CoPIRG Releases Principles for Privatized Transportation Projects

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Guide for Public to Determine If Deals Protect Public Interest


As Colorado’s transportation officials pursue more and more “public-private partnerships” (PPPs) to help build and maintain roads and transit projects, CoPIRG released a set of principles that the public can use to determine if projects adequately protect the public interest. CoPIRG released the principles the week the Colorado Department of Transportation (CDOT) is holding public information sessions on a proposed PPP to build and maintain highway US 36.

“Colorado is grappling with significant funding challenges for our transportation system and increasingly partnerships with private, for-profit companies are seen as a solution for financing,” said Danny Katz, Director of CoPIRG. “To ensure the public interest is protected, we can’t approach these deals as simply a “quick fix.” Any potential deal must maximize transparency, value, efficiency and safety.”

CoPIRG offered the following principles for any public-private partnership for transportation projects:

  • The public should retain control over decisions that affect the broader public interest. PPPs should not limit the government’s ability to act in the public interest by demanding financial compensation when the government improves neighboring roads or transit systems or requiring limits to public decisions around traffic speeds, signals or other policies. In addition, PPPs must be held to high standards for safety and upkeep to ensure profits are not pitted against the public interest.
  • The public must receive fair value so future revenues are not sold off at a discount. Independent, third-party valuation of the asset must compare the value for the asset on the open market with other viable options including the value of keeping the asset in public hands with the same fees or revenue opportunities that the deal would grant to the private entity.
  • Any deal lasting longer than 30 years must be approached with additional caution due to uncertainty over future conditions and because the risks of a bad deal grow exponentially over time. Special protections must accompany such long-term deals including the ability for the public to review the deal at regular intervals and modify it. Longer-term deals should also include strong provisions such as escrow accounts to ensure that private operators continue to prioritize ongoing modernization, upkeep and repair even though those investments will make less and less sense to their bottom line.
  • There must be complete transparency to ensure proper public vetting of privatization proposals. The public should be aware of every step that is taken in pursuing a privatization proposal—from the initial hiring of consultants to the solicitation of proposals to the selection of a winning bidder. In general, the public’s right to know should trump business confidentiality. There should also be a proper amount of time allotted for public hearings and ample time for review of the proposed agreement, before a privatization agreement is finally approved. Once underway, the operations and finances of a PPP should be no less open to ongoing public disclosure than if the arrangement were fully public.
  • There must be full accountability in which the governmental body must approve both that a deal be negotiated and the terms of a final deal. In other words, officials who are accountable to the public must have the ability to both shape the terms under which assets may be privatized and to approve the final deal that is presented to them.

“The more transparent these deals are the better. Not only do they build public confidence and decrease chances of corruption but they increase the likelihood the public is getting a good deal,” said Katz. “Without details it is hard to know if the public interest has been adequately protected.”

CDOT’s High-Performance Transportation Enterprise (HPTE) is overseeing the proposed PPP for highway US 36. In addition, the HPTE’s website lists opportunities for PPPs along I-70, I-25, and C-470. The Regional Transportation District (RTD) has also used PPPs for a number of FasTracks projects including the Eagle P3 for the Gold and East Lines and a P3 for the North Metro Line.

“PPPs are a part of Colorado’s transportation picture. The longer-term the deal and the bigger the deal, the more a bad deal will grow exponentially worse overtime. So it’s critical to get it right,” said Katz.

Download the principles here.