Transport Privatization: Full Speed Ahead

Investors are lining up to bid on American's transportation infrastructure, with many public sector managers happy to solve their budget woes.

"In the past year, banks and private investment firms have fallen in love with public infrastructure. They're smitten by the rich cash flows that roads, bridges, airports, parking garages, and shipping ports generate - and the monopolistic advantages that keep those cash flows as steady as a beating heart. Firms are so enamored, in fact, that they're beginning to consider infrastructure a brand new asset class in itself.

With state and local leaders scrambling for cash to solve short-term fiscal problems, the conditions are ripe for an unprecedented burst of buying and selling. All told, some $100 billion worth of public property could change hands in the next two years, up from less than $7 billion over the past two years; a lease for the Pennsylvania Turnpike could go for more than $30 billion all by itself. "There's a lot of value trapped in these assets," says Mark Florian, head of North American infrastructure banking at Goldman, Sachs & Co."

Full Story: Roads to riches



subsidizing sprawl

Road operators can only charge monopolistic prices, if there are barriers to create competing roadways and no real alternatives, such as rail or planes, to keep prices down.
Furthermore, by actually charging people for using road infrastructure, more sustainable modes such as walking, cycling and public transit become comparatively more attractive. Most governments have been unable/unwilling to charge road users and this, in effect, subsidizes sprawl.
In this environment, private roads are an attractive alternative to public ones.

U-Turn better for FFb33

The April 2007 Public Works magazine editorial asks, “If operating public infrastructure makes good business sense, why are we getting out of the business?” The following is a condensed answer.

The private sector is profit motivated. A profit motive efficiently balances toll rates and service level (transit time) in order to maximize profit. The public sector is service motivated. A service motive effectively balances taxes and service level in order to maximize service.

Note the pubic sector’s “service” is not limited to transit time. Service includes transit time, traffic safety, cost, air quality, water quality, visual impacts, noise impacts, and now the Climate Crisis. It would be a shame to shackle our transportation resources to the profit motive just as vastly improving electronics technology makes tremendous service improvements (that diminish profits) a done deal.

Transportation experts are scratching the surface of electronics’ potential. Transportation planners and elected leaders need to get beneath the surface. The public sector should be mining consumer electronics for transportation technology. Here are a few “near surface” examples of electronics applications, condensed from a draft Fossil Free by 2033 Plan:

? Easy Ride Sharing – Use cellphones to match regular and on-the-fly ride sharing requests.

? Easy Parking Sharing – A smart “communicating” parking meter (a GPS transponder) would allow people and businesses to share and sell parking spots by the minute.

? More Incentive to Share – Pay for auto insurance when buying fuel, with insurance cost tied directly to miles driven. Oregon has demonstrated the potential.

? Type A Inspiration to Share – Also, give demand for more fuel-efficient vehicles a rocket boost. Tie speed limits to passenger miles per gallon.

? Intelligent Communicating Vehicles – Auto manufacturers are deploying automation and communication technology (fully drive-by-wire stability control systems, adaptive cruise control, General Motors’ V2V). Congestion relieving vehicles will be available before 2030. In May 2007 Popular Science, Seth Teller, MIT faculty adviser, points out, “If cars are communicating, no one has to idle at a light for three minutes again.” Jacob Peters, University of California at Davis notes that “Active safety technology that makes cars drive closer together would easily double (road) capacity.”

Thus far, auto manufacturers have been deploying automation technology on a schedule not easily predictable by transportation planners and with inadequate incentive to address the full spectrum of transportation “service.”

It is not time for the public sector to surrender service to private enterprise or even to employ the private sector approach with tolls. It is time for the public sector focus on providing full spectrum service effectively.

Mark E. Capron, California Professional Engineer
Volunteer drafting components of a FFb33 Plan for a local non-profit. May Public Works and might have more details.

Prepare for the AICP* Exam

Join the thousands of students who have utilized the Planetizen AICP* Exam Preparation Class to prepare for the American Planning Association's AICP* exam.
Starting at $245

Essential Readings in Urban Planning

Planning on taking the AICP* Exam? Register for Planetizen's AICP * Exam Preparation Course to save $25.
Women's t-shirt with map of Los Angeles

City T-Shirts for the ladies!

Women's Supersoft CityFabric© Fashion Fit Tees. Now available in six different cities.
Melissa and Doug Town Blocks Wooden Play Set

Block play meets role play

New! Town block set from Melissa and Doug Toys