Report outlines flaws in PA Turnpike lease plan

| Wednesday, March 25, 2009

A public policy group says states should not rush into leasing existing road assets to the private sector.

In a report released Tuesday, March 24, the Philadelphia-based Pew Center on the States urged states considering public-private partnerships for infrastructure to exercise caution and lay down some ground rules to protect taxpayers and highway users.

The report centered on the proposed lease of the Pennsylvania Turnpike by state officials from May through September 2008. Legislation that would have enabled the $12.8 billion lease to divisions of Citibank and Spanish investor Abertis failed to advance from a state House committee.

Pew Center researchers reported what they believed the flaws in the proposal to be, including a lack of forethought by state officials into how a long-term lease would affect future generations.

“The failure of the Pennsylvania Turnpike lease proposal offers important lessons because private capital is likely to play a growing role in helping states pay for their infrastructure needs,” Susan Urahn, the managing director of the Pew Center, stated in the report.

The Owner-Operator Independent Drivers Association applauded the center’s evaluation of the turnpike lease.

“The Pew report seemed to provide some reasonable commonsense suggestions not only to Pennsylvania but to other states that are looking at selling an existing piece of infrastructure,” OOIDA Director of Legislative Affairs Mike Joyce told Land Line.

“We’ve been pointing out some of those things for a long time, such as how proceeds are being spent, oversight, short-term focus versus long-term focus, those types of things,” Joyce said.

“We appreciate the report, and hopefully it provides some pause to advocates who are gung-ho about selling our infrastructure to the private sector.”

Pew Center officials stated that Pennsylvania did do a few things well, including a thorough evaluation of its infrastructure needs.

The problem was that Pennsylvania was not prepared, according to the Pew Center report, because they had not provided enough oversight or accountability into the proposed lease.

“The state lacked a clearly articulated plan for how the proceeds would have been invested and spent,” Pew officials stated.

Pew Center officials offered several “lessons learned” and advice for states including:

  • Pass enabling legislation and establish ground rules before negotiations begin;
  • Keep transactions transparent and include stakeholders and the public in the discussion;
  • Have a clear understanding of the goals;
  • Be realistic with estimates and financial predictions;
  • Be clear about where the proceeds will be spent; and
  • Consider the effects of a long-term lease or sale on future generations.

 

Pew Center researcher Mariani Vaughn urged states to look further into the future when negotiating deals that leave a legacy for generations.

“These proposals typically involve billions of dollars and stretch over decades,” Vaughn stated. “It’s critical that state policymakers and the public have all of the information and answers they need to make a thoughtful and sound decision.”

– By David Tanner, staff writer
david_tanner@landlinemag.com

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