Showing posts with label P3s. Show all posts
Showing posts with label P3s. Show all posts

Wednesday, October 29, 2014

Megapolitan in a Mega-Drought? A Guide to the Sun Corridor

from the Stop CANAMEX project

Plans for massive new transportation projects in Arizona such as the Interstate 11, South Mountain Freeway Loop 202 Extension, and High Speed Passenger Rail seem out of touch with reality. As the urban heat island effect expands and the drought gets worse, it may be inevitable that residents will have no choice but to use expensive water piped in from desalination plants on the coast of Mexico or California. The massive amounts of energy needed to construct this infrastructure for desalination and transport also requires an immense amount of water--an endless ridiculous cycle--but one that is profitable to a few. Will those with the vision for the future of the so-called Sun Corridor, a "megapolitan" including Phoenix and Tucson, ignore these problems, and simply promote growth by building new roads like Interstate 11 and the South Mountain Freeway to allegedly improve the region's position in the global economy and provide the private sector with opportunities to make money on transportation projects?

Even the authors of the report to which most of the popularity of the Sun Corridor concept is owed admit that they're not so sure about the environmental sustainability of such a concept, yet at this point, many city and state officials as well as others take the Sun Corridor as inevitable. According to some in local government, media, and academia, it is both already the Sun Corridor, as well as a work-in-progress that requires strategic planning, infrastructure such as Interstate 11 and high-speed passenger rail connecting Tucson and Phoenix, intentional branding, and a regional identity.

Sun Corridor cheerleaders have projected that the area would double in population from 5 million to 10 million by 2050. The Sun Corridor is taken as a given, or inevitable because of this growth. It is allegedly justified both to accommodate the projected growth and to encourage it. The relationship between Phoenix and Tucson is described as natural and organic, despite the fact that the entire basis upon which the cities' settlement and expansion has been achieved has been through theft and exploitation of land, water, and other resources.


Primarily a project of think tanks with funding by large foundations, the Sun Corridor is one of several "megapolitans" in the US which were defined only about ten years ago based on projected population, proximity between two or more urban areas, an economic integration across boundaries, and their importance in global trade. In some ways it is a prediction based on a trajectory, but mostly it is an agenda for profit-seekers. The Sun Corridor concept is by no means homegrown. Some local officials adopted it after being informed by consultants of the “benefits” of the global competitiveness it would bring, or by the institutions pushing public-private partnerships or state trust land reforms for more developments or infrastructure.

Megaregions, Global-City Regions, Mega-Cities, etc. as trade hubs that surpass the metropolitan scale are not at all specific to the US, nor are they new. These and the accompanying finance, infrastructure and governance projects arose out of free-market-oriented models across the world, largely promoted and pushed by the World Bank specifically through structural adjustment programs and development over the last couple decades. The economic integration mirrors that of arrangements such as NAFTA paired with infrastructure like CANAMEX/I-11, or the the European Union with their passenger rail system. The Sun Corridor is part of a much broader shift towards large private companies attempting to gain access to decision-making and tax dollars to carve their design into the land in effort to increase economic competitiveness.

Profit-making opportunities abound for the few who are in a position to take advantage if the Sun Corridor comes to fruition. First, a megapolitan is seen as an important node in global trade, a way for the region to become economically competitive, or at least this is the justification used for promoting growth. It is also an opportunity for companies to win infrastructure deals, since pushing the megapolitan concept brings along "necessity" for infrastructure like roads and rail. It may allow for changes to laws regarding state trust land, which would enable transportation projects and new development projects. Megapolitans, along with other megaregions, span municipal and sometimes state or even international lines and render the area vulnerable to imposition of new methods of organization and governance, with the full intention of providing private interests access to decision-making and new "partnerships." An arrangement called a public-private partnership (P3) is an integral part of the megapolitan plan.

Financial Interests

Big banks, consultants, engineering and construction companies, and real estate developers all have interests in these new projects, even if they're not quite all on the same page. Those with the most power and influence are the large financial institutions with their relationships to think tanks, foundations, and academia.

Despite the high degree of interest in the construction of new roads and such, the the overarching motivation mustn't be overlooked. As explained in More than Bricks and Mortar, the primary incentive is likely a growing effort on the part of financial institutions and those who see common interests to find more profit-making opportunities.
Arizona Sun Corridor Partnership
"... 'infrastructure' is less about financing development (which is at best a sideshow) than about developing finance..." "what is being constructed are the subsidies, fiscal incentives, capital markets, regulatory regimes and other support systems necessary to transform 'infrastructure' into an asset class that should yield above average profits." 
Public-private partnership (P3), a variation on privatization, is the increasingly preferred “innovative financing solution” used to accomplish arrangements for transportation projects, sometimes involving toll roads for example, but often instead, companies get paid through taxes. P3s may be somewhat new to the US, but they're not new to the world. Since the 1980's, investment banks have developed new ways of making sure they receive full repayment for loans to countries across the world, rather than accepting when they've made bad investments. Repayment was ensured through the International Monetary Fund (IMF) and the World Bank, which saw major neoliberal influence in the early 80's, with a major role played by the Rockefeller Foundation, whose sway did not stop there. Indebted countries were then required to make institutional reforms called "structural adjustment programs" which cut back on social welfare programs and opened the country up to privatization and further foreign investment. Increasingly, investment banks and others have sought opportunities for profit-making in various developing countries, but also in Europe and North America through P3s for infrastructure projects. While structural adjustment programs had largely functioned as austerity measures and accepted only as conditions for accessing loans (with little to no choice), P3s in the US are portrayed as smart options for building roads and such.

In the early 2000s, financial institutions began to arrange for public-private partnerships (including the reform of state laws to enable P3s) to fund infrastructure projects in the US. These ranged from preservation and repair of old transportation infrastructure to development of new infrastructure, specifically trade corridors and transportation that would facilitate conurbation, such as intercity passenger rail. The relationships between the World Bank, Rockefeller Foundation (and other Rockefeller institutions and individuals), JP Morgan Chase, the Brookings Institution, and beyond is integral to this direction. The projects that get completed will have more and more to do with what these elite institutions decide to arrange financing for.

The "Megapolitan" in particular was conceptualized in the mid-2000s. It largely arose out of a graduate urban planning studio at University of Pennsylvania School of Design in 2004 called "Plan for America" involving the Regional Planning Association (RPA) and the Lincoln Institute of Land Policy (with connections to the World Bank and close ties to the Brookings Institution). RPA and the Lincoln Institute, sometimes along with the Rockefeller Brothers Fund, Rockefeller Foundation, and/or the Ford Foundation sponsored several more forums, conferences, studies and documents. Out of this came America 2050 (funded by the Rockefeller Foundation through RPA, as well as the Ford Foundation), which is a primary proponent of the megapolitan concept, along with high-speed passenger rail.

Central to the definition and promotion of megapolitans and the Sun Corridor is Robert E. Lang, originally of Virginia Tech, with fellowships through the Lincoln Institute of Land Policy and the Brookings Institution and involvement in America 2050. He co-authored numerous papers on US megapolitans, as well as the book Megapolitan America. Making the "Sun Corridor" a much more recognizable name, he worked with the Morrison Institute (with Grady Gammage Jr.) on the Megapolitan: Arizona's Sun Corridor while a visiting professor at Arizona State University. Lang became a spokesperson for the concept.

In 2008 when this Morrison report came out, the Arizona Republic printed an article in which Lang (with John Stuart Hall) revealed some of the primary reasons for interest in the Sun Corridor:
Mega regions will be closely watched because of the importance of more people to federal funding formulas (such as with transportation), marketing targets and venture-capital options.
The Sun Corridor also has unique challenges. For example, how state trust land will be developed is a critical wild card since more than a quarter of the Sun Corridor is managed by the State Land Department.
State Trust Land

In the context of a major drought, imagine a whole new city of another million residents being planned south-east of Phoenix. The Lincoln Institute of Land Policy has been particularly interested in state trust land reforms, notably in Arizona for this project called the Superstition Vistas.

