With federal and state funding drying up faster than the Aral Sea, local legislators are debating the pros and cons of private investment in the state’s infrastructure.
Whether it’s building a new highway, fixing an aging bridge or perhaps turning Bradley International Airport over to a private entity, there are myriad ways the state could raise revenue through private investment, said state Sen. John McKinney, a Republican who represents Easton, Fairfield, Newtown, and Weston in the 28th Senate District.
Under a proposed bill, H.B. 6217, the Departments of Transportation and Public Works and the Office of Policy and Management could under a competitive sealed proposals procurement process access billions of dollars in private equity to build or rebuild roads, bridges, parking facilities, airports and transportation facilities.
“It can be lucrative for the state because private companies put the money in and it doesn’t cost the state anything to build. It’s a good way to get some investment,” said state Rep. Gail Lavielle who represents Wilton and Norwalk in the 143rd House District.
According to the proposed legislation the contracts would be “design-build-finance-operate-maintain” where upon completion the private sector turns the project over to the state. Or, “design-build-operate-maintain services” where the private company gets some of the revenues from operating project.
Still, it’s an idea that makes some uneasy, as they envision a Backwater-type situation. Only this time it wouldn’t be paramilitary force operating with little or no oversight but rather a company that never plows its highway or lets its bridges crumble.
To that end, the Motor Transport Association of Connecticut, MTAC, opposes the bill.
The bill “allows these agencies to consider unsolicited proposals to purchase currently owned state assets and convert them into profit making ventures for private interests. There is no mention of the legislature having any role to play. This is very thin ice,” said Michael J. Riley, MTAC president, in testimony. “Privatization of state facilities is a risk fraught enterprise and on that requires caution and prudence. This bill does not provide either.”
Seeking to allay such fears, McKinney said the legislature must set ground rules.
“You draft a contract for the sale anyway you want. There are limitless possibilities,” McKinney said.
It’s definitely a concept worth considering for two reasons, said state Sen. Bob Duff, a Democrat who represents Norwalk and Darien in the 25th Senate District.
One federal funds for new projects are scarce, said Duff, who co-chairs the Transportation Committee. Two, the state too suffers financially.
“I would certainly entertain the idea,” said Duff, co-chair of the state’s Transportation Committee. “Look at, say Super 7. Would I consider private investment for that? Maybe. We have to think creatively.”
Eric Brown, associate council for the Connecticut Business Industry Association, testified that HB 6217 would allow competitive procurement of transportation facilities through design-build options.
“Other DOTs around the country are adopting design-build as an alternative mode of project delivery for infrastructure projects,” Brown said.
It’s neither a new nor a local idea.
Democrat Sen. John Kerry of Massachusetts and Republican Sen. Kay Bailey Hutchison of Texas support a plan to establish a financing institution for loans and loan guarantees based on the Export-Import Bank. The institution would fund up to 50 percent of a project’s costs. And in most cases, it would provide just enough money to attract private investment.
That kind of outside the box thinking is critical, said Duff. However, he cautioned the need to analyze the cost-benefit of the proposal.
And though Gov. Dannel P. Malloy’s proposed budget is priority, proposed bills such as HB 6217 can’t be ignored, Duff said. It’s indirectly related to the budget since infrastructure contributes to the state’s ability to grow and retain jobs and business.
It’s a way to revamp aging infrastructure and build new; both of which will attract jobs, Lavielle said.
“This is a potential source of funds and private sector jobs,” she said.
In 2010 Connecticut’s average unemployment rate rose to 9.1 percent from 8.3 percent in 2009, according to the New England Regional Office of U.S. Bureau of Labor Statistics.
Though New England’s 8.5 percent rate ranks below the national average, it’s the second highest for New England since records began to be kept in 1976. Then the region registered 9.1 percent average joblessness.
Aside from helping to spur job growth, the state could greatly increase its revenue, said state Rep. Kelvin Roldan a Democrat who represents Hartford in the 4th House District.
According to a 2003 DOT study Connecticut owns about 10,000 parking spaces adjacent to Metro North stations. Because municipalities manage the spaces they generate little or no revenue.
However, if the state opened the spots to private investment “on condition improvements recommended by commuters were made, the state could receive a significant upfront payment for the asset and commuters would receive the benefit of a more commuter friendly parking system,” Roldan said in testimony before the Transportation Committee.
The Fairfield Metro Center provides a model for private-public partnership, McKinney said.
Here a private company, Fairfield, and the state are developing and a 1.1 million-square-foot commercial and retail space that sits on 35 acres. So far the state has nearly finished work on the bridge, station platforms and elevator tower.
Bradley International Airport is another entity sometimes considered as ripe for a public-private partnership.
“I could envision a quasi private-public authority running the airport,” McKinney said. “That could bring in $25 million a year to the state.”