County Consortium Considers Toll Road Bid

November 13, 2014 by Doug Masson 4 Comments

The AP is reporting that the LaPorte County commissioners are considering an attempt to acquire the Toll Road whose operators have gone into bankruptcy. ITR has filed bankruptcy, and Gov. Daniels was incorrect when he said in 2006 that “even if they go under, we have our money and we’ll still own the toll road” and in 2008 “the leasing consortium goes bankrupt, the toll road reverts back to the state’s control.”

The Indiana Finance Authority has declined to take action to take control of the road, apparently reasoning that the road requires maintenance too extensive for the state to afford despite the doubling of the tolls that has taken place since 2005.

With respect to the seven county effort to take over the toll road:

[LaPorte] County Commissioner David Decker said having a nonprofit comprising the seven counties through which the 157-mile road passes – Lake, Porter, LaPorte, St. Joseph, Elkhart, LaGrange and Steuben – bid on the lease would be better than allowing another private firm to gain control of the road.

The consortium is engaging consultants to help them out.

Comments

Stuart says

November 13, 2014 at 16:22 -05006

I’m sure that I don’t know all the details, but this looks sweet. So, the State kicks sand in the Fed’s face, and the counties kick sand in the State’s face. Because the State refuses to take responsibility, the counties buy up the lease and get the profits which can be big money. Northern Indiana gets vengeance and the State gets Karma. Meanwhile, the rest of the State may start to question the validity of our current leadership that lets its AG stalk other states for his personal agenda while allowing the cigarette money to go, and the Gov. blows away a billion or two refusing to cooperate. I guess the State has money to burn.

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- Doug Masson says
  
  November 13, 2014 at 18:21 -05006
  
  The AG’s decision to sue to deprive Indiana residents of subsidies with which to buy health insurance is an interesting choice.
  
  Reply
- Joe says
  
  November 13, 2014 at 19:00 -05006
  
  I half expect the Legislature to pass a law to make this illegal since they’ve got immense respect for local control.
  
  Reply
Joe says

November 17, 2014 at 10:17 -05006

Aaron Renn weighed in. Summary – not a fan.

Then there’s the idea of putting the money back into the road. Where were these counties when the state was running the road and letting it deteriorate so badly? There were some truly decrepit stretches of highway, especially in Lake County. Where were all these counties back then? If the public sector is so much more responsive and attentive to public needs, why didn’t the state ever fix this when it owned it? Why didn’t the state ever install electronic toll collection? I started telling INDOT they should install this as far back as the O’Bannon administration, but nothing ever happened. It wasn’t until the privatization deal that money did indeed start getting invested back into improving the road.

Then there’s the counties’ proposed financial structure. The private company paid $3.9 billion and went broke. These counties think that they can pay $3.7-4.1 billion for it, and make a profit of $38-50 million per year even after they – get this – pay a private company to operate the road anyway. How is that supposed to work? Yes, they can issue tax exempt bonds at a lower interest rate. But they want to limit repayment only to the toll road revenues, so that will limit their rate savings. Also, they won’t be able to take advantage of the huge tax write-offs from depreciation and such that the private company had available. I’d have to see the details on this, but it’s quite a financial claim they are making. They are basically saying that they can buy the road back from the bankers and run it at a profit of $50M higher than the bankers could. (Remember, any profits the banks might actually make would surely factor into their sale price). That seems a bit dubious. If it’s really true, every county in American ought to think about turning themselves into a private equity fund to invest in infrastructure assets.

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