Another Public Private Partnership toll road company files for Chapter 11 bankruptcy

[Arif Khokar]

In 2008, the road was expanded with a 41-mile southern section to be
run by Cintra, a Spanish company, and US-based Zachary Construction.
Federal taxpayers paid a third of the $1.3 billion construction
cost, while Cintra only contributed 15 percent of the total cost by
borrowing the rest.
Toll collections were not enough to pay interest on the $686 million
in bond debt and the $493 million federal loan. Rather than invest
their own money in the future success of the road by paying this
interest, Cintra and its partner declared bankruptcy. As with many
projects of this type, the forecasts showing Texans' willingness to
pay to use a road built with substantial taxpayer subsidies proved
overly optimistic. The credit rating agency Moody's warned early on
that it considered the project to have "junk" status.
"Even assuming generous annual revenue growth rates, our discounted
cash flow analysis indicates the project may be unable to fully
support the current debt quantum in the long-term," Moody's analysts
wrote in 2013.

From

A private company that operates part of the Texas toll road with the
highest speed limit in the country filed for bankruptcy Wednesday,
fewer than three years after the section of the road it oversees
first opened.
The SH 130 Concession Company, a partnership between Spain-based
Cintra and San Antonio-based Zachry American Infrastructure, opened
the 41-mile-long southern portion of the State Highway 130 toll road,
from north of Mustang Ridge to Seguin, in October 2012 to much
fanfare. In addition to the record 85 mile-per-hour speed limit, the
company signed an unprecedented deal with the state to build and
operate its section of the road for 50 years in exchange for a
portion of the toll revenue.
But the road has faced a slew of financial headwinds in the years
since, as lower-than-expected traffic has led to shortfalls in
revenue. A year after the road opened, the lack of traffic prompted
Moody’s Investors Service to severely downgrade the company’s debt,
and Moody’s released a report eight months later warning that the
company was dangerously close to defaulting.

[rdc]

I'm assuming Transurban, the entity that runs the DC Beltway/I-95 toll
lanes, may be facing a similar circumstance. The toll for the stretch
of Beltway between Springfield and I-66 has been steadily increasing
since it was opened at the end of 2012, and the current cost during the
morning rush is seldom below $9, and oftentimes is above $10. Which,
of course, strikes me as ludicrous for an 11-mile stretch of highway.

The most recent article I can find on the project is from the 2-year
mark, and the end of 2014, where ridership and tolls are running below
projections, and Transurban had already had to restructure their loans
for the project.

But maybe things are looking up. But frankly, given the pricing, I
can't see how.

[jgar the jorrible]

Post by rdc
I'm assuming Transurban, the entity that runs the DC Beltway/I-95 toll
lanes, may be facing a similar circumstance. The toll for the stretch
of Beltway between Springfield and I-66 has been steadily increasing
since it was opened at the end of 2012, and the current cost during the
morning rush is seldom below $9, and oftentimes is above $10. Which,
of course, strikes me as ludicrous for an 11-mile stretch of highway.
The most recent article I can find on the project is from the 2-year
mark, and the end of 2014, where ridership and tolls are running below
projections, and Transurban had already had to restructure their loans
for the project.
But maybe things are looking up. But frankly, given the pricing, I
can't see how.

Both Orange County and San Diego have had to buy back toll roads after both subsidizing them and passing laws to limit widening of freeways to force use. Toll roads don't effing work!

jg

[John Levine]

Post by jgar the jorrible
Both Orange County and San Diego have had to buy back toll roads after both subsidizing them and passing laws to
limit widening of freeways to force use. Toll roads don't effing work!

Odd, they work just fine from Ontario, Quebec and Maine to Florida and
as far west as Chicago.

What do we easterners know that others don't?

R's,
John

PS: We even have a shared E-Z pass system that works in Maine, New
Hampshire, Massachusetts, Rhode Island, New York, New Jersey,
Pennsylvania, Delaware, Maryland, Virginia, North Carolina, Ohio, West
Virginia, Kentucky, Indiana, Illinois, and two toll plazas in Ontario,
Canada. You can get a pass from any of the state authorities and it
works everywhere.

