""We're not going to roll over and have them railroad a tollroad down our throats."

Toll-road foes crank up intensity in San Antonio

Politicians join opposition groups in denouncing plan for pay highways

Jan. 27, 2006

By JOHN W. GONZALEZ, San Antonio Bureau

Houston Chronicle
Copyright 2006

SAN ANTONIO - Preliminary construction of the city's first tollway was abruptly halted earlier this month for an environmental impact reassessment, but the debate about clogged highways hasn't slowed a bit.

Anti-tollway rhetoric turned caustic at a recent roadside rally where politicians joined 200 residents in denouncing state plans to build tolled lanes amid the city's clogged far-northside freeways.

Comptroller and independent gubernatorial candidate Carole Keeton Strayhorn said that if she's elected, the Texas Department of Transportation "will not do whatever the hell they want to do."

"We're not going to roll over and have them railroad a tollroad down our throats," added Bexar County Commissioner Tommy Adkisson.

Supporters point out need

While demanding relief for traffic congestion, tollway foes assailed the five-year-old proposal's necessity and expense. The first 3.5 miles of the project will cost $83 million to build, and motorists will pay an estimated 15 cents a mile to drive on it.

"A couple of overpasses would certainly resolve a great majority of the traffic jam that's been created out here," said auto dealer Ernesto Ancira, who made one of his dealerships available for the anti-tollway rally. He opposes addition of tolled lanes to freeways.

Proponents say new lanes — free and tolled — are badly needed on several local arteries, and perennially inadequate government funding for highway projects makes tolled lanes a crucial part of the long-term solution to road snarls.

Upward trends in population growth and home and business construction in northern Bexar County are expected to continue, officials said.

Yet, the state's proposed solution will have to wait. The reassessment is expected to take eight months, and even without new snags, completion of the first tolled lanes isn't expected until late 2007.

The initial plan calls for tolled lanes on U.S. Highway 281 for the few miles just north of Loop 1604, but later the lanes would be extended into Comal County and north to the Blanco County line. Parts of Loop 1604 and Interstate 35 also are targeted for tolled lanes.

Six weeks into their work, crews stopped clearing trees from right-of-way along U.S. Highway 281 North on Jan. 12 after the Federal Highway Administration demanded a new environmental survey. Impact studies done in 1984, 2000, 2004 and last year were no longer adequate, officials said.

That move nullified a citizens lawsuit demanding a halt to the project. Aquifer Guardians in Urban Areas had joined an anti-tollway group, People for Efficient Transportation, in pressing the suit, which was dismissed Jan. 17.

"When you have these two groups coming together, it just shows the depth and the strength of our cause," said Texas Toll Party regional director Terri Hall.

"It's a nonpartisan issue. It's about highway interests hijacking our freeways and turning them into tollways. It's an outrage and that's why the public is galvanized on this," she said.

A vote for Houston

Houstonians, who use 83 miles of tolled highways operated by the Harris County Toll Road Authority, "got to vote on their tollways. That's a big difference," Hall said.

Both sides are honing their strategies during the hiatus. Some toll opponents are calling for a "regime change" in Austin, targeting Gov. Rick Perry and other elected and appointed officials who advocate this and other tollways.

Proponents, meanwhile, hope to convince motorists that the proposed tolled lanes are justified and well planned and are a sure-fire way to hasten — perhaps by decades — funding of other inevitable upgrades.

"The growth is there. The demand is there. The need is now and the state is going to address that in one fashion or another," said Terry Brechtel, director of the Alamo Regional Mobility Authority, a new entity formed by Bexar County to work with the state on innovative transportation funding.

The authority's five-year strategic plan calls for a "starter system" of 22 miles of tolled lanes on U.S. Highway 281 North and Loop 1604, with a long-term goal of 50 miles. Wherever tolled lanes are built, free lanes would remain and in some areas will be increased, the plan states.

No tollbooths would be needed because officials are contemplating an electronic pass-card system. And while a Texas contractor has partnered with a Spanish firm in bidding to construct and operate Texas tollways, the local authority insists it will oversee tolled lanes. But getting started on them is essential, Brechtel added.

Though many residents resist tolls, "the state is pretty serious about tolled lanes plugging a gap that we have in our funding of transportation," Brechtel said. Besides, motorists will "still have the choice of the non-tolled system versus the tolled lanes," she said.

Responding to residents' complaints that they never voted on a toll proposal, Brechtel pondered: "Can you imagine what the state's transportation system would be like if we voted on every highway?"

Instead, residents are invited to another round of public hearings — the first were in 2001 — likely to begin in mid-March.

TxDOT area engineer Frank Holzmann said the state started the first segment because it could be a few years before the state awards bids for larger tollway projects.

"It'll probably be late 2007, early 2008 before the CDA would go through, so we wanted to try to get this infrastructure in before that time," Holzmann said.

Brechtel said the project delay gives proponents time to acquaint the public with the role tollways could have in solving the region's "transportation challenge."

john.gonzalez@chron.com
© 2006 Houston Chronicle: www.chron.com

MATTHEWS: "Is the governor of Texas behaving corruptly?"

Mom of WH Press Secretary runs for governor

Carole Keeton Strayhorn abandons party to run as Independent candidate for Texas governor

Jan. 26, 2006

HARDBALL
Chris Matthews
Copyright 2006 MSNBC

After 20 years as a Republican, Texas Comptroller Carole Keeton Strayhorn has abandoned the party to run for governor of Texas as an Independent, challenging Republican Governor Rick Perry. The race is not only interesting because of her defection, but because one of her sons, Scott McClellan, is President Bush‘s press secretary.

CHRIS MATTHEWS, HOST 'HARDBALL': Carole Keeton Strayhorn, Carole Strayhorn thank you very much, state comptroller for joining us tonight.

You have put your son in the hot seat. Well, it‘s great to have you. And great to be down in Houston. Let me ask you, is your son on the hot seat? Is he the cat on the hot tin roof because of his job and his mother?

CAROLE KEETON STRAYHORN, (I) TX CANDIDATE FOR GOVERNOR: Listen. All four of my sons grew up in the hot seat. So they‘ve gone from literally diapers to shaving while I‘ve been in the public arena. So they‘re used to that, and I‘m pleased and proud to be running as a Texas independent for governor in 2006. I‘m going to be a governor for all Texans, Chris.

MATTHEWS: Well, you know, in the big cities like I grew up, if you ran for office against the wrong person, you lost your job. Your family lost all their jobs. Is President Bush that clean a politician that he‘s willing to let his press secretary‘s mother run against his governor?

STRAYHORN: Listen. All of my sons are great in their own right. I‘ve got four grown sons, five young granddaughters. The good Lord has a sense of humor. I have got a sixth on the way. That may be another girl too. But they all are doing a great job, and I‘m proud of all of my sons, Chris.

MATTHEWS: Well, Carole, I thought my dinner table was tough. You must have a tough training table in the way you raise your boys.

STRAYHORN: Let me tell you what, Chris, my focus is right here in Texas. And we have a governor whose administration has been mean spirited and for a special few. He‘s had nine sessions of the legislature to fix our public schools and hasn‘t done that.

We‘ve got to cut property taxes. We‘ve got to fix our public schools, and we need to get something done. And Rick Perry has so politically fractured this state that‘s why I‘m running as an independent. We have got to set partisan politician aside, and I‘m setting partisan politics aside not only for this race, Chris, I‘m setting partisan politics aside during the Strayhorn administration.

MATTHEWS: Are you a conservative?

STRAYHORN: Absolutely. I am a common sense fiscal conservative. You know, I would rather pay $98 a month and insure a kid with prescription drugs and get that 72 percent match from the feds, rather than pay $6,700 for one hospital stay picked up by the property taxes going right through the roof. I am a common sense conservative. I would rather educate our kids than incarcerate our kids.

MATTHEWS: Let me ask you about the Republican Party. Do you have a problem with the Republican Party today? That‘s why you‘re leaving it or are you leaving it because you don‘t like Rick Perry?

STRAYHORN: Chris, I have set aside partisan politics, as I said, because this governor, Rick Perry, has so politically fractured this state, that we can‘t get anything done. This governor has absolutely forgotten our children. He has ignored education. The taxes have gone up.

You know, the budget under Rick Perry has gone up $40 billion and 41 percent in just five years. Skyrocketing pocket costs, everything from utility bills to homeowners insurance rates, and then he has absolutely abandoned our border.

MATTHEWS: Well, I was just checking the history books or rather one of my producers did, and they said the last independent to be elected governor of the lone star state was Sam Houston.

STRAYHORN: That‘s right. And I love Sam Houston.

MATTHEWS: Can you do what Sam Houston did?

STRAYHORN: By the way, that was 1859. Absolutely. Every speech I give by the way for decades, I‘ve been quoting Sam Houston, and over the last couple years, I‘ve always quoted Sam Houston right before the battle of San Jesana (ph). He said we‘re nerved for the contest, and we must conquer or we will perish.

Well, Chris, I too am nerved for the contest. And together with people from all walks of life across this state, Republicans, Democrats, Independents and those who I have no idea what their political affiliation is, we‘re going to change this state, change the leadership at the top.

Under Rick Perry, we have had misplaced priorities and failed leadership. And it‘s time to get something done. Texans want to fix our schools. Our most precious resource are our kids. And let me tell you, as a mama and a grandma, you know, Rick Perry wants his legacy to be that he sat in the governor‘s chair for more years than anyone else.

Well, I don‘t sit, I do. And, Chris, I want Carole Keeton Strayhorn‘s legacy to be that with every breath of air in her lungs, she fought passionately for education, passionately for paychecks and jobs for all Texans and passionately for our most precious resource, our kids.

MATTHEWS: OK. Carole, you‘re a record vote getter in Texas, as a candidate for comptroller. You‘ve won it a couple of times.

