BY JACKIE KEENAN, Medill News Service
Times of Northwest Indiana
How can a city use rail transportation to stimulate economic development, and how can private funds be attracted to help do the job?
Recognizing Chicago as an innovator in public-private financing, more than 1,100 transportation officials and experts from around the country are at a downtown conference that includes CTA visits to neighborhoods and suggestions about soliciting private capital for public improvements.
"It's appropriate we are giving this talk in Chicago, since this has been a city on the forefront on public and private partnerships," said Ed Fishman, a Washington-based attorney.
With the recent sales of the Chicago Skyway and the Indiana Toll Road to a private company, Fishman praised the Chicago area for being the harbinger of private-public partnerships in transportation. These successes, he said, have started a trend for local transportation financing, and the Federal Transit Administration is now moving forward with its own program to fund requested projects.
In Indiana, the operators of the South Shore commuter railroad also say the state's top transportation official has broached the idea of privatizing the commuter link, though the administration of Gov. Mitch Daniels has vehemently denied any such intention.
The purpose of the four-day Rail-Volution 2006 conference is to learn more about the design and implementation of Transit Oriented Development, a term used to describe a neighborhood built around a transit station. Conference leaders are encouraging and teaching city planners how to design and build these communities, which are deemed better for residents and the environment by reducing congestion and sprawl.
Officials from cities that have difficulty putting a "wall on sprawl," such as Houston, Tampa and Denver, can get instruction on how to determine which type of trolley best fits their city, how to plan parking more effectively, how to build better bike paths and how to accomplish such things with limited public resources.
According to the Brookings Institution, the top 50 U.S. cities have experienced tremendous growth in their downtown areas since the 1990s, and Chicago leads the pack. With this nationwide resurgence, funding for local transportation projects from the FTA has increased, but also has grown more competitive. So local authorities are considering alternatives, like private investors, to fund transportation systems and commercial development.
The Department of Transportation defines a public-private partnership, or PPP, as "a contractual agreement between public and private sector partners, which allows more private sector participation than is traditional."
Ed Fishman and his law firm have been consultants to the FTA in the implementation of the Public-Private Partnership Pilot Program, or Penta P.
The program's goal is to properly evaluate the advantages and disadvantages of this type of partnership. The project, which was launched in March, has taken requests from five cities that have vastly different transportation projects in mind. Fishman says that both Congress and the FTA are excited about the possibility of getting projects done more efficiently through use of PPPs, but the groups have not been able to ascertain criteria that will move the program forward. He hopes decisions will be made by the end of the year.
Benefits to PPPs are not only obtaining financing when government funding isn't available, but an acceleration of projects, according to Fishman.
"If private companies invest in a project, they know they have to get it done fast," he said.
But to consider the benefits of a project, is to also consider the drawbacks. One drawback mentioned in the conference is that taking control of a public asset is taking control of the public. Fishman said that the public has to feel confident that this type of partnership is going to yield for them the greatest value.
Conference attendee Greg Guimond said he's concerned about safeguarding the public interest in his state, Massachusetts.
Gov. Mitt Romney "wants to sell off things to private business, but he hasn't considered the public's losses," Guimond said.
He added that he's looking forward to attending the conference's "mobile workshops" that entail CTA visits to several neighborhoods.
Fishman and others at the conference feel public-private partnerships work only for certain types of public assets that are proven successes, such as highways, transit buildings and parking garages.
The sentiment by the workshop's moderators was that since rail systems rarely make a profit and are heavily subsidized, private investors have steered away from investing in what fledgling Transit Oriented Developments need most. The only solution to entice private equity, according to Fishman, is to give private investors subsidies when they reach certain benchmarks.
Guimond said the types of funding discussed in the workshop he will be able to share with his colleagues back home. And Fishman believes these types of innovative approaches are useful to city planners looking for other funding sources, but it shouldn't be the only one to use.
"It can never be a replacement for government funding," Fishman said. "It's just to assist."