HB2491

SECTION 1. The legislature finds that there has been activity at the community level supporting the concept of public-private partnerships, including the construction and operation of transportation toll facilities. Before opting to commit to this approach, the State must thoroughly examine what such an enormous change in public policy would mean for Hawaii.

According to the United States Department of Transportation, the cost of fixing the nation's highways and bridges exceeds $495,000,000,000. If railroads and ports are included, the estimated cost would exceed $1,600,000,000,000.

Further, the federal highway trust fund, upon which states, including Hawaii, depend to fund road projects is in serious jeopardy. Funded by the federal fuel tax, the highway fund will be $4,000,000,000 in debt by 2009. Many feel an increase in the federal fuel tax is long overdue. Raising the tax by three cents per gallon would raise millions in revenue, costing the average driver about $7.06 per year. Yet, even such an increase in the federal fuel tax would not be sufficient for the nation's transportation needs.

There is a growing trend in the United States toward privately financed transportation facilities. For example, the city of Chicago and the state of Indiana recently became parties to public-private partnership agreements relating to their public roads that will remain in effect for ninety-nine and seventy-five years, respectively. Although Chicago and Indiana have forged ahead, other states like Pennsylvania, New Jersey, and Texas continue to oppose the trend toward privatized toll facilities. New Jersey Governor John Corzine is reported to have said: "New Jersey Roadways are not for sale."

On the whole, the United States has been more resistant to free-market transportation infrastructure construction than the rest of the world, but as the nation's bridges and roads deteriorate, private investment groups see great opportunity in constructing toll facilities to reap profits over the long term.

In Hawaii, many see privately constructed and operated toll facilities as a panacea for persistent traffic problems because these facilities have the potential to increase roadway capacity without raising state taxes. Others encourage the construction of toll facilities as an alternative to current plans for a mass transit system.

The legislature finds that the federation of state Public Interest Research Groups (U.S. PIRG), an independent, citizen-funded research group, is working to encourage public support for new public transportation projects and improved service while at the same time making sure that privatization and public-private partnership agreements, including the construction and operation of toll facilities, are made in the public interest. A recent U.S. PIRG report cites the recent multimillion dollar transportation public-private partnership agreements in Chicago and Indiana as having spurred financial investors and consulting firms to promote and market similar agreements with state and local governments in anticipation of huge profits. The U.S. PIRG cautions that privatization would cause public jurisdictions to lose control over transportation policy with no guarantee that transportation toll facilities will deliver their promised value over the years. The U.S. PIRG cites problems such as fragmented road networks, an inability to prevent toll traffic from being diverted to local communities, difficulty changing traffic patterns on toll roads without paying additional compensation to private road operators, and difficulty of ensuring fair public-private partnership contracts that last multiple generations in the face of changing community needs.

The legislature finds that the State has a responsibility to protect the public interest. Before allowing the governor or the department of transportation to enter into any transportation public-private partnership agreements to construct or operate transportation facilities, including toll facilities, the State must thoroughly investigate and evaluate this sea change in public policy to ensure that the public interest is protected. With the price of oil threatening to reach $100 per barrel, selling our roads to put more cars in service would not be the responsible choice.

The purpose of this Act is to establish and declare the State's policy with regard to transportation public-private partnerships, including toll facilities.

SECTION 2. Transportation public-private partnerships; state policy. The legislature finds that protection of the public interest is paramount in any transportation public-private partnership entered into by the State to construct, operate, or maintain any transportation facility in the State, including toll facilities. Therefore, as a matter of state policy, in entering into any transportation public-private partnership agreement to construct, operate, or maintain any transportation facility in the State, including toll facilities, the governor and the department of transportation shall ensure that the following best practices are adhered to in evaluating and negotiating any such partnership agreement to ensure that the public interest is protected:

(1) The State, as the ultimate owner of any transportation facility, shall:

(A) Define the public interest and determine precisely how the public interest is expressed in terms of ensuring safety, controlling traffic congestion, controlling costs to the public, retaining control of jurisdictional and transportation policy, and any other elements of the public interest that may be necessary and appropriate;

(B) Determine the risks and benefits that are to be suitably allocated between the public and the private partner including at least the following:

(i) Risk of inaccurate or overstated estimates of traffic use and revenues -- determination of ultimate dollar costs and who bears that cost if estimates are inaccurate; and

(ii) Risk of uncertainty in agreements with a duration of twenty or more years; and

(iii) Any other risks deemed appropriate;

(C) Determine and implement appropriate remedies for potential risks including the use of escape clauses if any predetermined risk becomes reality; and

(D) Determine the need for department of transportation and other public agency staffing and personnel, and the accompanying public costs required, to operate a transportation facility;

(2) The State shall maintain transparency in any transportation public-private partnership and shall involve state residents and county governments, if appropriate, in the process by soliciting public comments and using an independent review panel;

(3) The State shall enact legislation to retain any revenue generated by a transportation public-private partnership for transportation uses in the same transportation corridor to ensure that a transportation facility benefits the paying user-customer. An example would be supporting mass transit buses or the like using the same transportation facility corridor; and

(4) The State shall prohibit the use of any non-compete clause that limits the ability of the state or county governments to meet current and future mobility and safety standards for the traveling public such as a clause that prohibits the State or a county from building or improving limited access highways within a certain distance from a transportation toll facility.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2491
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII