Another US toll road for foreign sale

By: Drivers.com staff

Date: Thursday, 26. April 2007

"Here we go again," as the late President Ronald Reagan might say. Another US toll road is going private, and some local politicians have given the $3.8 billion deal a standing ovation. However, not everyone likes the deal, and there's a hint that it was pushed through quickly to nip in the bud a legal challenge by a citizen group coalition.

The highway in question is the Indiana Toll Road, which cuts across the northern border of Indiana State and joins up with the Chicago Skyway. In a deal announced last Monday it is being leased for 75 years to a private consortium that already operates the Skyway.

The deal was praised as "an extraordinary moment in state history," and "a breakthrough that might come once in a public-service lifetime" by Republican Governor. Mitch Daniels.

"The dollar figure drew a collective gasp followed by a half-minute ovation from the few dozen legislators and lobbyists gathered in Daniels' Statehouse office for the announcement," wrote Partick Guinane, on nwitimes.com.

The legal challenge came from a group of "downstate activists" which includes the Citizens Action Coalition of Indiana. It argues that the $3.8 billion deal violates several tenets of the state Constitution. The group filed a lawsuit on Wednesday. However, the Daniels administration signed the lease on Wednesday morning, two days ahead of schedule.

The problem is that the $ 3.8 billion that Statewide Mobility Partners (SMP) is paying for the right to operate the Indiana Toll Road may look pretty paltry in a decade or so as traffic volumes (and toll rates) soar.

Adding to the controversy is the fact that SMP's parent company is a foreign consortium made up of Cintra Concessiones de Infraestructuras de Transporte, S.A. of Spain and Macquarie Infrastructure Group of Australia.

The 75-year lease is pretty long by normal standards for this kind of lease, but not quite as long as the 99-year leases negotiated by SMP's parent company for similar toll road operations on Ontario's Highway 407 and Chicago's Skyway toll road.

A few years ago, transportation experts had considered the $1.8 b deal for the Chicago Skyway to be very sweet for local government, and that the lease bidder had offered too much. However, the same experts seem to have reconsidered their estimate and now consider the price to be just right.

Politicians in Ontario had a similar response in the late '90s when the same Australian- Spanish consortium paid a little over US $2 billion for a 99-years lease on Highway 407, a state of the art electronic toll road that skirts the city of Toronto.

However, a detailed analysis of the 407 deal by two transportation experts who were closely involved with the deal concludes that, while the deal was a success in that it enabled the megaproject deal to proceed rapidly, it almost certainly short-changed the public over the long term.

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