A methodological framework can be used to evaluate public revenue financial risk exposure when transportation infrastructure is delivered through public–private partnerships (PPPs) in the United States. Transportation agencies worldwide and across the United States are increasingly using PPPs as a mechanism to deliver infrastructure. An analysis of international experience conducted for this research shows that countries with more extensive experience in PPPs than the United States have devised sophisticated methodologies to value and manage risk exposure in the context of value for money and optimum allocation of project risks. However, a review of major U.S. transportation PPP transactions reveals that U.S. states currently lack a well-documented methodology to quantify and incorporate the cost of public-sector risk into the evaluation of PPP projects. This evidence suggests that U.S. transportation agencies might benefit significantly from implementing more systematic approaches to incorporate the cost of risk in the evaluation of PPP projects. The framework proposed in this research provides a step-by-step methodology to quantify revenue risk exposure and is aimed at facilitating the estimation of the risk-adjusted costs of delivering a project as a PPP. The methodology is based on the concept of contingent liabilities and uses option pricing techniques. The application of the methodology is demonstrated by two U.S. transportation PPP case studies.

Value capture refers to the process by which all or a portion of increments in land value attributed to community efforts rather than to landowner actions are recovered by the public sector. As such, it is a form of a public–private partnership. It is widely used across the country and around the world for transit applications; however, its applications to roadways have only recently emerged into discussions of roadway finance, out of motivation stemming from the transportation funding crisis. Two states have legislative provisions for enabling value capture for financing transportation. In Texas, this takes the form of a transportation reinvestment zone (TRZ). This paper presents specifications for a TRZ based on a case study approach and then applies a financial evaluation model based on those specifications to a case study corridor in El Paso, Texas, to assess preliminary revenue sources and cash flows that can be accrued for value capture bonding capacity.

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This paper introduces port authority transportation reinvestment zones (TRZs), a funding tool created by the Texas Legislature to help fund long-term economic development port projects. TRZs were first introduced in Texas in 2007 as a tool to allow county and municipal governments to raise funds to help pay for transportation improvements using the property tax mechanism. Since then, the legislation has been amended to include other transportation modes, such as transit, rail, and parking facilities. Amendments passed in 2013 introduced the concept of port authority TRZ, which expanded authorized use of the tool to the state’s port authorities and navigation districts. Most of the existing funding tools available to Texas ports focus on the development of infrastructure within port property. Port authority TRZs complement existing funding sources by providing a funding tool flexible enough to fund port projects both inside and outside port property. Port authorities can take advantage of the TRZ concept to join forces with neighboring local governments and the Texas Department of Transportation to fund landside transportation enhancements that improve port accessibility and the regional economy. Currently, there are four active port authority TRZs in the following locations: Port of Beaumont, Port of Port Arthur, Port of Brownsville, and Sabine-Neches Navigation District. This paper summarizes the legal framework of port authority TRZs, describes the role that these TRZs play in port funding and finance, and presents highlights of the port authority TRZs that have already been established throughout the state.

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