Bringing More Public Value through Private Investment in Public Infrastructure

By:         

Amanda J. Baxter,  SVP,  Virginia Market & Operations, Transurban, North America
Mark F. Muriello, Director of Policy and Government Affairs, IBTTA and Former Deputy Director, Tunnels, Bridges & Terminals, The Port Authority of New York and New Jersey

We at the International Bridge, Tunnel, and Turnpike Association read with interest Ruchir Sharma's opinion piece on the Inflation Reduction Act and what he calls the “growing private ownership of U.S. infrastructure” published in the New York Times on May 8, 2023.  As both a current leader of Transurban, North America and a former leader of the Port Authority of New York and New Jersey, we have seen big transportation infrastructure projects get delivered for the public benefit by harnessing the power of private investment.  We think the author misses the value of public-private partnerships and their role in rebuilding and modernizing America’s aging and under-performing transportation assets.

We recognize that there is a tried-and-true rationale for public investment and oversight in infrastructure that is intended to serve the public’s interest.  And this is particularly true in transportation, where the facilities and services are so emblematic of the American way of life.  There is a lot of public interest at stake:  freedom of mobility, access to opportunity, quality of life, economic competitiveness, and health and safety.  We need our transportation assets to be safe, reliable, available, and affordable.

But the fact of the matter is that there is simply not enough money available through traditional public finance approaches to address our transportation investment needs.  Even with record commitments of federal resources through the Infrastructure Investment and Jobs Act (IIJA) and many states taking bold actions to enhance their revenue for transportation investment, the gap between our investment needs and the available resources continues to grow every year.  Projections indicate the U.S. Highway Trust Fund will be in deficit again by 2028, despite the $118 billion of federal general fund transfers that were approved in passing IIJA. 

Attracting more private investment in transportation, first and foremost can increase the amount of available resources to advance investment-worthy projects and accelerate their delivery.  The Port Authority of New York and New Jersey’s Goethals Bridge long struggled to maintain reliability and safety standards due to a physically and functionally obsolete design. When the bridge deck required replacement, the agency faced the challenge of how to find the extra capital investment capacity to deliver a modern replacement facility, rather than just reconstructing its deck with an obsolete design.  The public-private partnership undertaken by the Port Authority accelerated the funding for a modern facility design, while delivering the new bridge for public use sooner than the publicly financed alternatives and with with less construction disruption to travelers that relied on the crossing regularly. 

Risk transfer is another benefit of private partnerships. By working with the private sector, governments can shift risks associated with large-scale projects to those who are best able to manage that risk and provide protections to taxpayers.  The 495 Express Lanes in the DC area, a public-private partnership between the Virginia Department of Transportation and Transurban, is a good example of this.  The project shifted the risk of construction cost overruns and schedule delays to the private partner and assigned the revenue risk of the new dynamically-priced managed lanes to Transurban.  The agreement allowed the Virginia Department of Transportation to focus on its core competencies while still delivering a valuable and improved public asset. The Commonwealth has since put this P3 model to work to deliver more than $6 billion in private investment and nearly 90 miles of modern highway travel choices to taxpayers in Northern Virginia alone.

Additionally, private sector partners can bring valuable expertise, technological know-how, and innovative solutions directly to the project team.  The benefit is better accountability and avoided costs of supplemental advisory services in delivering critical infrastructure. 

We may not be able to deliver everything, everywhere, all at once.  But more private investment in transportation projects and operations can deliver more projects on accelerated schedules.  That’s not bad in these times of great need and rising costs.