Grueling Testimony to the Senate Appropriations Committee on Public-Private Partnerships

• By Guest Author
• June 13, 2006
• 1 comment

Good morning Chairman Schoenberg and Members of the Committee. My name is John Greuling and I am President & CEO of the Will County Center for Economic Development and the Will County Chamber of Commerce. First of all let me welcome you to Will County, the fastest growing county in the State of Illinois.As I am sure you have noticed during your visit to Joliet we are enjoying a robust local economy not seen in many parts of the state today. Our emergence as a global transportation center as a result of the development of one of the largest inland ports at the intermodal center in the former Joliet Arsenal speaks volumes to the importance of transportation to the future of the Illinois economy. Our work today on this subject is not insignificant.

It is my pleasure today to speak to you today regarding the proposed use of public-private partnerships for development and operation of public infrastructure in Illinois from both the local community and economic development perspective. The Will County Center for Economic Development is a private, not-for-profit 501c3 foundation supporting a range of economic development activities throughout Will County. Enjoying our 25th year serving our community, the Center is focused on three things:

I. Creating new wealth and jobs through business retention, expansion  and recruitment;

II. Supporting the development of critical infrastructure throughout the county to maintain a high quality of life and public services;

III. Establishing a strong partnership between the public and private sector leadership in Will County to assure our success in I & II.

As with many fast growing communities across this country, our biggest challenge in creating a quality environment for employers, employees and our residents is keeping up with infrastructure including our schools, utilities, parks & open space and most importantly, our transportation system. Since 1990 we have grown from 357,131 in population to 642,813 and we have not added one mile of new primary highway during that same time period. That of course will change with the 12-mile extension of the I-355 Tollway from I-55 at Bolingbrook to I-80 at New Lenox. Without the ability of the Illinois State Toll Highway Authority to extend this much needed highway using toll collections and their bonding powers it would be fair to say that this road would never be built – certainly not as a limited access interstate highway.

Let me say at this point that the Will County Center for Economic Development has not taken an 'official' position on the use of public-private partnerships in Illinois or the proposed leasing of all or part of the current Illinois Tollway to a private operator. Nor is the Center considered an expert in the use of these partnerships for management of existing infrastructure or development of new projects. We do believe, however that it is time for the Illinois General Assembly to look at how we are currently funding needed road projects in our state and develop innovative solutions to meeting the growing unfunded demand of all of our current and future transportation needs.

My own experience with public-private partnerships was in Colorado with the E-470 project linking the south metro-Denver area with access to Denver International Airport via a 12-mile Tollway. As the chief economic developer for that region I have observed first hand the development of a public-private project and its continuing success. I witnessed the development of a state-of-the-art toll road using a combination of private equity, license fees, impact fees and tolls to fund a critical piece of Denver's infrastructure. As you know, a number of other states that are enjoying economic health and prosperity are also using these partnerships for much needed road improvements quite successfully.

While we applaud your committee for exploring the 'public-private solution' for funding and operating public infrastructure in Illinois, we urge the continued thorough study of the issue before legislation is crafted and introduced for consideration. This review must consider the following policy questions:

1. Should public-private partnerships in Illinois be used for both existing infrastructure and new infrastructure?
2. Who decides when a public-private partnership is the best solution for funding a project?
3. Who will be the designated "public" in this partnership: The State? Large Cities? Counties? Or some regional entity?
4. How will the publics' interest be protected over the life of the project?
5. Will these partnerships be permitted for infrastructure beyond roads such as rail intermodal centers or airports?

One of the most important questions is: are we considering the partnership concept as a quick fix for Illinois' fiscal problems or are we really introducing an alternative financing mechanism for necessary infrastructure now and into the future? The lease of the Tollway is the focus of the discussion now, but should not overshadow the potential utilization of creative funding alternatives for key infrastructure projects on the horizon such as the Illiana Expressway or the Prairie Parkway. Private toll agreements may be the only way these and other needed transportation projects may get built.

Regarding the current proposal to enter into a long-term lease of the Illinois Tollway, we believe the following:

• The leasing process must be transparent to the public without jeopardizing the necessary private parts of the transaction;
• The proceeds from the lease of the Tollway must be reinvested in transportation infrastructure in Northeastern Illinois. Diversion of these proceeds to non-transportation funding requirements should be prohibited;
• Future expansions/extensions of the system need to be accommodated in any lease agreement;
• Future toll increases need to protect the 'public' as well as the 'private';
• Keep the Tollway an integral part of the metro-transportation system;

The fiscal challenges facing the State of Illinois today are huge, and not easy to fix. We recognize the desire to find new and innovative ways to address both current and future funding of transportation infrastructure throughout the state. We also recognize there is no quick fix to meeting these funding challenges. The use of public-private partnerships in Illinois should be done deliberately and carefully as part of an overall infrastructure funding strategy for the state.

Thank you.

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