February 5, 2008

Headlines

1. Is Texas DOT citing phony financial crisis to push private toll roads?
2. Palo Alto branding rights for city land could go to highest bidder
3. Infrastructure: the next asset bubble
4. Report faults security at U.S. monuments
5. Az. budget deficit stirs issue of privatization
6. Flood bill creates insurance oversight
7. Utah privatization bills stall after questions arise
8. Ky. megaprojects will require tolls
9. PA: Public-private group is latest ‘last hope’ for Mon-Fay toll road

News Summaries

1. Is Texas DOT citing phony financial crisis to push private toll roads?
Just how broke is TxDOT really? Lawmakers will be asking that Tuesday during a joint session of the Senate finance and transportation committees, reports the Dallas Morning News. For most of last summer and fall, the Texas Department of Transportation issued warnings that it was running out of money for adding lanes and building new highways. In December, it announced it would cut back spending on new highways and instead focus on repairing and, when needed, rebuilding existing roads. So far, though, that argument hasn’t set well with lawmakers, some of whom fear TxDOT’s warnings are designed at least in part to pressure them to support the agency’s push for private toll roads.

2. Palo Alto branding rights for city land could go to highest bidder
The Palo Alto City Council tonight will ponder changes to a city law that could give naming rights for city land to the highest donor. The city has not changed its land naming policy since 2004 and currently uses a process that leaves responsibility and final approval with the city council. In light of the cost for future capital improvement and infrastructure projects, however, city staff is again asking the council to explore the possibility of "putting a private or corporate name on a city facility in exchange for a significant financial contribution," according to the council staff report. Mayor Larry Klein said universities, museums and hospitals all use similar funding options and that it would lessen the fiscal burden on he city’s tax payers. The council would, however, have to hold corporate donors to high standards, he said. "I’ve thought about it, and I don’t have any problem with it," Klein said. "I think it’s where the world is going. If someone wants to put up ten or twenty million dollars, I think that’s a fair trade for us," he told the Palo Alto Daily News.

3. Infrastructure: the next asset bubble
Condé Nast Portfolio reports that the once-sleepy backwater of infrastructure investment—the buying up of public roadways, utilities, airports, hospitals, and even prisons—has become fertile ground for Wall Street titans. The problem is that the chief benefit of the investment—a safe long-term inflation-adjusted return—becomes harder to reach as more investors pile into the market seeking it. Experts worry that prices have already been driven too high for many of the best assets. As evidence, they note that more deals are being loaded up leveraged-buyout levels of debt. At the same time, yield-hungry investors are increasingly willing to build or buy infrastructure in riskier corners of the world. It’s an opportunity based on hard times, as governments around the world will have difficulty paying for what is estimated to be $53 trillion in needed infrastructure investment over the next 25 years. This leaves the door open for private investors to offer a helping hand—for a price.

4. Report faults security at U.S. monuments
The AP reports that inadequate security has left national icons such as the Washington Monument and the Statue of Liberty vulnerable, according to a government report on the U.S. Park Police released Monday. Investigators found that a grate blocking access to stairs under the Washington Monument was left open and unattended for about 20 minutes. In another case, a visitor left a suitcase against the monument’s wall for five minutes, and nobody appeared to notice.The report also includes a photograph an officer who appears to be sleeping in what the report says is a patrol vehicle at the Jefferson Memorial. The Park Police often rely on private security companies, but there is little coordination between the private guards and the officers, the report said. Officers told the investigators that many of the guards don’t speak English.

5. Az. budget deficit stirs issue of privatization
Privatization of government operations and services has surfaced in the debate over Arizona’s estimated $1.3 billion budget deficit, reports The Business Journal of Phoenix. That could mean good news or bad news for the private contractors in charge of prison operations, economic development and state support services. One legislative budget plan would cut into private prison contracts, funding for outsourced international trade offices, school construction, and health, technology and economic programs that rely on private contractors. The deficit, however, also has some people talking about increasing privatization efforts, saying the private sector can perform functions cheaper and more efficiently than the government.

6. Flood bill creates insurance oversight
On the heels of a federal report that found an inherent conflict of interest in having private insurance companies determine how much the government should pay on flood claims, Louisiana U.S. Sen. Mary Landrieu plans to introduce legislation creating an ombudsman to strengthen financial oversight of the National Flood Insurance Program, according to the AP. Flood policies are issued by the federal government, but private companies sell them alongside their homeowners products and determine the flood claims for the government after disaster strikes. Consumer advocates, plaintiffs attorneys and individual homeowners began to question the arrangement after Hurricane Katrina, when private insurance companies had the power to determine whether damage was caused by wind, which they pay for, or water, which the government covers.

7. Utah privatization bills stall after questions arise
A move to privatize some government activities stalled Tuesday, after one of three bills ran into a barrage of questions and clarification issues in a committee hearing, reports the Deseret Morning News. Rep. Craig Frank, R-Pleasant Grove, wants to expand both the authority and size of the current privatization policy board to "review whether or not certain services performed by existing state agencies could be privatized to provide the same types and quality of services that would result in cost savings." The bill would also require state agencies to create an inventory of all commercial activities the government is providing. Members of the House Government Operations standing committee raised questions on which agencies would be included, whether or not the public education system was exempt from the process and how the board seats were disbursed between the public and private industry.

8. Ky. megaprojects will require tolls
The Louisville Courier-Journal reports that Kentucky House Speaker Jody Richards said that tolls must be part of how the state funds the Ohio River Bridges Project and other new "mega" road and bridge ventures. His comments echoed remarks made last week by Senate President David Williams and came as the Kentucky Transportation Cabinet released a study describing eight different toll scenarios for the $4.1 billion Louisville project. Richards said he hadn’t reviewed the bridge toll study, but he favors a "public-public partnership" that would result in tolls. He noted that part of the revenue would be paid by residents of other states, and that Kentucky imposed tolls from 1971 through 2006 on some of its parkways.

9. Public-private group is latest ‘last hope’ for Mon-Fay toll road
When the Mon-Fayette Expressway was conceived more than 40 years ago, the idea of a high-speed highway connecting Pittsburgh and Morgantown, W.Va., seemed like an urgent transportation and economic development need for southwestern Pennsylvania. Since its 1973 groundbreaking, however, the toll road, now open from Jefferson Hills to Morgantown, has yet to make it through its most expensive and final phase — a Y-shaped 24-mile extension from Route 51 near Jefferson Hills to Pittsburgh and Monroeville. Now, a group of business and political leaders is looking to jump-start the project through a public-private partnership that they hope could raise half of the estimated $3.6 billion cost, reports the Pittsburgh Post-Gazette.

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