Questions we should ask about US 36 agreement

By Danny Katz
State Director

There are three things people should review around the US 36 proposal

  1. Is this a good transportation project?
  2. Should we engage in a public-private partnership to complete it? 
  3. Has this been a good process?

This post is mainly about # 2, the 600 page agreement between CDOT and a private company to manage US 36 for the next 50 years.

Details matter. So we’re taking our time to make sure we carefully review this document to ensure it properly protects the public’s interest, including consulting as many as experts as we can.

We know others are reviewing these documents too. So here’s the framework we’re using to ensure the public interest is protected based on the principles we released last week. I’m sure we'll be adding to this list as we go.

Does the public retain control over decisions that affect the broader interest?

  1. Construction - What are the construction responsibilities for the company? What standards do they need to meet? How do they compare to other CDOT projects or CDOT’s own policies?
  2. Maintenance – What are the maintenance responsibilities for the company? What standards do they need to meet? How do they compare to other CDOT projects or CDOT’s own policies? 
  3. Safety - What safety standards do they need to meet? How do they compare to other CDOT projects or CDOT’s own policies?
  4. Snow/Ice Removal - What standards do they need to meet? How do they compare to other CDOT projects or CDOT’s own policies?
  5. Bus-Rapid Transit Lanes – The idea of the new lanes is to prioritize the flow of the new bus-rapid system. What protections are in place to ensure this is the priority? As BRT develops, does the public maintain control over adjusting BRT policy?
  6. HOV policy – Over 50 years, HOV policy and needs could change quite significantly. What protections are in place to ensure the public decides HOV policy? Is anything locked in? 
  7. Neighboring Transportation Decisions – Is there any language that limits neighboring communities’ ability to make transportation decisions for local roads or transit projects?
  8. Electric Vehicles or other Future Technology Adjustments – Is the public limited in its ability to encourage or discourage the use of specific vehicle technologies such as free or discounted use of the new lanes? 
  9. Tolling – How will tolls be set? Are there limitations to what tolls can be? Will there be public comment processes around tolling decisions? What if toll revenue fails to meet expectations – what compensation is required?
  10. Privacy and Information Protection – How will tolls be administered and if personal information is collected what is the process to ensure security and privacy?
  11. Oversight - Who oversees the private companies management? Are they publicly accountable and do business according to best practices for transparency? 
  12. Compensation – Do any compensation clauses create an undue loss of control over public decisions?

Is the public receiving fair value so future revenues are not sold off at a discount?

  1. Financial Incentives – If the company wanted to maximize profits, what would they do? Is that appropriate? What is the complete list of compensation events for the private company and which ones are unique to a PPP?
  2. Cost – what does this project cost? Has this been independently verified? What’s the “interest rate” we’re paying to get this money? 
  3. Value of Project - What is the value of this project? Has this been independently verified?
  4. Choice – How does this project compare to the other options – doing nothing, waiting until current public revenue is saved up to do the project, raising public revenue right now, and this current proposal?

Any deal lasting longer than 30 years must be approached with additional caution due to uncertainty over future conditions and because the risks of a bad deal grow exponentially over time. Special protections must accompany such long-term deals.

  1. Future Term Changes – Can this agreement be changed in the future? What are the costs or penalties of changing the terms? What kinds of changes will result in major compensation events and which changes will not?
  2. Cancellation – What are the costs for cancelling this agreement in the future? 
  3. Regular Review Intervals – Will this contract be regularly reviewed – 10 years, 20 years, 30 years, etc? 
  4. Maintaining Asset Until the End – Are there protections to ensure the assets are returned in good condition and that the private entity does not have incentives to reduce maintenance before handing it back?
  5. Bankruptcy – What happens if the private entity goes bankrupt?

There must be complete transparency to ensure proper public vetting of privatization proposals.

  1. Proprietary – What information will be considered proprietary? What will not be public information?
  2. Transparency – Will financial, operations and subcontracting information all be publicly available and subject to public disclosure requirements?

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