But let me ask you about the big issues. Do you think the Republican Party has departed from its fiscally conservative roots? They‘re running— the U.S. Congress right now, the United States government is running almost a $400 billion deficit, we‘re heading toward. Do you think that represents a waywardness from fiscal orthodoxy?

STRAYHORN: Chris, on January 2nd when I announced as an Independent and that‘s a Texas Independent for governor, I said I‘m putting aside partisan politics. I have put aside partisan politics. I‘m not going to sit here and discuss partisan politics with you. I am going to discuss what we‘re going to do in the state of Texas.

MATTHEWS: Well, what are you going to do about illegal immigration?

STRAYHORN: Oh, yes, let‘s talk about that. Yes, let‘s talk about that.

MATTHEWS: Let me take an issue that coincides nationally and in terms of the state of Texas.

STRAYHORN: Right.

MATTHEWS: Not so much Texas, but other southwestern states. Illegal immigration. Everybody talks about it. Pat Buchanan talks about a big fence, and all the liberals talk about different things. Nobody talks about getting rid of illegal hiring. Would you do that? Would you stop a company or a business or a hotel or golf course from hiring somebody in the country illegally? Would you actually do that?

STRAYHORN: Chris, I am adamantly opposed to illegal immigration, and let me tell you the difference in myself and our current government.

MATTHEWS: Well, everybody is. Everybody says they are.

STRAYHORN: Well, let me tell you what Rick Perry did. Rick Perry signed legislation so that an illegal immigrant can enter higher education in the state of Texas paying in-state tuition. Now he did that for illegal immigrants.

Let me tell you what happens if you‘re Carl Basherman (ph) and you came back from the Iraq war to Austin, Texas. that happens to be my hometown city. He was in Iraq for two years. He comes backs to Austin, Texas, to enter Austin Community College, and he is told he has to pay out of state tuition because he hasn‘t been here the last two years.

Well he went to war for us, and I went to war for him. And now we‘ve got him admitted on in-state tuition. But, you know, Rick Perry...

MATTHEWS: So you‘re tougher on—you‘re saying that you‘re tougher on illegal immigration than Rick Perry is? And that‘s an issue?

STRAYHORN: Absolutely. Rick Perry has so abandoned the border that ordinary citizens instead of our law enforcement officials are having to enforce illegal immigration.

MATTHEWS: Does Rick Perry, the governor of the state, have a corruption problem? Or is he immune from the problems—DeLay has had a problem with being indicted. The Congress in Washington has a problem with Abramoff. Maybe DeLay might have that problem too soon. We don‘t know.

Do you think the governor you‘re running against, a Republican, you say you don‘t want to be partisan, but does the Republican establishment have a problem here?

STRAYHORN: The governor I‘m running against certainly has problems. He has misplaced priorities, failed leadership.

Let me take the state office of federal relations in Washington, D.C., as an example. That office has been there since the 1960‘s, and this is the first time, the first time ever that a governor has contracted for over a million dollars with two lobbyist groups.

Now, I don‘t care whether you‘re lobbying from the governor‘s office or governing from the lobby‘s office, it‘s wrong. And under a Strayhorn administration, that will come to a screeching halt.

MATTHEWS: Is the governor of Texas behaving corruptly?

STRAYHORN: I‘m telling you that what is going on has been mean spirited and for a special few.

© 2006 MSNBC : www.msnbc.msn.com

"Enron, Abramoff, and the Trans-Texas Corridor. Big money, big manipulations, and big mistakes."

Ms. McGuffie gets the last word

MEETING OF: Texas Transportation Commission
LOCATION: Conroe, Texas
DATE: January 26, 2006

COMMISSION MEMBERS:

RIC WILLIAMSON, CHAIRMAN
JOHN W. JOHNSON
HOPE ANDRADE
TED HOUGHTON, JR.

STAFF:
MICHAEL W. BEHRENS, P.E., Executive Director
STEVE SIMMONS, Deputy Executive Director
RICHARD MONROE, General Counsel
ROGER POLSON, Executive Assistant to the Deputy Executive Director

(Excerpt of transcript)

MR. WILLIAMSON: Okay. Then we have Alice McGuffie. And Ms. McGuffie, as you walk to the podium, I want to tell you how much we appreciate your patience and your indulgence as we worked through the meeting. Normally our meetings do not last this long, but they did today, and we understand it's taken out a valuable part of your life and we appreciate your patience.

MS. McGUFFIE: Thank you. My name is Alice Sorsbee McGuffie, and I live in Waller County. And it sounds like this may be a history-making session in terms of length. It's been interesting for me to be here and sit and listen to the proceedings.

I do have a statement that I want to make to you, to all the commissioners.

I do not understand how TxDOT can relinquish right-of-way acquisitions for public roads to multinational conglomerates whose primary interests and talents are the making and moving of money. These conglomerates rival governments in their size and influence and some have argued they are the quasi-governments of our future.

Where is the protection for the small Texas landowner who, through no fault of his own, happens to stand in the way of these devouring giants, bulldozing their way through our precious countryside? What chance will any Texan have in getting fair justice when what is left of our government is nothing more than a proxy puppet for these financial institutions?

Thomas Jefferson said, Governments are instituted among men, deriving their just powers from the consent of the governed. But when and where did the people of Texas consent to be governed by money-making corporations?

Ms. Taraborelli, the project manager for the Montgomery County Transportation Program, told the Conroe Courier, Texas will be watching to see how the FM 1488 toll road project is handled. Ms. Taraborelli, employed by the private firm, Pate Engineers, went on to say MCPT is not bound by TxDOT's philosophy. While she may be implying that a private business may be more efficient in its operations than a governmental agency, she also seems to be suggesting that a private business may have more leeway to operate in a more aggressive way in handling environmental issues and land acquisitions. Do you sanction the public intimidation tactics used by Ms. Taraborelli toward landowners in Montgomery County?

I am very uncomfortable with the idea of a private company taking on much of the power of the government without the same accountability to the public. It appears that this aggressive approach toward building Montgomery County's new Shiloh Toll Road, at the expense of the environment and landowners, may foretell how TxDOT and its private mercenaries will handle the massive Trans-Texas Corridor.

Decades from now, historians will record our age as one of the most politically corrupt periods in American history, rivaling the gilded age of the 19th Century. Enron, Abramoff, and the Trans-Texas Corridor: big money, big manipulations, big mistakes.

Thank you.

MR. WILLIAMSON: We appreciate you reading your comments into the record. We note that we might agree with some and we might disagree with others, but we appreciate you taking your position.

Are there other matters before the commission?

(No response.)

© 2006 TxDOT www.dot.state.tx.us

"The average driver who travels to and from work on Highway 121 would pay $700 more in tolls annually under state control."

Frisco drivers may face $700 toll rise

Thursday, January 26, 2006

By STEVE STOLER / WFAA-TV
Dallas/Fort Worth
Copyright 2006

Should you have to pay for roads somewhere else in the state?

That question is leading to a battle for control in Collin County.

At issue: Who will run State Highway 121.

Tolls will help speed up construction of the main lanes between the Dallas North Tollway and North Central Expressway.

But leaders from several communities are on a collision course with state officials.

Bruce Smith works at a corporate headquarters in Legacy Business Park. He drives on 121 to Plano every day.

"Of course nobody wants to spend extra money," he says.

Frisco leaders want to keep tolls affordable for all drivers.

They fear if the state awards contracts to private companies, thousands of drivers like Smith would pay higher tolls.

They estimate the average driver who travels to and from work on Highway 121 would pay $700 more in tolls annually under state control.

"Transportation is very expensive for us already," Smith said. "If there are ways to save us money, they should look into that as well."

"We want it to be the lowest possible rate it can be to pay for debt, maintenance and operation and improvements," said Frisco Mayor Mike Simpson.

But Ric Williamson, chairman of the Texas Transportation Commission, has said that the responsibility of the state is to build roads, not to keep tolls affordable.

"That's not our strategy. Our strategy is to let the consumer, the product, decide whether it's worth a buck or 10 cents or two bucks a mile, or whatever it is," Williamson said.

Leaders from Frisco, Plano, Allen, McKinney and Collin County want the state to let the North Texas Tollway Authority operate the Highway 121 toll road.

They said the NTTA is a known entity that will help keep tolls reasonably priced, while keeping the money in Collin County.

"I think it's important to keep that money local," said motorist Jeanine Connolly. "If I'm paying a convenience charge of a toll to drive on my local streets, I want that money to stay here in Collin County."

State and local leaders across Texas want to build badly needed new roads, but they don't have the money to do it.

The controversy here: Should excess money generated from State Highway 121 tolls be used to build new roads here in Collin County or anywhere in Texas it's needed?

sstoler@wfaa.com

© 2006 WFAA-TV www.wfaa.com

Perry, Craddick and Dewhurst paid seven figure tribute to Abramoff lobbyists with Texas taxpayer dollars

EDITORIAL: Texas' connection to partisan lobbying

January 25, 2006

EDITORIAL BOARD
Austin American-Statesman
Copyright 2006

Gov. Rick Perry's seven-figure contracts for Washington lobbyists to do what taxpayers already pay a governmental relations staff to do looks like nothing more than partisan back scratching.

At the direction of former U.S. House Majority Leader Tom DeLay, the GOP made lobbying a partisan activity. Under the plan, known as the K Street project, lobbying firms had to hire Republican loyalists, including some congressional staff members, to gain access to the GOP leadership. It was a perfect loop.

Perry gained access to that loop by hiring firms closely connected to DeLay and paying them more than $1 million. Lt. Gov. David Dewhurst and House Speaker Tom Craddick also signed off on the lobbying contracts, presented by the governor's staff.

One contract went to Drew Maloney, who had served as DeLay's chief of staff. Another, for $330,000, went to lobbyist Todd Boulanger and his firm, Cassidy & Associates, last year in a questionable process. Boulanger is identified as a close associate of Jack Abramoff, who has pleaded guilty to criminal charges in a wide-ranging lobbying scandal.

