INNOVATIVE FINANCING SOLUTIONS FOR RAIL TRANSIT PROJECTS USING A PUBLIC PRIVATE PARTNERSHIP

As a percentage of capital costs, the federal share of rail transit projects is continuing to decline. Facing budget pressures, States find it difficult to supplement this Federal shortfall. To move forward, rail transit projects must reduce their overall capital cost and increase the share of capital operating subsidies, which can be provided from the private sector and local sources. Fortunately, public-private partnerships (PPP) offer a new approach to project development and contracting, which can both substantially reduce capital costs, compress schedules and provide innovative financing solutions to the growing funding needs for public infrastructure projects. To maximize the benefits for projects, PPP should be structure in order to let the Public Partner define overall goals and objectives while involving the private sector very early in the project development process. The private partner can provide a developmental strategy, financial resources, technology, and skills not normally available in the public sector. Properly structured, public-private partnerships can greatly benefit rail transit projects by providing innovative financing techniques, private sector financing and in-kind investment. This paper addresses a general model for this project finance structure for rail transit projects.