10 Funding Innovations Required to Meet America’s Critical Infrastructure Needs

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Jack Finn

The price of maintaining and expanding America’s transportation infrastructure is high, but the price of failing to do so is even higher.

Unfortunately, the infrastructure funding situation this year is even riskier than in 2007. States need additional federal funds through the reauthorization of Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), but that bill may not increase funding significantly, or be enacted on its deadline of October 2009.

Estimates from the Urban Land Institute indicate the gap between the cost of identified infrastructure-improvement needs and projected available funding over the next five years is a staggering $1.6 trillion. Meanwhile, the Office of Management and Budget reports the Federal Highway Trust Fund is expected to post a deficit of $3.8 billion in fiscal 2009.

Here are 10 ways creative transportation leaders are helping states find innovative funding sources for public works projects.

1. Tolling

With tolling, the driver pays to use the bridge or road. SAFETEA-LU, passed in 2005, significantly expanded the authority for states to advance toll and value pricing projects and many states and local authorities are considering tolling options for capacity expansion.

2. Congestion Pricing

Congestion pricing varies the toll rates by the time of day or by traffic congestion levels to help improve traffic flow and safety. During selected periods, tolls are imposed or increased to encourage travel at off-peak hours, or to discourage vehicular travel in favor of other modes during peak hours.

3. High-Occupancy Toll Lanes / Managed Lanes

High-occupancy toll (HOT) lanes allow single-occupant vehi¬cles to use new or existing high-occupancy vehicle (carpool) lanes for a fee. HOT lanes can be built for this specific purpose, or can be added to exist¬ing high-occupancy vehicle (HOV) or general-purpose lanes converted to this use. HOT lanes are lanes open to carpools, vanpools and transit and toll-paying solo drivers. Tolls for HOT lanes and managed lanes are set on the basis of market economics (value of driver time as perceived by the individual user) to regulate the number of single-occu¬pant vehicles in the lane, thereby maintaining a high-level of operation for all HOT or managed lane users (including high-occupancy vehicles) even when regular lanes are congested.

4. Video Tolling

Video tolling uses video imagery, typically license plate pic¬tures, to collect tolls. This technology ties the license plate to the owner of the vehicle through a state vehicle registration database.

5. Electronic Toll Collection

Information is transmitted between a mounted transponder in the vehicle and the antenna on the lane. The corresponding customer account is charged. It provides a convenient way to pay tolls, eliminat¬ing unnecessary vehicle stops. Many facilities are a combina¬tion of electronic toll collection and cash.

6. Shadow Tolling

The public or private sector provides the financing for the infrastructure and there is no apparent toll¬ing on the facility. Rather, the public agency pays the money back over an extended time based on actual usage of the facil¬ity or on the availability of the facility. Shadow tolling is also seen with the state and local government working out a partnership to back the bonds.

7. Public Private Partnerships

Public private partnerships (P3s) are contractual agreements between the public and private sector that allow the private sector to finance, design, build, lease, manage and/or oper¬ate transportation facilities. P3s have been used for both greenfield projects and brownfield projects. Additionally, they can include concession fees, which are up-front pay¬ments that the concessionaire must make upon award of the franchise. This revenue can be used for infrastructure improvements by DOT or toll agencies, or to fund local road improvements. The Federal Highway Administration counts 23 states which have passed legislation providing the legal authority for private-sector participation in transportation projects to varying degrees.

8. Asset Capitalization

Asset capitalization includes leasing an existing facility to a private entity. The private entity maintains, operates and collects tolls. The private entity pays the public agency for the opportunity.

9. Regional Mobility Authorities

A regional mobility authority is a political subdivision formed by one or more counties to finance, acquire, design, con¬struct, operate, maintain, expand or extend transportation projects. These projects may be tolled or non-tolled. Projects include highways, airports, public transit and freight corridors.

10. Cordon (Area) Pricing

A fee is charged to enter or drive within a congested area, usually a city center. Cordon pricing has been theorized for decades, discussed in New York City, and implemented over the past decade in Singapore and parts of London. Concession fees occur when a private entity leases a facility, makes an up-front payment in addition or as all of the pay¬ment for leasing the facility.