January 11, 2010

Mary Peters takes a job in the private sector. Finally.

Apparently, TXDOT is hosting some sort of event that gives them time to jerk off their favorite toll companies and contractors. This time they even pulled in Bush Transportation Secretary Mary Peters...

Under Gov. Rick Perry, Texas emerged as the leader among states in pursuing private toll roads but that momentum was halted last year, when the Legislature allowed the legal authority for most private toll roads in Texas to lapse.

"That moratorium on public private partnerships should be removed," she said. "The state of Texas should put that in abeyance. Restoring (private toll roads) here in Texas could show the federal government that you are really serious about tackling your own transportation problems."

No one, including our intrepid reporter at the DMN (Michael, buddy, I'm not letting you turn into Ben Wear... you gotta man up and start REALLY blogging), even bother to call bullshit on this. PPP's are NOT a good solution for transportation funding for a couple of reasons

1) Private companies can not, ever, raise debt as cheaply as a state. Period. Which automatically means the cost of any project undertaken by a PPP will be more expensive than anything the state will do.

2) These projects are contracted under provisions designed to take most of the risk off the project (and put it on the taxpayer) through forbidding or penalizing improvements to alternate routes and off the private partner (and put it on the taxpayer) by limiting their losses, limiting their percentage of the capital structure (usually to less than that of the state) and guaranteeing a profit to the private partner.

3) In the end, indexing the fuels tax will take care of inflation in construction and maintenance costs and allow the costs to be spread more equitably. In contrast, tolls are not only regressive (harder on the poor than the rich) they are abusive.

Add it all up and 'innovative solutions' like public private partnerships are the most expensive funding solution available for transportation. So, it's curious why old Mary (despite the fact that she really doesn't have all that great a background in banking... she's never worked in finance, only as a bureaucrat in Arizona and Washington, DC). I guess it really shouldn't come as a surprise that SHE'S WORKING FOR A COMPANY THAT STANDS TO BENEFIT FROM PUBLIC PRIVATE PARTNERSHIPS (good catch, Michael)

Zachry American Infrastructure, in partnership with ACS, was chosen by TxDOT as the Master Developer for Interstate 69 in Texas. Zachry American Infrastructure partnered with Cintra to form SH 130 Concession Company, which is developing SH 130 segments 5 and 6.

Peters is now a paid consultant -- or "senior adviser" -- to Zachry American Infrastructure, a private toll road (and other infrastructure) developer affiliated with Zachry Construction, a Texas construction company founded in 1924. TxDOT tapped the infrasture development firm to provide a master plan for Interstate 69 in Texas, and the company joined with Cintra to develop SH 130 in Austin.

According to Peters, we need to repeal the moratorium to show DC we're interested in fixing our own problems and following the Federal lead to PPP's. Problem is, the tide is shifting in DC on PPP's. Everyone knows this could well be the next asset bubble to pop up and no one in anxious for that. Nevermind that how expensive these 'partnerships' are for taxpayers.

We're CERTAIN this is all Mary is concerned about. We're quite sure that there is no way her opinion is being influenced by the fact that she and her employer stand to take (not make) a bunch of money off taxpayers and the government officials (Hey TXDOT!) dumb enough to buy the snake oil they're selling.

Posted by mcblogger at January 11, 2010 08:39 PM

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