Blankenhorn Testimony to the Senate Appropriations Committee on Public-Private Partnerships - Metropolitan Planning Council

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Blankenhorn Testimony to the Senate Appropriations Committee on Public-Private Partnerships

Randy Blankenhorn is executive director of the Regional Planning Board of Metropolitan Chicago.

Mr. Chairman and members of the Committee, thank you for this opportunity to testify. My name is Randy Blankenhorn, and since May 1, 2006, I am the executive director of the Regional Planning Board for the Chicago metropolitan area. We are charged with integrating land-use and transportation planning for the seven-county region. Before joining the agency, I worked for over 20 years in the Illinois Department of Transportation, eventually becoming IDOT's Urban Program Planning bureau chief.

  • We need innovative approaches to fund transportation. One of our state's top priorities needs to be deciding how to fund the maintenance, improvements and operation of the entire transportation system. Transportation investment decisions impact not only the transportation network, but also land use and the overall environment. We need to ensure that transportation projects help to build stronger communities and are consistent with the surrounding environment. Public/private partnerships offer an innovative way to utilize private investment for public improvements and to bring new resources into the mix. But care must be taken to guarantee the protection of our public investment, while ensuring accountability in the near term and long term.
  • Give strong consideration to public/private partnerships for transportation. Clearly, innovative approaches are required if Illinois is going to avoid problems in maintaining the existing interstate and tollway system. Major additions to the system will be rare; extensions like I-355, connections like the O'Hare by-pass, and filling gaps like the O'Hare Western Access will be much more prevalent. As we look at the future of the transportation system in general -- and specifically, the Interstate system -- we need to focus on improving and getting the most out of our existing assets. The prospect of billions in new dollars to the state makes public/private partnerships appealing. When the City of Chicago raised $1.83 billion by selling the Chicago Skyway, that amount was equal to more than a third of the city's annual overall budget. Estimates of up to $20 billion for the sale of Illinois tollways indicate that many current transportation shortfalls could be overcome with such a large infusion of funds. Just as a business would, state government should carefully examine whether capital assets like the tollway are more valuable to keep or to sell. The magnitude of such a deal dictates that the public should be given a clear indication of how proceeds would be used and be given a reasonable opportunity to have input before final decisions are made.
  • Preserve accountability. In public/private partnerships, it can be tough seeing where government ends and the private sector begins. That complexity is why -- for all the potential benefits of public/private partnerships -- we need to carefully weigh their potential impacts, too. Above all, privatization doesn't eliminate the need for effective government transportation programs. Accountability should remain with the government, and we will always have a need for effective leadership that identifies and funds our state's most-pressing transportation needs. Privatization is not a substitute for strong and effective decision making by government. Government remains responsible and accountable for the delivery of services.
  • Protect local interests. The region is committed to implementing principles of Context Sensitive Solutions that involve local citizens and communities at the very beginning of transportation improvement projects. All improvements to the transportation system, whether public or private, should adopt these principles. Ongoing revenue streams must be invested primarily in the local area where those funds are collected. We need to ensure that public/private partnerships adequately address issues of local concern. For example, who would be responsible for building sound walls that minimize negative impacts on neighboring land? Or who would pay when new interchanges are needed? There will continue to be needed improvements due to projected growth. Local governments alone should not be expected to pick up the tab for these improvements. Funds from any privatization efforts must be reserved in a mechanism that will help fund these on-going needs.
  • Maintain the flexibility of funding for transportation. For any new road, the tolls collected are not likely to be enough to pay for 100 percent of its construction and maintenance. For example, construction of newer tollways like I-355 was funded from tolls collected on existing tollways. This kind of flexibility might not be possible with public/private partnerships, meaning other sources of public funding would be required. That could drain transportation resources needed for other purposes. It is important that revenues generated by privatization be put back into the transportation system, rather than being spent on non-transportation activities. Large infusions of cash from up-front payments should be dedicated to needed new infrastructure, and not dissipated into the general revenue fund with no new capital assets for the public at the end of the day.
  • Require independent, expert analysis. According to a Chicago Tribune editorial on June 6, 2006, this could be "the largest transaction in the history of state government." It's important to have independent economic experts review each specific privatization proposal to ensure that its projected fiscal results are realistic. Economists who reviewed the Ohio Turnpike privatization determined that government estimate of up to $6 billion was significantly higher than the economists' projection of at most $3 billion. According to preliminary estimates, Illinois could reap up to $20 billion from sale of all its tollways. But we need to carefully define what it means to "sell," and whether there are hidden costs to the taxpayers.
  • Privatization is different from traditional contracting of goods and services. And it's not quite the same as government simply divesting itself of such activities. A public/private partnership should be about shared revenue and shared responsibility. Whether it's an outright sale, a leasing arrangement or some type of concession, we are giving investors the right to do business on the facility for a specified term in return for an upfront fee paid to the state. Because each option has its own set of ramifications, we as a state need to carefully analyze the costs and benefits to our transportation system and the citizens who use it.
  • Preserve the role of planning related to public/private partnerships. Even though a facility may become the responsibility of a private entity, it must still be viewed as a vital component of the regional transportation system for which good planning is a requisite activity. Furthermore, federal regulations encourage and in some measure even require the participation of the private sector in the planning process. Planning currently plays a central function in the existing transportation system, and in the creation of new facilities. That role must be maintained or strengthened in the era of public/private partnerships. The new agency that I direct, the Regional Planning Board, was created in 2005 by the Illinois General Assembly for the express purpose of promoting better integrated planning for transportation and land use. The Board is ready to assist in analyzing the potential benefits and impacts of public/private partnerships and to participate in any proposed implementation.
  • Keep broader transportation needs in mind. Privatizing the tollways should be the means to an end, not an end in itself. We must use the proceeds to focus on improving operations of the system as a whole by, for example, seeking to develop Intelligent Transportation Systems (ITS) that give travelers real-time information; to improve traffic flow through intersection and signal timing improvements; and to provide rail transit and non-motorized options that take people where they need to go in a convenient and efficient manner. We need to examine the expansion of multi-modal corridors to include High Occupancy Vehicle (HOV) lanes and Bus Rapid Transit (BRT). We should look at implementing congestion pricing policies that seek to control usage on facilities by varying the cost to the user of the facility.
  • Conclusion. Development of the state transportation system has resulted in unprecedented mobility and prosperity for residents of Illinois . It is an asset that must be protected. I believe input from agencies like the RPB is essential for the state to seriously consider and weigh whether public/private partnership to operate existing tollways and build new ones is the best approach for Illinois . Working together, we can begin an intensive effort to upgrade transportation as a whole, to protect the system's public users and our communities while providing our citizens with the infrastructure and services they expect and deserve.

Again, thank you for the opportunity to testify before this committee, and we look forward to assisting you in this important work.

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