What Happened?
The Indiana Department of Transportation issued an RFP for private partners to fund an extension of the rail service that runs between Indianapolis and Chicago. The Indiana Department of Transportation is seeking private funding to improve the experience for passengers, attract more riders and reduce overall operating costs.
The Goal
Recently the federal government ended all support for Amtrak lines less than 750 miles long. This has forced the Indiana Department of Transportation to put out the RFP and tap into a public-private partnership to supplement the lost funding from the federal government.
According to the RFP, in developing the Hoosier State rail service the Indiana Department of Transportation will enable riders to reach Chicago quickly and efficiently due to additional train lines and faster speeds. To attract riders, the department is planning to deploy updated on-board amenities as well as processes to improve on-time performance.
By creating a more enjoyable rider experience, the INDOT hopes to boost revenue from the lines and cut down on the costs the department and its partners will have to pay to support the project. Overall, the project aims to boost use of public transit, which in turn can cut down on vehicle use and congestion, contribute to economic development, enhance energy efficiency and have a greater impact on environmental quality.
Striking A Balance
Tight budgets and a lack of resources are pushing many local governments to engage in privatization strategies to increase access to capital and eliminate the burdens of certain services provided to the public. However, for many services, a public-private partnership is still necessary to ensure the needs of residents takes top priority, followed by increased efficiency and financial sustainability.
Toronto, for example, is considering privatizing all or some of its transit system to free up some money and jumpstart projects to rebuild and update the existing infrastructure. Because the government-owned and operated system continues to fall short of residents’ expectations, many are pushing for complete privatization in hopes of turning the services around.
According to Matti Siemiatycki, associate professor of geography and planning at the University of Toronto, the potential problem with local government turning over all control of a public service to a private company is businesses exist to make money. Some public services are not revenue generators, and often operate at a loss but are maintain to meet the needs of the community. A private organization might have more resources to update a transit system, but if it fails to attract enough riders to turn a profit, there may be major changes made at the expense of residents’ convenience such as removing routes with lower ridership.
By maintaining a public presence in the partnership, local government can work collaboratively with a private entity to push critical projects forward to enhance the community and economic activity. If revenues do not grow immediately, the government might be able to maintain the project by pooling resources, instead of making cuts for the sake of profit margins.
Siemiatycki identifies three key components of a sustainable urban transit system:
- Funding commitment from government
- Making transit a high priority for urban mobility
- Thorough research to determine the best model for funding, operating and maintaining transit lines
With these three ingredients in place, a public-private partnership has a better chance for success.
Make It Work
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