State trust land was provided to various states by the United States Congress for each state to lease or sell as a way to generate revenue to benefit public institutions such as schools. Currently, Arizona state law requires that parcels of land are sold at auction to the highest bidder, making it nearly impossible for such a large section of land to be purchased with one central plan in mind. Most of the planning for Superstition Vistas dropped off due to the recession, but the land, or some of it, will likely be up for auction soon. The planning has taken place with the hopes that legal obstacles can be overcome.

Prior to the Sun Corridor report, the Morrison Institute (with Lang and Gammage) was commissioned by the Superstition Vistas steering committee for a study on the development of the land which they published in 2006 (The Treasure of the Superstitions). The steering committee also brought in the Lincoln Institute of Land Policy and the so-called conservation group, the Sonoran Institute based out of Tucson, around which time, the two groups created a joint venture.

Interest in this project and the involvement of Lang and the Lincoln Institute  seems to have been integral to the advancement of the megapolitan concept and the Sun Corridor in particular. Characterizing the area as a megapolitan region could be used to justify a development project like the Superstition Vistas and the necessary state trust land reforms, and accommodate cross-boundary governance which could more easily bring in private interests. Changes to the state trust land laws in Arizona would facilitate other development and transportation infrastructure projects, such as Interstate 11 connecting Las Vegas with Phoenix and potentially beyond. According to Megapolitan: Arizona's Sun Corridor, "...this effort could become a model for mega-scale thinking about state trust land and its role in the future of Arizona."
To recap and add some context, Robert Lang and the Lincoln Institute got involved in the Superstition Vistas project around the time that Lang (with his fellowship from the Lincoln Institute) was working on the megapolitan concept. The Morrison Institute Sun Corridor report was published two years after the Superstition Vistas report. Also significant may be that in 2005, the Lincoln Institute hired a new president, Gregory Ingram, who had worked for the World Bank and International Finance Corporation (the World Bank's private arm that is heavily involved in infrastructure investment). Ingram remained president until 2012 and may have had influence on the direction of the Institute in favor of the megapolitan concept. Also significant is that the Arizona state land department Commissioner as of 2012, Vanessa Hickman, sees importance in the success of Superstition Vistas and is now also on Arizona's Transportation and Trade Corridor Alliance (TTCA), a public/private entity that promotes the importance of "key commerce corridors"--essentially trade infrastructure.
The Morrison Institute reiterates the importance of this land in their 2012 report. "The 2.4 million acres of State Trust Land that make up 18% of the total Sun Corridor area will be critical to the future growth of the area." Additionally, they emphasize the role of this land for high speed rail. "It is possible to site a high speed rail line between Phoenix and Tucson largely on state trust land. While there are considerable legal challenges to this, the rewards would be substantial." 
Freeways and High Speed Passenger Rail
 
The importance of high speed rail (HSR) to the megapolitan and megaregion concepts can not be overstated. It is difficult to determine whether rail-builders' interest was what boosted the megapolitan idea, or if it is the megapolitan concept that requires the intercity rail. What is clear is that HSR would play a very important role in tying the urban areas together.
The Arizona Department of Transportation has a study in the works for a high speed passenger rail between Phoenix and Tucson. Of the three routes they’ve narrowed it down to, the eastern-most (orange) alternative runs right through the area some planners still hope will be the Superstition Vistas. The central (yellow) route could also serve this area.

The first of five objectives of the Sonoran Institute, one of the main promoters of the Superstition Vistas project, was to “promote a commuter rail system linking Phoenix and Tucson," according to their 2010 publication “Riding the Rails to Sustainability,” as part of their Sun Corridor Legacy Program.

While the best selling point for megapolitan development is high speed passenger rail as an alternative to driving, it is not as incompatible with new highways as it's made to seem. Certain environmental non-profit organizations citing research on megapolitans and population are promoting studies that show a decreasing number of drivers and therefore less need for new highways, and yet the megapolitan vision requires new roads as well, particularly the important trade corridors. Specifically, USPIRG and AZPIRG are funded by the Rockefeller Foundation for their HSR projects, and their publications reference America 2050, the primary promoter of the megapolitan concept, which is also funded by the same foundation. Aside from America 2050, most of the promoters of pairing the megapolitan concept with passenger rail also see CANAMEX or trade corridors in general as necessary endeavors.

While AZPIRG has solicited support for their HSR campaign from groups opposing Interstate 11 and the South Mountain Freeway, they likely will not join the opposition to these roads themselves, other than releasing a report naming the I-11 as one of several money-wasting “boondoggles.” It may be lost on them that the Sun Corridor concept justifies and even requires the trade corridor that I-11 would become, and the truck bypass that the South Mountain Freeway/Loop 202 extension would provide. The megapolitan is nearly always portrayed as an international trade hub, which requires massive multi-lane roads for freight trucks. "A successful Interstate 11 will be a smartly designed multi-modal trade corridor that yields multiple benefits for rural and underserved communities on both sides of the U.S.-Mexico border," is the opinion of the Sonoran Institute, or at least its Sun Corridor program director, who recently wrote in favor of the I-11. Dowdy lists rail specifically in an October 8th pro-I-11 commentary.

This is not the only mention of I-11 having multiple modes for transportation (and possibly for energy and even water). Potentially, the excitement for HSR could inadvertently be used to facilitate an acceptance of I-11, even despite PIRG's portrayal of I-11 as a boondoggle in their vaguely pro-HSR report (the report is largely based on their Rockefeller Foundation-funded research by both PIRG and the Frontier Group including the more blatantly pro-HSR "A Track Record of Success"). In a September 29th letter to the editor from AZPIRG, the director wrote, "We agree that 'this isn't about cars vs. transit' and that there should be a larger vision for an Intermountain West multi-modal corridor." The AECOM Sun Corridor report states that there's a potential to share right-of-way between rail and highway. Additionally, ADOT's 2011 Rail Plan (prepared in part by AECOM as a consultant, including Mike Kies and John McNamara who are involved in the I-11 Study) stated, "The proposed Interstate [11] route may be developed as a multimodal corridor, including freight rail, and is part of the Canamex high priority corridor, which is envisioned to include intercity or high-speed passenger rail service." Again, even if the I-11 is not justified by pairing it with HSR, there is demand for trade corridors with or without HSR.
Due to issues with increased development contributing to pollution, the urban heat island effect, increased water usage, impacts to wildlife, displacement of people, and damage to South Mountain in the case of the Loop 202 extension, the Sun Corridor's architects know that this megapolitan idea will only be accepted if it can be portrayed as “green”--as environmentally sustainable and responsible. But there are many ways of making something appear green that really isn't, such as can be seen with market-based mechanisms which involve turning things into commodities such as carbon for trade. Greenwashing is a term used to refer to the "unjustified appropriation of environmental virtue by a company, an industry, a government, a politician or even a non-government organization to create a pro-environmental image, sell a product or a policy," according to SourceWatch. This is not to imply that the benefits of HSR are enough to greenwash trade corridor infrastructure. HSR also requires a certain amount of greenwashing to justify itself. And this is not the only way that paving over the land to make space for transportation will be greenwashed.