Since Texas already has an established state-federal relations office with 12 staff members in Washington, paying more than $1 million for lobbyists connected to DeLay creates a distinct odor. Despite explanations from Perry's office, it appears that Texas had little need for expensive lobbyists.

Apparently, no governor prior to Perry found it necessary to hire beltway lobby firms, which adds to the smell emanating from these contracts. The circular connection of large amounts of taxpayer money, Republican cronies and the K Street lobbyists is not coincidence. Nor is it a matter of "everybody does it." According to Democratic critics, no other state hires lobbyists to supplement their governmental relations staffs.

Democrats have a right to complain. All that money went to lobbyists who never bothered to contact the Democratic members of Congress from Texas. It was a partisan effort, like the K Street project itself and this state's 2003 congressional redistricting fiasco.

A Perry spokeswoman said the firms were paid to lobby members from other states, but that's not what the records show. Boulanger's firm, for instance, was paid to organize a luncheon for Texas House and Senate legislative directors.

Largely under DeLay's direction, the Republicans created a continuous loop of power and influence. It was as simple as directing lobbying firms to hire former staff members if they wanted access to congressional leadership, and as complicated as channeling campaign funds through several different entities to wash it.

DeLay's influence was so intense that he demanded the Texas Legislature redistrict the state in mid-census to increase GOP power in Washington. And on his whim, Texas Republicans complied.

In light of all that, Perry's lobbying contracts look like another sop to curry favor with the Republican power brokers. It's a shame that Texas taxpayers had to foot the bill for nothing more than tribute.

© 2005 Austin American-Statesman: www.statesman.com

Ric Williamson: Limiting consumers' costs "is not our strategy."

City officials push to control tollway

Frisco: Leaders say state will allow higher fees on 121 project

January 25, 2006

By BILL LODGE
The Dallas Morning News
Copyright 2006

State and Collin County officials appear to be on a collision course concerning the future of State Highway 121.

At issue is who will control the project to convert the highway into a tollway – and how much it will cost area residents. The project covers an 11-mile stretch of State Highway 121 between Dallas North Tollway and U.S. Highway 75.

According to Frisco officials, if the state ends up in control of the project, annual tolls are expected to be more than double the amount that would be charged under a plan proposed by Collin County, Frisco, Allen, McKinney and Plano.

Tolls are needed on Highway 121 to complete its expansion by 2010 and avoid an additional decade of traffic tie-ups, said George Purefoy, Frisco's city manager.

He urged about 150 residents at a town hall meeting Monday evening to contact the county's state legislators and let them know whether state or local officials should control the expansion.

Frisco Mayor Pro Tem Maher Maso noted that Texas taxpayers already paid for Highway 121's existing lanes. But state officials are considering awarding contracts for the project to private companies, which could then set tolls as high as the market will bear, he said.

"Not only is that double taxation, it is taxation without representation," Mr. Maso said.
Frisco officials estimated that state plans to use Highway 121 as a cash cow would increase initial annual tolls for a twice-a-day driver by more than $700 – not counting weekends. Mr. Purefoy argued that the highway should be available to all residents, not just those who are wealthy.

He also said that the Texas Transportation Commission wants to use excess tolls from Highway 121 in Collin County to fund other projects outside the county.

"This entire group up here is against that concept," the city manager told the audience as he gestured toward City Council members.

The state is increasingly relying on tollways to fund road construction, he said, because gasoline taxes are no longer sufficient for the job.

He distributed information that indicates the North Texas Tollway Authority could operate Highway 121 as a tollway on behalf of the county and four cities, while holding initial tolls in 2010 to 12 cents per mile.

Mr. Purefoy said a private company, with the state's blessing, could initially charge tolls of 25 cents per mile.

Residents who were pleased with the state's record of funding public highways and public education are free to make their views known to their elected representatives, Mr. Purefoy said. But he urged those who were displeased to tell their legislators that they do not want state officials or private companies to control Highway 121's tolls.

Mr. Purefoy also was critical of statements last month by Ric Williamson, chairman of the state transportation commission, who said keeping highway costs as low as possible is "not necessarily in the best interest of solving the state's transportation dilemma" and that limiting consumers' costs "is not our strategy."

Mr. Purefoy said he interpreted Mr. Williamson's comments to mean: "He calls us sheep that he wants to fleece."

"I don't know if that gets your blood boiling, but it does mine," he said. "They shouldn't be taking money out of your pocket to help fund roadways somewhere else."
E-mail blodge@dallasnews.com

© 2006 The Dallas Morning News Co www.dallasnews.com

Texas Transportation Commission promotes "pass through" (shadow) tolls

Transportation Commission to hold meeting in Conroe

01/25/2006

By: Howard Roden
The Courier
Copyright 2006

The Texas Transportation Commission will be in Conroe today and Thursday to bestow its blessing on Montgomery County for becoming the first county to embrace the state's "pass-through" funding for road projects.

The four-person commission will hold its monthly business meeting at 9 a.m. Thursday in the Bluebonnet Room of Lone Star Convention Center. A private reception for the commission members, hosted by local civic and business dignitaries, will be held today at the convention center.

The TTC is the civilian governing board for the Texas Department of Transportation, one of the state's largest departments. The commission is responsible for establishing policy and the rules necessary to carry out the planning, design, construction, maintenance and operation of the state's highway system.

The commission also issues the final approval on the funding of all construction contracts within TxDOT's realm.

Although the TTC is based in Austin, it periodically holds its meeting - usually on the fourth Thursday of each month - around the state to "make it easier" for Texans to participate in state transportation decision-making, said commission spokesman Mark Cross. Montgomery County was selected because of its "new partnership" with TxDOT, said Gary K. Trietsch, district engineer for TxDOT's Houston District.

Montgomery County voters approved $160 million in road bonds last September that, as part of the state's new "pass-through" funding, is supposed to allow the county to construct more than $300 million in transportation projects. Among the projects are the expansion and reconstruction of Farm-to-Market roads 1314, 1484, 1485 and 1488. The newly-named Montgomery County Transportation Program also includes construction of flyovers at the intersection of Interstate 45 and Texas 242.

"TxDOT and Montgomery County have initiated a new partnership that will be a statewide model for collaborative projects all over Texas," Trietsch said. "The success of the pass-through financing in the county to accelerate highway projects is of special interest to the commission."

The commission "feels very positive towards the tool" of pass-through funding, Cross said. Pass-through funding is a method by which local governments obtain the money for road projects, and are later reimbursed by TxDOT, based on the traffic count on those roads.
Only a small portion of the commission's meeting agenda directly involves Montgomery County. The panel is expected to approve a $1.210 million contract to Traf-Tex, Inc., of Houston, for the installation of nine traffic cameras and four traffic control signs along I-45 between Tamina Road and FM 1488.

But for those county residents able to attend the meeting, it's an up-close opportunity see how the commission works, said County Judge Alan Sadler.

"This is a chance for people around here to learn about that process and see how it works," he said. "TxDOT is probably the one state agency that affects Texans the most."

Sadler, Conroe Mayor Tommy Metcalf and other civic leaders are scheduled to issue comments at the start of the meeting. Open comment will be allowed at the end of the commission's meeting. Each speaker will be allowed a maximum of three minutes and the speakers must be signed up prior to the open comment period.

"Sometimes we get none and sometimes we get a lot," said Cross of the citizens' comments. "We encourage it every month. We always let people know they can talk to the commission."
Commission members include Chairman Ric Williams of Weatherford, Hope Andrade of San Antonio, Ted Houghton of El Paso and John W. Johnson of Houston. The commission normally has five members, but Robert Nichols of Jacksonville resigned to run for state Senate District 3.

Gov. Rick Perry appoints commission members with the advice and consent of the Texas Senate. The members serve overlapping six-year terms.

Howard Roden can be reached at hroden@mail.hcnonline.net.

©Houston Community Newspapers Online 2006 www.hcnonline.com

Harris County Commisioners want fast cash in exchange for passing the buck to private toll road operators

County pays $1 million to banks for toll road study

Jan. 24, 2006

By BILL MURPHY
Copyright 2006
Houston Chronicle

The county agreed today to pay investment banks $1 million to study the toll road system, including a plan to privatize it.

Commissioners Court voted to study three possible scenarios for the Harris County Toll Road Authority: keeping the 83-mile system as is; selling it outright; and leasing the long-term rights to operate it.

Commissioners Court is expected to name JP Morgan Securities to lead the study of an outright sale.

Goldman Sachs & Co. will head the study of a long-term lease. Citigroup will look at keeping the toll road as is.

The studies will be completed by late spring. Commissioners Court will decide whether it wants to pursue one of the options in June, but would make no final decision until next year.

Financiers worldwide have begun viewing busy toll roads that draw hundreds of thousands of daily users as investment opportunities.

Investment houses and private toll-road operators have inquired whether the county is interested in privatizing, saying it might be able to lease its system for $2 billion to $7 billion.

An outright sale might net $2.7 billion to $4.4 billion, concluded First Southwest Co., the county's financial adviser.

But First Southwest and the investment banks have provided only preliminary estimates of how much the county could make. The studies will try to determine more exactly how much the county could reap by selling or leasing.

bill.murphy@chron.com

© 2006 Houston Chronicle: www.chron.com

"The fuse has been lit. Our own actions have helped to create dissension."

Fork in road on toll plans?

January 24, 2006

Some discuss pullout if agency uses local funds for FW highway

By TONY HARTZEL
The Dallas Morning News
Copyright 2006

For years, North Texas leaders have prided themselves on working closely on massive road-building projects.

But a simmering debate over the Southwest Parkway toll road has become the latest and perhaps most serious threat to that long-standing cooperation.

The dispute stems from a decision by the tollway authority board to use tolls collected on Dallas- and Collin-area roads to pay for more than half of the $825 million Southwest Parkway, a proposed Tarrant County tollway.

Upset with that decision, Dallas County commissioners raised the possibility of pulling out of the tollway authority.

