Maryland Announces Public-Private Partnership to Redevelop and Operate Travel Plazas

February 2, 2012

The Maryland Transportation Authority recently announced that it has approved a 35-year public-private partnership (PPP) for the redevelopment and operation of two I-95 travel plazas.  A consortium led by the Areas USA (a domestic subsidiary of the Spanish firm Grupo Areas SA which is involved in similar projects across the United States) will finance the project and administer the travel plazas through 2047, says Leonard Gilroy, director of government reform at the Reason Foundation.

  • The project will involve private investment of $56 million in the Maryland and Chesapeake Houses along the interstate.
  • In exchange for its substantial monetary investment, Areas USA will be partner to a revenue-sharing structure with the state.
  • The two travel plazas are expected to produce $400 million in revenue over the term of the contract.

The two parties -- the state and the private company -- will split responsibilities in addition to revenues.

Such an agreement produces benefits for all involved -- both the directly contracting entities and indirect parties such as state taxpayers.

  • The state will be able to replace to aging sites and will be able to leave them to the expert management of an experienced corporation, while still holding onto ownership.
  • The state and taxpayer alike will benefit from the revenue-sharing structure that will prove fruitful from day one; furthermore, the state's share of the revenues will increase as the projects' total revenue increases.
  • The state has sent a strong message of explicit support for private-public partnerships, and will likely benefit from oversubscription for future project opportunities.
  • Finally, the project is expected to employ 400 workers, and will also provide business to companies throughout the entire region that will be involved in various stages of the operation.

The state of Maryland will benefit handily from this PPP, and has simultaneously opened its doors to future opportunities of the same nature.

Source: Leonard Gilroy, "Maryland Announces $456m PPP to Redevelop and Operate I-95 Travel Plazas," Reason Foundation, January 27, 2012.

For text:

http://reason.org/news/show/maryland-announces-456m-ppp-to-rede

 

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