Protecting the Public Interest: Role of Long-Term Concession Agreements for Providing Transportation Infrastructure

Lack of cash has led virtually every state in the United States to explore innovative finance techniques that allow important improvement projects to move forward while keeping taxes and fees low. Many observers have hailed long-term concession agreements as the long-awaited silver bullet to solve the transportation funding crisis, but others have raised concerns about these deals. How are public-sector decision makers to know whether they are advancing the public interest when they consider these agreements? The concession approach has many advantages over traditional methods, but there are many concerns with these nontraditional techniques. At this point, very few people have a complete picture of the short- and long-term implications of different approaches and associated trade-offs. Some of the public concerns include facility undervaluation, use of upfront payments, length of concession, and noncompete clauses, among others. Many of the concerns with long-term concessions are legacies from the past that have been rectified as both the public and private sectors have learned and adapted. This paper summarizes public concerns related to long-term concessions, describes recent trends in how governments have evolved to respond to public reaction, and suggests key issues that need to be considered in the future.