Public-Private Partnerships Becoming Top Choice for Passenger Rail Projects in U.S.

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Researched by Industrial Info Resources (Sugar Land, Texas)--Passenger rail projects have become a booming business in the U.S. In recent years, every major city has either constructed some form of passenger rail, has a project under construction, or is planning to start a project. While some states have a long and storied history of passenger rail service, many do not and are trying to catch up. Traditionally, passenger rail funding has come from two sources: the federal government and the local entity seeking to construct the rail line. However, the former source has been drying up rapidly due to cuts in federal spending. In order to continue their passenger rail programs, cities, counties and states have been forced to seek alternative methods of funding, and the public-private partnership has become the top choice to get these projects off the ground.

A public-private partnership in the passenger rail sector is where the entity seeking to develop a rail line or system seeks private help to get the project off the ground. In the past, the city, county or state that was developing the project would contract out the design and permitting, then after initial federal approvals would essentially split the cost with the federal government. In the public-private partnership model, the city, county or state will take a project to the point of initial federal approval, as they always have, but at that point they seek a consortium who will help take the project through the final design and engineering stages to construction.

The public-private partnership is typically a large group of companies that bring design, engineering, public relations, financing, construction, operations and maintenance experience to the table. They will complete the final design, handle the engineering, complete the final permitting, finance the project, bid out the construction, manage the construction and build the rail line or system. When the rail line or system is operational, the public-private partnership team also will operate the line for a period of time specified in the initial agreement, typically at least 20 years, and will perform any and all maintenance on the line or system through the life of that contract.

What these agreements bring to the table first and foremost is the financing through banks or private equity firms that are part of the team. This allows the project to move forward while spreading the risk among several partners rather than between the city, county or state that planned the project or the federal government. These partnerships are banking on rail transportation continuing to gain popularity, something that is likely to happen given the high, and continually rising, oil and gas prices that are affecting the U.S.

Proposed projects in a number of states are seeking public-private partnership consortiums for projects that are at or nearing the point of initial federal approval. A number of other projects have been placed on temporary hold while the city, county or state that is planning the project seeks out potential partners to take the project to the next step of development. Denver Regional Transit (Denver, Colorado) has used this model to propel one of their major projects forward and is seeking partners for additional projects, while cities in California are doing the same.

Industrial Info Resources is currently tracking in more than of $40 billion worth of planned passenger rail projects in the U.S. that are ripe for public-private partnership involvement in the coming months and years. Given the success of this model with the initial projects that used it, the public-private partnership is very likely to become the next big thing in the passenger rail arena in the U.S.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.