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ARIZONA STATE LEGISLATURE
Forty-eighth Legislature – First Regular Session
BLUE RIBBON TRANSPORTATION COMMITTEE
Minutes of Interim Meeting
House Hearing Room 4 – 1:00 P.M.
Chairman Biggs called the meeting to order at 1:05 p.m. and attendance was noted by the secretary.
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Senator Ron Gould, CoChair |
Representative Andy Biggs, CoChair |
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Senator Robert Blendu |
Representative Marian McClure |
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Senator Pamela Gorman |
Representative John Nelson |
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Senator Rebecca Rios |
Representative Tom Prezelski |
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Senator Tim Bee |
Representative Jim Weiers |
presentations
Better Public Services through Public-Private Partnerships
David Slater, British Consulate General’s Office, U.K. Trade Investments, explained that the U.K. government is committed to modernizing the delivery of its public services. He stated that the public demands the best possible value for money coupled with high standards of quality and services, and that this combination has enabled the government to develop public-private partnerships (PPP) over the last fifteen years. PPPs put emphasis on service outputs, rather than on treating infrastructure as an end in itself, Mr. Slater explained, as the cost of building the infrastructure is spread over the long term, usually 25 years. He stated that taxpayers pay for the cost of a service as it is consumed. He added that this approach will work very well in an area of high-volume population growth, such as Phoenix, that is looking towards a global marketplace.
Stephen Harris, International Financial Services London and U.K. Government Export Advisory Group, explained that the U.K. has transformed delivery of its public services since 1995, and that PPPs are essentially procurement tools for services which are to be on time and on budget. He stated that PPP is used for hospitals, schools, police buildings, airports and the like. He added that all PPPs are funded by tax revenue.
Mr. Harris reiterated that PPP is not free infrastructure - it is funded by either tax revenue or a charge to the user. He explained other features of the program, which include:
· charges occur as services are consumed
· any problems are reported to the government
· forces government to take a strategic approach to rate provision
· private sector must comply with quality standards and deliver to a consistent standard
· private sector cannot renege on the agreement or it does not get paid
Chairman Biggs asked, since tolls are not paid, have taxes have been raised in the U.K.; Mr. Harris replied in the negative, explaining that costs are spread over 25 years, thus saving on maintenance costs. He added that the payment system rewards proper delivery of services and that the PPP program specifies outputs, not inputs – it is the private sector which must solve the problems of implementation. He stated that PPPs transfer risk from government to the private sector.
Mr. Harris explained that he has done some light-rail projects, but that they are not money-makers and that they require significant government subsidy.
Mr. Harris added that he has seen other governments’ PPP programs fail due to:
1. lack of high-level political support for procurement
2. do not communicate to public or press
3. do not get good advice
Senator Blendu asked if U.K. PPPs are different than those in U.S.; Mr. Harris explained that PPPs in the U.K. are not run by an existing company, but rather they form consortia, each consisting of a bank, a contractor, and a facilities operator, and the bank acts as a watchdog and also interacts with the government.
Chairman Biggs stated that the key is in the contract, that the U.S. government can specify exactly what it wants delivered; Mr. Harris concurred, saying that a PPP is all about the contract: “What happens if the private sector does not do X?”
Senator Blendu asked if the government could do this itself; Mr. Harris replied that PPPs finance, build, operate, and maintain these public facilities, and that government typically cannot do all these things. He added that the private sector often brings innovation to the projects.
Senator Gorman asked if these contracts are public record; Mr. Harris explained that most are, depending upon the government authority, however some commerce information must be filtered out. Senator Gorman asked if there are special departments to handle these contracts; Mr. Harris explained that every government spending industry has a PPP unit.
Representative Nelson asked how Mr. Harris accomplished returning the projects to the government after 25 years; Mr. Harris explained that the first projects were signed in 1995, so none have come to the end of that period yet, however the plan is that, because the facilities were built on land owned by the government, at the end of the period the government can either take over the running of the facility or put it out on another contract, which would be maintenance and operational only.
Mr. Harris further explained that the private sector would only make their money in the initial 25 year period – after that, the government may do with the facility what it likes. He stated that, with proper maintenance as defined in a proper contract, facilities should keep going indefinitely, long after the first 25 years.
Rail Study Status Report
Richard Travis, Deputy Director, Arizona Department of Transportation (ADOT), presented a rail study update (Attachment 1) detailing the specific status of four rail studies:
1. railroad inventory and assessment
2. MAG commuter rail strategic plan
3. high speed rail study
4. multimodal freight analysis study
Representative Nelson asked about the economy of rail travel; Mr. Travis explained that rail travel does serve as a land bridge for freight moving across the state.
Representative Prezelski asked about rail traffic in and out of Mexico and the problem of those rails being a different gauge than US rails as well as inspection at the border; Mr. Travis replied that there has not been an analysis of that yet, but that the truck traffic occurring now is certainly being looked at as a model. Mr. Travis concurred that the infrastructure would need to be looked at also.
