01155674

Component

Transportation needs throughout the country are at levels that governments are unable to meet their capacity needs through traditional revenue collection methods. 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’s 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.

01147878

10-2713

English

16p

2010

Transportation Research Board 89th Annual Meeting

DVD

Figures (4) ; References (17) ; Tables (2)

Bonds; Case studies; City government; Construction; Finance; Liabilities; Public private partnerships; Revenues; Value capture

Transportation Reinvestment Zones

Transportation infrastructure

Administration and Management; Construction; Finance; Transportation (General); I10: Economics and Administration; I20: Design and Planning of Transport Infrastructure

Transportation Research Board Annual Meeting 2010 Paper #10-2713

TRIS, TRB

Jan 25 2010 11:19AM