LANCASTER, Pa. (AP) - Friday marked the beginning of a new era.
It was the deadline for companies or consortiums to tell PennDOT they are interested in a massive program to rebuild 500 bridges across the state - including 33 in Lancaster County - over the course of the next six years.
The “Rapid Bridge Replacement Program” is unprecedented in scope and ambition. Never before has PennDOT been able to tackle so many projects in such a brief period of time.
Never before has PennDOT had access to such a large pool of money for improvements. The catch is, it isn’t public money - it’s private.
A 2012 law authorizing “public-private partnerships” will enable PennDOT to team up with a private-sector partner that will finance, design, build and maintain the 500 bridges for up to 35 years. The state won’t have to borrow to build the bridges - the private partner will do that, and be repaid over the lifetime of the contract. By “bundling” the 500 bridges into one project, PennDOT thinks it can save money on design, and ultimately maintenance. That could be a boon to taxpayers, and to motorists, who could see better roads and bridges sooner.
Other aspects of the law could be a bane. The law explicitly permits “user fees” - tolls - on new or rebuilt roads or bridges, though PennDOT officials stress none of the 500 bridges in the rapid replacement project will be tolled. But, down the line, motorists could see more toll booths, or EZ Pass restrictions.
Others worry about hidden costs that could ultimately cost the state and its taxpayers more than if new bridges and roads were built in the traditional way.
Yet many public officials say Pennsylvania’s infrastructure needs are so great that there’s little alternative. The state doesn’t have the money to fix all these roads and bridges; the private sector does.
“The law has opened up some options and created flexibility in funding infrastructure improvements,” said James Cowhey, executive director of the Lancaster County Planning Commission. “So, it may not be the only way but it is another way to raise the funds for needed system improvements.”
One design fits all
More than 5,500 Pennsylvania bridges are deemed “structurally deficient,” and in August PennDOT announced weight restrictions on about 1,000 state and local spans - including 39 in Lancaster County.
Some, though not all, of those spans are part of the Rapid Bridge Replacement Program. The list includes other bridges that have been deemed deficient but haven’t had restrictions imposed, said Erin Waters-Trasatt, PennDOT’s deputy press secretary.
All bridges in the program are similar in size and design. By bundling them, Waters-Trasatt said, the private partner can in effect use one design to rebuild all 500 spans.
That, she said, will save a lot of money.
Waters-Trasatt was unable to say Friday how many firms or consortiums had submitted their qualifications to the state, asking to be considered for the project. PennDOT wants to move quickly, hoping work on some of the bridges can begin by 2015. It hopes all the work can be completed by 2020.
That, officials say, could never happen without private capital - and the 2012 law that opened the door for it.
Pennsylvania’s P3 Act made it one of 30 states that permits some form of public-private collaboration. The law set up a seven-member board, chaired by the secretary of transportation, to review projects. It permits private firms to submit unsolicited proposals -in other words, a project may not be on the list of priorities but if a private firm offers a good deal, the state could give it a thumbs-up.
Under P3, private groups’ return on investment would come in the form of state payments made when construction benchmarks are met, and via “availability payments” - payments based on how well the bridge holds up and how well it’s maintained by the private partner, which could be responsible for most upkeep for up to 35 years.
Since the cost of maintaining a bridge over time can dwarf construction costs, PennDOT anticipates that the private partner will construct the spans in a way that keeps maintenance to a minimum - another cost savings.
Tolls may also be imposed by the private partner, and after the P3 law was passed in 2012, some initial analysis focused on tolls as a way for the private partner to generate revenue.
“Under the law, the state would, for instance, retain ownership of a busy roadway while a private firm in a P3 would build new express lanes along that roadway. Following construction, the private firm would receive a return through tolling drivers who use the express lanes,” wrote attorneys with the law firm of Pepper Hamilton, which has 13 offices around the country, including three in Pennsylvania.
Wrote an attorney with the firm of Fox Rothschild LLP, with five offices in Pennsylvania: “Toll revenues on highly-traveled bridges would not only provide for repair, operation and maintenance of the tolled bridges, debt service on the bonds and (federal) loan, but also revenues to repair structurally deficient bridges in more rural areas.”
PennDOT’s Waters-Trasatt said tolls were never envisioned as part of the Rapid Bridge Replacement Project. “The fact some P3s in the country include tolls in the financing is evidence of the need to raise new revenue, especially to fund capacity adding projects,” she said in an e-mail. “In this case, replacing bridges on the existing state system is something PennDOT believes should be funded through our traditional revenue sources.”
Cowhey, the county’s chief planner, said he doubts Lancaster County will see tolls any time soon. “Like any tool, (tolling) is only right when applied at the right time to the right job. … I don’t think it is needed. Is it inevitable? I don’t think so, but it might be a viable option at some point.”
Some worry about costs that aren’t as readily identifiable as tolls.
In a June 2013 report on the risks and options of “P3” partnerships in New York State, state controller Thomas P. DiNapoli cautioned that private financing “could be viewed as a new form of backdoor borrowing … (it) may increase the ready availability of funds in cases where states or localities have self-imposed spending and debt limits that can be bypassed by using P3 financing. So, private financing could be used, in effect, as a new source of borrowing that might never appear in any budget, on any financial plan, or in financial statements.
“It is important to recognize that private financing does not constitute a new source of funding - ultimately, the costs will be borne by the public,” he wrote.
He also noted that “availability payments,” like those PennDOT will pay, may mean “the public is obliged to pay for years, with no consideration of changing circumstances or ability to pay. … future resources will be locked up, limiting the public partner’s ability to respond to changes in revenues or needs.”
Former Penn State law professor Ellen Dannin, a long-time critic of privatization, says “adverse action” provisions in public-private contracts could ultimately be a big public cost.
“In 100 percent of the (public-private) contracts I’ve read, set out in almost identical language, are the adverse action provisions,” she said. These give the contractor the right to compensation whenever the state “lowers the amount of money the private contractor expects to receive” - for example, requiring a design change in a bridge.
She cited the city of Chicago, which privatized its parking meters and garages - and is now mired in litigation because the city built a new parking garage near a privatized garage.
“I would be stunned if (adverse action provisions) weren’t there” in the Rapid Bridge Replacement Project, she said.
The duration of the Rapid Bridge Replacement contract, 25 to 35 years, “is longer than a lot of marriages last,” she said. “What if we get to the point where the state feels it has to get rid of the contract, and has to buy its way out?
“If you start adding these things together, these are real costs, things that can hamstring democracy.”
Full speed ahead
Still, PennDOT officials are convinced that the P3 era means wins for everyone - for motorists, who will see improvements sooner; for taxpayers, who will see savings, for the private sector, which will see a return on investment, and for Pennsylvania’s economy as a whole.
“When Governor Corbett signed the P3 legislation into law, he gave us a tool to find more ways to work with private businesses to meet our transportation needs, or expand the services we deliver,” PennDOT Secretary and P3 Board Chairman Barry J. Schoch said late last year.
“This project is a prime example of how investment in the public sector empowers stronger partnerships within the private sector, leading to increased safety, good-paying jobs and better services for all Pennsylvanians.”
Information from: Intelligencer Journal/Lancaster New Era , https://lancasteronline.com
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