Chapter 9: Transportation
Lease Rest Area Sites
to the Private Sector
Summary
The Texas Department of Transportation should offer rest areas on US highways
for lease to the private sector to reduce state maintenance costs and provide
travelers with additional services.
Background
As befits its size, Texas has a huge network of US highways. Rest areas along
these highways provide various amenities including restroom facilities, picnic
tables, vending machines, and useful information for travelers. In fiscal 1999,
the Texas Department of Transportation (TxDOT) maintained a total of 21 US
highway rest stops, 85 percent of which were 20 years old or older. In the same
year, the agency spent more than $966,000 for maintenance work on these rest
areas, an average of about $46,000 per rest
area.[1]
Federal law prohibits the leasing of interstate highway rest areas. No
similar prohibition exists, however, for US highways; Texas could lease any or
all of its 21 US highway rest areas if it could find interested private
partners.[2] A survey conducted by the University
of Texas at Austin’s Bureau of Engineering Research concerning US Highway
59 near Lufkin reported that 65 percent of 295 respondents supported the
commercialization of rest areas (i.e. the involvement of private sector partners
in both operating rest areas and offering commercial
concessions).[3]
The state is missing opportunities to commercialize rest area sites that may
have a significant potential for generating revenue. Texas has already realized
some successes in leasing state-owned property; in December 1990, for instance,
the state executed a lease on a 39-acre portion of the Austin State
Hospital’s holdings that became the site of 870,000 square feet of
mixed-use development.[4] Returns from the
75-year lease and associated subleases are projected to generate $270 million.
At the end of the term the leasehold interest, along with all improvements, will
revert to the state’s full control.
Some rest areas are not used steadily over the course of a typical day, and
such sites tend to attract vandalism, panhandling, graffiti, drug use, and other
unwelcome activities that cause the public to avoid them. Assuming that the
highway carries enough traffic to attract customers, a private firm operating a
business on a rest-area site might increase public safety for travelers.
Recommendation
The Texas Department of Transportation should issue
a request for information (RFI) to identify vendor interest in leasing any of
the state’s 21 US Highway rest areas.
This RFI would allow private vendors to consider and recommend options for
using rest areas that would benefit the public and save taxpayer dollars. The
public would reap benefits through improved amenities. The lessee would be
responsible for maintaining each site, reducing the state’s maintenance
costs.
To ensure that the property is used for public advantage, policymakers, local
citizens, and area businesses should have input into the proposed uses of rest
areas.
Fiscal Impact
Any fiscal impact would be contingent upon private interest in leasing rest
area sites as well as the specific provisions in each lease contract. Potential
savings to the state would derive from the elimination of construction and
maintenance costs. Potential revenues would come from state shares of the sales
of lessees as well as lease payments. Lease arrangements would incur some
additional state administrative costs associated with TxDOT’s monitoring
of the leases.
If Texas could lease two rest areas over the biennium, the state could
realize savings of up to $92,000 per year for the State Highway Fund. Potential
revenue gains cannot be estimated.
[1 ] Interviews with and e-mail
from Richard Kirby, Texas Department of Transportation, June-August 2000.
[2] V.T.C.A., Transportation
Code, Chapter 202.055.
[3] Texas Department of
Transportation, Feasibility of Safety Rest Area Commercialization in Texas,
by the Center for Transportation Research, Bureau of Engineering Research,
the University of Texas at Austin (Austin, Texas, November 1992).
(Consultant’s report.)
[4] Texas General Land Office,
Real Property Evaluation Reports: Texas Department of Mental Health
and Mental Retardation (September 1, 1993), pp. 5-6.
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