Public officials in California, Washington State, and Florida recently have elected to terminate long-term concession agreements awarded to private developers of three prototype road and water projects in the U.S. At least one other private concession viewed as a municipal model for utility infrastructure may also revert to government’s balance sheet soon.

In the first three instances, governments will continue to rely on their private partners to build and/or operate the facilities—under negotiated, sole-source contracts. But the infrastructure users and the large public institutions representing them now will assume all risks of ownership, albeit at a lower cost of capital than the project financing put in place or proposed by private investors.

The projects representing over $1 billion in capital investment, still will be funded with user fees. But rates will be set by agencies of government rather than by contract or market demand.

The private shareholders in all three ventures say they are being fairly compensated for their expenses and risk in delivering fully permitted projects to their government clients. Some public officials worry, however, that political leaders have misjudged the hurdles that remain for government employees in completing and/or operating these privately conceived projects.

“If find it phenomenal that government wants to take on more risk,” says Jerry A. Ellis, who has led the public-private development effort at Washington State’s DOT for the past 12 years.

The projects where decisions have been made recently to assume public ownership includee:

• the SR91 Express Lanes toll road franchise, privately developed, financed and operated since 1994 in the median of the Riverside Freeway in Orange County, Calif., will be purchased for $207.5 million by the Orange County Transportation Authority, once OCTA gains state legislative approval to become a toll authority. The road’s current operator and 13% owner, Cofiroute Corp., will contract with OCTA to run the electronic toll collection system;

• the proposed twinning of the Tacoma Narrows suspension bridge, conceived in 1991 and brought to 20% design completion by Bechtel’s United Infrastructure Corp. (UIC), now will be financed with about $840-million in state-backed fuel tax bonds, to be issued next month. Completion of the design, construction and operation of the improvements will be managed by the Washington Dept. of Transportation; and