HSR map overlaying Megapolitan map from USHSR
High speed rail would not only be used to make the megapolitan or trade corridors acceptable. It supports the concept of the megapolitan as a node in international trade, it is meant to facilitate regional identity and economic integration, it is another piece of infrastructure that provides finance opportunities, and would contribute to the destruction caused by increased development. It is true that HSR makes sense to many in an era of diminishing oil. But the political and economic stability sought by having alternatives to oil-based transportation is meant to support commercial and financial productivity, not to save the planet.
That which primarily inspired early proponents of HSR including Robert Lang to promote US megapolitans paired with HSR is the European model of regionalism and the ways HSR facilitated economic integration (the EU) and regional identity. Lang and a couple of RPA/Lincoln Institute colleagues promoted HSR as early as 2005, while most others (Brookings Institution, AECOM, PIRG, and even Lincoln Institute as a whole) didn't pick up on it in any significant way until 2009 when Obama promised billions of dollars in federal funds for HSR, at which point the HSR lobby grew exponentially. State officials, but especially the private sector, have gathered that alternative modes of transportation are necessary and desired, yet profit is the underlying motivation. Legislation continues to be introduced to facilitate more HSR in the US. Rockefeller Foundation/America 2050's U.S. High-Speed Intercity Passenger Rail Program has made investments of $10.1 billion in high-speed and conventional passenger rail corridors across the country, according to a 2011 report. How much money would their associates (board members even?) stand to make from these projects? 

Private-Sector Imposition

Most likely any high speed rail project in Arizona, if it gets built, will be a public-private partnership (P3), like many are in Europe. The way things are going, the same could be said for roads as well. P3s can involve concession such as rail fares or tolls on roads, but can in some cases allow for an arrangement in which private companies can access financing that they couldn't otherwise, in the form of low-interest federal loans, tax-free bonds, and payments from tax-payers via local government. P3s are more attractive to governments because the arrangements allow for getting transportation projects finished without relying on the minimal government funding, although they often don’t work out in the public’s favor. The companies themselves are interested in profit, and on a larger scale, financial institutions are able to make money as well.
As described in More than Bricks and Mortar, "Under PPPs, the private sector builds, finances and manages a project in return for the government guaranteeing a revenue stream from the project’s users (in the case of a toll road, for instance, the government undertakes to pay should usage fall below a minimum number of cars per day) and giving other contractual undertakings." The report explains that the situation has been described as a “'build now, pay later' scheme that is 'no different from the credit card consumerism boom that contributed to the global financial crisis.'" An illusion is created in which it seems that financing is coming from a private source, but in the end, taxpayers or service users are making the payments. Elsewhere, P3s are often compared to mortgages, and we've seen how well we can trust banks and the government to keep these debt-based transactions from impacting the broader economy.

Nearly any document promoting megapolitans and/or trade corridors also touts P3s for their indispensable benefits, even including the early megapolitan-related 2004 City Planning Studio/Lincoln Institute document, Toward an American Spatial Development Perspective. The Brookings Institute in particular has been producing documents and policy recommendations for P3s for years. The primary Brookings document related to the Sun Corridor is by Robert Lang called Mountain Megas (2008).


Other publications that advanced the Sun Corridor concept, trade corridors, P3s and megapolitans include North America Next: North American Opportunities and the Sun Corridor (2009) prepared by the North American Center for Transborder Studies (NACTS) at ASU (now defunct); and the Sun Corridor, Future Corridor report (2010) by AECOM Global Cities Institute.

As with many neoliberal-leaning institutions, the view is that the federal government's role is to facilitate free-market policies such as free trade. In chapter five of Brookings' Mountain Megas document, entitled "Forging a New Federal-Mega Agenda for the Intermountain West" which highlights the Sun Corridor, the authors emphasize CANAMEX/I-11 and high speed passenger rail along with P3s.

Brookings and other think tanks have had success in moving the federal government in the direction of P3s. The megapolitan/P3 project has increasingly been taken on by the federal government as shown by tax-breaks and other forms of corporate welfare, as well as providing resources for local governments to implement policy changes. Case in point is the September 9, 2014 announcement of the federal government’s Build America Investment Initiative, although this is not the first effort to promote P3s. According to Chadbourne.com,
The part of the President’s new initiative that could provide the most immediate benefit is creation of a new office within the US Department of Transportation called the Build America transportation investment center. The center will open by November 14. The President said it will serve as a “one-stop shop for cities and states seeking to use innovative financing and partnerships with the private sector to support transportation infrastructure.”
The center will play an informational role. It will make federal resources more understandable and promote access to federal credit assistance programs to help finance transportation infrastructure.
This initiative includes a joint investment between the Rockefeller Foundation and the Ford Foundation of “over $1 million to support innovations in U.S. infrastructure. The new partnership will expand the infrastructure pipeline by incubating innovative public private collaborations, including... Provide seed capital for promising regional collaboration models, including regional infrastructure exchanges, that make it easier for localities to attract private finance…” “Regional” here likely implies megaregions or megapolitans.

It is worth noting that large foundations serve many roles. In addition to acting as tax shelters, foundations often have political agendas relating to the interests of their board members and/or the companies they invest in. For example, there has been a long-standing relationship between the Rockefeller Foundation and JP Morgan Chase. Many think of foundations as simply a provider of charitable donations and grants to non-profits. Tax law requires foundations to spend a minimum of 5% of their taxable assets on grants and administrative expenses, which allows much of the rest to be invested. Foundations such as Ford and Rockefeller are not politically neutral, but instead are particularly interested in proliferating free-market capitalism, managing dissent, maintaining economic and political stability, and strengthening US hegemony. They are part of the power elite. Governance allows for participation not just from the companies that foundations have relationships with, but also from non-governmental organizations (NGO’s) who often do their bidding--all with an appearance of being more democratic.

Another example of obvious involvement of the federal government is the Federal Highway Administration website and their promotion of megaregions such as in their Megaregions Report and literature review prepared by Catherine Ross (member of the National Committee for America 2050) in 2011. This, along with their promotion of P3s, has likely resulted due to lobbying. Although it may appear as a more horizontal governance approach through incentive funding and relaxation of current laws rather than top-down state power, the intention is that private interests will benefit from federal government-given protectionism and subsidies. This is a variation of “actually-existing neoliberalism,” a form that utilizes the state to allow the private sector into decision-making and financing that it previously had little access to. Governance facilitates an entry of the private sector into official decision-making such as for more infrastructure and more P3s. In the case of these types of governance structures, decisions tend to be made behind closed doors.

Brookings also promotes a new method of governance. In their Mountain Megas report, they advocated for tweaking Municipal Planning Organization (MPO) law and creating governance structures such as the Joint Planning Advisory Council (see below), and to incentivize other innovations in governance for megapolitans. This echos Lang's early writings on the megapolitan concept: "...new super MPOs could result from future legislation that directs Megapolitan Areas to plan on a vast new scale."

The junction of megapolitans/megaregions, governance, and P3s is rooted in "new regionalism," as Ross' FHWA report discusses:
...'new regionalism', proposes an institutional shift in regional emphasis from government to governance, and emphasizes public and private-sector partnerships and joint ventures... The new institutional forms require a strong coordination of governments at different scales, and public and private actors...The territorial and functional reorganization of the power of the national government means the changes of its boundaries in terms of roles, emphasizing the coordination of the boundaries between public, private, and other actors.
In this same report it was argued that the Sun Corridor "will have to consider a different form of governance, regional cooperation and infrastructure investment that will promote its global perspective and shift the paradigm to solidify it as a new geographic entity."

Described as a milestone in Sun Corridor efforts, a Joint Planning Advisory Council (JPAC) was formed in 2009 by the Maricopa Association of Governments (MAG), the Pima Association of Governments (PAG) and the Central Arizona Association of Governments (CAAG). They are joined by their private “partnering agencies," the Arizona Mexico Commission (a P3 unit that is said by their CANAMEX expert to be the "godfather" of CANAMEX), the CANAMEX Coalition (also a P3 unit), AECOM, and the Morrison Institute.

Trade with Mexico
This same collaboration as initiated with JPAC is considered highly important according to the NACTS report, which the authors argued "should be implemented to take advantage of international opportunities." NACTS, the now-defunct ASU establishment, was an extension of the Security and Prosperity Partnership via the Council of the Americas. They have been a major proponent of NAFTA and the CANAMEX Trade Corridor and they conceptualized the Sun Corridor as a multi-modal inland port.

