News that Virginia is delaying a major HOT Lanes project in the Washington D.C. market is a further sign that the financial collapse that has crippled the housing, banking and automotive industries is having an effect on the transportation industry.
Not only are state governments cutting budgets and people, major investment groups are rethinking sinking billions of dollars into projects.
The Virginia HOT Lanes project is a Public Private Partnership, or P3, which many in the industry have seen as a savior for the underfunded. Under a P3, private investment groups, many from outside the U.S., have ponied up construction dollars when local, state and federal funding could not be found.
A new toll project would be built now, when the need exists, and the private sector investors would get a return on their money over time. John Beck, an expert on P3s, says the private investors have been willing to stretch the timeline and wait for the return on their investments for 30, 40 and even 75 years in some cases.
Virginia Governor Timothy Kaine and Secretary of Transportation Pierce Homer made the announcement to delay the project but I have to wonder that the private consortium funding and building the project, Fluor-Transurban, was the partner raising the red flag.
Under the P3, it is Fluor-Transurban that is taking the investment risk and has to maneuver the bond markets.
If the current financial market continues to scare off investors the transportation infrastructure dilemma we face in the U.S. will only worsen. P3s have been seen as a viable alternative to state and federal funding and if they diminish many critical projects will be shelved.
David Fierro is a transportation public relations consultant. He is a former newspaper and magazine editor and worked for both the Florida and Virginia departments of transportation.