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Case Studies of Financially Distressed Highway Public–Private Partnerships in the United States

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Public Private Partnerships

Part of the book series: Competitive Government: Public Private Partnerships ((CGPPP))

Abstract

Many public–private partnership (P3) highway projects implemented in the United States have transferred revenue risk to the private sector. Several of these projects have experienced financial distress with some going bankrupt, such as the South Bay Expressway in California and SH 130 Sections 5 & 6 in Texas. Case studies of four highway P3s examine the circumstances and outcomes of distressed projects where three of the four projects ultimately went bankrupt. The cases focus on the causes of the distress, the actions taken by the private sector to mitigate financial difficulties, and the outcomes of each case. The evidence indicates that private sector options to abate distress are limited, public agencies are generally insulated from financial loss, and resale of the developed assets is plausible and likely in future P3 bankruptcies. While each case demonstrates that risk transfer was essentially sustained as intended, P3 bankruptcies are discussed to more fully to consider their broader implications.

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Notes

  1. 1.

    TransNet is a regional half-cent sales tax fund for transportation administered by SANDAG.

Abbreviations

AB 680:

Assembly Bill 680 in California

CDA:

Comprehensive Development Agreement

CTV:

California Transportation Ventures (an SPC in SBX case)

HOT:

High-occupancy toll

HOV:

High-occupancy vehicle

IFA:

Indiana Finance Authority

IRR:

Internal rate of return

ITR:

Indiana Toll Road

ITRCC:

Indiana Toll Road Concession Company (an SPC in ITR case)

LBJ Express:

Lyndon Baines Johnson Express Lanes in Texas

NAFTA:

North American Free Trade Agreement

ORC:

Otay River Constructors (design & construction consortium in SBX case)

P3:

Public–Private Partnerships

PAB:

Private activity bond

PPTA:

Public–Private Transportation Act in Virginia

SANDAG:

San Diego Association of Governments

SBX LLC:

South Bay Expressway Limited Liability Company (an SPC in SBX case)

SBX:

South Bay Expressway

SBXLP:

South Bay Expressway Limited Partnership (an SPC in SBX case)

SPC:

Special Purpose Company

TIFIA:

Transportation Infrastructure Finance & Innovation Act

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Authors and Affiliations

  1. Department of Civil and Environmental Engineering, Virginia Tech, Blacksburg, VA, USA

    Michael J. Garvin

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  1. Michael J. Garvin
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Correspondence to Michael J. Garvin .

Editor information

Editors and Affiliations

  1. Environmental Engineering and Public, Health Consultant, Cincinnati, OH, USA

    Robert M. Clark

  2. Center for Competitive Government, Temple University, Philadelphia, PA, USA

    Simon Hakim

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Garvin, M.J. (2019). Case Studies of Financially Distressed Highway Public–Private Partnerships in the United States. In: Clark, R.M., Hakim, S. (eds) Public Private Partnerships. Competitive Government: Public Private Partnerships. Springer, Cham. https://doi.org/10.1007/978-3-030-24600-6_4

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