In addition to analyzing possible public-private partnership alternatives, Price Waterhouse complied information on potential funding and financing sources, which have been grouped into the categories below:
Any financing and funding alternatives will require comparison with various cost centers that are also explained in this section.
The final selection of a mix of funding and financing for the SEHSR system will depend on factors such as funding availability, ownership and management structure, the magnitude of cost centers, and project phasing. This mix should be explored in later study tasks in which system cash flows will be modeled and tested.26
15.1 POTENTIAL REVENUE SOURCES FOR OPERATING COSTS
15.1.1 FAREBOX REVENUE
Farebox revenue is generated directly by the HSR service. The total farebox revenue is a function of the number of riders purchasing tickets at various fares for travel within the Corridor. The State's ridership and revenue projections, as well as those in the FRA study High Speed Ground Transportation for America, indicate that the SEHSR will have net revenues by 2015. While farebox revenue has the potential to increase over time with growth in ridership, predicting ridership and farebox revenue with total certainty before the HSR system begins operation is not possible and therefore the magnitude of this revenue source is uncertain. This uncertainty surrounding the farebox totals makes it difficult to rely on this revenue as a source for debt service. Farebox revenue forecasts are dependent on all assumed improvements to the infrastructure and service being in place. In addition, improvements to stations will be necessary to handle the anticipated demand.
15.1.2 ON-BOARD AND IN-STATION CONCESSIONS, ADVERTISING
On-board concessions would involve the sale of goods and services on the train such as food, beverages, and telephone. In-station concessions would involve such sales as food, beverages, telephone, books and magazines, parking, and other items. Advertising revenue would come from selling space in and around the station and possibly posters on-board. Concessions provide a relatively predictable revenue and allow for needed passenger related services while transferring risk to the concessionaire. Concessionaires can also be responsible for some station improvements and services desired by passengers and can increase overall customer satisfaction with SEHSR. Revenues, however, are dependent on system ridership/success; fixed fee agreements can limit revenue potential. The total amount of the in-station concession revenue will vary depending upon the number of stations; these revenues, moreover, would be most reasonably utilized to cover O&M or on-going debt service costs and the total magnitude of all the revenues discussed here would be relatively small. Station facilities must be remodeled or constructed to accommodate concessions. With regards to passenger equipment, NCRR must allow for facilities needed for on-board concession.
15.1.3 HIGH SPEED PARCEL TRANSPORT
This involves the transport of U.S. mail or expedited parcel delivery on HSR trains. While parcel transport services are relatively easy to implement since the negotiated agreements take advantage of the existing schedule and stops, the industry is highly competitive. Currently, there is mail on the southbound Carolinian from Washington, DC to Greensboro, NC. This is a one-way route as no mail flows on the north bound train. NCRR could provide a similar service to the USPS within the Corridor, conceivably with courier style pickup and delivery at major stations. More research is required to determine the amount of potential revenue. If a determination is made that mail and/or parcel service would be a sufficient revenue source, then the generated revenue would be used to cover on-going cost centers (O&M and/or debt service). The service would only be a supplementary form of revenue for the HSR system. NCRR must market the service's availability and could negotiate shipping deals with firms in need of parcel transport in the Corridor. It must also convince the USPS to utilize the HSR system that may put it in competition with Amtrak's mail transport services as provided on the Carolinian. The business would also need additional cars or space in train sets.
15.1.4 LEASE OF NCRR (FREIGHT)
Under this scenario, NCRR would lease the right-of-way to the Norfolk Southern Railroad (NS) or other railroad for freight rail operations. In turn, NS would pay an annual lease fee and assume responsibility for the maintenance and dispatch of the right-of-way. A lease provides a stable stream of revenue over the length of the agreement and some risk is transferred (maintenance and dispatch on right-of-way). High speed improvements may also benefit freight operator, although negotiating a lease agreement with favorable terms for the NCRR/State may be difficult. Currently, NS has a lease agreement with NCRR whereby it leases the railroad for its freight operations while it maintains and dispatches the railroad. The lease has expired, and it is unclear whether it will be successfully renegotiated. The lease payments will not be available as a lump sum source for funding the infrastructure; rather they will be made on an annual basis. Therefore, these revenues would be most reasonably utilized for on-going O&M costs, or as a source to cover debt service. In addition, because the State's assumed buyout of current NCRR privately held shares may be financed, any future lease payments may ultimately be used to repay that debt.
