State looking to gain $2 billion in tolls

INDIANAPOLIS | It should be no surprise the Indiana Toll Road is a hot commodity for foreign investors, a panel of privatization experts assembled by the Indiana Department of Transportation said Monday.

Brick-and-mortar investments like the 157-mile tollway offer long-term stability that attracts foreign firms, many of which are managing the nest eggs of workers abroad.

"Think about a road. Where's a road going to go? It's not going anywhere. And that is part of the beauty, from a pension -- risk-averse -- situation, to do these deals," Barbara Reese, chief financial officer of the Virginia Department of Transportation, told a packed auditorium.

Along with California and Texas, Virginia is considered a leader in public-private transportation projects. Reese said she spends half of each day working with private investors. Her state has privatized nine projects worth $3.5 billion.

Republican Gov. Mitch Daniels is courting private firms for a multidecade lease of the Indiana Toll Road that could net more than $2 billion. The bidding includes firms from Australia, China, Italy and Spain, Forbes.com reported last month.

Cintra Concessiones de Infraestructuras de Transporte, S.A., one of the Spanish firms reportedly interested, teamed last year with Macquarie Infrastructure Group of Australia on a 99-year Chicago Skyway lease that paid the city $1.83 billion.

Cintra is among a group of firms that last year agreed to pay Texas $1.2 billion for 50 years of tolling rights on more than 300 miles of four-lane highway to be built between Dallas and San Antonio. Construction will cost the private consortium $6 billion.

"We are making public-private partnerships work," Ed Pensock, an administrator for the Texas Turnpike Authority said Monday.

Texas also plans to seek private financing to improve Interstate 69, a north-south route that reaches Evansville. Daniels, meanwhile, wants the private sector to bankroll a 142-mile toll road connecting I-69 with Indianapolis.

Panelists said there are several reason private firms are eager to help. Unlike government, they can deduct a road's depreciation from their annual taxes. That alone was worth at least $300 million in the Chicago Skyway deal, said Robert Poole, transportation director for the Reason Foundation, a California nonprofit.

Congress recently made road privatization even more attractive by cutting the window for filing environmental lawsuits and allowing private firms to float tax-exempt bonds, said Tyler Duvall, a deputy assistant secretary for the U.S. Department of Transportation. Environmental objections to road construction now must be launched within six months, not six years. The tax change, meanwhile, can eliminate millions in borrowing costs.