At stake could be the future of other regional projects such as the Bush Turnpike and even the North Texas Tollway Authority itself.

Complicating the matter are efforts by officials in Denton and Collin counties to collect tolls on State Highway 121 and to keep excess toll revenue primarily in their own counties. That all adds up to a divided region, said Dallas County Judge Margaret Keliher.

"If that's going to happen, then this whole idea of regionalism is going to fall apart," Ms. Keliher said of the county-based toll roads. "My concern is that counties are going to cherry-pick the good projects. Dallas County toll payers would end up paying for other projects that the business community wouldn't do."

Last month, the tollway authority board voted 4-3 to adopt its toll policy for Southwest Parkway and other projects. Representatives of Denton, Tarrant and Johnson counties supported the vote.

Representatives of Dallas and Collin counties unsuccessfully pushed for a policy that could set higher tolls for projects, such as Southwest Parkway, that don't initially generate as much revenue.

"The fuse has been lit," Paul Wageman, the Collin County representative of the tollway authority board, said at an agency retreat this week where board members spent an hour discussing last month's vote. "Our own actions have helped to create dissension."

Toll shortfall

The tollway authority's most recent estimates show that the approved policy would collect only enough tolls to initially pay about 45 percent of Southwest Parkway's construction, operating and debt costs. Although the policy calls for higher tolls on Southwest Parkway than on most other roads, the Fort Worth toll road is not expected to raise enough money to pay its costs, even after 30 years.

"I think the NTTA ought to be responsible for developing a business plan that makes sense," Ms. Keliher said.

Many questions surround the notion of a county withdrawing from the tollway authority, which is a separate government entity that owns and operates all existing toll roads.

"I'm not advocating anything at this point," Ms. Keliher said. "But I am concerned that other counties will do other projects and not participate on a regional basis any longer."

Dissension is not new to the tollway board. Last year, some officials in Tarrant County raised the possibility of leaving the tollway authority board. Their effort, seen by others on the board as an attempt to define the agency's role in future toll projects, was dropped quickly.

"In every instance, it's anti-regional and ill-advised," said the tollway authority's Tarrant County representative, Bill Meadows, who did not take part in the withdrawal discussions.

Who foots the bill?

As Texas shifts to a heavier reliance on toll revenues over gas taxes to fund road construction, the number of clashes over how projects are paid for seems to have risen.

The Texas Department of Transportation is encouraging private groups to submit bids for projects such as Highway 121 toll roads in Denton and Collin counties, as well as a State Highway 161 toll road in southwest Dallas County.

To gain approval for those projects, state leaders have pledged some of the toll revenue to help build neighboring road projects.

The focus on local benefits "has been fostered by the whole concept of near-neighbor" toll revenue sharing, said Collin County Judge Ron Harris. "Those citizens along Highway 161 are going to feel that the money should stay right there."

Meanwhile, the state Transportation Department and the tollway authority have been talking for months about how to pay for construction of an interchange at Interstate 30 and the Bush Turnpike in Garland. Breaking from past agreements, the state is seeking a fixed share of toll revenues from tollway authority projects it will help build.

That differs greatly from 10 years ago, when the state paid to help build some of the major highway interchanges along the Bush Turnpike. The tollway agency pledged to repay some of that money over time. That widely lauded model has become outdated as the state looks to toll roads as its own revenue source.

Using toll roads to pay for nearby projects has a larger benefit than to just that immediate area, said Bob Brown, the deputy district engineer for the state Transportation Department's Dallas office.

"This helps the entire economy of the D-FW area," he said. "A lot of folks are looking at this very short-sighted."

E-mail thartzel@dallasnews.com

Leaders want a more active tollway group

The key to strengthening regional cooperation, many say, starts with a more active tollway authority.

In late November, a handful of political leaders met near Dallas/Fort Worth International Airport to discuss the North Texas Tollway Authority's future. The consensus, according to several participants, was that the agency must compete strongly with private groups for such projects as LBJ toll tunnels or a Highway 121 toll road.

"The NTTA is well-positioned to be more creative than they have been to date," said Lee Jackson, chancellor of the University of North Texas and a longtime leader in regional transportation issues who attended the November meeting.

"They can do some things that counties currently feel like they need ... other entities to do."
In the past few years, the agency has declined offers to participate in such projects as the proposed LBJ tunnels or toll roads on state highways.

"What was appropriate for the NTTA to do in 2000 is probably not sufficient today," said board member Bill Meadows, who represents Tarrant County. "The rules of the game have changed."

In today's climate, the tollway authority has no choice but to become more competitive, said David Blair Jr. of Farmers Branch, chairman of the agency's board.

"We've got to," he said, adding that the Dallas County concerns have come at a difficult time as the agency also deals with competition from private companies. "It's our job now to convince people that we are the right agency to do the work because we understand the challenges."
Tony Hartzel

© 2006 The Dallas Morning News Co www.dallasnews.com

Indiana Toll Road: Aesop fable or Grimm fairy tale?

Will Hoosiers drive happily ever after?

January 24, 2006

BY JACK COLDWELL
Northwest Indiana Times
Copyright 2006


The "selling" of the 157-mile Indiana Toll Road is toughest for Gov. Mitch Daniels in the northern Indiana counties.

Here, the Toll Road, like the wondrous goose of the Aesop fable, has provided golden eggs of economic development, transportation convenience and funding for infrastructure improvements.

The governor's plan to lease the Toll Road to private operators long-term is viewed by critics in the north as a greedy scheme to sell the road that lays the golden eggs, an attempt to get the gold all at once -- billions of dollars upfront to use on long-delayed highway projects all over the state. They would prefer not to share for the decades-long length of the lease.

Legislators and community leaders elsewhere in the state are more receptive, some even delighted. After all, no toll road gold has come their way before.

Unlike the unlucky lady in the fable who winds up with neither goose nor gold, the governor knows what he is doing. He would not kill the road or even actually sell it, although a lease for 75 years would in effect sell the right to operate the Toll Road for beyond the lifetime of most living Hoosier taxpayers.

The gold during the lease would go to the private investors.

A long-term lease would be patterned after the deal in which Mayor Richard Daley obtained $1.8 billion through the 99-year lease of the Chicago Skyway to a Spanish-Australian consortium.

What are the short-term and long-term ramifications of such a lease in Indiana, politically and economically?

The ending could be that "they drove happily ever after." Or, that the governor was as mistaken as the woman who did in Aesop's golden goose.

Short term?

The governor would gain politically in much of the state by speeding up long-delayed highway projects. He would have an immediate bonanza of goodwill based on positive announcements and contract-letting and groundbreaking before the 2008 elections, if he seeks a second term.

Daniels says his Major Moves plan for highways, with the key Toll Road lease, would create jobs and spur economic development.

But in the short term, he also might lose voter support in northern Indiana among Republicans, Democrats and Independents, who would be unhappy with higher tolls and loss of the annual gold from Toll Road profits.

Lease critics compare higher tolls -- and many agree tolls would rise often and considerably -- to a tax increase paid only by Hoosiers who live near the road and use it often. There would be grumbling that people in Indianapolis, Evansville or elsewhere who don't use the road would gain from the lease's windfall.

The governor has promised northern Indiana would share in the windfall and come out ahead, because cherished projects could not move ahead without gold from the lease.

Long term?

This is more difficult to analyze.

No reputable economist would claim to know now what the economy will be like in 2081, if the lease is for 75 years.

In decades to come, a lease could be viewed positively if the Toll Road were running smoothly, with proper maintenance and safety and with the private operators adding lanes and other improvements to increase traffic flow.

Positive economic development could follow in areas where the upfront money was used to build roads and bridges.

But a negative view would prevail along the Toll Road corridor if tolls were perceived as excessive, if the operation wasn't smooth, if maintenance were poor and if the operators were reaping huge profits during 75 years with little benefit going to counties along the corridor.

Guesses range from suggestions that private operators could fail and default, handing back a crumbling road, to claims the operators eventually could make a profit each year equal to what they paid upfront.

Politically, it might not matter much in the long term. Most Hoosier voters in 25, 50 or 75 years likely would not know or care which governor made the Toll Road deal or his party affiliation. The real political impact, plus or minus, would come in voter perception this fall, in 2008 and perhaps in a few elections after that.

Economically, it might matter more in the long range. High tolls that discourage truck use and curtail development of warehousing and distribution centers near the Toll Road would be a blow to economic development in the northern tier.

But if the upfront money actually helped Indiana catch up on road demands -- and to maintain what was built -- the statewide economic impact would be positive.

The opinions are solely those of the writer.

© 2006 The Northwest Indiana Times www.thetimesonline.com

Up-front cash generates feeding frenzy

Pitfalls abound on private roads

Still, officials enthusiastic about raising cash

January 24, 2006

BY SYLVIA SMITH
Ft. Wayne Journal Gazette
Copyright 2006

WASHINGTON | Overly rosy projections for how much traffic private toll roads would attract have limited their financial success. But the idea has excited transportation officials in almost every state in the past few years.

State officials who consider leasing an existing toll road should learn from the mistakes other states have made, said Robert Poole, director of transportation for the Reason Foundation, which supports public-private partnerships in road building.

Taxpayers are at little risk of losing a valuable asset if it is made clear how lease income will be used; toll rates and increases are spelled out; and adequate oversight is included, said Oliver "Trip" Pollard III, a lawyer with the Southern Environmental Law Center.

Recent projects that faltered include:

* Camino Colombia highway, a 22-mile stretch from Texas to Mexico's border that went bankrupt after three years.

Projections that heavy truck traffic would pay $16 per toll never materialized. The state bought the private toll road in 2004 for $20 million, a fraction of its $90 million cost, and Texas got a new road for 22 cents on the dollar, according to Texas officials.

* Pocahontas Parkway near Richmond, Va., where 8.8 miles cost $377 million to build three and a half years ago.

