Tennessee eyes P3s and toll lanes to ease congestion

Tennessee would turn to public private partnerships to build toll lanes to ease congestion and tackle a $26 billion infrastructure backlog under a plan unveiled last week by Republican Gov. Bill Lee.

Opposed to both issuing bonds and raising the gas tax, Lee said P3s and toll lanes are the best way to address congestion in the fast-growing state. He plans to propose legislation in the upcoming session allowing the state to enter into long-term leases with private companies to build toll lanes, or what the state is calling choice lanes.

“All we’re doing here is asking for the ability to look at this as an option,” Tennessee Department of Transportation Commissioner Butch Eley told local reporters last week. “Right now, we can’t do what other states around the country are doing as it relates to public-private partnerships.”

Tennessee is the only state in the southeast that does not allow P3s for new road and bridge projects. Current statue limits the use of P3s and the state is not allowed to use progressive design-build structure at all. Lee’s legislation would allow P3s for roads and bridges, including design-build-finance-operate-maintain agreements for choice lanes as part of the “Build With Us” transportation plan unveiled last week.

The state would set up an oversight board to manage the partnerships.

“As Tennessee continues to experience unprecedented growth, it’s critical we invest in roads and bridges to fully harness our state’s success,” said Lee in a statement. “I asked Commissioner Eley to look at best practices around the country to see what’s working and what isn’t. The “Build With Us” plan will provide quality infrastructure in both rural and urban communities and blunt congestion without raising the gas tax or going into debt.”

The state needs $26 billion to deal with urban and rural congestion, including $14 billion in the four urban areas of Nashville, Memphis, Chattanooga and Knoxville, the state department of transportation said in a white paper outlining the plan.

Tennessee is one of only six states, including Wyoming, South Dakota, Nebraska, Iowa and South Carolina, that does not float bonds for road projects.

Using P3s would speed up projects and lower the costs, the administration said. The state DOT currently takes an average of 15 years to complete a project and sees a roughly 40% increase in cost over original budgets, the state said. TDOT also faces a 20% vacancy rate in its workforce, the administration said.

The state also wants to raise user fees on electric vehicles. Like all states, Tennessee faces eroding gas tax revenues amid the growth of electric vehicles. It estimates by 2028 it will face a $40 million revenue loss if EVs account for 3% of the total fleet.

The General Assembly returns on Jan. 10.