Wednesday, November 14, 2007

"What once were public and government owned freeways and toll roads are now becoming privately owned cash cows for foreign companies."

Foreign companies acquiring U.S. Highways, raising tolls and stopping competition through contracts

November 14, 2007

Peter Morris
The Business Shrink
Copyright 2007

It wasn’t long ago in February of 2007 that an uproar of protests spread throughout the US when everyone realized that a major American port was going to be sold to Dubai Ports World. DP World is a United Arab Emirates (UAE) owned company. President Bush tried to rush the approval of the sale of the port but roadblocks derailed the plan quickly.

Now on the horizon is a battle that could give America’s transportation system to the highest bidder. What once were public and government owned freeways and toll roads are now becoming privately owned cash cows for foreign companies.

Politicians repeatedly find it easier to get into office promising to cut taxes and not to raise taxes on a number of items and keeping gas taxes in check. In addition to these taxes most politicians are not comfortable with approving toll price increases to cover the dwindling funds that are needed to maintain America’s transportation system. This leaves options for funding America’s highways bleak and a new creative way is becoming commonplace throughout the entire country.

The new creative solution is called a PPP. Public-Private Partnerships are expected to change the way freeways, highways, toll roads, bridges and even public utilities will be handled today and in the future.

The Federal Highway Administration has a dedicated website under the Department of Transportation headquarters website that details the new PPP plan which you can find here. The website lays out a detailed map on how states can change their constitutions and laws to be able to sell off their public infrastructure to private entities. Within this website the FHWA has a 200+ page PDF document detailing current case studies where the government has either leased or sold American highways to private ownership. You can access this PDF report directly by clicking here to see detailed case studies of the following 7 selected projects that have used a PPP:

* Anton Anderson Memorial Tunnel - Whittier, Alaska
* Atlantic Station 17th Street Bridge - Atlanta, Georgia
* Chicago Skyway Long-Term Lease - Chicago, Illinois
* Route 3 Rehabilitation Project - Burlington, Massachusetts
* Route 28 Phase II Expansion - Fairfax and Loudon Counties, Virginia
* South Bay Expressway (State Road 125) - San Diego County, CA
* Trans-Texas Corridor (TTC)-35 Toll Road Program - East Central Texas
* Port of Miami Tunnel - Miami, Florida

In an increasing number of these cases, this ends up giving ownership of these transportation systems to foreign companies that don’t exactly have American citizen’s interests on their mind.

Just recently in June of 2006 an Australian-Spanish conglomerate paid $3.8 billion to lease the Indiana Toll Road. The immediate results were double increases on the toll rates of the Indiana Toll Road. Now that Indiana has locked themselves into the deal they face strict rules that do not allow them to redo the contract unless they want to pay steep penalties and pay the new owner for lost profits.

The private companies are strictly there for a profit and are not worried about transportation solutions, ease of use and traffic congestion. If the profit is not being produced from the roads they will hike up costs until they start to see a return. In a free-market system competition would keep toll roads from getting to ridiculous prices, but most PPP agreements have non-compete clauses in their fine print which keep states and other private entities from competing within as much as 10 miles on either side of the owned transportation system.

The private road monopolies have already started to raise costs to sky high rates. One example is the Chicago Skyway. As mentioned in this AP release, in 2005, the city of Chicago decided to sell a 99-year lease on the eight-mile Chicago Skyway for $1.83 billion. The buyer was the same company that leased the Indiana Toll Road. The Australian-Spanish conglomerate is made up of two companies very interested in owning most of the US transportation system. The Australian company is Macquarie Infrastructure Group of Sydney, Australia and the Spanish company is Cintra Concesiones de Infraestructuras de Transporte of Madrid, Spain. The Chicago Skyway tolls rose 50 cents to $2.50 but it is in the contractual terms that by 2017 the cost of the toll will be increased to $5.

It doesn’t take much digging to find out the true motives of these powerful companies that are grabbing up deals to privately own America’s highways. The same companies previously mentioned, Macquarie Infrastructure and Cintra Concesiones de Infraestructuras de Transporte are fighting for the NAFTA Superhighway Corridorright to acquire a deal to own State Highway 121 that is right outside of Dallas, Texas.

Macquarie has made it very clear how important it is to obtain the deal for the NAFTA Superhighway corridor by spending $110 million in US dollars to buy up 42 local newspapers that surround the area around the proposed Trans-Texas Corridor as stated here.

When looking at the list of Macquarie Infrastructure acquisitions and deals you start to wonder how long the list is going to get. Macquarie has also purchased a 99-year lease on Virginia’s Pocahontas Parkway and Macquarie partnered with Cintra again in landing a deal to build and run a toll road from Austin, Texas to Seguin, Texas for 50 years.

When looking closer at Macquarie Infrastructure and even Cintra you will notice a common thread in their success in establishing the transportation deals that have come to fruition. There is one man that seems to have increased their success in landing the large deals they have completed so far and most likely paves the way for success in the future deals both companies strive for.

The long list of connections start in Arizona with a Republican named Mary Peters. Mary Peters was the transportation director for the state of Arizona. Mary Peters left her job as transportation director for a company that focused specifically on helping states take public roads and taking them private by either acquisition or building competing private installations. Mary Peters needed a partner in her quest for privatizing the nations roads and the man she chose to take with her was David James Gribbin.

Mr. Gribbins had a background as a field organizer with the religious organizations run by Pat Robertson and Ralph Reed. After working with Mary Peters, Mr. Gribbins went to Koch Industries in Wichita, Kansas where his job was to promote and sell the idea to states to convert to Public-Private Partnerships. Not too long after Mr. Gribbin’s success in this area, the Bush Administration named David James Gribbin’s as the chief counsel of the Federal Highway Administration. At the FHWA Mr. Gribbins worked closely with Governor Mitch Daniels in Indiana. If you don’t remember the previously mentioned deal done in Indiana, Indiana privatized their state Toll Road.

After working with Governor Daniels Mr. Gribbin’s started working as the head lobbyist in Washington, D.C., for Macquarie Bank. Macquarie Infrastructure has been landing deals left and right in the United States in the transportation systems and is currently working on expanding the NAFTA Superhighway System. Mr. Gribbins was nominated as the head counsel to the Department of Transportation in January of 2007.

The conclusion of this resume is that people that have a direct interest in selling our highway system to private foreign companies are now literally running the government organizations that are in charge of maintaining our national highway systems. If you’re looking for more interesting connections and information on this changing face of America, please check out this in depth article at Manufacturing News.

The Business Shrink reaction:

“How does it feel to be in an all you can eat restaurant that has one item on the table… that’s the democracy we’re in. We have a government that is a democracy that has all these rights and freedoms and in you’re all you can eat restaurant they put a chicken wing in front of you…

This is a prime example of a few people running this country and doing whatever they want.

Selling a major strategic monopoly, selling for gain politically, financially and not just to Wallstreet but selling to foreign investors who theoretically could have a strategic use for our transportation system in a war or terrorist scenario.

How far do our property rights and constitutional rights go? Anyone who is a foreign company or organization doesn’t have our best interests in mind. If they jack up the toll road rate to $100 and people start driving through the toll booths and not paying do they have their right to bring their own people in and take control of the toll road?

What if China decides to buy our bridges? Couldn’t China then withhold our debt or sell treasury notes to crash our economy? Even if things are not controlled by police force it could very well be controlled by economic sanctions.

Why is this all going on through the back door? It’s 1984 all over again.”

© 2007

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