CANAMEX is a NAFTA trade corridor stretching from the western Mexican port of Guaymas up through five US states to Alberta, Canada. Interstate 11 is needed to create a better truck route between Las Vegas and Phoenix, but is intended to extend the length of the CANAMEX corridor or some variation on it called the Intermountain West Corridor, therefore going through or near Tucson to Mexico (read more on the I-11 confusion at Filling in the I-11/CANAMEX Gaps). AECOM defines the Sun Corridor as a piece of the CANAMEX Corridor and envisions the Sun Corridor as an inland port with a strong trade relationship with Mexico. Their Sun Corridor, Future Corridor report (2010) was written by AECOM Global Cities Institute. One author was AECOM's John McNamara who is now instrumental in the Interstate 11 Study and was involved in the Arizona Trade Corridor Study, an early CANAMEX document of 1993.
AECOM, which is one of the private partners within JPAC, seems to have entered the megapolitan game when they got a board member on RPA in 2006 (Kevin S. Corbett, DMJM Harris). They are involved in various types of transportation infrastructure and P3s, including high speed passenger rail and roads, the I-11 Study being only one of them. Just like the Brookings Institution's Mountain Megas report, both AECOM in their Sun Corridor, Future Corridor report (2010), and the Central Arizona Association of Governments (2011) prioritized I-11/CANAMEX and high speed rail as central to the Sun Corridor project.

Also check out more on AECOM and I-11 at Privatized Roads, Privatized Water 

The Sun Corridor and its position within the CANAMEX Corridor claim to provide business opportunities such as for the Casa Grande-based PhoenixMart, a massive wholesale trade center involving a foreign trade zone. Casa Grande is planning an "inland port" involving proximity to one or more Foreign Trade Zones (FTZ) and increased rail infrastructure. FTZs and other such zones are being increasingly created to provide incentives to big companies to do business in those areas, allowing them to avoid paying certain taxes and fees. Last year, in "PhoenixMart seen as catalyst" Melissa St. Aude wrote (likely confusing the term megapolitan with megalopolis):
Casa Grande could someday be the epicenter of a sprawling Sun Corridor megalopolis, spanning from Tucson to Phoenix.  That was the vision given Friday by PhoenixMart Chief Executive Officer Steve Betts and AZ Sourcing President Jeremy Schoenfelder...
At the center of the megalopolis would be PhoenixMart, a nearly 2-million-square-foot sourcing center with 1,750 manufacturer showroom suites, attracting wholesale buyers from around the world and triggering development of various spin-off businesses ranging from hotels, restaurants and warehouses to other services.
The promise of Arizona's economic growth has everything to do with trade with Mexico. As Albert Lannon of the Avra Valley Coalition pointed out, the I-11 Corridor Justification report use of certain projections to explain the benefits of the Interstate is telling.
The key words in the projections are “nearshoring” and “integrative manufacturing.” The planners predict that, as Chinese wages rise, Mexico will become more attractive to corporations. With U.S. manufacturing labor costs at 100 on an ADOT index, China is 5 and Mexico 12. As “trade with Mexico expands,” the report argues, so will “the current trend of moving manufactured goods production … to Mexico. ... Mexico was the most popular choice for nearshoring, where hourly compensation costs are nearly as low as China.”
The report suggests “industry clusters” and “integrative manufacturing” to house the making of parts in the U.S., with assembly in Mexico. Kies told the stakeholders, “Mexico is happening!”
The report discusses planned improvements at the Mexican port of Guaymas for container traffic. That impacts high-paying jobs in the West Coast stevedoring, trucking and warehouse industries. The report discusses receiving even more goods from Asia as another “alternative future scenario.
In their discussion of marketing I-11 to the public, the pitch is “enhancing economic vitality” and “commercial opportunities.” I-11 is being sold as a way for corporations to make more money. Period. There is no expressed interest in workers except as cheap labor across the border.

The Megaregion/megapolitan, due to its alleged promise of prosperity, is popping up everywhere, with different interests promoting varying concepts with a lack of coordination. Arizona and Sonoran government officials recently signed a partnering agreement called the Arizona Sonora Binational Megaregion. One of their listed guiding principles is to "Use the megaregion as a framework to further enable the development of local relationships to advance projects/initiatives of regional significance on both sides of the border in areas such as transportation and infrastructure, education, economic development, border security and public safety, trade area promotion, commerce and tourism."

And there's also the Southwest Triangle Megaregion, seemingly having everything to do with I-11. This specific megaregion is a new concept notably used in the I-11 Study documents by AECOM and CH2MHill. The triangle connects the Sun Corridor, Southern California Megapolitan, and Las Vegas. Older plans for high-speed passenger rail making this same triangular connection likely play a part in the creation of this megaregional conceptualization. Additionally, some other people came up with the nearby Cali-Baja Binational Megaregion. Perhaps all of this will turn into the Southwest-Sonoran Trapezoid Mega-mega-region.

Somehow the logic of globalization does not acknowledge the absurdity that the population growth in the Sun Corridor is used to justify the area's role in global trade, specifically NAFTA, even though it is policies like NAFTA that have caused the displacement south of the border, leading to migration and population growth in Arizona. The population projections for the Sun Corridor are based on the growth of the region leading up to the primary studies on the concept around the mid-2000's. More recent estimates show lower numbers but still project a few more million in the area by 2050. Pro-NAFTA institutions such as the Rockefeller Foundation, Brookings Institution, NACTS, etc, would have us believe that we can still expect trickle-down benefits from these sorts of trade arrangements. We are to accept the idea that this the Sun Corridor should be a trade-hub, with its accompanying foreign trade zones allowing tax- and duty-free transactions for corporations.

Migration from south of the border is a primary factor in local population growth and encouraging or embracing that growth through Megapolitan development would seem to hasten the likelihood that white people will become the minority, a rather silly concern. Nonetheless, Robert Lang dedicated a portion of his book, “Megapolitan America” to easing the fears of white people about getting out-numbered. He reasoned that the definition of whiteness is fluid and will be expanded. There are a number of environmentalists who also concern themselves with the ethnic and racial composition of population growth.

Recent history has shown us that racists and xenophobes use environmental concerns to try to push their population control policies, ranging from border security to sterilization (not to mention the Rockefeller Foundation's role in population control campaigns across the world). The real problem with megapolitans in the context of environmentalism is that they don't just accommodate population growth, they encourage expansion and consumption on a mega scale. The infrastructure and accompanying resource extraction are the much bigger problems.

Environmental Sustainability

A new study shows that Arizona may be amidst a mega-drought, depending on how the next couple decades go. Yet the Morrison Institute's 2012 Sun Corridor report describes the Sun Corridor as natural and organic. While they may see the ways that a tendency towards conurbation has occurred without much private or state intervention, a glaring omission of perspective is the basis upon which the settlement and urbanization occurred in the first place.

What isn't acknowledged is, for example, "a coalition of lawyers, businessmen, and politicians engaged in 'legal theft' to turn this high desert, called Black Mesa, into one of America’s largest strip mines. The energy from that coal would power the excesses of Las Vegas and pump the Colorado River over three mountain ranges to Phoenix as part of the Central Arizona Project, the world’s most expensive water system," as described in a review of Judith Nies new book "Unreal City." Also ignored is that Tucson as a settler city was able to survive and grow due to the pumping of groundwater from the Tohono O'odham San Xavier reservation, that O'odham water rights have been undermined, and that their access to Central Arizona Project water was contingent on not having the power to prevent more pumping and pollution (e.g. from mining) of their groundwater.

The Morrison Institute report, Watering the Sun Corridor, a follow-up to the original Sun Corridor document, contains concluding remarks that are rather myopic, and pretty much racist, with this in mind. They write, "The Sun Corridor exists only because past Arizonans worked together tirelessly to build a vast, complex plumbing system. Using the power of government to do this represented the clearest consensus imaginable about serving the needs of society through collective action" (my emphasis). This report is also laden with admissions of the limitations regarding knowledge about whether the Sun Corridor area has enough water to sustain it. Overall, it recommends proceeding with caution, and attempts to legitimize the development even if it takes more drastic infrastructural changes to accommodate it, along with a few less swimming pools.

