Private Road Deal Offers Some Protections, Also Has Some Downsides

Improving Public’s Ability to Understand Deal and Provide Feedback Critical for Moving Forward

CoPIRG

Denver – With many in the public still confused and concerned about a 50-year private road deal to construct and manage US 36, CoPIRG released an analysis to help answer the question – what’s the deal?

“Every effort should be made to ensure the public understands and supports a private road deal before it is finalized,” said CoPIRG Director Danny Katz. “To understand this deal and decide whether you support it, you need to not only understand the transportation piece – what’s being built – but also the financial piece – who’s contributing what and what are they getting for it.”

To help the public understand the US 36 deal, CoPIRG’s report reviewed the infrastructure project, the financial and management deal with Plenary, and the process for developing and approving the deal. Since many private road deals across the country have pitted profits against safety and local control, CoPIRG’s report put an emphasis on identifying the financial incentives and public costs in the US 36 deal with Plenary Roads Denver and the protections in place to protect the public. 

“I think the public recognizes you don’t get something for nothing. This deal is about getting private capital now so the US 36 project could be completed by 2016. There’s no such thing as free money. So what did we gain and what did we have to give up?” said Katz.

To educate the public about the deal, CoPIRG’s analysis first clarified the transportation project. Among other things, the Plenary deal enables Colorado to rebuild US 36 and add two new Bus/HOV/toll lanes from 88th Street in Louisville to the Boulder Table Mesa/Foothills exit. The rebuilding of US36 and addition of two new Bus/HOV/toll lanes from 88th Street to Pecos Street is already underway and would be completed with or without the Plenary deal. CoPIRG concluded that to move people efficiently and safely in the future, building two new lanes with priority bus access along U.S.36 and making safety improvements to the current four lanes is good transportation policy, much better than just adding additional lanes.

The cost of completing the US 36 project from Louisville to Boulder is $179 million and given funding challenges, transportation officials made the decision to pursue private funding. Plenary Roads Denver will be tasked with completing the U.S. 36 project from Louisville to Boulder. In addition, they will be responsible for all general operating and maintenance of all lanes for all of U.S. 36 as well as any major maintenance of the two new Bus/HOV/toll lanes. CDOT will pay Plenary $675,000 (indexed) annually for this maintenance. Plenary will also be responsible for all snow and ice removal for all six lanes, for which CDOT will pay them $352,470 (indexed) annually. They will also manage, collect and keep tolls from the two U.S. 36 toll lanes and the current I-25 lanes within a set of parameters in the agreement. At the end of 50 years they will be required to return the Bus/HOV/toll lanes in good condition, known as reconstructed condition. Plenary brings $120 million dollars to the project and CDOT will transfer a $54 million loan from Phase 1 to Plenary.

CoPIRG’s analysis concluded that a lack of clarity around options other than this private financing undermined public confidence that all other options were fully explored, hindered the public’s ability to determine whether a public-private partnership was the best option for U.S. 36 and added to the concern and confusion that was exhibited as the final deal was approved.

“We heard a lot of talk about how critical it was that we finish the last part of US 36 and that this was the only option,” said Katz. “But I think the details and process behind those conclusions were not as clear and so the public felt backed into this 50-year agreement. Presenting options, even if they have been determined to be problematic or politically infeasible, are critical for people to decide if they support the proposal.”

The majority of the report was devoted to a section-by-section analysis for each major part of the Plenary agreement. CoPIRG concluded that there are a number of parameters in the agreement that reduce the risk that profit motives will undermine the public interest. These protections seem strongest when it comes to construction, maintenance, safety, toll administration and ice and snow removal. In addition, some of the most egregious examples of non-compete clauses that undermine future transportation decisions are not present.

The agreement also has some protections in place to reduce problems with a longer-term deal. For instance, if Plenary ends up collecting far more tolls than in their forecast, then the state will share in some of this revenue. In addition, clear standards are in place to ensure Plenary makes the investments to hand back U.S. 36 in good shape.

There are a number of protections in place to ensure the priority for the new Bus/HOV/toll lanes is the efficient movement of people and not toll revenue. However, it is hard to predict whether these protections will be effective throughout the 50 years of the agreement. A lot depends on the strict definitions of Peak Periods and its correlation to peak travel times in the future. Plenary’s increased flexibility outside of Peak Periods and their use of dynamic tolling could allow them to identify ways to increase profits over the efficiency of the bus service, which could hinder the success of U.S. 36.

However, the public does cede some decision making authority. HOV policy and policies to allow certain vehicles free access to toll lanes, such as cleaner fuel and electric vehicles, are severely limited though the impact depends on whether travel patterns warrant a change in the future. The agreement does limit the public’s ability to make major additions to U.S. 36 over the next 50 years with a few notable exceptions. Plenary will also be eligible for compensation for certain emergency events and if future public policies increase costs or reduce their revenue.

On the process, CoPIRG concluded that while the US 36 infrastructure proposal has been developed over a decade and the Plenary deal has been years in the making, public confusion and concern over the deal demonstrates public involvement could be improved moving forward at every step of the process but especially around the final details.

“There needs to be a clear public comment period and process between the release of the full details and the signing of a long-term agreement with a private company to manage any road,” says Katz.

CoPIRG offered a number of recommendations moving forward including:

1. Continue to prioritize transportation projects that increase alternatives for Coloradans.
2. Improve documentation of decision making process and ensure the public can clearly weigh final agreements against alternatives, even if those alternatives are no longer under consideration. 
3. Increase public oversight so that the highest level of oversight is done by the most publicly accountable officials. 
4. Private road proposals should typically be no longer than 30 years and any proposal for an exception should come with a clear rationale. 
5. Final details and agreement documents should be made public well before a final deal is approved. 
6. Public involvement and comments should be increased throughout the process and there should be a mandatory public comment period of at least 30 days between the release of the final details and the final vote on an agreement. 
7. CDOT/HPTE should create a robust public review and comment process for the Plenary deal moving forward including a timeline for periodic review and for any proposed changes to the agreement or approval of Plenary plans. 
8. Do not just “settle” for private deals if publicly provided projects would be preferable.

“Funding challenges for transportation are well documented, but generally, publicly-funded projects will be better long-term deals. So we should make sure we are continuing to actively pursue public funding as much as we pursue private funding,” said Katz.