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.