Direct link to part of the second article here. The rest only available through subscription.
Our politicians are drinking the Kool-Aid, folks! Time to send a message Nov 7 nationwide…American infrastructure is NOT for sale! The best quote of a companion article:
“This is just crony capitalism. There’s no way a private entity can run the toll road more cheaply than a public entity…they’ve (private firms) got to make a profit,” Grant Smith, Citizens Action Coalition.
Toll hogs: World’s largest toll operators hungry for U.S. market
By David Tanner
Landline Magazine, for Independent Truckers
July issue
The dinner bell is ringing and private companies are headed to the trough.
If you haven’t heard by now, the main course is America’s infrastructure.
Gracious hosts have already included Illinois and Indiana, whose governors leased toll roads to private investors for up-front cash, cash to make up for growing gaps in their road budgets.
And why wouldn’t the states be gracious hosts, with the Bush administration paving the way in August 2005 with the federal highway funding legislation known as SAFETEA-LU?
And in May of this year, Transportation Secretary Norman Mineta, in a plan to take pressure off congested highways, called for private investors to take more interest in alternate routes, toll routes, airports and railways.
“Private capital will give those communities willing to embrace it an opportunity to augment public funds in order to complete critical transit and highway projects,” Mineta said in a press release. “We will never succeed in making today’s traffic a thing of the past without the involvement of this nation’s private sector.”
The toll hogs are coming to the trough and they are amassing huge portfolios while accepting the invitation to seats at the dinner table.
The recent private leases of the Chicago Skyway and the Indiana Toll Road – both to Spanish-Australian consortium Cintra-Macquarie – now look like they could just be the appetizer course.
During the bidding process and legislative action in Indiana that paved the way for Cintra-Macquarie to collect tolls for the next 75 years on the 157-mile Indiana Toll Road, another important business deal was brewing in Europe that soon could impact things to come in North America.
The deal, not widely publicized so far in North America, could give a new private investor a spoon to dip into the great melting pot.
Merger would create mega toll company
Two large European infrastructure companies, Abertis of Spain and Autostrade of Italy, announced a planned merger April 23 that would create the world’s largest private toll-road operator.
The reason for the proposed merger: the U.S. infrastructure market, according to a posting on the Abertis Web site, abertis.com.
“The objective is to set up a large European infrastructures operator with the volume and critical mass necessary for tackling operations in strategic markets such as the USA, Latin America and Asia,” Abertis officials stated on the site.
As of press time, Autostrade shareholders were scheduled to vote on the merger June 30. If approved, the merged company will operate under the Abertis name and be based in Barcelona.
In the event of the merger, the new Abertis would have a market capitalization of $30 billion U.S., with an annual revenue of $6 billion, according to the Wall Street Journal.
The merged Abertis would operate 4,130 miles of toll roads in Spain, Italy, France, the United Kingdom and several other countries. The company would also employ more than 20,000 people in 16 countries.
Part of Abertis’ portfolio is paid parking spaces. A subsidiary called Saba manages 91,400 parking spaces in Europe, South America and Africa.
The Italian government is not happy with the announced Abertis-Autostrade merger, according to that country’s top newspapers.
Italian infrastructure minister Antonio Di Pietro told the Italian media that he opposed the merger because it appeared to be an Abertis takeover of the Italian company. But Autostrade shareholders seemed to favor the merger even before the vote in late June, according to BBC News.
Autostrade shareholders bumped a board executive, Vito Gamberale, to a powerless position for reportedly opposing the merger, BBC News reported.
Skyway was first domino to fall
The proposed Abertis-Autostrade partnership, much like the group that’s already operating in North America – Cintra-Macquarie – has every intention of making a profit in the U.S. infrastructure market.
The merged Abertis, according to Forbes, will have a projected cash flow of $19.8 billion by 2014.
Even before the announcement of the merger, Abertis and Autostrade were actively seeking new toll roads to invest in.
Together, and with eyes set on the U.S. market, the new Abertis could well become a major stakeholder in state road building and tolling.
Cintra-Macquarie has led the way as the first foreign consortium to buy into the infrastructure buffet with a $1.83 billion lease of the Chicago Skyway that will last 99 years.
Tolls on the Skyway are expected to increase with the rate of inflation.
That has not been the case so far in Indiana.
Cintra-Macquarie will raise truck tolls on the Indiana Toll Road from $14.85 to $32 by 2010.
State lawmakers saw an increase as being inevitable, so they struck a deal with the Spanish/Australian consortium to phase in the increases instead of allowing the company to take it all in one mouthful.
Macquarie, with roots in the Australian banking industry, promises big returns for its investors, particularly once the U.S. market opens up to more privatization.
Goldman, Sachs & Co. officials in May told a House transportation panel that the U.S. infrastructure market could open up $50 billion to private investors.
Waiter, there’s a fly in the soup
But there’s a stigma attached to being a “foreign” investor in the U.S., despite the fact that numerous U.S. entities and about 80 percent of the country’s port terminals already operate under foreign leadership.
Macquarie may soon list itself as a U.S. company to shed the stigma attached to “foreign” investment in U.S. infrastructure, according to The Australian newspaper.
And, it remains to be seen how easy it will be the lease infrastructure state-by-state. For example, a group of Indiana residents decided they didn’t want to see U.S. infrastructure being leased, so they filed a lawsuit to challenge the constitutionality of Gov. Daniels’ “Major Moves” transportation plan and the lease of the Indiana Toll Road to Cintra-Macquarie.
That lawsuit had made it to the Indiana Supreme Court at press time.
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States ring the bell for the toll trough
By David Tanner
Land Line Magazine
Owner-Operator Independent Drivers (Truckers) Association
July 2006
A possible $15 billion privatization deal is in the works for 274 miles of the Illinois Tollway System.
Virginia is planning a $13 billion renovation to add lanes to the 325-mile Interstate 81, and is also planning to lease the Pocahontas Parkway for 99 years to Transurban from Australia for $525 million. The state has already leased the Dulles Greenway to Macquarie Infrastructure Group of Australia.
The Trans-Texas Corridor will require private investment to build and/or expand Interstate 35 and Interstate 69 to bolster a NAFTA corridor.
South Carolina applied in May for the right to toll the 200-mile Interstate 95, joining North Carolina, Virginia, Missouri and other states applying through a federal pilot program to toll existing interstates.
Private investment along the New York Thruway could help rebuild the Tappan Zee Bridge and others for $3 billion.
Lawmakers are proposing tolls on a 33-mile loop in Colorado around Colorado Springs called Springs Toll Road.
Arizona’s first ever toll road could include private investment opportunities in the Casa Grande area.
The South Bay Expressway, a 10-mile toll loop in San Diego, is being built with private dollars by Macquarie Infrastructure Group.
A bill nearing passage in Louisiana would allow the formation of public-private partnerships to build toll roads and bridges. A Nevada lawmaker is touting a similar bill.
Pennsylvania Gov. Ed Rendell has praised the lease deals in Illinois and Indiana and said public-private partnerships would help the state’s cash flow for roads.
A New Jersey lawmaker recently withdrew a bill that would have privately leased 49 percent of the interest in the 148-mile New Jersey Turnpike and Garden State Parkway.