15.1.5 PARALLEL USES OF RIGHT-OF-WAY
This approach would involve leasing longitudinal rights to the use of part of NCRR's right-of-way, typically for a period of 20 or more years to firms in the telecommunications, power or gas utility industries. The leases would provide a predictable stream of income for a long period of time. Such parallel uses, however, could complicate future right-of-way improvements. The most likely use for the Corridor right-of-way would be for fiber optics (telecommunications). Currently, NCRR does not have any parallel use leases. A freight lessee would normally not object to parallel uses so long as it did not interfere with normal freight operations. In the State of North Carolina, there is a statutory mandate requiring that highway right-of-ways be available for parallel uses at no charge to the private developer. Nonetheless, private firms often turn to rail right-of-ways because they sometimes offer superior routing advantages and typically do not utilize private land owner property or easements. The availability of this approach depends on the market for use of the right-of-way.
15.2 POTENTIAL FUNDING SOURCES FOR CAPITAL COSTS
15.2.1 FEDERAL FUNDS
There are currently a number of Federal programs funding various areas in high speed rail planning, research and corridor development. These funds provide a guaranteed money source as a grant that does not need to be repaid. Federal funds often require a matching grant at the state and local levels; future Federal funding levels are also difficult to predict and any Federally funded improvements would be subject to certain Federal regulations. Current Federal funding programs for high-speed rail mainly focus on technology development with a goal of greater safety and greater operational efficiency. While the SEHSR has been able to benefit from specific technology development and grade crossing demonstration projects, significant funding for continued planning and capital investments may not be available. If the State obtains Federal funds, NCRR would need to comply with all Federal regulations attached to those funds such as the National Environmental Protection Act (an EIS process).
15.2.2 NORTH CAROLINA STATE FUNDS
State sources of funding can take many forms, depending on the State and the type of project being funded. There is a clear link between State funding and in-state economic and transportation benefits; State funding can also be guaranteed and requires no repayment. Securing such funds, through the annual State budget process, however, can be difficult. State funding to NCDOT flows from a number of sources:
The $5 million from the Highway Fund and the NCRR lease revenues, if any, are revenues dedicated by general statute for the medium term. The General Assembly could appropriate additional funds to the State. Once the NCRR is State-owned, the direct lease revenue could amount to $6 million annually.28 Rail Division funds are specified in the NCDOT budget; this budget, and any other State funds, are available subject to annual approval by the General Assembly.
15.2.3 LOCAL PUBLIC FUNDS
Local funds are represented in the form of a "match" to other Federal and State funds offered for the SEHSR system or as a direct grant for station improvements. Local funds are grants that do not need to be repaid, although securing local general revenue could be difficult and would depend on varied local support of the project. Local funds would probably not be considered a source for improvements to the rest of the SEHSR, since transportation improvements in North Carolina have traditionally been viewed as a State responsibility.
15.2.4 DEDICATED STATE AND/OR LOCAL TAX REVENUE
A dedicated revenue source is a legislated tax or fee imposed on a reliable source to pay for capital costs or for debt service on bonds issued to fund some infrastructure development. Such a funding source is relatively stable, has a solid history on which to forecast future flows, requires no new taxes and requires no annual budget reauthorization. Securing dedicated revenues is difficult due to the many competing sectors of government and potential voter disapproval. The dedicated revenues could flow to the Rail Division, or directly to NCRR. Any State tax used or the purposes of issuing debt requires legislation and then a referendum, which may be hard to accomplish because the entire state would be asked to approve investment in a geographically limited corridor. Taxation not used for the purposes of issuing debt service does not require a referendum, but a proposed increase in taxes may be politically contentious. Allocating an existing tax would be difficult for budgetary reasons.
15.2.5 LOCAL VALUE CAPTURE METHODS
In order to capture revenues associated with enhanced real estate development resulting from improvements in transportation corridors, jurisdictions have created special assessment districts (SADs) which impose real estate taxes and collections. For transportation infrastructure developments, these funds are usually dedicated to debt service for station development projects. Similar in concept to special assessment districts, tax increment financing looks to gains in property value, economic activity, and related revenues as a source of funding. This value is measured by the increased property tax revenue created by development in a specific area. SADs provide a guaranteed revenue source and can be designed to meet local needs. Tax increment financing is an allocation of incremental tax revenue increases; therefore tax rates will not change as a result of a tax-increment bond issuance. Infrastructure financed by the bonds issue is often designed to attract new development, which in turn generates additional tax revenue.