The impact of settler infrastructure projects on indigenous communities is not a thing of the past, but continues, for example in the building of roads like the South Mountain Freeway, which would be central to the junction of the Sun Corridor and the I-11 Las Vegas-Phoenix Corridor. Its function as a truck bypass would cut through the mountain sacred to the O'odham and cause damage to the environment and to health.
In addition to the impacts of global warming, the urban heat island effect, largely due to roads, will raise temperatures. In one study, the researchers show "the intensification of observationally based urban-induced phenomena and demonstrate that the direct summer-time climate effects of the most rapidly expanding megapolitan region in the USA—Arizona’s Sun Corridor—are considerable." Can't we just paint all the roofs white to reduce the impact of the heat island effect? Well, that might be nice if it didn't also decrease rainfall by as much as an additional 4% on top of the 12% from Sun Corridor growth as discussed in "Researchers emphasize need for evaluation of tradeoffs in battling urban heat islands."



Just like the impact of coal mining in northern Arizona has been overlooked, so too have repercussions of copper mining. Freeport McMoran, the largest copper producer, with various mines in Arizona (and elsewhere) and an office in downtown Phoenix, has interests in state trust lands; they're buying up farmland for water rights; and they're scheming to gain access to more tribal water rights across Arizona. With one of the highest paid CEOs in the world, Freeport has finagled Arizona water legislation to allow them to pollute ground water (not to mention what they've done in New Mexico). In January, Freeport hired the previous director of the Arizona Department of Water Resources as their director of water strategy. Freeport is a major participant and sponsor of the Arizona-Mexico Commission--self-identified as the god-father of the CANAMEX Corridor--most likely because of their interest in the Port of Guaymas. Mining requires an exorbitant amount of water, yet individual residents will be made to feel guilty about how long they shower.

"Follow the money" is more than a cliché. The infastructural projects are clearly a means to make a few people money. Furthermore, the Sun Corridor is a fantasy at best, a heat- and drought-ridden, abandoned and perhaps apocalyptic scene at worst. Or there is no Sun Corridor. Growth, development, resource/energy extraction, can all be slowed or stopped with enough effort.

Published with the permission of the Stop CANAMEX blog

Saturday, December 28, 2013

COMPANIES SEEK PARTNERSHIPS WITH ADOT TO PROFIT ON FREEWAY, PART 2: THE METHODS


The future of the proposed $2 billion South Mountain extension of the Loop 202 freeway is not looking so bright, and with good reason. In August the Environmental Protection Agency (EPA) released a statement which found the Arizona Department of Transportation's $22 million Draft Environmental Impact Statement (DEIS) to be "inadequate", and unbalanced by overstating the risk of greater traffic congestion and air pollution if the freeway was not built.

In addition, two school districts have passed separate resolutions against the extension of the Loop 202 freeway citing environmental impact and health concerns for students and residents. The Tempe Union High School District Governing Board passed a resolution in November opposing the new construction, while the Kyrene School District Governing Board passed a resolution in October that opposed the extension and in support of the "No Build" alternative to the Pecos Rd alignment. 

The anti-freeway resolutions supported by two school districts, and the EPA's statement are validations of the concerns of Akimel O'odham residents of the Gila River Indian Community and their grassroots campaigns to halt the project.  Despite the opposition from community members and the negative report from the EPA, a coalition of construction groups continue to lobby for the South Mountain extension, along with the Arizona Republic's editorial board, and a handful of Phoenix politicians (including two who admit they have taken donations from the construction groups, and another who has land investments tied to the freeway). While the freeway project appears to be in limbo, state transportation officials insist that construction will begin soon, even if the funding sources could face more criticism than the politics behind the freeway.

The article below is the second part to the series of article from the Stop CANAMEX blog and details more of the complex relationships between the business interests lobbying for the construction of the freeway, and the larger economic vision for central and southern Arizona.

Down and Drought have reprinted the article with the author's permission.Please also see, "Companies seek partnership with AZDOT to profit on freeway, Part1: The Networks" at http://stopcanamex.blogspot.com

Disclosure: The author of this piece was unfamiliar with the financial concepts discussed below, prior to researching this specific public-private partnership for the Loop 202 extension.  This is meant to provide a starting place for further examination of these issues.


You're likely wondering, "No tolls?  How are private companies going to make profits fronting the money for a freeway?"  Well, here's what you need to know.  These companies' vast public-private partnership (P3) promoting networks have come up with a number of ways to make profits from joining with the public sector to work on projects that would normally be funded by tax dollars.  But wait- these projects would be funded by our tax dollars anyway, and on top of that, these companies can avoid paying some of their own taxes.  Some recent transportation P3 arrangements include something called "availability payments" which come from our local sales taxes several years down the road, TIFIA funds which are federal loans with lower interest rates than private entities can usually get, and other options such as private activity bonds which the companies don't have to pay taxes on.  This P3 arrangement is actually preferred by companies because they take on less risk than with a toll road since they're not relying on the traffic to pay the tolls; they get paid no matter what, as long as they finish it.

It appears likely that one or more of these "innovative financing solutions" may be part of the proposal put forth by the South Mountain Development Group (SMDG) to build the Loop 202 South Mountain Freeway.  This unsolicited proposal is being sold to us as a way to get the road built more quickly, even though the companies would make a profit from our tax dollars.  Not only are many opposed to the freeway whether or not it would involve a P3, it also may not even qualify for federal funds if it violates federal environmental and civil rights laws.

The South Mountain Development Group (SMDG) is made up of Kiewit Development Co., Kiewit Infrastructure West Co., Sundt Construction Inc. and Parsons Corp.  The way availability payments work is that essentially the companies and the Arizona Department of Transportation (ADOT) would come into an agreement in which SMDG fronts the money and after completing the project, they receive payments from the state years down the road, as they become available (hence the name).  When they say that SMDG would front the money, this means they are likely to put up some of their own money, but most of the funds will come from loans from banks and/or financing such as loans with lower interest rates through federal programs.  In fact the timing of this P3 proposal may have to do with a temporary increase in funding through a federal program called Transportation Infrastructure Finance and Innovation Act (TIFIA), to be discussed below.

The lack of state funds is the primary barrier to completing projects, which is a good thing for the many people who do not want damage done to South Mountain, the surrounding environment, and the community resulting from the proposed Loop 202 extension, aka the South Mountain Freeway.  With private interests putting up the funding, the construction could start that much sooner.  The companies' interests in profit may also impact our ability to oppose it.

Availability Payments

The limited information about the arrangement for this P3 can be found in various news articles. According to an Arizona Republic editorial, SMDG, "offered to front the money and design and build the freeway, with the state paying them back later."1  Another AZ Central article provided a bit more information on this sales tax. "Because much of the project is funded by Maricopa County’s voter-backed, half-cent-per-dollar sales tax, the South Mountain Freeway has a dedicated stream of revenue that takes uncertainty away from would-be private financiers."2

The availability payments, it appears, would likely come from the Maricopa County Regional Area Road Fund into which the Arizona Transportation Excise Tax is deposited.  The sales tax extends through the end of 2025.3 

This would not be Kiewit's first transportation project that involves availability payments on a non-toll road, and as the nation's third largest contractor, this definitely wouldn't be their first P3.  Kiewit is part of the construction of San Francisco's new Presidio Parkway P3 project. "No tolls will be collected. Instead, the legislature has agreed to annually appropriate the availability‐based payments promised to the P3 developer for the 30‐year term of the concession. That money will be used to secure about $300 million in loans to build the project, cover the developer’s profit and pay all operating expenses."4  Other projects in North America with Kiewit as part of the P3 have involved availability payments, often in combination with toll concessions.5  

