Toll Concession Public Private Partnerships: Frequently Asked Questions

There are very few situations in which there is only one road or highway between point A and point B. Some people object when a project once planned as a “free” highway is developed as a toll road instead because the state DOT does not have the money to build it using gas tax revenues. But that road is not a monopoly; there are almost always alternatives to using the toll road. (In Texas standard practice is to include multi-lane non-tolled frontage roads on either side of a toll road.) Concerns have been raised about provisions in many (but not all) concession agreements that provide some limits on new “free” highways being added parallel to the toll road. When the first toll concession project (the 91 Express Lanes in California) was being financed, the debt providers insisted on protection for the toll revenue stream via the inclusion of a “non-compete” provision in the concession agreement, under which the state DOT agreed not to build any more non-tolled lanes in that corridor. That turned out to be overkill, and today’s practice is that the company agrees to accept all projects in the current long-range transportation plan of the state or metro area. For any other projects that would be proposed and implemented later, if the company can prove that X% of its traffic diverts to the new free road, it is entitled to some degree of compensation for lost toll revenue.

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