Price for Indiana Toll Road rights could be at least $2 billion, state offical says

The world has its eyes on the Indiana Toll Road, and that could mean big bucks for state government.

In fact, it could mean at least $2 billion for leasing rights, according to Chuck Schalliol, state budget director.

Schalliol confirmed on Thursday that the administration of Gov. Mitch Daniels is in talks with several firms interested in leasing the Indiana Toll Road, a 157-mile highway that comprises all of the state’s Interstate 90 route and most of the state’s Interstate 80 route.

One of those firms is the Spanish company that has leased the Chicago Skyway for 99 years.

The Indiana Toll Road lease could run for at least 50 years or may run as long as 75 years, Schalliol said. Once bids are finalized, Schalliol said his office would run them by Daniels and the Indiana General Assembly for approval.

State leaders have not committed to finding a bidder, but if the offer is high enough, Schalliol said they might believe the offer too good to pass up.

“I think the question will be, 'Is this an attractive enough bid?’ ” said Schalliol, Daniels’ director of the Indiana Office of Management and Budget.

Schalliol would not say which firms have bid, but a report on the Forbes Web site said several firms from Spain are eyeing the leasing rights.

Forbes identified the Spanish companies as Cintra Concesiones de Infraestructuras de Transporte SA; Fomento de Construcciones y Contratas SA; Sacy Vallehermoso SA’s Itinere; and Albertis Infraestructuras SA.

But the bids have an international flavor outside of the Iberian peninsula.

Forbes reported: “Other international companies bidding in the privatization include Autoroutes du Sud de La France, Italy’s Autostrade SpA, several Australian companies and Hong Kong-based Cheung Kong Infrastructure.”

Schalliol would only say that more than three and fewer than 10 firms have been offering to bid.

The talk has Northwest Indiana legislators cautiously choosing their positions on leasing the road. Some have yet to commit without seeing a price for a lease.

“There has to be a litany of guarantees,” said state Rep. Ralph Ayres, R-Chesterton. “There have been a lot of questions raised about privatization. ... I think that first week will be crucial. ... The more information, the better.”

Ayres wouldn’t comment on what an attractive price would be, but he said $1 billion wouldn’t fly.

Ayres said legislators will have a better idea in January, when bids will be finalized, of how to proceed.

Schalliol said a high bid could bring in most or all of the $2.8 billion the state is said to need for major highway construction, especially in northern Indiana.

In late 2004, Chicago Mayor Richard Daley received approval to lease the eight-mile Chicago Skyway for 99 years for $1.8 billion. The successful bidders were Cintra and Macquarie Investment Holdings Inc.

The move caught Daniels’ attention as he prepared for office while facing transportation-funding challenges — challenges like extending Interstate 69 to Evansville and funding U.S. 31 improvements in the north.

Schalliol said Thursday that previous administrations kept putting off new construction projects.

How a firm could make a profit on leasing a toll road may seem difficult to fathom, but Schalliol said several factors make it attractive to private companies despite some state restrictions on toll rates.

The federal government offers tax incentives to firms, incentives like financial depreciation the state cannot use.

Schalliol said the successful bidder could be allowed to raise tolls at the rate of inflation.

Schalliol said Indiana can proceed with privatization without a federal OK, as the Toll Road is completely funded with state money.