|Who's Buying Your Commute?
News: A state-by-state tally of highway privatization projects in the works.
Mother Jones Magazine | January 1, 2007
FL - Florida was set to choose a company to build North Tampa's East-West Road Project, a 3.1-mile toll road to link I-75 and I-257, by December 18, but due to the resignation of the state expressway authority's executive director, the decision has been postponed. This will be the first privately financed highway construction project in Florida; it's valued at $150 million. Two companies, Plenary Roads Tampa, a subsidiary of a consortium from Australia, Canada, and New Zealand, and the Spanish firm Obrascon Huarte Lain SA., bid on the construction last month. Australian toll-road operator MIG was initially interested in the project but was rejected due to a conflict of interest by one of its proposed subcontractors.
OR - In May 2006, the Oregon Department of Transportation entered into an agreement with the Oregon Transportation Improvement Group, a consortium made up of MIG, the engineering firm Hatch Mott MacDonald, and several other small investors. The group's purpose is to review the feasibility of funding three new highway construction projects through public-private partnerships. On December 12, MIG released a report on one of the projects, the Newberg-Dundee Bypass, a four-lane, 11-mile expressway, claiming that privately managed tolls were the best way to fund its construction, with MIG fronting $379 million and the state $150 million for initial costs. MIG would then manage and operate the road for 50 years.
CO - Super Slab, the 210-mile-long, 3-mile-wide privately funded toll road and rail corridor that Denver developer Ray Wells has been trying to get off the ground since the 1980s, would connect Fort Collins to areas south of Pueblo. Farmers and other residents whose properties stand to be divided by the road are adamantly opposed and have vowed not to sell their land; Halliburton subsidiary KBR is now working with Wells on the eminent domain issues. Last August, Wells renamed his project the Prairie Falcon Expressway.
IL - A state-commissioned valuation study released by Credit Suisse in August suggested that the Illinois Tollway, a 274-mile system, could yield the state upward of $24 billion for a 75-year lease. There are rumors that MIG is interested in the deal, and legislators will likely debate privatization of the road in 2007. Governor Rod Blagojevich has promised to veto any such bill that comes his way. Most agree that the toll road is too lucrative for the state to sell.
IN - Governor Mitch Daniels this month announced that Illinois and Indiana will partner to build the Illiana Expressway, a new freeway from Illinois' I-57 into Indiana, with private funding. Daniels was behind last year's biggest road privatization deal, the takeover of the 157-mile Indiana Toll Road by a consortium made up of MIG and the Spanish road operator Cintra that agreed to pay $3.8 billion for a 75-year lease. Goldman Sachs was Indiana's financial adviser on the deal.
Daniels has also announced his intent to pursue the controversial extension of I-69 as part of a proposed NAFTA highway to Mexico. Indiana's part of the project would involve a privately funded, 75-mile bypass through five counties in the southern part of the state.
MO - The Missouri Legislature passed legislation in May that allows the state to consider unsolicited proposals for public-private partnerships. The decision was sparked by the proposal for an eight-lane, $910 million Mississippi River bridge connecting Missouri and Illinois, just north of St. Louis. A report by the St. Louis Regional Business Council, released in January 2006, recommended a privatization strategy for this venture. Goldman Sachs is working with the council to assess the project. The governor of Illinois has proposed an alternative, a four-lane bridge that would only cost $410 million; so far, the states haven't been able to agree on a plan.
NV - This past May, Boulder City ordered a study to assess the feasibility of installing tolls on a portion of US 93 that would bypass the community. The project cost is estimated at $400 million and is being pushed by city officials, but Nevada does not have laws on the books that allow for privatization deals.
NJ - A report commissioned in September 2006 by Governor Jon Corzine has concluded that the New Jersey Turnpike, the Atlantic City Expressway, and the Garden State Parkway are lucrative assets that could be privatized. The state has taken no action so far.
NY - New York law prohibits public-private partnerships, so privatizing the Long Island Expressway and the Tappan Zee Bridge could be an uphill battle, but this has not stopped Governor George Pataki from urging the Legislature to consider privatizing these and other state assets. Australia's MIG has already expressed interest in the Tappan Zee, proposing to build and run a replacement bridge.
OH - A proposal to lease the Ohio Turnpike for as much as $6 billion for 99 years, championed by former Republican gubernatorial candidate (and former Ohio secretary of state) Ken Blackwell, may be dead in the water in the wake of Blackwell's defeat this past November.
