Proceed With Caution

Governor Corzine and the New Jersey legislature are currently determining whether to pursue private investment in the State’s transportation assets. These proposals, collectively known as public private partnerships (PPPs), can have the effect of transferring control of public infrastructure systems – such as highways – to private entities. PPPs offer the potential to gain significant immediate financial gain, but usually rely on investors recouping their payment over time through toll collection and other revenue sources. Perhaps the most important aspect of these proposals is that they entail long-term fiscal consequences. The public must be well informed of the potential implications of any proposed asset sale or lease.

A PPP around a highway is not necessarily a good or bad proposition. The details of the agreement, contract or lease that establishes the partnership determine its value to the State, private investors, motorists, and New Jersey residents. PPP agreements are long and complex, requiring hundreds of hours of highly-skilled professional input and resulting from high level negotiations. PPPs also require enabling legislation at the State level. These agreements and legislation can contain the answers to some important questions, including:

• How much will tolls increase, and when?
• How will toll revenue be used, compared to the status quo?
• Will toll strategies be designed to help cut congestion and pollution?
• What happens if the road does not raise enough revenue, or the deal defaults?
• Are taxpayers at risk?
• How will windfall revenues be spent by the State?
• Will the new facility operator deliver superior transportation system performance?
• If corridor performance degrades over time, what remedies does the contract allow?
• How will important labor, environmental and related concerns be addressed?
• What are the land use impacts?

New Jersey residents, especially motorists, need to know the answers to these questions.