly for trucks (and for that reason is unlikely to involve tolls), those who seek to gain from a P3 will have to have a good strategy to sell it to us. Much time, effort, and money has been going into this, for certain. While I-11 has the potential to be a toll-road, such an arrangement would be controversial. As described in Companies seek partnership with ADOT to profit on freeway, Part 2: The Methods about the Loop 202 South Mountain Freeway extension, other avenues exist for companies to make money off of P3s, through accessing loans with lower interest rates like TIFIA loans, and receiving availability payments, coming out of our tax dollars decades down road.
Consultants and think tanks have been planting the seeds of P3 arrangements for trade and transportation infrastructure and megapolitans like the Sun Corridor arguing that global competitiveness is what can help local/regional economies. (See AECOM, Lincoln Institute for Land Policy, Urban Land Institute, HDR).
The Brookings Institute is one such think tank. The article, Has I-11 hit a dead end? quoted Robert Puentes, a senior fellow of transportation at the Brookings Institute,
“[Nevada officials] recognize that the cavalry is not coming, so they’re trying to think of their own tailored solutions."While this may seem like the simple observation of an expert, the quotation fails to acknowledge the involvement of the Brookings Institute and Puentes in pushing for public-private partnerships, trade corridors and transportation infrastructure, and the concept of the megapolitan such as the Sun Corridor. This is not insignificant in the least.
For example, a Brookings document of six years ago, Forging a New Federal-Mega Agenda for the Intermountain West, says the following: "...the federal government should give priority in the next round of transportation funding to strengthening nationally significant passenger and freight corridors. One of the weak spots along the CANAMEX corridor is the two-lane U.S. 93 highway connecting Las Vegas and Phoenix." That's the future Interstate 11 by the way. In the same document: "To finance expansion, the federal government should provide more flexibility for developing public-private partnerships and alternative financing arrangements"
Robert Puentes was co-author of this 2011 Brookings paper, Moving Forward on Public Private Partnerships: U.S. and International Experience With PPP Units as well as the 2013 article, Invest But Reform: Establish a National Infrastructure Bank Capitalized by a Repatriation Tax Holiday. This Infrastructure Bank concept has been years in the making and may have an important role in P3 promoters getting their way. "Rep. Steven Horsford, D-Nev., is co-sponsoring a bill to create a national infrastructure bank that would fund transportation projects through loans via the private sector." (Source). This subject will require further attention.
Probably more significant are the programs Phoenix has and will be participating in with Brookings. "The Greater Phoenix region was selected as one of eight markets in the U.S. to take part in the Global Cities Initiative, a joint project of Brookings Institution and JP Morgan Chase... The project entails designing and implementing strategies to grow the region’s economy by expanding global trade and investment" (Source).
The Phoenix area also participated in a similar project in 2011. "The Maricopa Association of Governments (MAG), in collaboration with economic development leaders across the region, has been selected to participate in a Metropolitan Business Planning Initiative to determine an economic development strategy for the region... the initiative is part of the Brookings-Rockefeller Project on State and Metropolitan Innovation, a collaboration between the Metropolitan Policy Program at Brookings Institution and the Rockefeller Foundation" (Source).
Brookings 2013 Annual Report elaborates on the initiative. "Metro plans to generate new and updated trade data on exports, foreign direct investment, and freight flows in the coming year as part of the Global Cities Initiative: A Joint Project of Brookings and JPMorgan Chase. This research will serve as the foundation for working with public and private sector leaders in 28 U.S. metros—as well as select international metros—in the coming years to help them shape export and global engagement strategies to grow their economies. (Source).
Promises about increased jobs abound in promoting the I-11, echoing 20+ years of similar rhetoric about the trickle-down benefits of NAFTA. It is no surprise that P3s are promoted as a way to facilitate globalized trade. P3s are much more common in other areas of the world where countries are forced to accept privatization deals as part of structural adjustment programs in exchange for financial support by the World Bank. It's possible, especially due to the troubling lack of fresh water in the region (1, 2, 3)--which is all the more reason not to encourage further development and sprawl-- that success with transportation P3s may open the door to water privatization in Arizona, which is increasingly prevalent throughout the world.
Brookings and others promote megapolitans as sites for global competitiveness--sites that can blur municipal lines and open more inroads for privatization. The term "Sun Corridor," an intentional economic integration of Phoenix and Tucson, has gained increased usage due to a Brookings Report called "Megapolitan: Arizona's Sun Corridor."
Arizona is already set up with broad-enabling legislation for P3s. The 2012 federal legislation "Moving Ahead for Progress in the 21st Century" (MAP-21) that designated Interstate 11, encourages P3s for transportation projects. A P3 toolkit and other resources are now available through the Federal Highway Administration website.
More details on how the P3 might go down for the I-11:
"Every dollar in the MAG region, and this project is in the MAG region, that they anticipate coming in the next 20 – 25 years has been programmed. It will be a long time before there will be any new incremental money to do anything other than what was in the original program. Public / private money is reticent to be invested in projects where the alternative alignment study and where the environmental work has not yet been completed. The opportunity that is here is that the coalition that they have been working with has made a commitment to work with them on possible donation of a significant amount of Right of Way, if the alignment study ultimately shows that this road should go through their property. If it does not, all bets are off. If it ultimately does show that, they have committed to sit down and work with them on developing some sort of a donation agreement. If they have received that money, one of the costliest pieces of a major rebuild project is Right of Way. If they can get that Right of Way for little to nothing based upon this study, then when they go out with a solicitation and potentially do this road as a public / private partnership as a toll road, that is a cost that they do not have to incur... What they need is private capital to build the facility and then do this as a public / private partnership. That is the plan.” John McGee, Executive Director for Planning and Policy for the Arizona Department of Transportation (Source p 10).
See also: Companies seek partnership with ADOT to profit on freeway, Part1: The Networks
and Filling in the I-11/CANAMEX Gaps