Public-Private Partnerships Work Their Way Into State Government

Image Credit: Public Domain

By Sam Stockard [Tennessee Lookout -CC BY-NC-ND 4.0] –

Not long after the Tennessee Department of Transportation proposed public-private partnerships to build express lanes and cut congestion on highways, the University of Tennessee-Knoxville sought permission for a joint venture to build dorms and an indoor athletic facility.

The State Building Commission authorized the university’s plan to take bids for a public-private partnership for three multi-use student housing facilities on campus and construction of the infield practice facility.

The General Assembly will have to pass legislation enabling the Department of Transportation to enter a public-private partnership in which a company would invest the money in a road project, then recoup it through fees.

Under the UT-Knoxville proposal, which didn’t require legislative action, the university will “engage” a developer to design, construct, finance and maintain the buildings, which will meet growth needs and allow renovation or replacement of older dorms. The university is requesting proposals from developers on each project.

“The added facilities will help us meet our campus housing needs and position UT-K for anticipated enrollment growth while supporting the Volunteer student experience. This process has been utilized in various other states,” the university said in a statement.

It is unclear what impact these public-private partnerships would have on the university’s finances, though UT-K would remain in charge of dorm assignments and programming.

The question is whether this is the wave of the future for Tennessee government operations in which it would ask the private sector to take control of building projects and maintain and operate them. Thirty-five states have authorized public-private partnerships for highways, and Tennessee could be the next. 

The idea is to inject 80% of private investment in road projects, expedite the delivery of construction from the typical 15-year time frame and cut the cost of urban projects to free up money for rural road expansion.

Most lawmakers aren’t aware of the UT-K project, and they say they need more financial information about public-private partnerships on road construction before making a commitment.

State Sen. Todd Gardenhire, a Chattanooga Republican, believes proposals for express lanes, which would be paid for with motorist fees, would most likely be geared toward Nashville.

“I would have to see what the economics of it is and make sure it’s not more of a public with a capital P and private with a little p,” Gardenhire says.

He’s also uncertain how express routes or use of high-occupancy lanes would work differently than they do now.

Gardenhire contends that few drivers use the state’s high-occupancy vehicle lanes appropriately. During his trips on I-24, he sees the HOV lanes surrounding Nashville packed with vehicles carrying only one person, when they are supposed to be for two or more during rush hours, such as 7 to 9 a.m.

“People don’t even try to hide it anymore by putting a dummy with a hat on in the passenger seat,” Gardenhire says with a laugh. “They’re a waste of space.”

He appears willing to give them a chance, though.

“If somebody can figure out how to make it so I can pay a fee and get in there and blow it out going back home or coming to Nashville, that’s great,” Gardenhire adds.

Though state transportation officials prefer to use the term “choice lanes” for their proposal on express routes, Gardenhire, a member of the Senate Transportation Committee, contends they are “toll roads” in essence because motorists would have to pay to drive on them.

State officials, including Transportation Commissioner Butch Eley, the former founder and CEO of Infrastructure Corporation of America, proposed “choice lanes” and public-private partnerships in response to Gov. Bill Lee’s request to find ways to build more roads without raising taxes to meet a 9% growth rate over the last decade.

Eley’s old company is one of the nation’s leading asset maintenance management companies with contracts nationwide. DBi Services bought HDR | ICA Asset Management from Nebraska-based holding company HDR in 2018, the second sale of the company in three years.

Tennessee state Rep. Sam Whitson agrees with the need to find an innovative way to move traffic, and he believes Eley can get it done.

“I’m still driving on the same roads and interstates I’ve been driving on since I was 16 years old in the 1970s,” says Whitson, a Franklin Republican.

Whitson says he’s interested in finding out how options such as public-private partnerships would generate revenue to build “choice lanes” and express routes.

House Democratic Caucus Chairman John Ray Clemmons is not enthused with the idea of allowing private entities to take control of tolling. Privatizing government services has been a goal of both Lee and former Gov. Bill Haslam, he points out.

“My big concern is the extent they’re talking about privately-owned toll roads or fast lanes. That’s going to be a dead end when it comes to Democratic support,” Clemmons says. “We’re not going to back a plan that hands over state roadways to management, operation or ownership of a private entity.”

