Why the controversial US 36 contract could be the wave of the future
By the end of this week, Colorado transportation officials are expected to sign a controversial and historic contract giving a private company control of the Boulder Turnpike. This public-private partnership, a first in Colorado for road maintanence, is raising big red flags for some politicians and residents, but it's an increasingly common funding tool nationwide as traditional sources of road money shrink.
Under the agreement with the state, the Australian business consortium Plenary Roads Denver will expand, operate and maintain U.S. 36 between Denver and Boulder. That includes finishing the $425 million project to widen the Turnpike by adding a new bikeway and a third traffic lane in each direction for buses, carpools, and toll-paying drivers. In exchange for all that work, the company will get to keep all revenues from the new toll lanes for the next 50 years.
Martin Leckie, a technician with a Boulder electronics firm, is one of the thousands of people who rely on the Turnpike for their daily commute. Leckie, who either drives or takes the BX bus, considers the road crucial for the region and he's uneasy about the new contract.
“I don’t think going privatization is good because it can be controlled by private interest, literally," Leckie says. "It needs to be generalized in the public’s interest; this is a highly used road.”
Leckie may not like it, public-private partnerships, known as P3s, are an increasingly common tool for governments looking to pay for big infrastructure projects. Thirty-three states currently allow such contracts, according to the National Conference of State Legislatures. P3s are already being used on transit projects in Colorado, although the U.S. 36 deal will be the first for roads.
“I would say in the last 10 years it’s become more of a trend because of lack of dollars,” NCSL transportation researcher Jim Reed says.
Reed was recently called to the Capitol for a hearing on the U.S. 36 contract. He told lawmakers that even some states with relatively strong economies, like Virginia, Texas and Florida have started relying on P3s.
There are several reasons for the shift: The recession has meant leaner tax revenues, the federal government is sending less money to states and the traditional backbone of road funding, the gas tax, doesn’t go as far as it used to.
“The millennial generation is driving less," Reed says. "Driving declined during the economic recession and we’re getting fuel-efficient cars. It was a downturn and now it’s a steady, slow decline in driving. And, of course, the fuel tax is tied to how much gasoline is purchased.”
Indeed, since the recession, revenues for the Colorado Department of Transportation are down sharply, according to the agency, leaving it $750 million a year short of the amount needed to handle the state's growing population.
“We have no additional money for transportation," House Majority Leader Dickie Lee Hullinghorst [D-Niwot], says. "We don’t even have enough money at the state level for maintenance and the local governments find themselves in the same boat generally speaking.”
But critics have come out in force against the new road funding regime, with hundreds showing up for public meetings in the last few weeks, organizing a petition drive to stop the deal and pursuing a lawsuit.
Outside a key CDOT meeting on the future of U.S. 36, a small group of protesters handed out Colorado flags and explained their objections to the Plenary Roads deal. Among other things, they're unhappy that the contract allows tolls as high as $14 dollars each way. CDOT says the rate will likely average around $5 to start, and vary according to traffic congestion.
Denver resident Jim Burness, whose wife commutes on the Turnpike, believes the deal will create a system of haves and have-nots, with those able to pay high-priced tolls zipping along in one lane and everyone else stuck in what he calls "peasant lanes."
Burness says that's already happening on the I-25 toll lanes north of Denver. "You have the BMWs and the Lexuses in the carpool lanes, and then you have everybody else jammed into the free lanes," he says.
Instead of tolls, protest organizer Ken Beitel, from Boulder, would rather see the state fund roads through new taxes on marijuana, oil and gas, high income earners or an increase in the gas tax.
“Would you prefer a maze of toll roads or would you prefer a small increase in the fuel tax?” Beitel said at the protest. “The only thing that’s more unpopular than taxes in Colorado is toll roads.”
CDOT did consider trying to put a tax increase on the ballot last year, which is required by law, but agency spokeswoman Amy Ford said polling by the Colorado Transportation Coalition found little appetite for several kinds of tax hikes, including a sales tax increase.
"The public didn’t just say ‘No,’ they pretty much said ‘Hell no. We’re not interested in raising the tax at this point in time,'" Ford says. "So it is a real struggle.”
Opponents of the U.S. 36 deal believe CDOT's polling was flawed and that the Department failed to examine all potential funding options.
Colorado's gas tax is currently 40.4 cents per gallon. The rate, which isn't indexed to inflation, hasn't changed in two decades. It ranks in the bottom 15 among states, well below the national average, according to the American Petroleum Institute.
CDOT's Amy Ford says the declining purchasing power of the gas tax means the state is faced with a difficult decision about how to fund transportation. But for some, the public-private partnerships are actually a step in the right direction.
"It’s a good idea, and it is the wave of the future, and there are many benefits," Dennis Polhill, a Senior Fellow in public infrastructure at the Independence Institute, says. "It'll bring new capital to the system. It’s the only option if we want to see more mobility for less cost.”
House Majority Leader Hullinghorst said she wants more transparency regarding the Turnpike agreement, but isn’t opposed to public-private partnerships.
“This tolling is one of the only ways that we’re going to make highway improvements,” Hullinghorst says.
The U.S. 36 debate has taken on something of a partisan tone. Republicans in the state legislature are blaming a 2009 effort by Democrats to overhaul transportation funding, called FASTER, for the current controversy. That law created the High-Performance Transportation Enterprise, a body tasked with setting up P3s to fund Colorado road projects.
FASTER "created unelected commissions and empowered them to secretly contract with private companies," Senate Minority Leader Bill Cadman said in a statement. "The public is displaying the same outrage that we exhibited when we tried to stop this legislation...I don't want to say 'I told you so,' but..."
Back on the BX bus, Boulder Turnpike commuter Martin Leckie seems resigned to the new transportation funding realities. But he wishes the state had at least picked a local firm for the project.
“It’s something we’re going to have to do, and something we’re going to have to pay for. But let’s keep it local," Leckie says. "There’s people here [who are] starving and need the money.”
For a national perspective on the rise of public-private partnerships and how the relationships are working in other states, Colorado Matters talked with Rick Geddes, director of the infrastructure policy program at Cornell University. Learn more here.
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