SADs may require special legislation and may result in public objection and conflict with zoning laws. Revenue sources in tax increment financing, moreover, are speculative and may not be available during the early stages of a project. The availability of this funding source depends on the willingness of local governments to create SADs and tax increment financing districts to be used for station improvements in conjunction with HSR. The magnitude of funding available would probably only be sufficient to cover part of the station capital and/or operating cost centers.
15.2.6 REGIONAL TAXATION DISTRICTS
Similar to tax increment financing but on a broader scale, a regional taxation district is established to pay for the costs of infrastructure development, often spanning the entire region benefiting from the infrastructure. RTDs provide a geographically limited project the ability to use tax revenues to back debt, with the majority approval of a referendum required only in the district. The Raleigh-Durham Airport District is example of a special district formed to finance airport development in two of the SEHSR counties, Wake and Durham. A similar district could be established to finance the HSR system in the Corridor. Although legislation must be created to allow for a HSR district, it could be modeled after the existing legislation creating Regional Public Transportation Authorities (G.S. 160, Article 26), such as the Triangle Transit Authority. While the successful creation and funding of the Raleigh-Durham Airport and the Triangle Transit Authority are encouraging, the HSR district would cover many more counties at once. Forming a district between all the counties in the Corridor could be a difficult process, involving public hearings and approvals throughout the Corridor. Once some counties are on board, however, others may follow suit, especially if there are incentives for counties to be in the district, such as assurance of a station stop.
15.2.7 SALE OR LEASE OF DEVELOPMENT RIGHTS
Under this scenario, NCRR sells or leases property it owns at or near the new infrastructure facility to a private owner who wishes to develop the land. Selling or leasing development rights can provide a source of cash or be part of a joint development strategy for stations. Such action also provides supplemental revenue that can be in the form of sale or lease payments. The price sold may be a lower price than that achieved at a later stage of development, however, and environmental and zoning concerns may arise from development proposals. This public-private partnership funding source assumes that the NCRR, the State or the localities own some developable land adjacent to the HSR stations. If the land is leased, the revenue should be used to cover on-going O&M or debt service. If the land is sold, the State could use the up-front funds towards any number of cost centers including ROW acquisition, civil engineering, signalization, grade crossings, or rolling stock. Air rights might be used in a similar fashion to the benefit of station development. At this point, it has not yet been determined the extent to which the sale or lease of development rights would be available, if at all. The ability to sell or lease development rights is contingent upon private sector interest in development around the HSR stations, as well as certain environmental and zoning issues regarding the development.
15.3 POTENTIAL FINANCING SOURCES FOR CAPITAL COSTS
15.3.1 TAX-EXEMPT REVENUE BONDS (BACKED BY DEDICATED STATE AND/OR LOCAL TAX REVENUE)
Tax-exempt revenue bonds are backed by dedicated tax revenue and issued to cover investment in a public asset. Exemption of the interest income from Federal taxes would lower the bonds' interest costs. By not having to pay interest income tax, investors could still achieve the same effective return on tax-exempt bonds issued with a lower interest rate as they otherwise would on taxable bonds at higher rates. The use of tax-exempt bonds would enable a higher total value of bonds to be issued for the same project revenue stream. Such bonds are relatively stable and guaranteed, have a lower interest rate than taxable debt, and provide strong backing for debt service. They should also attract adequate investor interest and secure an investment grade.
There is a precedent in North Carolina for partially backing bond issues with gas tax revenue. Although gas tax revenues are not guaranteed, given changes in consumption and other factors, the tax source is still relatively predictable. In fact, the level of security provided by a dedicated gas tax makes this type of tax suitable to back debt service. Recent forecasts produced by NCDOT indicate that gas consumption is anticipated to continue rising until at least the year 2001. Tax-exempt revenue bonds may be difficult to secure in the State of North Carolina because any tax used to support State debt must be approved by referendum according to the State Constitution and General Statutes. The State cannot legislate a tax to back bonds of this nature without this statewide simple majority approval. (The State would need a constitutional amendment to initiate a tax used for debt without a vote.) Given that North Carolina residents outside the Corridor area might not be convinced of benefits for them, a super-majority of votes would be required within the Corridor. In any event, aggressive marketing of the benefits of the proposed HSR system to constituents would be essential. Further examination of the statutory limitations of any tax exempt bonds and various operator contracts, concessions or leases of the NCRR would also need to be considered.