Another reason to assume that availability payments are part of the SMDG plan is that Kiewit is also directly involved in promoting the availability payments arrangement and P3s as part of the Association for the Improvement of American Infrastructure (AIAI).  "The growing acceptance of the availability-pay model for delivering transportation megaprojects has drawn an alliance of major U.S. and Spanish contractors into the P3 advocacy business. Five builders and investor Star America launched the [AIAI] at a conference in New York this June. Their aim, among other things, is to put a lobbyist in key states to promote all types of P3 models—availability, revenue risk and 63-20 nonprofits."6  Arizona already has what is termed "broad-enabling" P3 legislation which allows for availability payments and unsolicited proposals, which means this is one of a minority of states that are the most lax about P3s.7

Why are these companies increasingly pushing for P3 with availability payments?  In "Highway Robbery: How 'public-private partnerships' extract private profit from public infrastructure projects," Darwin Bondgraham explains further, 

Availability payments are akin to lease payments, whereby the state pays the private developer of a highway to maintain the road for public use. Rather than collecting tolls from drivers who use the route, the state pays the private developer directly from general state revenues collected through a gasoline tax or other taxes...
P3 companies, in short, are now virtually guaranteed returns on their investments. The shift away from tolls and the growing use of availability payments means P3 investors no longer need worry about traffic flows. Guaranteed lease payments, together with the low interest rates of federally subsidized loans and tax-exempt bonds they use to pay for construction, mean sure profits.8
It is the combination of the availability payments and federally subsidized loans that makes these deals work so well for private companies.

TIFIA funds

The primary reason for the timing of this large-scale P3 project is likely the increased access to TIFIA funding.  Last year, Obama signed into law Moving Ahead for Progress in the 21st Century Act (MAP-21) which provides more funding for transportation projects for a limited time. In a section titled "Public-Private Partnerships," a MAP-21 Analysis report summarized, "MAP-21 makes strategic investments to attract private sector resources to transportation improvements. Specifically, it increases funding for the Transportation Infrastructure Finance and Innovation Act (TIFIA) program from $122 million per year to $750 million in FY 2013 and $1 billion in FY 2014. The measure also increases the maximum potential TIFIA share of total project cost from 33 percent to 49 percent."9   This report was published by American Road & Transportation Builders Association (ARTBA), whose conference sponsors include HDR (contracted to do the Environmental Impact Statement for Loop 202) and speakers include Gail Lewis of ADOT.

The Loop 202 extension may have caught the eye of SMDG members because USDOT Federal Highway Administration website lists "South Mountain Toll Road" among other examples of illustrative U.S. projects that could be funded with TIFIA.10

Keiwit's construction of the Presidio Parkway in San Francisco was also partly financed by TIFIA loans, but it likely won't be the last.11  The Federal Highway Administration's website explains the appeal, "The new FHWA policy will allow those considering the availability payment public-private partnership (P3) delivery method to count on a level of Federal assistance comparable with that of a traditional public works project. Although San Francisco's Presidio Parkway was the first project in the country to use Federal-aid for availability payments, these new and expanded policy flexibilities will make it easier for other States to follow suit and take advantage of this form of innovative financing."12   

In "Highway Robbery," Bondgraham cautions,
Although P3s are advertised as tapping the power of private capital markets to invest in public infrastructure, the reality is that P3 investors enjoy large public subsidies. For example, private companies building P3 highway projects now routinely expect states to grant them authority to issue qualified private activity bonds (PABs). Unlike most lending in private capital markets, interest payments on PABs are exempt from federal taxes (because the cash proceeds are expected to be put to use building goods with broad public utility, rather than projects that solely benefit private parties). Since the bonds are not taxed, they allow the borrower to obtain cash at less cost. This form of financing, then, is essentially a tax cut for the investment banks and corporations with the P3 contract. The U.S. Department of Transportation also routinely grants Transportation Infrastructure Finance and Innovation Act (TIFIA) loans to P3 developers. TIFIA loans provide companies with much cheaper interest rates and more flexible terms than anything available in the private capital markets—again because the public subsidizes them.13  
It will be interesting if HDR comes out with a competing bid on the Loop 202 extension P3 since they have directly "consulted frequently to the Federal Highway Administration's Program Office of Transportation Infrastructure Finance and Innovation Act (TIFIA) on risk-based revenue and credit forecasts."14  They have also be involved in projects that have received TIFIA funding.

The Arizona Republic reports that Rick Norment, executive director of the National Council for Public Private Partnerships stated that they, "advise folks to take the low-hanging fruit first." He sees the Loop 202 extension as too risky for ADOT because it is a more difficult project.  However, Gail Lewis, Director of ADOT Office of P3 Initiatives and International Affairs, and Eric Anderson, MAG’s transportation director see it differently because of the new availability payments option. The companies, "know they’ll get paid back, making Loop 202 'low-hanging fruit' in Lewis’ and Anderson’s minds."15

Limitations to their funding strategy

Now, the good news is that if SMDG is counting on access to these TIFIA funds, they are in for an uphill battle to get approved.  As of right now, the EPA does not accept the current DEIS for the Loop 202 South Mountain Freeway extension.16   The proposed freeway may also not meet National Environmental Policy Act (NEPA) standards, and may violate civil rights as well.  The TIFIA statute requires that "...all projects receiving TIFIA credit assistance must comply with generally applicable Federal laws and regulations, including title VI of the Civil Rights Act of 1964, the National Environmental Policy Act of 1969..."17 

Attorney Howard Shanker outlined the problem in a cover letter regarding comments on the Loop 202 South Mountain Freeway DEIS. "NEPA requires a fully informed decisional process through, in part, the preparation of a DEIS.  The DEIS, however, treats the crucial decision to proceed with a $3 billion tax payers' funded project not as an impending choice to be pondered, but as a foregone conclusion to be rationalized.  The DEIS provides flawed analyses, generalities, heavy-handed self-justifications.  This is a direct violation of applicable law and a gross abuse of the public trust.  No reasoned decision could be made on the basis the DEIS that, for example, improvements to existing highways or arterials would not better serve regional transportation needs; that public transportation alternatives are not viable; or that abandonment of the project is impractical."18 The organization Protecting Arizona's Resources and Children intends to fight for No Build in court if need be.19

Additionally, a Federal Title VI Civil Rights complaint was submitted to ADOT on July 30.  "The civil rights complaint alleges that ADOT violated the civil rights of Native peoples of the Gila River Indian Community by proposing and promoting the South Mountain Loop 202 Freeway that would negatively and disparately impact Gila River Indian Community tribal members by desecrating their sacred South Mountain and causing disparate health impacts."20

At this point it seems that ADOT may issue a call for competing proposals, and we wait to see what happens with the Draft Environmental Impact Statement.  There are various reasons to oppose the project even if it is not a P3, although P3s pose new problems.  We are likely to see more P3 proposals, such as for the Interstate 11 connecting Phoenix with Las Vegas,21 and/or the North/South Corridor22 to facilitate CANAMEX freight traffic.


Thanks to Gila River Against Loop 202 and Darwin Bondgraham for assistance and insight for this series.

