The nation's major transit agencies can no longer wait for federal funds to finance the multi-billion dollar expansions needed to relieve today's congested highways.

As one answer to this funding crisis, legislation in 21 states enables transit agencies to form public-private partnerships to design-build or even design-build-operate-maintain parts of local transit networks. A skeptical U.S. House subcommittee recently took testimony on similar federal legislation and also reviewed the current state of public-private partnerships in funding transportation projects.

A century ago, a number of toll roads were privately built and operated, but the practice died when it proved to be too costly to collect the tolls. While in the mid-1980s, the concept resurfaced as a tool for financially strapped local or state highway departments, the idea of forming a partnership with private parties is just catching on with transit agencies.

"Entities like Metro can no longer wait, sometimes for decades, for our turn to receive evermore scarce federal and state resources to undertake projects that are needed immediately," said Frank J. Wilson, CEO of the Metropolitan Transit Authority of Harris County, in testimony before the House Subcommittee of Highways and Transit.

The head of Houston's transit system was the only witness to specifically address transit needs.

"Today, a vibrant private equity market is providing opportunities for financing, building and operating these facilities. It is not an option that works in every circumstance, but there are often circumstances where a partnership between public and private markets makes better sense than one party 'owning' the project."

Houston's Story

Houston is now negotiating with a "facility provider" who will, at a minimum, design and build four corridors of guided, bus rapid transit and an intermodal terminal. The agency has selected Houston Transit Partners, a consortium lead by Washington Group International, from three proposals to handle the project. The agency wants the 20 miles of guideways, including stations, to be completed by late 2010 with operational vehicles in place by 2011. Houston Metro hopes to begin construction later this year.