TX - Two companies, Zachry American Infrastructure and ACS Infrastructure Development, submitted paperwork to the state in October expressing interest in building an extension of the Trans-Texas Corridor from Shreveport, Louisiana, and Texarkana, Texas, through Houston and into Mexico. Bluebonnet Infrastructure Investors, whose equity partner is Spanish road operator Cintra, is also interested; the Texas Department of Transportation is scheduled to ask for detailed proposals in early 2007. Cintra-Zachry has already been picked to build a 600-mile toll network in several places along I-35. The master plan for the I-35 section of the Trans-Texas Corridor was released in September of this year; it maps out a new I-35 connection south of San Antonio and a loop around the Dallas-Fort Worth area. The environmental impact is under review. Meanwhile, the Texas Department of Transportation is negotiating with private companies vying to construct a toll road from State Highway 121 to US 75, and a series of pay-to-drive fast lanes along I-635. And finally, a toll road loop in Bexar County has garnered offers from MIG and Cintra-Zachry.
VA - The Virginia Department of Transportation has an agreement with a consortium made up of the Australian toll road operator Transurban and the U.S. construction giant Fluor Corp. for the creation of 56 miles of "high-occupancy toll" lanes on both I-95 and I-395. The agreement instructs Fluor-Transurban to do a traffic and revenue study and file a detailed plan for the extra lanes, after which a public-private partnership could use toll revenue to fund the project, estimated at $913 million.
UT - Goldman Sachs is advising the state on a 40-mile privately funded highway construction project that will connect Salt Lake City Airport with Utah County. The firm earlier this year helped convince the Legislature to pass a measure allowing the state to enter into such agreements.
PA - Governor Ed Rendell is accepting proposals from firms for a potential lease of the Pennsylvania Turnpike, a 500-mile network of toll roads that has been valued at between $2 and $30 billion. Proposals are due later this month.
GA - In May, the Georgia Department of Transportation entered into an interim agreement with Georgia Transportation Partners, a joint venture between Bechtel Infrastructure Corp. and Kiewit Southern Co., to expand the Northwest Corridor with as many as four new lanes in each direction. An environmental and engineering assessment of the estimated $2.1 billion project is under way. Private companies have also put in a bid to construct a new section of GW 400 from Highway 20 to I-85 through a public-private partnership. And in June 2006, Northwest TOT, a group that includes Goldman Sachs., McGuireWoods LLP, and the Atlanta engineering firm Post, Buckley, Schuh & Jernigan Inc. made an unsolicited proposal to the Georgia Department of Transportation to add truck-only toll lanes to I-285, which ties into the Northwest Corridor project. Four other companies have submitted proposals for such a project, and the state is evaluating each. On December 14, Goldman Sachs withdrew its offer. The firm will instead vie to advise the state on this decision and its future public-private partnership offers.
AK - The Knik Arm Bridge project from Anchorage to Point Mackenzie has been excoriated as one of the "bridges to nowhere" that regularly attract congressional earmarks. But even if Washington doesn't pitch in, the Knik Arm Bridge and Toll Authority says it will look to private funding for the bridge, estimated at up to $2 billion. An environmental impact report reveals that the project could be more expensive than expected, and that it would also endanger wildlife.
MI - In January 2001, MIG's North American Infrastructure Group bought out Detroit & Canada Tunnel Corp.'s (DCTC) shares of the Detroit-Windsor Tunnel for $53.5 million. MIG now maintains and operates the tunnel and collects toll revenue.
CA - On May 22, 2003, California Transportation Ventures finalized its financial agreement with the state of California to build and operate a four-lane, 9.5-mile toll road expansion of Route 125 south of San Diego, set to open next year. The company, which is owned by MIG, entered into a 35-year lease agreement for the nearly $800-million project.
AL - On December 30, 2005, MIG purchased the four-lane Foley Beach Expressway bridge from the Baldwin County Bridge Co. LLC for $95 million.
VA - In March 2005, MIG announced its takeover of the 14-mile Dulles Greenway for $617.5 million. On June 29, Transurban entered into a $519 million, 99-year agreement to lease the 8.8-mile Pocahontas Parkway.
IL - In 2005, Chicago agreed to lease the 7.8-mile Chicago Skyway to MIG-Cintra for $1.8 billion. Goldman Sachs advised the city on the 99-year lease agreement.
TX - On June 29, 2006, Cintra-Zachry signed a $1.3 billion, 50-year lease agreement to build 40 miles of toll roads from Austin to Seguin. The company will collect most of the tolls during the time of the lease.