For more information: http://stopcanamex.blogspot.com 

1 http://www.azcentral.com/opinions/articles/20130726editorial-hope-from-private-sector.html
2 http://www.azcentral.com/community/ahwatukee/articles/20130725south-mountain-freeway-private-money-plan.html
3 http://www.azdot.gov/Inside_ADOT/FMS/PDF/rarf11.pdf
4 http://db78bc60e308ad8dc7c2-6f6534a35fc09b927eb00e4333a7f4cf.r47.cf2.rackcdn.com/uploaded/t/0e895293_the-role-of-private-investment-in-meeting-us-transportation-infrastructure-needs.pdf
5 http://www.pwfinance.net/document/research_reprints/chart%201%20US-Canada.pdf
6 http://pwfinance.net/
7 http://www.ncsl.org/documents/transportation/PPPTOOLKIT-AppendB.pdf
8 http://www.dollarsandsense.org/archives/2012/1112bondgraham.html
9 http://db78bc60e308ad8dc7c2-6f6534a35fc09b927eb00e4333a7f4cf.r47.cf2.rackcdn.com/uploaded/c/0e895333_currentissuesmap-21analysis.pdf
10 http://www.fhwa.dot.gov/ipd/tifia/technical_resources/federal_credit_policy_paper/appendix_e.htm
11 http://www.fhwa.dot.gov/ipd/project_profiles/ca_presidio.htm
12 http://www.fhwa.dot.gov/ipd/fact_sheets/tifia_availability_payments.htm
13 http://www.dollarsandsense.org/archives/2012/1112bondgraham.html
14 http://www.hdrinc.com/portfolio/traffic-and-revenue-debt-service-projections-and-credit-risk-modeling-for-tifia
15 http://www.azcentral.com/community/ahwatukee/articles/20130725south-mountain-freeway-private-money-plan.html
16 http://www.epa.gov/region09/nepa/letters/az/south-mountain-freeway-deis.pdf
17 http://www.fhwa.dot.gov/ipd/tifia/guidance_applications/program_guide_web.htm#ch3
18 https://docs.google.com/file/d/0B30ItDvVwsixY29tZS1qMDhwZFU/
19 http://azcommunitypress.org/2013/08/08/experts-conclude-that-the-south-mountain-freeway-should-not-be-built/
20 https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhohVKy0pacsdp0VWtG9ThCnPubfBnfh3_moyRIZigsclDIWUZrQc-bmi-vun2gHIfUoi6sUltnewE7YYfKCAcQ4BGpyi2gZgOVfE_EdcdqNL7DBrZU5DAsEKe-DaGbbmG4EsqfAZJVWQ/s640/civil+rights+south+mountain.jpg
21 http://www.azdot.gov/Highways/Projects/Public_Private_Partnerships/pdf/Proposed-Arizona-Interstate-Corridor-Phoenix-Las-Vegas.pdf
22 http://www.azdot.gov/Highways/Projects/Public_Private_Partnerships/PDF/North-South%20Corridor%20Proposed%20Project.pdf/

Thursday, August 8, 2013

COMPANIES SEEK PARTNERSHIPS WITH ADOT TO PROFIT ON FREEWAY, PART 1: THE NETWORKS

The plans crafted for a new Loop 202 extension, which would blast through South Mountain, have met steadfast opposition from Akimel O'odham and Pee-Posh residents in the Gila River Indian Community, as well as residents from the neighboring Phoenix village of Ahwatukee. The Loop 202 extension has been criticized as a commercial truck bypass scheme, while freeway supporters insist the freeway will bring housing and retail growth to the southwest valley and Gila River Indian Community.

An eruption of organizing against the freeway has taken place over the last year involving groups from across the valley who are not only opposing a freeway plan, but also a blueprint for more unsustainable urban growth into the Sonoran desert. A sampling of some of this activity: Gila River Against Loop 202 participated in ADOT freeway meetings and gave information on the tribe's "no build" option, the Akimel O'odham Youth Collective mobilized youth for demonstrations and gatherings, GRACE(Gila River Alliance for A Clean Environment) has filed a civil rights complaint against ADOT over the cultural impact of the destruction of South Mountain, the Ahwatukee based PARC (Protect Arizona's Resources and Children) is spreading anti-freeway information and planning legal opposition ,and the No South Mountain Freeway group holds informational meetings in Laveen and speak outs at freeway meetings organized by pro-freeway politicians.

A month back we reprinted an article from the Stop CANAMEX blog on the efforts of business interests and Arizona government, through Private-Public Partnerships (P3), to create a trade corridor through Arizona, and the plans for large scale urban growth and infrastructure projects.  The Stop CANAMEX blog has published the first part of a two part exposé on the public-private partnerships driving the latest alliance between developers and state transportation to secure the proposed Loop 202 extension.

We have reprinted the article with the author's permission.


Companies seek partnership with ADOT to profit on freeway, Part 1: The Networks 

A late July announcement from the South Mountain Development Group raised eyebrows amongst environmentalist and anti-freeway organizations across Arizona.  A group of three of the largest construction companies in the United Stated has proposed to fund and build the long contested Loop 202 extension through South Mountain.  Among those troubled by the announcement was the Sierra Club, who publicly opposed the freeway as an environmentally destructive project.

“Why did they wait to announce this until the day after the deadline for the comments on the freeway Draft Environmental Impact Statement?” asked Sandy Bahr of the Sierra Club.1 Now that the announcement has been made, the controversial public-private partnership model is likely to gain the attention it deserves. The attention may come a bit too late, however, due to the timing of this July 25th announcement in relation to the Draft Environmental Impact Statement (DEIS) comment period, despite the proposal being submitted a few months ago. Had news of the possibility of privately funded construction come out sooner, this new type of arrangement may have brought more critical comments.


A public-private partnership or P3 (or PPP) is essentially privatization, with perhaps a friendlier face. Projects that would normally be delivered by the state, such as transportation infrastructure like highways, are taken on by private companies. In cases such as this, private companies finance the project, build it, and they often operate and maintain it. Then they get their money back in addition to profits, of course. In a P3, the public sector has more control than in a privatization situation, but it also takes on most of the risk, meaning ultimately the money still comes from the tax payers via the state, even if it's a few decades down the road--especially since tolling is not part of this proposal for the proposed South Mountain extension to the 202.

Arizona has what is considered broad-enabling P3 legislation, which passed in 2009.2 Much effort has been in the works since then to move things in the direction of increased privatization. In fact there is a vast network of P3 promoters who have been pulling strings in Arizona. Unsurprisingly, some of these same P3 promoters are involved in the 202 proposal.

Going by the name South Mountain Development Group, the companies, Kiewit Development Co., Kiewit Infrastructure West Co., Sundt Construction, Inc. and Parsons Corporation submitted an unsolicited proposal to the Arizona Department of Transportation (ADOT) in February to build the Loop 202 extension. "Unsolicited," while technically correct, is a misleading term due to the longstanding relationships between public (such as ADOT) and private interests, and their pro-P3 organizations. You can see the push for P3s coming out of networks such as these:
  •  Sundt sponsored P3 conferences in Phoenix on several occasions, and attending at least one in 2010 was a representative from Kiewit, a representative from HDR (the engineering firm contracted to do the Environmental Impact Statement for Loop 202), and Gail Lewis of the P3 Office for ADOT as speakers.3
  • Kiewit is on the board of a pro-P3 organization called the Association for the Improvement of American Infrastructure (AIAI). According to their website, AIAI "is a non-profit organization formed in the District of Columbia to help shape the direction of the national Public Private Partnership marketplace."4

  • ADOT's John Halikowski is co-chair with Arizona-Mexico Commission's (AMC) Jim Kolbe in the newly founded Arizona organization called the Transportation and Trade Corridor Alliance (TTCA). The TTCA, which includes members of the Arizona Commerce Authority (ACA), was described as "heavily private-sector" by Gail Lewis, Director, ADOT Office of P3 Initiatives and International Affairs. AMC and ACA are also pro-P3 organizations with private and public membership.5 

  • Also a member of the TTCA, as well as the ACA, is Mary Peters, former Federal Highway Administrator for the U.S. Department of Transportation. She is also on the board of HDR. Participating with her in ACA is Doug Pruitt, former CEO of Sundt. 

