Jennifer Aument knows how to build successful public-private partnerships. Aument’s team at Transurban worked in partnership with Virginia to develop the I-95 and I-495 Express Lanes project, a $3 billon venture completed on time and on budget, which today enjoys an astonishing 85% satisfaction rate among weekly rush hour users of the Express Lanes.
Transurban at a glance
- Specializes in toll road development, financing, delivery, operations and technology with a network encompassing more than 900 lane miles of all-electronic toll roads, tunnels and bridges.
- Delivered approx. $25 billion globally in infrastructure projects
- Employs more than 2,000 people in the US and Australia
- Partnered with Virginia to deliver and manage I-95 and I-495 Express Lanes
- Extending the I-95 Express Lanes eight miles to the D.C. line, a $500 million investment.
Public-Private Partnership is the phrase du jour.
At least in infrastructure circles.
The Trump Administration is an unabashed supporter of Public-Private Partnerships, also called P3s.
Officials tout the benefits of having local governments work with private companies to build, repair and manage our nation’s aging infrastructure. P3s often complete projects quicker and more cost effectively. The partnerships protect cities, states and municipalities from taking on more debt. Most importantly, they protect taxpayers by shifting project risks to the private sector.
Still, the P3 pipeline is lackluster today.
They account for only a tiny fraction of US infrastructure spending. On toll roads, for instance, where they have been used the most, they accounted for just 1 percent of all spending between 1989 and 2011, according to a report by the Congressional Budget Office.
Most P3 practitioners complain about the lack of pipeline in the US. According to Inframation, last year, there was $120 billion worth of P3 transactions globally in transportation. Of that, only 16% occurred in the US.
Part of the reason is our mature municipal bond market that can finance public projects, lessening the need for private partnership. A bigger reason, however, is a lack of understanding about how such projects work and a scarcity of completed projects which could serve as role models.
But that could be changing, thanks to successful P3 projects springing up in recent years.
One such P3 project is the Interstates 95 and 495 Express Lanes in Northern Virginia. Transurban, a global leader in toll road development, partnered with the state to ease gridlock in one of the nation’s most congested corridors.
As Transurban’s North America President, Jennifer Aument has spearheaded the $3 billion project, including design, construction and financing, and continues to manage it. Today, the project enjoys an 85% satisfaction rate among weekly rush hour drivers – no small thanks to her leadership that included extensive community outreach and engagement.
Not surprisingly, she serves on P3 advisory boards for organizations such as the Eno Center for Transportation, the American Road and Transportation Builders Association, and George Mason University. Aument spoke with Gargi Chakrabarty, Content Director at Icons of Infrastructure, on how successful P3s such as the Virginia Express Lanes are helping shift public thinking on such partnerships, paving the way for more such projects in the US.
GC: You have led one of the nation’s successful P3 projects – completing Virginia’s I-95 and I-495 Express Lanes on time, and on budget. Now your company is operating the toll roads. What does the status of the transportation and P3 markets in the US look like from your perspective?
JA: If you listen to many thought leaders in the industry, you could walk away quite pessimistic. There are stories about infrastructure projects that are taking decades to develop, from concept to ground breaking. According to the American Society of Civil Engineers, the US will be about $1 trillion short by 2025 on what we are spending and what we need to spend to remain competitive. That’s partly because we haven’t touched a primary funding vehicle, the gas tax, since 1993.
But from where I sit in the transportation space, it’s quite the opposite.
I am energized and optimistic by the persistence and innovation we are seeing among government officials at the local and state levels across the country. Many transportation leaders at the state level –especially in states such as Virginia, Colorado and Florida – are not sitting back and waiting for Congress to deliver more funding; they are finding new, innovative ways to push the envelope and meet the infrastructure needs of their constituencies.
There’s no better example than here in Virginia. We have partnered with five Virginia governors on both sides of the political aisle who have embraced innovative transportation solutions. As a result, we have advanced a managed lanes network that has served more than five million customers, helped fund major transit improvements, unlocked gridlock in the congested Washington region and put more than 28,000 people to work.
We were among the first to develop commercially focused lanes in the country, using dynamic toll pricing. We were also among the first users of TIFIA (Transportation Infrastructure Finance and Innovation Act) funds. But what I’m most proud of is, I believe we are leading the way in transforming how consumers respond to tolling. We have helped shift the thinking.
“Tolling in the past has been difficult for politicians, but now they can say to their constituents “listen, you are going to get real value for the dollars you pay.”
GC: How did Virginia finance this $3 billion project?
VA: Our approach was to advance a capital strategy that would help Virginia maximize every tax dollar it was dedicating to the project. We achieved this by combining Virginia’s dollars with private equity, a series of TIFIA loans and Private Activity Bonds. This approach enabled Virginia to get a return of 29 times its investment on the 495 Express Lanes and 110 times on the 95 Express Lanes. We were among the first to use the TIFIA program on our I-495 project. Without the support of TIFIA, the project would never have been possible.
With this P3 project, Virginia could also effectively transfer traffic and revenue risk of the Express Lanes project to the private sector. HOT (High Occupancy Travel) lanes can be risky. What Virginia has done is protect its taxpayers by shifting the long-term traffic and revenue risk to Transurban.
GC: How did Virginia drivers react to the Express Lanes?
JA: In Northern Virginia, among the frequent customers of the Express Lanes, there is 85% satisfaction among weekly rush hour users. The reason is because we are consistently delivering a faster and more reliable trip in exchange for the toll they pay. If you look at our customers on the I-95 managed lanes, they are saving, on an average, 52 minutes on commute in exchange for the toll they pay. For example, on some Thursday nights in summer, they could be saving as much as 3 hours for a 30-mile trip. That’s great for a family on the way to the beach. They see the value for the toll they pay, but it’s also transformational for our industry because it helps build political support for using tolling in innovative ways to close the funding gap.
Tolling in the past has been difficult for politicians, but now they can say to their constituents “listen, you are going to get real value for the dollars you pay.”
GC: Did you do things differently when building the Virginia toll roads?
JA: One key difference is that Transurban and Virginia shaped the project from the beginning with the ultimate customer in mind. We used the latest technologies to provide faster and more reliable trips. We used real-time, dynamic tolling to better manage congestion by increasing or decreasing toll price based on what’s happening on the roadway at any given time.
We looked at access points to see how we could serve key shopping areas and key communities in our corridors that weren’t connected in the past. We wanted to provide access and transit options to new places, working with transit organizations and consumer-focused groups to have a consumer voice at the table at every stage of the project.
From an operations perspective, since Transurban is an investor operator, we form partnerships with governments to fund projects, design them, oversee construction, and ultimately operate the system for the long term. We always focused on implementing new technologies and strategies to improve safety and reliability, and I think you are seeing strong customer and community support as a result.
Also, we focused on proactive engagement with stakeholders and surrounding communities. This enabled us to deliver a better, faster, and most effective project. I’ll give you an example. During construction of the I-495 project, we replaced 50 bridges and overpasses. One of the bridges we replaced involved taking down 4 lanes of the existing Capital Beltway as it crossed Tysons, a busy commercial area. We worked with a coalition of approximately 120 businesses to say, “we can cause disruption and delays for many months through traditional construction methods, or we can work together on an alternative that requires more disruption over a weekend or two, but that will enable us to get finished and out of your way quickly. The community agreed on the alternative, and it was ultimately better for everyone. That’s the value of genuine engagement.