15.3.2 PROJECT FINANCE
Project revenue bonds are backed solely by the operating revenue stream of the infrastructure system. These bonds can be either tax-exempt or taxable depending on the management and ownership structure of the HSR. Project financing provides needed funds free from the political process that encumbers other sources (e.g., tax-backed financing). Investors, however, may consider bonds backed by project revenue as too risky. Therefore, the project may not be able to generate sufficient investor interest and may also receive a poor investment grade rating as compared to G.O. bonds or those backed by dedicated revenue. This type of HSR project is new to the market, and thus relatively untested. Without successful precedents, investors are often wary of potential risk that revenue will not be adequate to cover the debt service. Debt financings backed by farebox revenues are likely to be given a lower bond rating than other types of dedicated revenues. Studies completed by NCDOT do not predict that the farebox revenue from the HSR system would be sufficient to cover the debt service for a bond issue large enough to fund the capital costs associated with the project. A recent FRA study, however, has determined that annual farebox revenue would cover operating and capital costs of a Charlotte to Washington HSR corridor.29 To date, there have been no precedents in the U.S. of HSR project obligations backed solely by anticipated net operating revenue streams. The market might be somewhat comforted if the State can demonstrate through its own financial contributions to the facilities that the Corridor is an "essential facility." Revenue bonds would likely be used in conjunction with other financing sources.
15.3.3 GENERAL OBLIGATION (G.O.) BONDS
G. O. bonds can be issued to pay for investments in public transportation facilities, and are backed by the full faith and credit of the State. The debt service would be paid out of the State treasury and the overall liability would be that of the State. Any excess revenue generated from the HSR system could likely be directed to the State if a G.O. bond is used to fund capital costs for the system. With G.O. bonds, investors would analyze the State's credit risk, not risk of the project (which may be higher). The State of North Carolina has a strong credit rating that would likely attract investor interest and a relatively low interest rate. However, the appeal of these bonds would be weighed against the addition of State debt. A tax-exempt revenue bond or a project finance bond would not receive as high a rating as State G.O. bonds. G.O. bonds have been used previously in the State of North Carolina to back transportation projects, most recently on November 5, 1996, when a $950 million, G.O. bond issue referendum for highway development was passed. In addition to authorizing legislation, the G.O. bonds would require approval through a referendum, by achieving a simple majority vote on a statewide basis. This may require a super-majority in the affected Corridor region to overcome the possible negative vote of the rest of the State, which does not stand to directly benefit from the project.
15.3.4 STATE GUARANTEE
Under a State Guarantee, the State agrees to back project revenue debt (i.e., project finance). The guarantee would take effect if project revenues, net of operating and maintenance costs, are insufficient to pay lease and debt service payments. If such an event were to occur, the debt service would be paid out of the State treasury. Advantages to this scenario are that it reduces the finance costs (i.e. interest rate) given the lower risk associated with State credit support and that it improves chances of securing an investment grade rating on the project finance bond issue. Disadvantages are that it puts the State at risk should the project revenues be insufficient to cover operating costs and debt service. Given the difficulties NCRR might face in an attempt to issue bonds backed solely by anticipated revenue streams (see Project Finance), the State might consider providing a guarantee. This credit support would reduce the interest rate obtained, and thus increase the portion of project costs that could be financed with project revenues. A guarantee would likely require a referendum in addition to legislation, as it pledges State revenues to the debt in case of insufficient project revenues. In addition, since project revenue bonds would in any event be insufficient to cover all system costs, it may not be worth pursuing a State guarantee.
15.3.5 EXPORT FINANCING
Export/Import Banks offer a variety of loan programs to assist in the export of equipment. The type of loan packages offered varies from country to country. In a successful transaction, all parties benefit. The vendor gets to sell its equipment, the foreign country exports goods, and NCRR receives attractive financing terms and the ability to secure a loan that might not have been available through a direct purchase. Typically, export/import banks only consider loans of $50 million or higher. There are many countries with export financing institutions, each with its own set of available products, regulations, and financing terms. The ability to secure overseas financing can be relatively easy given the export/import Bank's lending assistance; however, there could be legal impediments depending upon the country from which the capital is obtained. Today, most foreign rolling stock and technology vendors have U.S. manufacturing operations in order to satisfy Federal "buy American" requirements. Typically, the U.S'subsidiaries of foreign firms specialize in supplier credit arrangements. As a result of the required size of an export bank loan ($50 million or more), under this arrangement NCRR would purchase all 6 or 7 train sets ($8.5 million per set) at one time.
