Privately built toll roads sprinkle the land
Starting in the mid-1990s, a limited number of states began granting concessions for private toll roads to firms willing to put up the cash to build them. Most were short connectors of 12 miles or less or express lanes added to existing roadways. A few examples include:
CALIFORNIA
91 Express Lanes
Opened 1995
Route: S.R. 55, Orange County to Riverside County line
Miles: 10 miles of express (HOT) lanes
Cost: $130 million
Builder: CALTRANS and CPTC (Level 3 Communications, Cofiroute, Granite Construction)
Concession owner: Orange County Transportation Authority*
TEXAS
State Highway 130 (south portion)
Opening: 2012
Route: Austin to Seguin
Miles: 40 miles
Car tolls: to be determined
Cost: $1.3 billion
Builder: Cintra-Zachary
Concession owner: Cintra-Zachary
VIRGINIA
Dulles Greenway
Opened: 1995
Route: Leesburg to Washington's Dulles (airport) Toll Road
Miles: 14 miles
Car tolls: $3.20 weekday
Cost: $350 million
Builder: Kellogg Brown & Root
Concession owner: TRIP II (Macquarie Infrastructure Group)
Pocahontas Parkway
Opened: 2002
Route: I-95 at Chippenham Parkway to I-295 near Richmond International Airport
Miles: 8.8 miles
Car tolls: $2.25
Cost: $324 million
Builder: Fluor Daniel Inc./Morrison Knudsen
Concession owner: Transurban LLC
* Orange County Transportation Authority paid $207.5 million in 2002 to buy out lease to escape non-compete clause.
Sources: Texas Dept. of Transportation, California Dept. of Transportation, Dulles Greenway, Pocahontas Parkway, U.S. Federal Highway Administration
BY KEITH BENMAN, Times of Northwest Indiana
kbenman@nwitimes.com
Gov. Mitch Daniels made history with the first privatization of a statewide interstate when he leased the Indiana Toll Road for $3.8 billion last year.
But the Hoosier governor will not make history with his drive to build the Illiana Expressway and Indiana Commerce Connector as privately-run toll roads.
Other states have been contracting with private companies to build and then run private toll roads since the mid-1990s, with several that are up and running or under construction.
"There has been a renaissance, a kind of second coming, of the idea in recent years," said Robert Poole, founder of the Reason Foundation and one of the leading U.S. proponents of private toll roads.
The Dulles Greenway, a 14-mile airport link in Virginia, opened in 1995. The 8.8 mile Pocahontas Parkway, a Richmond, Va., bypass, opened in 2002. In California, the car-only 91 Express Lanes opened in 1995.
Other private projects are now planned in Texas, Virginia and California.
The people vs. profits?
But the road to building a private toll road can be a bumpy one, Poole acknowledges.
State laws authorizing the them have been on the books since the late 1980s. But only a handful have been built. And getting legislative authorization for those roads, as Daniels is doing now, is only the first step.
States often run into citizen opposition throughout the process. The idea of land being taken to benefit a private company rubs many people the wrong way.
"There are some places that will actually want the road to go through, and others that will fight it to the death," Poole said.
And private investors will not put up the hundreds of millions of dollars needed to build the road unless they are sure there will eventually be profits down the road.
Private bonds issued for both the Dulles Greenway and Pocahontas Parkway could not be paid off because the anticipated traffic did not arrive, according to the Federal Highway Administration. Both projects had to be refinanced.
At one time, end-to-end tolls on the Dulles Greenway were as low as $1. New owner Macquarie Infrastructure Group now wants to raise tolls to $4 at peak hours by 2009.
Pocahontas Parkway tolls were $1.50 when it opened but have since risen to $2.25.
In Oregon, the state recently dropped its "Sunrise Corridor" project, after a report showed the expressway would not attract enough toll-paying traffic.
"The big question for any new toll road is always is there enough traffic demand that people will pay a high enough toll to pay for the road," Poole said.
Steering for the public good
The situation with the $3.8 billion lease of the Indiana Toll Road was far different.
That 157-mile northern Indiana roadway already was making money. And, thanks to a hefty toll increase and the lease's 75-year term, should make even more money for private operator Cintra-Macquarie, according to John Foote, a senior fellow at Harvard's John F. Kennedy School of Government.
The state leveraged the maximum up-front payment possible for the Toll Road by trading away protections for users and citizens, Foote said.
If a balance is not struck between the interest of the private builder/operator and the public, states "will kill the goose that laid the golden egg" when it comes to privatization, Foote said.
Having shorter leases, sharing tolls with states and requiring the payment of property taxes can help strike that balance, Foote said.
Another important difference between leasing an existing toll road and having a private company build a new one is the lack of any up-front windfall for the state.
The Illiana Expressway would result in at most a minimal up-front payment to the state. Instead, the concessionaire would pay for the building of the 50-mile highway, which could cost $1.5 billion or more.
End of the road
A joint Indiana-Illinois feasibility study for the llliana Expressway is just getting underway. Gov. Daniels hopes to have the study completed in three years time. He also hopes to have a private partner on board and ready to build by that time.
Poole said the state has "a shot at making that kind of aggressive schedule," but that obtaining all environmental clearances in just three years time will not be easy.
In Northwest Indiana, many people assume that there will be enough demand for the road to entice private investors. But the recent experiences in Oregon show that is never a given.
What seems to be a given is that states are running out of money to build new expressways.
Tolls and gasoline taxes currently only pay about 64 percent of the cost of new road construction, according to a U.S. Department of Transportation study.
Foote said that if government doesn't have the stomach to raise the gas tax or tolls on its own, then private tollways may in many cases be the only alternative.
But "push-back" from citizens in Texas and other states, is giving some politicians second thoughts about the wisdom of building private toll roads.
Others see no way to avoid the trend, given constraints on federal, state and local treasuries. They also see the new private roads one of the fairest ways to pay for new construction, since it is only users who pay the toll.
"For significant new capacity, it's either a toll road or no road," Poole said.
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