The deal calls for the state to operate and maintain the road until the tolls generate enough money, but use is about half of original projections, according to a report by the Government Accountability Office, the auditing arm of Congress.

The Pocahontas Parkway was a regional priority for years as an untolled highway but couldn't be built, because the state didn't have enough money, said Tamara Neal, spokeswoman for Virginia's Department of Transportation.

Now the state pays for repairs and maintenance. Last year, the state paid for $389,000 in upkeep; so far, the parkway has not repaid the state transportation department.

* Southern Connector toll road that rings Greenville, S.C. for 16 miles and opened in 2001.

Last year, it lost ridership but increased revenue because of a 50-cent toll increase, which allowed the Southern Connector to make a debt payment in January without dipping into its reserve fund for the first time, spokesman Tim Brett said.

The debt payment is scheduled to increase by $10 million next year. When private investors stepped in, the state reaped the benefits.

"The state was able to get a $200 million federal interstate built without using precious state resources or using the state bond limit," Brett said.

When the bonds are paid off in 30 years, the South Carolina Department of Transportation "will own and operate it with no debt," he said.

* Private express toll lanes along 10 miles of highway in Orange County, Calif.

Built by a private conglomerate for $125.6 million in exchange for a 35-year lease, the agreement prevented the state from building or improving roads within 1.5 miles of the toll road, including the adjacent public highway.

In a few years, the noncompete clause became a political nightmare, because it blocked upgrades to the public highway.

In 2003, the state bought the toll lanes for $207.5 million in bonds, which it expects to pay off with toll revenue.

"The main advantage from the standpoint of a state like Indiana is the large amounts of cash upfront to finance badly needed transportation improvements," said Kenneth Orski, a transportation consultant who was a Department of Transportation official in the Nixon and Ford administrations.

Sylvia Smith is Washington editor with The (Ft. Wayne) Journal Gazette.

© 1995-2006 Northwest Indiana Times www.thetimesonline.com

Hoosier lawmakers root for quick cash

Indiana Gets $3.85 Bln Bid From Macquarie-Cintra for Toll Road

Jan. 23 (Bloomberg) -- Indiana, looking to raise money for highway repairs, was offered $3.85 billion in a joint bid from Australian and Spanish companies seeking to buy a toll road that spans the state between Chicago and Ohio.

The bid, from Australia's Macquarie Infrastructure Group, the world's largest developer of toll roads, and Cintra Concesiones de Infraestructuras de Transporte SA of Madrid, marks the most a U.S. municipality has ever been offered for any asset, according to state officials.

"It's unprecedented,'' said Charles Schalliol, Governor Mitch Daniels's budget director, in a telephone interview. "This is a blowout bid for the state.''

Private ownership of major toll highways, a rarity in the U.S., is being seized on by state and city officials as a way to shore up budgets and raise money for infrastructure projects.

Selling the Indiana expressway, which requires approval from state legislators, may allow foreign investors to profit from raising tolls on an artery that carries more than 50 million vehicles a year across the northern part of the state.

The 157-mile (253-kilometer) Indiana Toll Road, nicknamed "the Main Street of the Midwest,'' is a section of the east- west Interstate 90 that runs between Boston and Seattle. Goldman Sachs Group Inc., last year's No. 1 mergers arranger, stands to collect millions of dollars in fees as Indiana's adviser.

'Gigantic'

The bid eclipses the $1.83 billion Chicago got last year for selling its only toll road, a 7.8-mile elevated highway known as the Skyway. That road also was bought by Cintra and Macquarie Infrastructure Group, which is managed by Macquarie Bank Ltd., Australia's largest investment bank.

Bankers involved expected the Indiana Toll Road would top the Skyway, said Conor Kelly, who heads Dublin-based Depfa Bank Plc's six-person infrastructure finance unit for the Americas. Depfa worked with a potential bidder, Kelly said, though he wouldn't name the company.

"It's going to be a gigantic transaction,'' Kelly said in an interview before the winning bid was announced.

Chicago, with its Skyway sale, became the first U.S. government to sell an existing toll road, according to the Washington-based International Bridge, Tunnel and Turnpike Association.

Billions Proposed

While less than 30 of the 5,244 miles of U.S. toll roads are currently run by private operators, according to the group, there are some $25 billion of private investments proposed or committed for new and existing toll roads in six states including Virginia, Texas and Oregon.

The trend is being driven by increasing investment needs as U.S. highways are aging and congestion is worsening, said Martin Wachs, director of transportation research at the Santa Monica, California-based Rand Corp. A growing reluctance by politicians to raise the tax on gasoline, which has funded most federal and state highway construction, also has played a part, he said.

As governments consider selling toll roads, investment banks are gearing up for the millions of dollars of fees that could come from work as advisers on the deals or arrangers of related financing.

Goldman and Chicago-based Loop Capital Markets LLC reaped $12 million in advisory fees on the Skyway sale. Goldman and Citigroup Inc., both based in New York, also managed a $1.4 billion sale of floating-rate bonds in August 2005 to refinance the project.

Four Offers

In Indiana, budget director Schalliol said the state began looking into privatizing the Indiana Toll Road after the Skyway sale. He said the state didn't want to raise the gas tax, and was struggling to find enough money for highway projects.

Schalliol said he had hoped the sale would generate enough to pay for Daniels's 10-year, $2.8 billion plan to overhaul and expand the state's highways. Schalliol said four offers for the toll road were made from six bidders who were considering the project up until the Jan. 20 deadline. He wouldn't identify the other companies or how much they bid for the road, whose tolls range from a $2.70 commuter rate for cars to $28.75 for the biggest trucks.

Daniels, a Republican who was President George W. Bush's first budget director, is proposing higher tolls that would more than double some rates, and phase in increases for trucks. The road links directly to the Skyway, which Cintra and Macquarie began operating in January last year.

Cintra shares today rose 22 cents, or 2.2 percent, to 10.47 euros ($12.85) in Madrid, leading gainers today in the benchmark IBEX 35, which fell 0.3 percent.

Texas Tollway

Cintra, controlled by Spanish builder Grupo Ferrovial SA, was chosen in December 2004 by Texas to invest $6 billion in building a 316-mile highway between Dallas and San Antonio, and then pay the state $1.2 billion for a 50-year contract to maintain the road and collect all toll revenue.

Other companies who said they were pre-qualified by Indiana to bid on the toll road were: Madrid-based Sacyr Vallehermoso SA, Barcelona-based Abertis Infraestructuras SA, Europe's largest toll-road operator, and Fomento de Construcciones & Contratas SA, also of Barcelona.

Sacyr, Spain's fifth-biggest builder, worked on its bid with RBC Capital Markets, according to Chris Hamel, head of U.S. public finance for RBC, the investment-banking arm of Toronto- based Royal Bank of Canada.

RBC late last year hired former Macquarie banker Aaron Barman to head the firm's push to win more toll privatization business, Hamel said.

Banking Business

Mark Florian, a Goldman managing director who advised Chicago and Indiana, relocated in December to New York from Chicago to bolster Goldman's efforts.

"It's not just public finance people being involved,'' Florian said in a previous interview. Goldman's mortgage and derivatives desks were involved with the Skyway bond sale, he said.

Private toll roads have been the norm in European countries such as Spain, Italy and France since the end of World War II, and in Australia and some South American countries such as Brazil and Chile in the last two decades, said Patrick Jones, executive director of the International Bridge, Tunnel and Turnpike Association.

While Indiana legislators must pass a law to allow the sale, Jeff Espich, a Republican from Uniondale who is chairman of the Ways and Means committee of the state House of Representatives, said last week that lawmakers would likely support the plan if the price exceeded $3 billion.

"There's just so much good you can do with that kind of money,'' Espich said in a telephone interview.

To contact the reporter on this story:
Eddie Baeb in Chicago at ebaeb@bloomberg.net.

©2006 Bloomberg L.P. www.bloomberg.com

"Elected leaders see private investment as a palatable alternative to raising gas taxes to pay for roads."

When good toll-road ideas turn bad

January 23, 2006

By GORDON DICKSON
Fort Worth Star-Telegram
Copyright 2006

Today, 17 states are negotiating about $35 billion worth of private toll-road projects. Elected leaders see private investment as a palatable alternative to raising gas taxes to pay for roads.

But some early examples of private projects didn't go so well.

Transportation officials in Texas and other states, who collectively are privatizing at least $36 billion in toll-road projects, say they can prevent similar mistakes by negotiating contracts that protect the public.

Here are some examples of early private toll-road projects that seemed like good ideas but went bad, based upon reports from the toll-road industry, newspapers and other sources.

Camino Colombia, Laredo -- Investors spent about $90 million in the 1990s building a 22-mile truck bypass from the Mexican border around Laredo, but traffic was only 13 percent of projections. Some critics say the downfall was high tolls of up to $16. Others say planners misjudged the way trucking companies use border crossings.

Last year, the Texas Department of Transportation bought Camino Colombia for $20 million and immediately began making improvements and lowering tolls. Officials expect traffic to pick up this year and the road to eventually be profitable.

Supporters note that it was the original investors, not the public, that took a bath.

SR 91 Express Lanes, California -- Private investors in 1995 built toll lanes in the median of a busy freeway connecting Riverside and Anaheim. A few years later, county officials wanted to expand adjacent non-toll lanes but were forbidden by a noncompete clause in their contract. SR 91 investors didn't want non-toll roads hurting business. The county bought back the toll lanes for $208 million to clear the legal hurdle.

407 ETR, Toronto -- Residents and government officials have gone to court to try to stop Madrid-based operator Cintra and its partners from raising toll rates and taking strict steps to punish motorists who use the road without paying their tolls. Because of a contract between the company and the Ontario provincial government, Cintra can block motorists from re-registering their vehicles if they haven't paid tolls, and some residents say their credit is shot.