Clemmons contends transportation and roadways are an “inherent governmental function” and the public needs accountability. The state could lose authority over rates and maintenance if it allows a private entity to control the roadway, he says.

“The last thing you want is somebody profiting off of somebody else’s inconvenience,” Clemmons says.

The Transportation Department is declining to discuss too many details or exactly how “choice lanes” would be monitored because it doesn’t want to get ahead of legislative action.

It contends state law not only prohibits public-private partnerships for highway projects, it also limits the number of “alternative delivery” projects the state can complete each year. 

“All we are doing right now is asking the Legislature to change that in the Build With Us proposal so we can keep up with the growth Tennessee urban areas are experiencing,” TDOT spokeswoman Beth Emmons says.

TDOT says Texas and Georgia are good examples of how “choice lanes” or express routes work. 

Eley and other state officials recently visited Dallas, Texas to review its “choice lanes,” which have seen a 10% increase in general traffic but with a 60-75% reduction in congestion and an average speed increase of 10-15%, according to the state.

The department points out many states with “choice lanes” use electronic transponders to track vehicles. Texas issues different types of fees to motorists who want to use its express lanes.

The Georgia Department of Transportation partners with the private sector for projects in which the contractor designs and builds the highway or takes complete control, designing, building, financing, operating and maintaining.

That state touts “expedited” completion compared to the normal time for delivery of a project, in addition to cost savings and improved quality along with the use of private resources and personnel to cut back on the need for public employees and funding. Access to private capital is another benefit, according to the Georgia Department of Transportation.

“We’re all over them. We are a believer and utilize them and will continue,” says Georgia state Rep. Rick Jasperse, a Jasper Republican who chairs the House Transportation Committee.

Known for having some of the worst traffic congestion in the nation but as a “transportation hub of the Southeast,” Georgia had to find a new method for building roads quicker and moving people faster, which impacts surrounding states such as Tennessee.

Georgia is in the midst of a project it calls a “P-3 heavy” on Atlanta’s north side along I-285 that will connect I-20 East to I-75 and then to I-20 West. The limited access road is to be funded, built, tolled and maintained by a third party and enables the state to embark on a project that, otherwise, would “overwhelm” the state’s budget, Jasperse says.

Another project calls for a truck route from Atlanta to Augusta in East Georgia.

“There is some state money in any of these projects, but it really helps us spread our money further and addresses true traffic needs,” he says.

In some instances, the private entity will take all of the risk on a project. In others, the state will pay back the price of construction plus interest, but state officials feel they can justify that expense because the road is completed in half the time of conventional methods, according to Jasperse.

“It’s not some damn giveaway either,” he says.

Jasperse is quick to note that bidding for these projects is highly competitive among multinational companies and contracts are heavily scrutinized. 

Georgia motorists use what is called a Peach Pass, a small transponder or small electronic toll collection device that kicks in when they use an express lane. They’re also good in North Carolina and Florida.

Money is deducted from the motorist’s account, and violators receive a civil fine from the Georgia Toll Authority. No private tolling is done yet in Georgia.

A trip for Jasperse to Jasper in North Georgia can cost $2 to $8, depending on how jammed the interstate is around Atlanta. The minimum is 10 cents per mile.

“I have the choice. I don’t have to get on that road. I can stay on the five-lane highway or get on the express lane at a cost,” Jasperse says.

One possible drawback is that express lanes along interstates such as I-75 allow traffic to move in only one direction at different times of day. The lanes are closed for an hour when the direction is shifted.

Jasperse also acknowledges express lanes can get backed up too, but he says they don’t run into the same problems as the normal interstates. He believes it’s the right option, though, because the state has limited money and construction costs are increasing. 

Jasperse also says it is critical to have a department of transportation and governor’s office that can be trusted to handle complex multi-year contracts and “to do what’s right and not to make screwy deals … or allow poor infrastructure that hurts us in the long run. Because you really get one shot.”

About the Author: Sam Stockard is a veteran Tennessee reporter and editor, having written for the Daily News Journal in Murfreesboro, where he served as lead editor when the paper won an award for being the state’s best Sunday newspaper two years in a row. He has led the Capitol Hill bureau for The Daily Memphian. His awards include Best Single Editorial from the Tennessee Press Association. Follow Stockard on Twitter @StockardSam