15.3.6 VENDOR FINANCING
With vendor financing, suppliers offer financing to purchasers to encourage the sale of their machinery and equipment. Vendor financing allows the buyer to borrow for purchases at lower finance costs and/or longer terms as compared to separate financing of the equipment (e.g., bank loan). Vendor financing may be used to finance rolling stock acquisitions and could be explored for other capital costs such as signaling systems. Vendor financing can take many forms and can be tailored to suit the individual needs of a specific purchase. The final financing package often includes a leasing arrangement (see section on Equipment Leasing). Financing, however, is based on the vendor's cost of funds, which may be higher than the cost of the State's tax-exempt debt. To lessen the total funds requiring legislative or voter approval, however, NCRR might be willing to accept the higher finance costs for the increased ease of implementation.
15.3.7 EQUIPMENT LEASING
Substantial cost savings in the financing of facilities and equipment can be achieved in the U.S. through the use of a tax-oriented lease. With such a lease, the lessor claims and retains the tax benefits of ownership (consisting of tax depreciation deductions), and passes to the lessee most of such tax benefits in the form of reduced rental prices. The lessor claims depreciation deductions and the lessee deducts the full lease payment as an expense. Another available option might be an operating lease, which is essentially a short-term rental (potentially cancelable at any time by the lessee). A short-term lease will result in a greater required payment from the lessee over the long-term. Realization of tax benefits for the lessor result in a lower cost to the lessee than other forms of financing. The rail equipment leasing market is also well developed, and numerous leasing firms could compete for this business. This form of financing should be available to NCRR for the required HSR fleet. The typical terms of a capital lease for rolling stock are 20 years or more. Because a secondary market for the kind of passenger rolling stock planned for this HSR system may not exist, an operating lease may not be an option. Therefore, in order to lower lease financing (as well as maintenance) costs, the acquisition of proven rolling stock is recommended. The Talgo equipment (as used by Washington State) is one example.
15.3.8 PRIVATE EQUITY
Private sector equity investment in a corporation is raised through the issuance of shares of common stock. A concessionaire also provides equity to the extent that it is asked to invest its funds in system capital. Common stock would provide an up-front source of financing for capital needs, reducing the need for other sources; however, the State would forego some control over NCRR to its private shareholders. The State would unlikely issue NCRR stock to private equity holders given the State. s assumed basic strategy with respect to NCRR becoming a vehicle for public service (i.e. passenger rail). Though there are no guarantees of returns to investors or concessionaires, investors will only be attracted to the extent that they feel confident in the ability of the system to provide net income and profits.
15.3.9 LOANS (COMMERCIAL AND INSTITUTIONAL)
Commercial lending is the most popular financing source for infrastructure projects in developed countries. Commercial loans are made by commercial banks, for fixed periods of typically 5-8 years, with floating or fixed interest rates. Depending on the level of risk involved with a project, a commercial loan might be difficult to secure. Institutional investors might also make loans to finance infrastructure projects. These loans differ from commercial loans in that they typically involve fixed rates and are made for a longer term. Often the projects seeking institutional support involve high risk or other special features that would limit the ability to secure a loan through a commercial bank. This conventional method of securing financing for a project and proceeds is available in the early stages of the project, although high levels of project risk might preclude the ability to secure a commercial loan. Commercial loans and institutional investor financing also have a greater cost than the issuance of bonds; however, the ability to issue investment grade bonds might be more difficult than securing a loan. Loans should be available to NCRR, considering regional banks may be more willing to provide reasonable debt terms given their interest in the region and the HSR service (either for economic development or as a marketing tool). The up-front financing would be used to cover capital cost center payments. The amount of the loan that NCRR could secure is a function of its ability to meet loan payments. Much like debt service, a lender will determine a specific amount available to lend based on a determined coverage ratio and the given interest rate. If the HSR system supports its loan with net revenues alone, the size of the loan may be limited, and thus only available to cover one cost center.
