Infrastructure public private partnerships and contingent liabilities: a value capture case study from Texas

Transportation infrastructure needs throughout the United States are at levels that governments are unable to meet their capacity needs from traditional funding sources. One innovative financing method that is a form of public private partnership (PPP) is value capture (VC). VC initiatives involving municipal bond financing are all a non-commercial alternative form of PPP that like many PPPs, also involve contingent liabilities. This paper presents a VC mechanism recently established in the state of Texas that is innovative from a municipal transportation financing standpoint because it allows for the establishment of Transportation Reinvestment Zones (TRZ). The paper uses a case example to demonstrate that TRZ’s are a way for cities to leverage state and local funds for infrastructure construction and uses the case example to discuss financial risk issues implicit in contractual arrangements of this type of PPP especially those stemming from risk allocation. The paper argues that there is a need to better define this risk allocation and understand the contingent liabilities implicit in these forms of partnerships. Finally, the paper proposes a contingent claims analysis approach to value the liability implicit in the TRZ model using a corridor example.

• Availability:
  • Find a library where document is available. Order URL: http://www.piarc.org/en/order-library/13949-en-Proceedings%20of%20the%20XXIVth%20World%20Road%20Congress,%20Mexico%20-%202011.htm
• Supplemental Notes:
  • Abstract reprinted with permission of the World Road Association – PIARC.
• Corporate Authors:

  World Road Association (PIARC)

  La Grande Arche, Paroi Nord, Niveau 5
  F-92055 La Defense Cedex,   France 
• Authors:
  • Aldrete, Rafael
  • Vadali, Sharada
• Conference:
  • 24th World Road Congress
  • Location: Mexico City , Mexico
  • Date: 2011-9-26 to 2011-9-30
• Publication Date: 2011

Language

• English

Media Info

• Media Type: Digital/other
• Features: Figures; References; Tables;
• Pagination: 14p
• Monograph Title: 24th World Road Congress Proceedings: Roads for a Better Life: Mobility, Sustainability and Development

Subject/Index Terms

• TRT Terms: Case studies; City government; Financing; Infrastructure; Liabilities; Public private partnerships; Risk analysis; Value capture
• Identifier Terms: Transportation Reinvestment Zones
• Uncontrolled Terms: Risk allocation
• Geographic Terms: Texas
• Subject Areas: Administration and Management; Finance; Transportation (General); I10: Economics and Administration;

Filing Info

• Accession Number: 01500447
• Record Type: Publication
• ISBN: 2840602679
• Files: TRIS
• Created Date: Dec 3 2013 9:11AM