PRIVATE SECTOR ROLE IN U.S. TOLL ROAD FINANCING--ISSUES AND OUTLOOK

Highway finance in the United States since 1790 has often reflected the relative strengths and attitudes of the public and private sectors at the time of construction. Presently, toll roads are enjoying a renaissance in the United States. Competing economic pressures are creating a variety of approaches to financing toll highways, and several projects are showing signs of privatized approaches to finance and management. These approaches are at once the result of the current attitudes toward project economics and the current mix of economic and fiscal forces at work on infrastructure finance. This paper analyzes apparent trends in the toll road industry through seven case studies to address several related questions: Why has U.S. toll road development increased in recent years? What are the conditions encouraging more private sector participation in toll roads? How can the private sector directly contribute to new toll roads? What role does the federal government toll road pilot program play? What is the outlook for more privatization of toll road projects? A principal conclusion is that direct private sector participation in new toll roads is real, and that such participation will continue. The extent of participation will be governed by the relative presence of growth pressures, the lack of alternative facilities, and the prioritization of projects by regional and state agencies. The federal pilot program may provide assistance to at least two proposed projects; however, it is a transition structure and will not significantly influence private involvement either way. Also, with few exceptions, full privatization of toll roads will be limited. Most private interests will secure their objectives through selective participation in project development, financing, and construction oversight, leaving final ownership and operation in public control.