The Department of Transportation (MDOT) would turn over state-run highways and facilities to a private company, which could, in turn, set up tolls to either build new roads or expand capacity on existing roads, under a proposal presented to a joint House-Senate transportation committee today.

Michigan could save money under this arrangement and the state's roads could improve, according to the two presenters who advocated this approach.

These partnerships, known as public-private partnerships (PPP), would allow the state to make agreements with private companies under a single, long-term contract. These agreements would be allowed under HB 4961 , which was introduced in May by Rep. Lee Gonzales (D-Flint).

James RAY, a former chief consul of the Federal Highway Administration, stated the need of Michigan to look "outside the box" with regards to transportation, and to look into PPPs. Ray said that the traditional method by which the state engages in multiple contracts with private entities is inefficient, and that PPPs allow for more efficiency.

"We don't have to rely on yesterday's answers for today's problems," Ray said.

Joe AIELLO, senior investment director for Meridam, an investor and developer involved in PPP projects, said these agreements encourage competition, allow for innovation, and would lower road costs. He stressed that states should enter into long-term contracts with these private companies, otherwise companies would be wary of getting involved.

During the hearing, Senate Transportation Committee Chair Jud Gilbert (R-Algonac) questioned the speakers on the flexibility of long-term contracts, especially with the possible construction of toll roads and the setting of toll rates. Aiello stated that a range for toll rates would be established, along with a system for measuring them, at the start of each contract.

Sen. Alan Cropsey (R-DeWitt) questioned the speakers on specifically what types of projects would be in mind for Michigan. Both Aiello and Ray stated that the Department of Transportation (MDOT) had a list of around eight to 10 projects, and that they would be responsible for suggesting projects.

Gonzales asked about the consequences if the revenue from a PPP project, such as a toll road, is lower than expected. Ray said that private organizations involved in PPP would be held responsible, which would encourage these organizations to be accountable. According to him, this would not put any extra burden on the taxpayer, and that the state would still own the land that projects are built on.

HB 4961 will be taken up by the House Transportation Committee for additional testimony in the future, said Committee Chairwoman Rep. Pam BYRNES (D-Chelsea).

The approach earned an endorsement from the Michigan Infrastructure and Transportation Association (MITA), considering it was a recommendation of the bi-partisan Transportation Funding Task Force.

"We are very encouraged that legislators are finally engaging in discussions to fix Michigan's crumbling roads," said MITA Vice President Mike Nystrom. "Legislators are finally taking steps toward doing what's right for Michigan drivers, businesses and taxpayers."