Georgia DOT planning larger private sector role in toll-lanes projects
ATLANTA — The Georgia Department of Transportation first turned to the private sector to help finance a major road-building project with the Northwest Corridor, adding toll lanes a few years ago to Interstate 75 in Cobb and Cherokee counties.
Now, the DOT wants to take the public-private partnership (P3) concept to a new level using its experience with the Northwest Corridor as a guide.
The agency is looking for a private partner interested in shouldering the lion’s share of the cost of a plan to build toll lanes along the Top End of heavily traveled I-285 from just north of its interchange with I-20 East to just north of the I-20 West interchange. Terms of the deal would be set out in a 50-year contract, up from the current 35-year contract governing the Northwest Corridor.
The new form of P3 the DOT has in mind is closer to selffunding than any project the agency has going today, Georgia Commissioner of Transportation Russell McMurry said.
“The private sector will bear the investment costs needed to deliver the project(s), relying solely on the toll revenues generated by the project for their repayment,” he said. “To better enable a private investor to manage that risk, we give them a longer contract term. At the end of the day, we get more project and more value for less public dollars.”
That “more project” of which McMurry speaks could include adding two barrier-separated lanes along 285 instead of one as originally planned, Meg Pirkle, the DOT’s chief engineer, told members of the State Transportation Board during a recent presentation.
“Barrier separation means greater time-saving benefits and safer trips,” she said.
Benita Dodd, vice president of the Georgia Public Policy Foundation, a think tank with a market-oriented approach, said deep-pocketed private investors also could help pay for improved drainage along I-285.
“We’ve seen the Northwest Corridor flood several times because of inadequate maintenance of drains,” she said.
Dodd said the form of P3 the DOT envisions already is in place in other states and across the globe, including Europe, Australia and South Africa.
“I’ve been on the toll roads in South Africa,” she said. “There’s no comparison between the quality of the general-purpose lanes and the toll lanes. It is a superior product.”
But the DOT plan has its skeptics, starting with questions over why the state needs to rely so heavily on private financing.
Neill Herring, a lobbyist for the Georgia chapter of the Sierra Club, pointed to the transportation funding legislation the General Assembly passed in 2015, which pumps about $950 million a year primarily into building roads and bridges. Georgia also is in line for a share of the huge infrastructure bill President Joe Biden is pushing, Herring said.
“What problem are we solving here?” he asked.
But Seth Millican, executive director of the Georgia Transportation Alliance, an affiliate of the Georgia Chamber of Commerce, said the state’s needs in the transportation arena dwarf whatever public funds might become available.
Then-Gov. Nathan Deal launched the state’s Major Mobility Investment Program in 2016, of which the I-285 toll lanes are a part. The 11-project program’s price tag at the time was pegged at $11 billion, but that could go even higher considering the I-285 toll lanes alone are expected to cost $6.1 billion.
“There continues to be a lack of resources to do what we need to do,” Millican said. “We need these big projects, but it’s a lot to bite off.” Herring said the proposed 50-year contract also is uncomfortable to swallow.
“I’m not aware of any 50year contracts in government,” he said. “They’re creating a private DOT with a private revenue stream on public property. … Why is that constitutional?”
Indeed, Deal canceled an early version of the P3 contract for the Northwest Corridor out of concern the state would cede too much control over the road to the private sector. The transportation board eventually approved a scaled-back contract that reduced the amount of private investment going into the project and swapped in more public money.
But McMurry said the DOT has gained more experience with the P3 model since then.
“Georgia – and the rest of the P3 industry is more mature,” he said. “Market analysis and strong interest from the private sector tell us this corridor is ripe. … We are ready to embrace this next level.”
Supporters say the key to success will be making sure the contract includes provisions protecting the state’s and the public’s interests.
Transportation board member Kevin Abel, who represents a congressional district in Atlanta’s northern suburbs on the board, said the DOT should insist on capping the private partner’s return on investment from the project.
Abel also suggested building in a guarantee that the project include a transit component.
He said investors otherwise might be tempted to leave transit out of the mix because transit riders would take cars off of I-285, reducing the toll revenue.
“Once we sign a 50-year agreement, we’re subject to the whims of the marketplace,” Abel said.
The DOT plans to hold an industry forum later this year to talk about the project with potential bidders.