The South Bay Expressway
Southern California is notorious for its terrible traffic, and San Diego County is no exception. Part of the problem is that the region has not been able to afford the new roads that it has had planned for as many as 50 years. The Rte. 125 extension is a textbook example.

The Rte.125 extension – a road that would extend Rte. 125 to just north of the Mexican border and every town in between – had been part of San Diego County’s regional vision since it was originally conceived in 1959. But, unfortunately, California budget limitations have prevented the development of the Rte.125 extension. Recently, a private company contracted with the state of California through a public-private partnership to build the road dozens of years earlier than the state could have. In exchange, the company gained rights to all tolling revenue generated by the road, but it also acquired total responsibility for operation, upkeep and management.

The South Bay Expressway opened in November of 2007 to tremendous acclaim and has already drawn a huge stream of regular commuters. Stretching 10 miles off of the pre-existing Rte. 125 in Bonita, the Expressway provides easy access to the communities southwest of San Diego and allows its users to bypass city traffic altogether.

The South Bay Expressway has also taken careful steps to ensure a clean environmental footprint. In the process of construction, more than 1,000 acres of sensitive wildlife habitat were painstakingly preserved at a cost of more than $20 million. This cost was absorbed entirely by the private sector. Additionally, because the Expressway cuts down so heavily on congestion, those who drive it use less gas and reduce the carbon emissions of the entire San Diego region – all at no cost to taxpayers.

Indiana Toll Road
In 2005, Indiana Gov. Mitch Daniels moved to fund $2.8 billion of critical infrastructure improvements, though the state lacked sufficient funds. There was little appetite for a gas tax increase, but Daniels understood the importance and value in investing in infrastructure throughout the state and began to look for alternative sources of funding.

The key to funding the program became a lease of the Indiana Toll Road. When bids were opened the next year, the winner bid $3.85 billion—the proceeds from the lease funded more than 200 vital transportation projects and left additional money to spare.

Since then, proceeds from the 75-year lease have been placed into a transportation trust fund, earning the state millions in interest. In fact, early estimates suggested the interest alone would bring in another $800 million. With completion of the lease, Indiana finds itself in an enviable position. As Governor Daniels puts it, “we’re the only state, I think it’s safe to say, that has money in the bank, or will have, to fund the next set of investments [in transportation infrastructure].” Furthermore, the concessionaire has pledged to spend about $4.4 billion for road improvements, with more than $200 million spent in the first three years of the deal.

The lease also is guided by a very detailed 263 page contract that protects the public interest. In it, toll rates and possible increases are established as are limits on the contractor’s profits. Further, it has spelled out all kinds of “what-ifs” and established well-defined performance levels that the contractor is legally required to meet. These standards dictate everything from future maintenance and road conditions to the time it should take to remove dead animals. In many cases, these standards go beyond the traditional management levels achieved by the state’s Department of Transportation.

Furthermore, the state can revoke the contract at any time. The concession agreement and lease sets the conditions for the state to cancel the contract and resume operations of the road should the contractor fail to perform. In any event the state keeps the $3.85 billion payment. All risk is shed to the contractor.

Pocahontas 895
Following the establishment of the Public Private Transportation Act in Virginia in 1995, the Virginia Department of Transportation (VDOT) began working with a private firm in 1997 to build Pocahontas 895 toll road to meet the need for a link between southern Chesterfield and eastern Henrico Counties.

Linking Interstate 95 at Chippenham Parkway (Route 150) with Interstate 295 to create a southern bypass of the city, the 9-mile toll road provides the only crossing of the James River for six miles in either direction. It also operates using a combination of cash and fully electronic tolling, allowing customers with E-ZPass™ to travel without stopping or slowing down to pay tolls.

In 2006, the Commonwealth of Virginia selected a private company to manage, operate and maintain Pocahontas 895. Although the concession agreement grants that company a 99-year lease agreement, VDOT will continue to have ownership and oversight of Pocahontas 895. This arrangement under Virginia's PPTA was the first of its kind in the Commonwealth and - at the time- only the third of its kind in the nation.

As part of this public-private partnership, the selected operator has committed to financing and building the Airport Connector Road, which will directly connect Pocahontas 895 with Richmond International Airport. The Airport Connector Road is expected to be completed in 2010. The operator has also paid off all of Virginia’s existing debt for the Pocahontas Parkway Association (to finance construction of the route, this non-profit association issued $324 million in bonds). They have also taken responsibility for Pocahontas 895's costs and management, including upgrading electronic toll equipment, and have reimbursed VDOT’s costs to maintain, operate and repair Pocahontas 895.

Finally, if the facility is more profitable than expected, Pocahontas 895’s operating company has committed to share revenues with the Commonwealth of Virginia, further helping to alleviate the state’s budget constraints by providing money for transportation and freeing up funding for health care and stronger schools.