Another Cautionary P3 Tale

Maryland is about to enter the wild world of public private partnerships (known as P3s). Earlier this year, I wrote about Maryland’s fascination with a process that neighboring Virginia is abandoning, and then about a particularly egregious Virginia P3 horror story.

Today, Michael Laris in the Post has another spooky Virginia P3 tale, this one about a new Norfolk tunnel.

The private proposal to build a new underwater tunnel in this congested port city was originally billed as a way for Virginia to get a crucial piece of infrastructure without having to put in a single dollar of state money.

Instead, Virginia officials have agreed to spend $580 million on the project, more than twice the investment from the companies behind the deal. With no competition, the companies won the right to collect billions of dollars in tolls over 58 years.

The state also agreed that the companies — Swedish construction giant Skanska and Sydney-based finance group Macquarie — are entitled to large government payouts if Virginia builds or expands other bridges or tunnels nearby, making fixing other traffic woes more costly for generations to come.

From Florida to California, public-private partnerships have proliferated as a bipartisan cure-all for the nation’s plugged-up politics and sagging infrastructure. The idea is that market forces can slash waste and speed projects, delivering much-needed improvements without soaring taxes. Maryland officials are seeking such a deal for the Purple Line light-rail project, and another is being considered to widen Interstate 66 outside the Capital Beltway in Virginia.

The rest of the article is a cascading narrative of stupid decision piled upon bad assumptions, incompetent planning, and panicked sole source negotiations. In the end, Virginia will end up paying vastly more for the infrastructure that it initially said it couldn’t pay for. And if the state wants out, the costs will be even higher.

The Purple Line is coming to Montgomery County. It’s very likely that the deal will be negotiated by state level actors, despite the fact that the state has reduced its contribution to the project drastically. So where will the conseuences fall for a poorly negotiated deal? On Montgomery and Prince George’s County, that’s where, two counties that are already stretched to the breaking point with competing needs for capital expenditures. If this deal goes to shit like those in Virginia, Maryland and its counties will have no one to blame but themselves. But it will be the taxpayers who will suffer for several generations from the pom-pom waving politicians collectively throwing themselves over the cliff for a deal that is likely to benefit everyone involved except the residents of our state and county.

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