15.3.10 STATE INFRASTRUCTURE BANK
The 1995 National Highway System legislation established a State Infrastructure Bank (SIB) Pilot Program. The legislation directed USDOT to approve entities that would capitalize their transportation infrastructure banks using 80% Federal and 20% state transportation funds. Ten state SIBs were approved as part of the program. In September 1996, Congress passed legislation enabling USDOT to designate additional qualified states to participate in the SIB program. It is not clear to what extent HSR systems would be allowed to benefit from infrastructure banks. Such Federal bank funding would come from the existing highway and transit funding apportionment, which already falls short of meeting highway and transit needs. Moreover, most existing Federal highway and transit funding can not be used for intercity rail investment. However, funds would revolve through a loan fund to benefit a series of highway, transit and other transportation projects on an on-going basis, rather than using the funds for direct one-time grants. Intercity rail may benefit from SIB funds indirectly through allowable grade crossing improvement projects (because grade crossings benefit from highway funding programs). Financing costs might be lower than for a direct debt issuance. SIBs pose the same limitations as Federal funds for a HSR system, because the SIB is capitalized with Federal funds. NCDOT could set up a portion of a SIB capitalized exclusively with State funds, which could be used for any project approved by the State. Thus, HSR could benefit from the SIB's financing tools. Virginia has already established a SIB, providing a potential funding source for any of the future HSR extensions into Virginia (within the limitations of the funding uses with respect to rail). Under the legislation passed by Congress to expand the number of SIBs, North Carolina could also apply. If Federally capitalized SIB funds are utilized, NCRR would be subject to all regulations associated with the use of Federal funds.
15.4 COST CENTERS ANALYSIS
When determining what funding and financing options to undertake, the State must also consider the costs of the project. Cost are often divided into two groups, capital cost centers and operating and maintenance (O&M) cost centers. While O&M costs are ongoing once the service is operational, the capital expenditures are required in order to get the service started. Thus, revenues from the operation of the service will not be available for up front capital costs, but only for later rehabilitations or expansions. Capital costs, other than rolling stock and stations, would be paid for from a combination of debt financing and direct funding.
O&M costs will have fixed components, as well as components which are variable with the level of HSR service provided, which may be adjusted over time. Since the HSR will be a new service, there will be a certain period of market penetration as ridership and revenue "ramp up" to a forecasted level, which itself will adjust over time with demographic and service changes. The ramp-up period must be kept in mind, as it affects the ability to commit net operating revenues to a specific purpose, in particular debt service, during the earliest years. A short-term loan ("bridge" loan) is often used to cover startup costs until permanent long-term debt is arranged once operations begin.
Dedicated revenue sources, while more politically difficult to secure, have a greater potential for providing a predictable and larger revenue stream. They would be available immediately for use during the early years of operation, as well as during the construction phase. As discussed elsewhere in this document, the dedicated revenue could be a tax or fee, and collected statewide, in a regional district or by a regional public authority.
Note that the basic temporal distinction between capital and O&M costs, i.e., start-up versus ongoing, is a somewhat simplified view of reality. The cash flow model will involve a more micro-level analysis, and will show how the two are inter-related. Furthermore, while phasing of the HSR service implementation (and its associated startup costs) is not currently being considered in the Master Plan's studies, this may become a more pragmatic approach.
15.4.1. ADDITIONAL COMMENTS ON CAPITAL COST CENTERS
15.4.2 ADDITIONAL COMMENTS ON O&M COST CENTERS
15.5 SUMMARY OF FUNDING AND FINANCING OF COST CENTERS
Ultimately, a proper mix of ownership structures, management structures, and funding and financing sources must be chosen for the SEHSR. A final cost center mapping will be refined in later stages of the SEHSR planning, as cost and revenue estimates are finalized and as cash flow modeling is undertaken.
The discussion throughout this section has assumed that the State of North Carolina would retain the NCRR in its entirety, and that the NCRR would become the independent public body responsible for the implementation of the HSR system. Freight services might continue under a lease to a class I or short line operator. In addition, the NCRR could be transformed into a public authority, which might confer benefits in terms of jurisdiction and taxation.
A range of management structures is theoretically possible for HSR services. Based on the goal of developing a public-private partnership, as well as consideration of the HSR service's potential revenues, it appears that the two structures with the greatest potential are the Operating Contract and the Operating Concession. The two are similar in many respects in that the NCRR retains basic responsibility for the right-of-way, while a private operator provides service. The future cost center map will cover both cases and make note of any specific differences.
Key public-private partnership aspects of the preferred structures include:
At this time NCDOT has not identified which revenue, funding or financing alternatives would be most likely to be implemented. Later phases of the SEHSR planning process will model the potential public-private ventures and finance alternatives to determine which alternatives might be incorporated into the SEHSR operations. Future studies will also examine potential bi-state operations of the SEHSR to analyze optimum operations of a high speed corridor from Charlotte to Washington, DC.
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