Freight Rail Crossings; Congestion Relief
Mr. Travis explained that rail crossings are the intersection of two transportation modes, and can be public or private crossings. He stated that the Arizona Corporation Commission provides primary safety oversight for the state’s rail crossings, and that ADOT administers the Federal railroad/highway crossing program (Attachment 1). He explained that Arizona has 220 miles of railroad and 1,800 crossings (805 public and the remaining on private or leased land), and discussed safety and improvement and grade separation projects.
Transportation Framework Studies
Bob Hazlett, Project Manager for Arizona Councils of Governments (COG), Metropolitan Planning Organizations (MPO), and Maricopa Association of Governments (MAG), introduced the mayors.
Keno Hawker, Mayor of Mesa, stated that efforts on these projects to anticipate transportation growth must be statewide.
Jim Cavanaugh, Mayor of Goodyear, Chairman of MAG, explained the importance of taking a local approach, as COG and MPO are each doing, and listed the four groups that are planning how to approach the taxpayer with additional transportation requirements:
He said the questions being addressed are:
Mayor Cavanaugh asked to be involved in the planning.
Senator Gould asked about the plan to take to the voters; Mayor Cavanaugh replied that the Governor just spoke of it, that it is what the groups would like to see happen in transportation in the next twenty to thirty years, and that ADOT is developing a preliminary list for presentation to the Legislature in May, 2008. Mayor Cavanaugh said that the issues could go to the voters in 2009 or 2010.
Senator Gould stated that this would represent a tax increase and that his committee would not send anything to the ballot that would require a tax increase.
Mr. Hazlett returned to the podium to present information on transportation framework studies (Attachment 2) and he discussed the potential statewide growth in the central corridor.
Senator Blendu asked about the
viability of rail transportation from Nogales to Flagstaff;
Mr. Hazlett replied that a statewide approach must be taken and he defined the
term “megapolitan”.
Mr. Prezelski asked if planning for the worst case scenario can actually spread development and infrastructure beyond where it should go; Mr. Hazlett replied that there is a link between land use and transportation planning and a question of which comes first.
Mr. Hazlett stated that population studies predict that Arizona will have 14 million people by 2050, which could make it the fifth largest state. He went on to discuss the mobility reconnaissance study (Attachment 2) by the COG and MPO organizations, along with ADOT.
Chairman Biggs asked about maquiladoras; Mr. Hazlett stated that textile production is decreasing but others are converting to hard goods. He addressed border areas and a tool to forecast future travel patterns.
Representative McClure asked if there were any specific rural needs studies; Mr. Hazlett replied that ADOT has a continuing planning process utilizing profile studies to determine needs for additional corridors.
Mr. Travis returned to the podium to discuss the scope of work defined by framework studies which yield both a process and an outcome and study needs and how to address a political issue. He explained that the task is to define what kind of a transportation system Arizona will need to move people and goods across the state and that this is now a #1 priority in ADOT. He described the six regions in Arizona (Attachment 2) which are being studied and the objectives of the framework studies.
Senator Blendu asked if this is the first time that the state is getting involved in areas which had been handled by local jurisdictions, e.g. bicycle paths. Mr. Travis replied that this is a study of need, but that how to address the need is a political question that will come later.
Chairman Biggs asked if the studies would evaluate whether a project is state or local; Mr. Travis answered in the affirmative.
Mr. Travis stated that people now live further and further from their places of work and that partnerships with other organizations and transportation network alternatives must be considered.
Mr. Hazlett stressed the importance of these studies of transportation corridors. He described the status of two more framework studies:
Philippe Zubia, State Transportation Board, discussed how these projects will be financed, as soon there will be no money in the federal highway trust fund.
Chairman Biggs asked what amount of money will be needed; Mr. Zubia replied that by 2050, a dedicated, permanent funding source of $40 to $50 billion will be required. Chairman Biggs asked if that is spread among local, regional, and state needs; Mr. Zubia replied in the affirmative, clarifying that this is highways and roads only, not mass transit.
Representative Prezelski asked how developers can get involved; Mr. Zubia replied that developers could be involved in the initial planning.
Representative McClure asked how much would additional funding would be required for mass transit; Mr. Zubia replied that he did not know.
call to the public
Martin Schultz, Pinnacle West Capital Corp., stated his opinion that the U.K. information was a good addition to the debate.
Mr. Prezelski urged Mr. Schultz
to meet with the Mayor and City Manager of Tucson;
Mr. Schultz replied that he has every intention to meet with representatives in
southern Arizona.
Rudolf Kolaja, Traffic Engineer, representing himself, expressed his opinions about funding and the need for a clear transportation plan.
Chairman Biggs then explained that a Final Transportation Committee Report would be compiled and he asked each of the members to submit to him any issues to be included in the document.
Without objection, the meeting adjourned at 3:13 p.m.
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Jane Dooley, Committee Secretary
December 4, 2007
(Original minutes, attachments and audio on file in the Office of the Chief Clerk; video archives available at http://www.azleg.gov/)
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BLUE RIBBON TRANSPORTATION COMMITTEE
December 4, 2007
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