Niki Kelly has a Toll Road article in the Fort Wayne Journal Gazette entitled Toll Road sides start swinging. I don’t have anything of substance to add to the article, but I saw the quote from Governor Daniels comparing the privatization offer to a “Powerball check.” I thought to myself, “what, you mean half of it is going to be gone before it gets to us, long lost relatives will be coming to us for handouts, and, much to the surprise of our neighbors, 7 years from now we’ll be filing for bankruptcy?”
Comments
Trackbacks
-
[…] Toll Road: Non-compete Provision By Doug In a prior post, Paul O’Malley posed a question about the non-compete provision in the proposed Toll Road lease. It was hard enough to find and is an important enough question, that I thought I’d make it the subject of a separate post. […]
That’s a lot of money. Should Mitch get his way, the real fun will be figuring out where all that money really goes.
In musing about this “power ball” check another analogy came to mind. How is the toll road deal different, in essence, from the State borrowing 3.8 billion (which gets Indy some new driveways) and leaving it to the residents of the northern tier of counties with the obligation for paying it off (on a 75 year mortage where the lender has a fair amount a freedom on the repayment schedule rates)?
I don’t know that it is much different from taking out a 75 year mortgage the toll road where the bank gives us $3.4 billion up front and an additional $4.4 billion in the form of capital improvements over the next 75 years.
Instead of repaying the loan directly in the form of taxes paid into the general fund, the loan will be repaid in the form of road taxes (a/k/a ‘tolls’) paid directly to the bank. Those road taxes will be doubled immediately followed by an increase of at least 8% in 2010 followed by an additional 2% tax increase every year after that.
Does the “non-compete” clause I have heard about limit the state from improving the South Shore between South Bend and Chicago?
I haven’t yet located the non-compete clause yet. The agreement is here (PDF). The enacting legislation is here.
(I did notice that the transaction is to be regarded under Section 2.8 as a “sale” under the federal tax code. So, I don’t think it’s hyperbole for detractors to call the transaction a sale.)
O.k., this might be it. SECTION 14.1 specifies that if state or local government takes action during the 75 year term that can reasonably be expected to 1) have a material adverse effect on the consortium; 2) be principally borne by the consortium or private operators of toll roads generally; and 3) is not mandated by the U.S. Government, then the consortium is to be compensated. And, even more specifically — “development, redevelopment, construction, maintenance, modification or change in the operation of any existing or new mode of transporation (including a road street or highway) does not constitute an Adverse Action. HOWEVER, the opening of a Competing Higway shall constitute a Compensation Event.
Competing highway means any newly-constructed Comparable Highway, at least 20 continuous miles of which is within 10 miles of the highway. In addition, US 20 can’t be improved to an extent that 20 continuous miles of it is considered a Comparable Highway. Comparable Highway means a divided 4 or more controlled access interstate quality highway with interchanges, interstate quality bridges or combination or portion thereof.
So the short answer to your question is “no.” The non-compete provision doesn’t apply to improving the South Shore. Improvements to US 20 are out, though.