Cross City Tunnel, Sydney -- Australians boycotted the 1.2-mile tunnel rather than pay a stiff toll, roughly $2.60 in U.S. dollars. Above ground, perfectly good lanes on city streets were shut down to try to persuade people to try the tunnel.

Gordon Dickson, (817) 685-3816 gdickson@star-telegram.com

© 2006 Fort Worth Star-Telegram: www.dfw.com

“Cash positive” doesn 't necessarily mean “profitable.”

Privately built roads often fail to keep promises

Jan. 23, 2006

By Sylvia A. Smith

Washington editor
FortWayne.com
Copyright 2006

WASHINGTON – The calculus for David Thomasson is a no-brainer. For about $3.50, he can shave a half-hour off his commute and be almost guaranteed not to run into a traffic jam that halts all lanes.

Thomasson usually takes a train to his office in downtown Washington from his home 60 miles away in Virginia, but when he drives, it’s on the privately owned Dulles Greenway – not on the roads his tax dollars helped build. The public roads between Leesburg, Va., and Thomasson’s office are full of traffic lights, low speed limits through small towns and congestion.

That’s exactly the kind of reaction a group of investors hoped for in the early 1990s when they proposed building and operating a $340 million, 14-mile private toll road to link the Dulles airport and the rapidly growing Leesburg area. It opened in 1995.

But in the first 10 years of its 40-year franchise, the Greenway never turned a profit, in part because traffic was much lower than projected. The toll road defaulted on its loans in 1996, refinanced, and last year sold a majority interest in it for $533 million to an Australian investment firm that was part of the conglomerate that leased the Chicago Skyway.

Traffic – and the toll rate – increased in the past year as nearby development grew, and the operation now is “cash positive,” a Greenway spokeswoman said. She said she wasn’t permitted to say more or to indicate whether “cash positive” is the same as “profitable.”

Although privately owned and operated toll roads are commonplace around the world, they’re a rarity in the United States. Only a handful exist, and many have rocky histories. But the idea has excited transportation officials in almost every state in the past few years.

“Every conference I went to in 2005, this was the topic,” said Robert Poole, director of transportation for the Reason Foundation, which supports public-private partnerships in road building.

Despite his enthusiasm, Poole said there are pitfalls, and state officials who are thinking about leasing an existing toll road – such as Indiana – or proposing the construction of a new highway with private money should go to school on the mistakes other states have made.

For instance, a decade ago California authorized 10 miles of private express toll lanes along a highway in Orange County. The project was built by a private conglomerate for $125.6 million in exchange for a 35-year lease. The lease prevented the state from building or improving roads within 1 1/2 miles of the toll road, including the public highway adjacent to the toll lanes.

Within a few years of the toll lanes’ opening, the non-compete clause became a political nightmare because it blocked upgrades to the adjacent public highway. In 2003, the state purchased the toll lanes for $207.5 million in bonds, which it expects to pay off with toll revenue.

Elsewhere, overly rosy projections for how much traffic private toll roads would attract have limited their financial success. For instance, toll roads in Virginia and South Carolina have not lived up to their expected usage, so the income from tolls is below projections.

The 8.8-mile Pocahontas Parkway near Richmond, Va., cost $377 million to build, most of which was financed through tax-exempt bonds. The deal calls for the state to operate and maintain the road until the tolls generate enough money.

But according to a report by the Government Accountability Office, the auditing arm of Congress, tolls are about half the projected amounts for the 3 1/2 -year-old highway.

Tamara Neale, spokeswoman for the Virginia Department of Transportation, said the Pocahontas Parkway was a regional priority for years – as an untolled highway – but couldn’t be built because the state didn’t have enough money.

Now the state pays for repairs and maintenance. Last year, for instance, the state paid for $389,000 in upkeep; so far the parkway has not repaid the state transportation department.

The Southern Connector toll road that rings Greenville, S.C., for 16 miles opened in 2001. Last year, it lost ridership but increased revenue because of a 50-cent toll increase. The rate increase allowed the Southern Connector to make a debt payment in January without dipping into its reserve fund for the first time, spokesman Tim Brett said.

The debt payment is scheduled to increase by $10 million next year. Brett said the Connector’s management “is in preliminary review of possible restructuring of the debt.”

Pete Poore, communications director for the South Carolina transportation department, said the Southern Connector was part of the state’s master plan for years but wasn’t a priority. Brett said when private investors stepped in, South Carolina reaped the benefits.

“The state was able to get a $200 million federal interstate built without using precious state resources or using the state bond limit,” Brett said. When the bonds are paid off in three decades, he said, the South Carolina Department of Transportation “will own and operate it with no debt.”

The spectacular failure in the world of public-private partnerships is in Texas, where the 22-mile Camino Colombia highway from the Mexico border went bankrupt after three years. The state bought the private toll road in 2004 for $20 million, a fraction of its $90 million cost.

Poole said the toll road was doomed for several reasons, including legal fights over a provision in the North American Free Trade Agreement that allows Mexican trucks to make long-haul trips into the United States. Until the court battles are settled, Mexican goods have to be dropped at a truck yard where American trucks hook up the trailers and continue the haul. The upshot for the Camino Colombia is that heavy truck traffic paying a $16 toll never materialized.

The model of a toll road from the U.S.-Mexico border didn’t work, Poole said, but the silver lining is that “Texas got a brand-new road” for 22 cents on the dollar.

The Chicago Skyway appears to be the first example of an existing U.S. toll road being turned over to private operators, so there is no history of how well leasing arrangements work.

“The main advantage from the standpoint of a state like Indiana is the large amounts of cash upfront to finance badly needed transportation improvements,” said Kenneth Orski, a transportation consultant and Department of Transportation official in the Nixon and Ford administrations.

“Over time – years – the returns from the turnpike to the state might be the same as to a private operator,” he said. “But what the private operator is willing to do is assume the risk of the toll road continuing to produce revenue in exchange for an upfront payment.”

Even skeptics of projects that allow a private company to build a new toll road say lease deals are less risky for taxpayers.

“The risk is you put profits ahead of sound transportation planning,” said Oliver “Trip” Pollard III, an attorney with the Southern Environmental Law Center.

But with public commitments on how the lease income will be used, and with the lease arrangement spelling out toll rates and increases, and adequate oversight, he said, taxpayers are at little risk of losing a valuable asset.

sylviasmith@jg.net

© 2006 Knight Ridder www.fortwayne.com

"Texas Transportation Commission doesn't expect to set caps on proposed toll rates."

Private firms eye toll plans

Jan. 22, 2006

By Dave Moore
Dallas Business Journal
Copyright 2006

Someday soon, North Texas drivers who use toll roads here may be paying Australian retirees for the privilege.

As far-fetched as that idea might sound, it could be just a little more than a year away.

To officials at the state of Texas, it's a simple case of supply and demand: Billions of dollars await investment internationally, while the number of cars jamming Texas highways continues to climb. And money from the federal gas tax that normally pays for roads hasn't nearly kept pace with demand.

The officials' solution: Plow all that investment money into toll roads that serve tolltag-carrying drivers who need to get from point A to point B. Then, the state might get extra money for more road construction.

"I think people might think this is just a way for private companies to make money," said Robert Poole of the Reason Foundation, a Libertarian think tank. "But I think this is the most exciting way to fund highways to come along in the past 10 years. The gas tax simply wasn't enough to do the job."

It's been about 50 years since the federal government initiated a gas tax to pay for roads, said Bob Brown, deputy district engineer for the Dallas district of the Texas Department of Transportation's Dallas office.

"Now there's not enough to build new roads," he said. "Many states are turning to tolling."

Poole said about 17 states, including Texas, are considering privatizing highways to some extent. And passage by the Texas Legislature of laws giving TxDOT more flexibility in funding road construction in the past three years has put Texas at the forefront of privatizing toll roads, Poole said.

Under the law, the state transportation department retains the land and the road itself, while developers sign a lease that allows them to build, operate and toll the roads.

Five projects costing nearly $9 billion are under consideration for such leases in North Texas, according to TxDOT.

Among them are the $3.5 billion expansion of Interstate 635 and a $1.5 billion toll road proposed to pass through Collin and Denton counties. One of the biggest of the statewide toll projects would be the Trans-Texas Corridor, which has captured the interest of toll investors worldwide.

Statewide, private companies have expressed interest in building more than $27 billion worth of projects across the state, said Mark Ball, a TxDOT spokesman. That number approaches the $35 billion in federal highway gas tax funds that Congress issued nationwide in 2004.

"This is going to become a new thing in U.S. markets," said Philip Armstrong of the New York office of Skanska, a predominately Swedish-based building consultant. "They want to get involved in the U.S. market."

Risk and return

Australia-based Macquarie Infrastructure Group has also bid on several Texas toll projects.

While Macquarie handles investments from and staffs offices in the United States and worldwide, it got much of its initial infusion of investment capital back in the early 1990s, when the Australian government passed a law requiring employers to invest 9% of employees' pay in retirement vehicles, according to a Macquarie spokesman.

The fund now has market capital of about $6 billion to $7 billion, the spokesman said. Macquarie and other firms sell bonds that are used for toll-road projects.

U.S. investment groups have yet to completely jump aboard the notion of leasing tollways for profit. Of the five firms entering preliminary bids to lease the State Highway 121 tollway, which will span from McKinney west to the Dallas County line, only one was based in the United States.

Jack Matthews of Dallas-based Matthews Southwest Inc. was the first to enter an unsolicited bid to lease and operate the Denton County portion of S.H. 121, but the state didn't accept his proposal. Later, the Texas Transportation Commission accepted an unsolicited bid from Skanska. The Skanska proposal called for a lease agreement for S.H. 121 in both Denton and Collin counties.

Matthews, whose firm is primarily a real estate development company, said he was involved early in the development of the 407 Express Toll Road in Toronto. Generally speaking, he said, investors can expect an 8.5% annual return on their investments with a toll road, versus a return of about 7% to 7.5% if they invested in an office building.

