Denver RTD does the PPP thing

Some big transit funding news out of Denver on Friday: the RTD, the metro Denver area’s transit agency, approved of a public-private partnership to help build three rail lines, including a connection between Denver and the distant Denver International Airport.

The deal works like this: the consortium of private firms called Denver Transit Partners is putting up $1.3 billion for construction of the lines, with the RTD contributing the rest of the $2.085-billion cost.

What’s in it for Denver Transit Partners? They get to operate the lines for 40 years in exchange for annual payments from the RTD. That will presumably be enough to cover their up-front costs.

I’m writing about this because the three rail lines that the Denver RTD are building were part of a package of projects approved by voters as part of a 2004 sales tax increase called FasTracks. The project has actually run into some money woes — there’s not enough funding to complete all the projects in FasTracks — and the RTD will likely have to go back to Denver-area voters for another increase to build all of them.

That said, the agency said from the get-go that PPPs were one way to stretch taxpayers’ dollars. I don’t think it’s fair to call such deals as common in transit circles, although they’ve certain been much talked about in funding circles in recent years.

This is also worth mentioning because the Board of Directors of Metro in January voted to approve a contract with a private firm to study whether PPPs may work for some Measure R projects here, including the Crenshaw Line, the Westside Subway Extension and the Downtown Regional Connector. And the Foothill Extension Construction Authority is also looking into a financing deal in which the contractor that will eventually be selected to build the line would finance up-front construction costs in exchange for later repayments from Measure R.

PPPs can take a lot of different forms. I’m not saying they’re the answer — and certainly people have raised questions about handing over operations of transit or other public functions for such long periods of time to private firms (most notably in Chicago, where a private equity firm took over the city’s parking meters in exchange for an up-front cash payment). But PPPs also look like they’re going to be discussed in many different regions in coming years, including Los Angeles County.