DATA:Public-Private Ventures

US locks up talent

The Europeans and Australia have gone much further in privatization than the US which foolishly locks up too much of its transport talent in state or municipally owned agencies that are legally confined within their geographic boundaries. Engineers at the New York State Thruway were the first in the world to implement electronic tolling in a mixed barrier and ticket system environment. They did it in-house. If they had been an investor owned Empire Thruway Inc running the Thruway instead of an old socialist style state authority, they’d be out there adding to the pool of competitive talent bidding on jobs all over the world, and probably helping out in places like Melbourne Australia or Hong Kong. As it is they can’t get involved even next door in New Jersey or Pennsylvania even (where their experience could be helpful too.)

Other local govt toll authorities probably don’t attract the talent they could in-house because opportunities are limited to the local jurisdiction, so they are more reliant on consultants and contractors. Or they suffer higher turnover of top people.

PWF’s Survey looks at the accumulating total of projects since 1985.

A couple of quibbles. UK? My Gawd i’ts way up there. $21b of toll facilities! Turns out PWF classifies the Channel Tunnel ($15.5b) as a toll project. Guess it’s one of those close calls. It takes a lot of motor vehicles on special flatcars, but I’d call it rail.

Public or private?

PWF are liberal in their definition of private involvement so that for example they classify even the southern California San Joaquin and Foothill/Eastern toll roads of the Transp Corridors Agencies as public-private ventures (PPVs). The projects were design-build and the financing was secured against various non-toll revenues. And TCA’s own staff is quite modest (relative to the giants back east). They contract out operations. Still I would have classified their toll roads as a public or government venture.

TCA itself is the debt issuer and ultimate manager and it is a joint powers creation of a bunch of purely govt agencies, local cities and Orange county, and there is no investor equity at risk in the performance of the road itself and no stock readily tradable on the capital markets – if those are the elements of a private or investor interest. Now of course it can be argued that these days a lot of loans are so subordinated and unsecured that they are barely different from equity. Where is the distinction, people ask? Of course by that definition the US Government which has a lot of investor debt and no traded stock, might be defined as a PPV?

Definitional quibbles aside, this is an amazing job of compilation, documentation, classification and description and it makes an excellent reference tome. (tel 908 654 0397 pwfinance@aol.com)