However, Matthews and other investment experts say, exact rates of return are hard to generalize because they're affected by the amount of control the state exerts in negotiating a lease agreement, whether a road has already been built, and other considerations.

He said toll roads carry higher rates of return because they carry higher risk -- especially because they face competition from other roads.

Matthews said he intends to re-enter a bid to lease the Denton portion of S.H. 121 when the highway commission requests detailed proposals.

Some residents have voiced opposition to foreign money paying for Texas roads. (See accompanying story, "Counties split over foreign investment.")

'Competition is good'

Collin County officials are hoping that a North Central Texas Council of Governments political advisory committee, the Regional Transportation Council, will endorse the North Texas Tollway Authority for the lease of the Collin portion of S.H. 121. The council is expected to vote on the matter in a month or two.

While the council's recommendations have weight with the state transportation commission, geographic considerations won't be a factor in picking the winning bid, said transportation Commissioner Ted Houghton.

"Who do you think would be buying those (North Texas Tollway Authority) bonds?" Houghton said. "There are investors from all over the world. We're getting real parochial in our thinking. We want investors in on this. Competition is good. I get to bring someone else's money into the state of Texas? That's wonderful."

On Jan. 17, more than 300 people took part in a standing-room-only informational session in Austin, where TxDOT spelled out its expectations and ground rules for bidding on tollway leases.

Many say the state will have to strike a balance between seeking extra money to pay for other road projects and allowing firms a fair profit and drivers reasonable toll rates. While the commission doesn't expect to set caps on proposed toll rates, it will be able to control them by determining which proposal it selects for projects.

The decision is expected to be made in March 2007 for the S.H. 121 project. "We'll have to do what's right for the state of Texas," Houghton said. "We'll see which one shines."

© 2006 Dallas Business Journal msnbc.msn.com

"Nason's limited experience in motor vehicle safety suggests a political favor--or a simple lack of interest in the agency--by President Bush."

Lobbyists Grouse At Nomination of Lobbyist to Safety Agency

January 23, 2006

ConsumerAffairs
Copyright 2007

The Bush Administration's nomination of a 35-year-old Capitol Hill lawyer and lobbyist to run the National Highway Traffic Safety Administration (NHTSA) has tongues wagging among Washington's lobbyists and pump primers.

"Maybe she has talents not yet obvious to the outside world," stabbed one auto industry lobbyist commenting on Nicole Nason's nomination to be head of NHTSA.

Nason's resume includes almost three years as assistant secretary of the Department of Transportation for governmental affairs where she worked as DOT's congressional lobbyist.

She has also worked on the staff of anti-abortion hero Rep. Henry Hyde of Illinois and former Rep. Porter Goss of Florida, who is now director of the Central Intelligence Agency.

Her limited experience in motor vehicle safety, which is NHTSA's primary task, suggests a political favor -- or a simple lack of interest in the agency -- by President Bush. Nason's not talking until the confirmation hearings, which have not been scheduled.

Public Citizen President Joan Claybrook has pointed out that as head of NHTSA Nason would be in the position of implementing measures she had opposed as a lobbyist for DOT.

Coming to Nason's defense was Alan C. McMillan, president of the National Safety Council.

"Ms. Nason was instrumental in leading Department of Transportation efforts to include incentives for states to pass primary seat belt laws in the final transportation reauthorization bill passed by Congress and signed into law last year. These incentives will result in more lives saved," McMillan said.

"In addition, Ms. Nason's experience with and support of the law enforcement community in her previous role as assistant commissioner for the U.S. Customs Service will be critical as NHTSA Administrator.

Several important decisions face NHTSA in this year. The agency is about to finish work on new side-impact crash standards and roof strength regulations. There is a major overhaul of the government's fuel economy program in the works as well.

Ralph Nader has criticized the automobile safety agency as nothing more than a lap dog for the auto industry. The consumer advocate said NHTSA "is now a consulting agency to Detroit" and federal regulation is essentially dead.

Before being named to the DOT post, Nason was Assistant Commissioner of the Office of Congressional Affairs at the U.S. Customs Service. Earlier, she was Government Affairs Counsel at Metropolitan Life Insurance Company. She is a graduate of American University and earned her law degree from Case Western Reserve University Law School.

© 2007 ConsumerAffairs.Com Inc. www.consumeraffairs.com

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Cintra-Macquarie gets winning bid for Indiana Toll Road

Cintra-Macquarie bid of $3.85b for Indiana TR accepted

1/23/06

TollroadsNews
Copyright 2007

A Cintra-Macquarie partnership has offered $3.85b, the highest of four bids for the Indiana Toll Road on a 75 year concession. Governor Mitch Daniels who had initiated the privatization process announced the bids at a news conference this morning, calling the $3.85b an "astonishing sum." The state's reserve price was $2.0b. Gov Daniels said the Cintra-Mac bid is "clearly superior" to the other three bids and "after due deliberation, I am proud, and thrilled, to recommend it to the General Assembly and to my fellow citizens."

He said the concession fee would allow the state to "stop dreaming, and start digging" on other important projects.

We got Charles Schalliol, director of the State Budget Agency, on the phone.

He sounded very excited about the Cintra-Mac bid. He says the state is aiming for a financial close on the Cintra-Mac deal by June 30. He said it needs endorsement of the legislature which is due to adjorn March 14. He did say: "I'm not a politician. I'm from business, but..."

"We think it will get bipartisan and strong support. With this number ($3.85b) I don't see too many voting against it. It fully funds our ten year program. It is good for every area of the state. There's something for every constituency. It is hard to see legislators telling us to tear up a check for nearly four billion dollars."

Other bids

Schalliol said of the other three bids: "They were good solid bids."

All the final bids were for an identical concession contract - available on the website of the Indiana Finance Authority. See http://www.in.gov/ifa/tollroad.html/

The state won't release the names or the numbers of the losing bids until after the planned June 30 financial close with Cintra-Mac.

That follows precedent set by the City of Chicago on the Skyway privatization - their argument being that in case of a failure to achieve a financial close the city (state) as concession grantor wants to be in a position to bargain with one of the other bidders without them knowing the offers they are competing with - the sealed bids argument for getting top money.

We've heard independently that the second bid was in the $2.8b to $3.0b range and that the third and fourth bids were over $2.0b, but we'll know the reliability of that mid-summer. Fluor was in one of those. A fifth bidder Washington Group International and Abertis were in the race until the last few days, we also heard. They were considering a bid in the range $2b to $2.2b, but decided at the end not to submit.

Cintra statements

Cintra chief exec in the North America Jose Maria Lopez de Fuentes told us in a telephone interview he thinks the bid is good for Indiana and good for the shareholders of the two companies. He said their policy was to bid "what we think it is worth" not what was needed to win the concession, because "you never know that." If you really want to win you bid your maximum, he said.

"It was a very aggressive proposal. If we pay a lot more than the others, we have no hard feelings. That is alright. We think it is worth $3.85 billion, so we bid that. We hope it will serve the state well. It will give them money, I think, to make Indiana one of the states leaders in terms of modern infrastructure. It will help the economy and the people of the state. Meanwhile we are committed to completely modernize the Toll Road, both by the concession contract and in the interests of our business."

Lopez said they hope to be in a position to do a financial close and take control ahead of June 30: "We may be able to do it earlier than that. First they need legislation supporting the concession. Then we sign the contract after that. Then we do a financial close and execute the contract. It is quite quick."

The Cintra chief says they plan $700m of improvements over nine years of which more than a half will be done in four years.

"We will be joining the IAG (Inter Agency Group for E-ZPass) very soon to plan electronic tolling. We want to move quickly on that."

Much of the early work will be at the busier western end. 14km (9mi) is already 2x3 lanes. The group will widen another 11km (7mi) to 3 lanes each direction, improve toll plazas and interchange ramps. Over the nine year period there will be improvements over the whole length of the tollroad. Level of service guarantees will dictate many improvements.

"We will really rejuvenate this road," he says.

Lopez told us that although the Skyway and the ITR will support one another, they will have separate staffs and separate accounts because they are separate companies with separate concession obligations.

In a prepared powerpoint presentation Cintra says that the consortium proposes to provide $770m equity (Cintra $385m, Macquarie $375m) and to raise senior bank debt of $3279m for a total of $4,049m. They estimate equity internal rate of return of about 12.5%. The yield from the first years will be 3.5%, "creating value from day one." The presentation says: "Financing already completed: debt in local currency wsithout recourse to partners."

Cintra will nominate a CEO "subject to board approval."

The presentation says the concession provides a "very attractive tolling plan" and a "long concession." Other attractive features are that the facility has been operational for 49 years and has good growth potential because it is a "link between the main logistics hubs in the US."
Macquarie statements

Stephen Allen, CEO of Macquarie Infrastructure Group (MIG) said: "We are delighted to have been selected as preferred bidder for the Indiana Toll Road. The Indiana Toll Road, often referred to as the 'main street of America' is an essential part of the US National Interstate Highway System and serves as an integral connection between the east and west coasts of America. Consistent with the integral role of the road in the national economy, we are committed to enhancing levels of service for all Indiana Toll Road users. This will be done through significant capital improvements over the coming years and the introduction of electronic toll collection.

"The Indiana Toll Road will be an attractive addition to the MIG portfolio of roads businesses. Significantly, it has a long operating history with solid prospects for revenue growth over the 75 year concession. Traffic has grown over 3.9% per annum since opening. In addition, an attractive toll schedule has been set in place until 2010 after which tolls will increase at the greater of 2 per cent, CPI and nominal GDP per capita growth. This acquisition will increase the average concession term, internal rate of return and equity risk premium of the MIG portfolio."

The Indiana Toll Road will comprise 5% of MIG's portfolio after the close.

Allen said the estimated internal rate of return will be between 12.5% to 13.5% a year, providing a risk premium of between 8% to 9% per annum over US 10 year bond yield. Average expected yield will be 2.6% per annum over the first 5 years with an anticipated 15 year payback period to equity.

