Study Shows Signs for Caution on Private Roads

Media Contacts
Jason Donofrio

Arizona and Other States Vulnerable to Bad Private Road Deals

Arizona PIRG Education Fund

A new report released today identifies problems in a national trend toward private toll roads. The study Public Roads, Private Costs: The Facts About Toll Road Privatization and How to Protect the Public examines 15 completed private road projects and 79 others that are proposed or underway.

“How we fund, finance, and choose our transportation investments is top-of-mind for many policymakers throughout the nation,” said Robert Puentes at the Brookings Institution. “This report is a major contribution to that important discussion and will be valuable for those sorting through the right mix of public and private investments and partnerships.”

A growing number of states are considering arrangements in which a private operator provides an up-front payoff or builds a new road in return for decades of escalating toll receipts. The report assesses these deals and identifies basic principles needed in road privatization agreements to protect the public interest:

  • The public should retain control over decisions about transportation planning and management.
  • The public must receive fair value so future toll revenues are not sold off at a discount.
  • No deal should last longer than 30 years because of uncertainty over future conditions and because the risks of a bad deal grow exponentially over time.
  • Contracts should require state-of-the-art maintenance and safety standards instead of statewide minimums.
  • There must be complete transparency to ensure proper public vetting of privatization proposals.
  • There must be full accountability in which Arizona decision makers must approve the terms of a final deal, not just approve that a deal be negotiated.

Some states have seen a backlash against this trend. Strong public resistance in New Jersey and Pennsylvania turned back proposed privatization deals in 2007 and 2008. 

This issue will likely become more heated in coming months as Congress considers how to finance reauthorization of the six-year transportation bill which expires in September.

“Many of the same banks and investment firms responsible for the mortgage market meltdown are lobbying hard for deals to finance America’s infrastructure,” stated Alex Nelson, Transportation Associate for the Arizona PIRG Education Fund.  “No matter how desperate public officials are for short-term cash, Arizona should not sign any deal that will hurt the public over the long term.”

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