Valuation of Buyout Options in Comprehensive Development Agreements
This project investigates the feasibility of and develops an economic valuation model for buyout options in Comprehensive Development Agreements (CDAs). A CDA is a form of public-private partnership in which the right to price and collect revenues from toll roads is leased to a private entity for a finite but lengthy period of time in exchange for providing local and state governments with a quick influx of cash and/or additional infrastructure. Uncertainty associated with such long-term leases is of substantial public concern. In particular, there is a sentiment that the state and/or municipal governments may not be sufficiently compensated for the forfeited development opportunities and the possibility of lost revenue due to higher-than-expected future growth during the lifetime of the lease. An under-studied aspect of the problem is the feasibility and economic value of an option for the government to buy back the leased infrastructure at a future date prior to lease expiration. Such an option would give the public sector additional control over the future use of leased facilities and address potential concerns regarding long-run uncertainty and possible unforeseen windfalls for the private sector. The developed buyout option valuation model can aid transportation policymakers in decisions on leasing public infrastructure. Project deliverables include: feasibility assessment of buyout options, an economic valuation model for buyout option in a CDA, and identification of methods, data, and parameters required to apply the model to evaluation of buyout options in actual (planned or existing) CDAs.
- Record URL:
-
Supplemental Notes:
- This research is supported by a grant from the U.S. Department of Transportation, University Transportation Centers Program.
-
Corporate Authors:
University Transportation Center for Mobility
Texas Transportation Institute, Texas A&M University System
College Station, TX United States 77843-3135Research and Innovative Technology Administration
1200 New Jersey Avenue, SE
Washington, DC United States 20590 -
Authors:
- Power, Gabriel
- Burris, Mark
- Vadali, Sharada
- Vedenov, Dmitry
- Publication Date: 2009-12
Language
- English
Media Info
- Media Type: Print
- Edition: Final Report
- Features: Figures; Tables;
- Pagination: 34p
Subject/Index Terms
- TRT Terms: Economic models; Infrastructure; Leasing; Leveraged buyouts; Public private partnerships; Valuation
- Uncontrolled Terms: Comprehensive development agreement
- Subject Areas: Economics; Highways; I10: Economics and Administration;
Filing Info
- Accession Number: 01150716
- Record Type: Publication
- Report/Paper Numbers: UTCM 08-04-12
- Contract Numbers: DTRT06-G-0044 (Grant)
- Files: UTC, TRIS, USDOT
- Created Date: Feb 19 2010 10:59AM