Indiana is "out in front"

Budget Agency chief Schalliol bragged a bit about their process in our interview.

"We are very proud of what we have accomplished here. Indiana is out in front on this. We did (the selection) in 117 days versus two and a half years in Chicago. We have the concession contract ready. It's a good contract for the state and for road users. The concessionaire guarantees Level of Service D and better in the urban part (of the ITR) compared to Level of Service E now and worse in prospect under state ownership. They promise Level of Service C in the rural areas. All this is after their initial investment in improvements over two years... We got four solid bids... These people know the business. They are the biggest private toll operators in North America."

Most of all he was excited by the bid number.

"We were blown away by it. It enables us to fully fund ten years of major construction, that is presently unfunded."

The impression is that state officials got a solid billion dollars more than they expected.

The same companies that did the Skyway were employed by the state of Indiana on this privatization: Goldman Sachs doing the financial numbers, and Mayer Brown Rowe, Chicago lawyers, the bidding process and legal issues.
Daniels' statement

The text of prepared remarks by Gov Mitch Daniels this morning:

"One year ago, Indiana faced twin deficits: a fiscal deficit stemming from years of government outspending its means, and an infrastructure deficit, a $3 billion shortfall between the cost of needed transportation projects and the dollars due to come in. We had more than $2 of needs and plans for every $1 of funds on a business as usual basis.

"Today, state government is operating on a balanced budget, and is on its way to paying back its debts to schools and local governments. This morning, in one bold stroke, we announce the closing of Indiana's second deficit.

"As a candidate and as governor, I said that we should explore the possibility of attracting private capital, other people's money that no Hoosier (colloquial for Indianan) need be taxed for, to build the great projects we cannot afford, bringing with them countless thousands of new jobs and a more prosperous future for our children. We sought to leap to the front of an onrushing, worldwide trend to use such partnerships.

"Last Friday, after the fastest bid process in the history of such transactions, we received four final bids to lease and operate the Indiana Toll Road on a long-term basis. Every bid offered an enormous amount of money far beyond anything the state could generate on its own. One bid was clearly superior to the others, and after due deliberation, I am proud, and thrilled, to recommend it to the General Assembly and to my fellow citizens.

"I ask this morning that the legislature pass our proposed 'Major Moves' initiative (a ten year program of transport projects) and enable Indiana to accept the offer, from the joint venture known as Statewide Mobility Partners (the operating name for the Cintra-Mac partnership for the ITR), of a lump sum payment of $3.85 billion. "After closing, we will deposit this astonishing sum, equaling more than a decade of new construction funding at the current level, into a new trust fund, to be invested as fast as legally and humanly possible in the biggest building program in state history. The Hoosier Heartland Corridor, a non-stop US 31, new Ohio River bridges, I-69, the Fort to Port highway, the Gary-Chicago Airport, and hundreds more projects will all change overnight from wishes to certainties. The money will be in the bank. At last, we can stop dreaming and start digging.

"The advantages don't stop there. We will have a vastly better Indiana Toll Road than we have today. It will be better maintained, better patrolled, with better technology than the state could ever provide. Statewide Mobility's capital plan for the next few years calls for more than twice as much investment to upgrade the Toll Road as the state has managed in the recent past.

"It's been years since state government has been able to provide a dime of road money to local government. Because the winning bid was so large, even beyond what is estimated to fully fund our 10-year plan and other Major Moves commitments, I have asked the bill's sponsor to add to it an amendment to commit $150 million in direct funding to our 92 counties, to help them address their own project needs and backlogs, over the next three years.

"On the day it closes, this transaction will become the largest such event in American history. That record will not last long. Other, larger states are already considering similar steps, and will be emboldened by Indiana's example, but our moving ahead of others almost certainly contributed to the high level of the bids we received.

"One record likely to last a long while is the time in which we got this done. We took just 117 days to conduct a complex financial process that typically takes 9 months or even longer. In today's world, speed makes a huge difference and those businesses, or states, that move fast gain a major edge.

"I speak often to our New Crew in government of the need for our state to think big, aim high, and move fast. In this instance, it's safe to say that Indiana has done all three.

"Today marks an extraordinary moment in state history. A breakthrough like this may come but once in a public service lifetime. We invite and welcome the support of every legislator for this unprecedented and probably unrepeatable opportunity to build Indian's future. Surely partisanship and negativism will now be suspended to seize this fantastic opportunity. Let everyone share in the credit, and in the joy of seeing new life come to Hoosier communities and thousands of new jobs come to the workers of our state." [end quoting Daniels statement]
Toll increases announced by state in September

Toll revenues in 2005 were $88m, and other revenues (service areas mainly) were another $8m. The state's costs were $35m producing an EBITDA or earnings before interest, tax depreciation and amortization of $61m.

The state announced major toll increases in September designed to approximately double toll revenues to $170m/yr. These higher rates - the first since 1985 and due to go into effect this spring - form the toll base point for the concession. Toll increases for cars will rise from the present 3c/mile to 5c/mile (they say from $0.0296 to $0.0504c/mi) or 72% (2c to 3c/km). For trucks toll increases will be even larger averaging 122%. Average tractor-trailer tolls will more than double from 9.3c/mile to 20.4c/mile. The common 157 mile (253km) trip across the state between the OH and IL lines will go from $4.65 for a car to $8.00 and for the truck from $14.55 to $32.00.

Indiana Toll Road rate increases will only bring them above levels in Ohio, but they will still be below rates in Pennsylvania and Illinois.
Concession limits on tolls

The concession agreement keeps passenger vehicle tolls at 5.1c/mile for four years to mid-2010, then it allows a "catch-up" increase for inflation over those four years. From mid-2011 on annual toll increases are allowed for passenger vehicles of 2%, the increase in CPI, or nominal US GDP per capita, whichever of those three is the greatest.

Commercial vehicle tolls at the lowest class go 11.4c/mi to April 1 2007, 14.4c/mi to Apr 1 2008, 17.4c/mi to Apr 1 2009, 20.3c/mi to June 30 2010, then a 4 year catch-up to June 30 2011, and after that an annual increase of 2%, the increase in CPI, or nominal US GDP per capita, whichever whichever of those three is the greatest.
Traffic origins

66% of the Indiana Toll Road tolls are paid by out-of-state vehicles, 18% by Indiana cars, and 16% by Indiana trucks.

The ITR is one of the first generation of tollroads in the motor vehicle era, having opened in 1956, around the same time as the Ohio Turnpike, Illinois' main tollways, the New York State Thruway, the New Jersey Turnpike and the Massachusetts Turnpike. Only the Pennsylvania Turnpike (1940) and Maine Turnpike (1947) are substantially older.
Two tollroads

The ITR is in some ways two tollroads: including a 37km (23mi) barrier system portion and a 216km (134mi) ticket system portion.

The 37km (23mi) western seventh carries heavy commuter traffic of southwest Michigan and northwest Indiana residents going to jobs in the Chicago area and travelling on the Skyway over the Illinois state line. This portion also carries Chicagoans going to nearby Indiana and Michigan to recreational spots including casinos weekends. It exploits its closeness to the lakefront as the most direct route to Chicago though it faces competition from the untolled expressways which parallel it further from the lakefront including the Borman, Kingery, Bishop Ford, and Dan Ryan Expressways. The western portion has a point toll or barrier toll system. Traffic in 2005 averaged 46k veh/day here. This 15% of the length provided 18% of toll revenues.

The long 216km (134mi) eastern six-sevenths of the ITR caters little to commuter traffic. It links the South Bend-Mishawaka-Elkhart cities in the central north of the state to Chicago but there are few commuters at that distance of 120km (75mi). The main traffic of this long eastern portion of the ITR is interstate - longdistance occasional travelers and heavy trucks. Indeed trucks constitute about 40% of the traffic volume and produce 65% of the revenue on this six-seventh.

Tolling of this stretch is by ticket - issued on entry and tendered on exit to compute the toll by miles traveled. Traffic volumes at 25k/day hardly warrant road widening.

This portion of the ITR faces less competition from free roads in the sense that there is no parallel expressway standard route - only surface rural arterials. South Bend residents headed to Chicago can take state route 2 (IN2) to I-94 in Michigan City IN and take the freeway but there is a time penalty. Traffic crossing the state on the big trucking routes Chicago to the east coast - Boston, New York, Philadelphia and Baltimore - really have no alternative to the ITR. US12 in Michigan and US20 in Indiana are both 2x1 lane arterials going through small towns, 35% and 15% slower, according to traffic and revenue estimates.

COMMENT: Cintra-Mac clearly bid their max to win this one. We told people last week our guess was $2.5b to $3b. But then we thought the Skyway was worth $1.2b and they put $1.83b where their mouth is. The ITR is clearly at least twice the toll business of the Skyway, perhaps three times its potential. We thought they'd pay about 2x to 2.5x$1.2b. WRONG. They paid 3.2x $1.2b or 2.1x$1.83b.

Anyway short of some unforseen fiasco which torpedoed a close, this one clearly establishes them as the leader in concessions in North America.

Also they clearly see a synergy with their Skyway concession. The west end of the ITR plugs into the east end of the Skyway, so there are major advantages in operating them together as a single business unit. They can do joint marketing and joint customer service, and spread operations crews over the two facilities. Improvements on one benefit the other because they attract more traffic. Cintra-Mac already have commited to two years of construction on the Skyway which will reduce capacity during that time. They don't want more traffic on the Skyway until 2008 because they can'd handle it.

During those same two years they will now be trying to do about $200m of improvements to the western barrier system end of the ITR - toll plaza improvements, electronic tolling and third laning. The push to market the improved level of service and reduced trip times will start 2008. MEMO to MacDonalds: Plan to move your franchise out of the center of the Skyway toll plaza there by 2008. That real estate will be needed for open road tolling. TOLLROADSnews 2006-01-23

© 2007 TollroadsNews: tollroadsnews.info