  • A consulting firm, Tom Warne & Associates, lists Kiewit, Parsons, ADOT, HDR, and others as clients.6  Tom Warne writes a newsletter that regularly discusses P3s.  He was awarded as a the American Road & Transportation Builders Association (ARTBA) P3 Division Entrepreneur of the Year.  Mary Peters also won this award.7

  • HDR is a 2013 sponsor of the ARTBA Conference, at which Gail Lewis of ADOT recently spoke.  According to their website, "ARTBA approached the National Conference of State Legislatures (NCSL) to develop a toolkit to help educate lawmakers navigate the challenges of enacting and improving P3 enabling statutes."7

And there are yet more webs to untangle. The timing of the announcement of this new P3 may be related to HDR's involvement. HDR is the corporation that the Arizona Department of Transportation (ADOT) contracted to do the DEIS. HDR is an engineering and consulting firm which also happens to be a major proponent of P3s, claiming 35 years of experience delivering P3s and offering their expertise to others through their consulting services.8  HDR is part of The Transportation Transformation Group which "is an unprecedented alliance of state government, finance, academic and private industry leaders who aspire to transform American transportation policy into a goal-based arrangement that maximizes flexibility to enhance the roles of the state and local public sectors and their private partners to solve the growing problems of congestion and mobility." This group includes a variety of notorious financial institutions like Goldman Sachs, Citi, JP Morgan, etc.9

While ADOT has many consultants, HDR is likely to be a highly influential one. It is unclear whether it is the consultant referred to in the minutes of ADOT's Citizen's Transportation Oversight Committee meeting in 2011, but it certainly could be (Tom Warne and Associates is another possibility). "Gail Lewis, Director, ADOT Office of P3 Initiatives and International Affairs, provided an update concerning P3 projects and processes... ADOT’s Steering Committee has been helpful getting P3 integrated into the process. An outside consultant is helping to formulate, guide, evaluate and negotiate programs as they come forward."10

While there could be a conflict of interest, it is possible that HDR could put in a bid for a P3 to build Loop 202 extension as well. There is at least one other P3 in Colorado for which they put in a bid that Kiewit also put a competing bid in for.11 Alternatively, HDR may not have seen any value in the Loop 202 project, thus why they did such an incompetent job on the EIS.

Opponents of the Loop 202 extension have pointed out that the freeway is intended more as a truck bypass. Few Arizonans have even heard of the CANAMEX Corridor, the NAFTA trade route that runs from Mexico through Arizona and four other states to Alberta, Canada. It utilizes existing roads but in order to fulfill its purpose to move more merchandise between nations, it needs to grow much larger, involving more road construction including the proposed Interstate 11 between Phoenix and Las Vegas. While the Loop 202 isn't part of the current official CANAMEX route, it would certainly serve the freight and commercial truck traffic that comes through Phoenix. Tax payers are less likely to want to pay for something that isn't meant for the local community, particularly if it's done without their knowledge.

Steve Brittle of the local environmental non-profit Don't Waste Arizona, pointed out, among several issues of concern, that, "trucks originating in Mexico will be fueled with diesel that doesn't meet the CARB diesel standards adopted by Arizona over a decade ago. In Mexico, there is no regulation about the sulfur in diesel fuel. In Arizona, the law was changed to allow only diesel fuel to be sold that has had 98% of the sulfur removed." He writes that the state had this information, as well as the stats on how many trucks come in from Mexico. Yet these models of Mexican truck traffic were not considered in air quality models in the DEIS. ADOT and HDR also know that the purpose of the 202 extension is to facilitate trade traffic coming in from Mexico. Why did this not make its way into the DEIS, especially considering HDR's involvement in P3s and trade?

While the population growth projections in the DEIS may have been influenced by the anticipated megapolitan called the Sun Corridor resulting from increased CANAMEX trade, it wouldn't be useful to HDR and ADOT to discuss the negative impacts to health and the environment. Why is it so certain that they know about it? Again, HDR put together this DEIS, with Mary Peters on their board. Mary Peters is well aware of CANAMEX since she was part of the CANAMEX Corridor Coalition as ADOT Director. Tom Warne of the consulting firm for HDR, ADOT, Kiewit, etc. was also in the CANAMEX Corridor Coalition as UDOT Director at the same time.12 Worthy of mention is that Arizona Representative Russell Jones, who introduced P3 legislation, is on the Governor's CANAMEX Task Force and part of the Arizona-Mexico Commission (AMC). AMC is said to be the godfather of CANAMEX by Jim Kolbe, their CANAMEX expert.13

These officials have recently been building their careers on pro-P3 efforts as part of a plan to build trade infrastructure designed to benefit international corporations, not to accomplish goals for the quality of life for the local community. The various companies take an interest in this trade corridor for differing reasons.



The significance of the existing massive network of pro-p3 companies and organizations is that they see tremendous potential for profit so they have built relationships with people in the public sector (politicians and transportation and commerce officials) by providing those officials with the resources they need to accomplish the goals of the P3s. Financial institutions see profit opportunities; the various companies that do the actual design, construction, etc. see dollar signs; and public sector folks see possibilities for career advancement.

Why the Loop 202 South Mountain Freeway and why now? It's likely it has something to do with new federal legislation. "President Obama signed into law the “Moving Ahead for Progress in the 21st Century Act”, or MAP-21, July 6, 2012. It authorizes federal highway and transit investment through September 30, 2014 and provides a historic expansion of the Transportation Infrastructure Finance and Innovation Act (TIFIA) program as well as a number of other important policy reforms."14 Darwin Bondgraham writes, "The U.S. Department of Transportation... routinely grants Transportation Infrastructure Finance and Innovation Act (TIFIA) loans to P3 developers. TIFIA loans provide companies with much cheaper interest rates and more flexible terms than anything available in the private capital markets—again because the public subsidizes them."15  A hypothetical "South Mountain Toll Road" is listed among other examples of possible projects that could be funded with TIFIA, as seen on the USDOT Federal Highway Administration website.16

Private companies are salivating for grants and low interest rates on loans for public projects, but they also intend to get their money back and then some. An arrangement involving something called availability payments is an increasingly common way for P3s to make money for companies. They get paid back by the state after they've completed the project. "The ultimate source of project financing, then, is always the public, either through tolls or taxes. Why then allow private banks, drawing from private capital markets, to serve as intermediaries? Private financing simply permits the insertion of the financial interests of investment banks and private-equity funds into the long-term wealth-producing potential of public infrastructure. By allowing private investors to fund the construction of a project, the state allows these parties to impose their monopolistic claims on future flows of tax or toll revenues" [my emphasis].17 (This will be examined further in Part 2).

In reference to the TTCA, which clearly exists to facilitate CANAMEX infrastructural development, ADOT Director and chair of TTCA, John Halikowski stated, “Our job is not to lead the horse to water. Our job is not to make the horse drink. Our job is to make the horse thirsty.”18 This is a very telling quote that says a lot about the philosophy of at least one high-ranking Arizona transportation official. The citizens of Arizona, the horse in Halikowski's view, are not thirsty for massive transportation infrastructure, yet the goal of the TTCA is to sell us a story that convinces us that this is for our own good. But we see urban sprawl all around us. Empty subdivisions on the fringes of Maricopa County as one example. Arizona is a natural desert that does not need the increased development that private businesses hunger for. There are federal contracts and TIFIA loans that need to be awarded before September 30, 2014 and they are on a deadline, after all.

There are many reasons to oppose this freeway extension.  “The off-reservation alignment would gouge a 40-story high, 200-yard wide cut into South Mountain, which is sacred to all O’odham and Pee-Posh.”19 According to the Gila River Against Loop 202 website, the main concerns are public health, air quality, ground water, loss of land, and desecration of Muhadag Do’ag (aka South Mountain) and other sacred places.20

Opposition to the freeway is strong and justified whether or not it would involve private partners. The issue is whether the pro-P3 entities have the power to push this project, and what the consequences would be. Are the P3 arrangements and CANAMEX something the public knows about or even wants? Would this set a precedent for increasing privatization?


For more information: http://stopcanamex.blogspot.com
Check back for "Companies seek partnership with AZDOT to profit on freeway, Part 2: The Methods" on how the P3 companies will make their money if this is not a toll road.


Thanks to Gila River Against Loop 202 and Darwin Bondgraham for assistance and insight for this series.