IL Gov. Proposes P3 to Break $425M Logjam

Il Gov. Proposes P3 To Break $425M Logjam

Urging action: Standing before IL House Speaker Mike Madigan (D) (red tie), IL Gov. Bruce Rauner (R) last week said that he was reintroducing legislation to establish P3 project delivery in the state as a way to rebuild infrastructure.

by JOHN GREGERSON | Feb 9, 2016

In the Land of Lincoln, in this week when we annually honor our 16th U.S. president, the only thing on which both political sides can agree is that the state's finances are a complete mess. Each blames the other for the budget crisis, so compromise has been off the table since IL Gov. Bruce Rauner (R) took office 13 months ago

To break the logjam, at least for one critical interstate artery in the Chicago area, Rauner has proposed a public-private partnership (P3) that would allow investors to help bankroll a $425-million makeover on the Adlai E. Stevenson Expressway, aka Interstate 55 (I-55). 

"Other states have moved to public-private partnerships to boost economic development efforts, while Illinois has stood still," said Rauner on Jan. 27 in his annual State of the State address. "Last year, we introduced legislation to create a P3. But it stalled in the legislature. This year, we will move forward with a revised version that will laser focus on sales, marketing and customer service, to increase our competitiveness for job creation and investment."

“Other states have moved to public-private partnerships to boost economic development efforts, while Illinois has stood still.”

— IL Gov. Bruce Rauner

Last week, Rauner followed through on that statement, proposing that the state partner with private investors to add toll lanes along a 25-mile stretch of I-55. Under the arrangement, private investors would recoup their investment from fares that the rebuilt roadways accrued.

Long a source of frustration and headaches for daily commuters, portions of 1-55 accommodate up to 170,00 vehicles per day, many of them trucks. “It’s a critical economic corridor (that is) heavily congested,” Rauner told reporters last week. “We need to begin to relieve the congestion on I-55 in order to continue our economic growth here in Illinois.”

Time is money: In a hurry? How much extra would you pay for an express tollway option? 

As envisioned by planners, the highway's three existing lanes would remain free, but provide drivers the option of accessing toll lanes during periods of high congestion. Fares would be variable, rising as congestion builds and falling as it eases, with roadside signage advising drivers of congestion levels and the fare required to bypass traditional lanes.

“If they’re in a hurry and they want to get around the congestion, [drivers] can pay a toll — and we’ll try to keep the toll as modest as we can — so they can get where they need to go,” said Rauner.

Details have yet to be finalized, but one scenario would exempt carpoolers from fares. The “congestion pricing” concept isn't new. Orange County CA implemented a similar plan for express lanes in 1995.

If all goes as planned — and that's a big 'if' in Illinois — the Stevenson project would break ground in late 2017, with a completion date set for 2019. However, the plan first must gain approval from the state's Democratic-controlled General Assembly, with which the Republican governor has locked horns over budget issues since Day One. However, some contend the plan could and should eventually garner Democratic support by creating jobs in the financially troubled state.

UPCOMING, FEB. 18: To learn more about P3s and other alternative project delivery methods, plan on attending our next #SmartWorlds special event. For more details, including speakers and ticket information, click here.

To date, Illinois has met with little success in executing P3 projects. Still on life support is the proposed $1.5-billion Illiana Expressway, a pet project of former Illinois Gov. Pat Quinn (D). As planned by Quinn and Indiana Gov. Mike Pence (R), the $1.1-billion, 47-mile project would have connected Indiana's I-65 to Illinois I-55, allowing truck drivers to bypass busy Interstate 80.

State officials anticipated Illiana would generate $2.4 billion to $3.8 billion over the life of the development contract they had proposed, with a select developer recouping its investment from tolls, much like the I-55 proposal. However, Quinn had said taxpayers would make up the difference if Illiana failed to generate the revenue required to repay investors. Some estimates put taxpayers on the hook for as much a $1 billion or more, and Rauner mothballed the project upon assuming office in 2015.

In 2012, Chicago Mayor Emanuel announced creation of an infrastructure trust "to leverage private investment for transformative infrastructure projects to guide the city’s renewal of these vital and foundational elements in the 21st century.” The first plan of action was to work with debt and equity investors to reduce energy consumption by 20% in participating city assets, repaying the investors with interest from the city savings on electricity costs. The initiative was attended with great fanfare but ultimately generated few projects.

Last year, a frustrated Emanuel hit the reset button, shaking up staff and naming Leslie Darling as the trust's new executive director. Emanuel also expanded a five-member board to seven and replaced all but one existing members. To date, nothing much has changed, but the longer the state's political standoff persists, the more attractive P3s may look, despite their admittedly spotty track record.