[Arif Khokar]

Post by John Levine
Odd, they work just fine from Ontario, Quebec and Maine to Florida and
as far west as Chicago.

How many are public-private partnerships instead of a toll road authority?

[jgar the jorrible]

Post by John Levine

Post by jgar the jorrible
Both Orange County and San Diego have had to buy back toll roads after both subsidizing them and passing laws to
limit widening of freeways to force use. Toll roads don't effing work!

Odd, they work just fine from Ontario, Quebec and Maine to Florida and
as far west as Chicago.
What do we easterners know that others don't?
R's,
John
PS: We even have a shared E-Z pass system that works in Maine, New
Hampshire, Massachusetts, Rhode Island, New York, New Jersey,
Pennsylvania, Delaware, Maryland, Virginia, North Carolina, Ohio, West
Virginia, Kentucky, Indiana, Illinois, and two toll plazas in Ontario,
Canada. You can get a pass from any of the state authorities and it
works everywhere.

How many of those were built after the interstate system started and won't get the toll lifted when public bonds are paid off?

I think any that are left wouldn't be economically feasible if they started today. Things are more expensive these days. "Free" (that is, taxes amortized across the population and heavy commercial users)limited access highways help the economy, even Hitler and Eisenhower saw that.

jg

[John Levine]

Post by jgar the jorrible

Post by John Levine
Odd, they work just fine from Ontario, Quebec and Maine to Florida and
as far west as Chicago.
What do we easterners know that others don't?

How many of those were built after the interstate system started and won't get the toll lifted when public bonds are
paid off?

I'd be surprised if any more of the tolls in the northeast were ever
lifted. The NY Thruway, for example, was built in 1952 and the
original bonds were paid off in 1996, but other than two toll barriers
in Buffalo, the tolls remain. It's been kind of a political
piggybank, having taken over the maintenance of untolled I-84 and
I-287 for a while, now runs the NYS Barge Canal which everyone still
calls the Erie Canal, and they're in the midst of very expensive
construction to replace the Tappan Zee bridge where it crosses the
Hudson.

Other toll roads are constantly rebuilding and widening to handle
increased traffic, e.g. parts of the Garden State parkway have been
widened from four lanes to ten, and much of the NJ Turnpike from 6 to
12. Passenger car tolls on the western half of the Mass Pike were
removed for a while but they're back, too.

There are some new privately built roads. VA 267, from Dulles Airport
to Leesburg is private. The Dulles toll road is run by the airport
authority which is semi-private. The 407 in Toronto is private,
although its toll transponders for some reason don't interoperate with
E-ZPass despite using the same technology.

The Indiana Toll Road and Chicago Skyway have 75 and 99 year leases
respectively to private operators that collect the tolls and maintain
the roads. It remains to be seen how successful they are.

The tolls on the Connecticut Turnpike, now part of I-95 and I-395,
were removed when the bonds were paid off, but they're considering
putting them back on to pay for improved maintenance.

The oddest is the

Post by jgar the jorrible
I think any that are left wouldn't be economically feasible if they
started today.

Maybe, although 267 isn't that old.

[John Levine]

Post by John Levine
The oddest is the

That was odd.

It's the Reedy Creek Improvement District in Florida, where the roads
are maintained by Disney World under a contract with the district,
which gets essentially all of its revenue from taxes paid by Disney
World. No tolls, though.

[jgar the jorrible]

Post by John Levine

Post by jgar the jorrible

Post by John Levine
Odd, they work just fine from Ontario, Quebec and Maine to Florida and
as far west as Chicago.
What do we easterners know that others don't?

How many of those were built after the interstate system started and won't get the toll lifted when public bonds are
paid off?

I'd be surprised if any more of the tolls in the northeast were ever
lifted. The NY Thruway, for example, was built in 1952 and the
original bonds were paid off in 1996, but other than two toll barriers
in Buffalo, the tolls remain. It's been kind of a political
piggybank, having taken over the maintenance of untolled I-84 and
I-287 for a while, now runs the NYS Barge Canal which everyone still
calls the Erie Canal, and they're in the midst of very expensive
construction to replace the Tappan Zee bridge where it crosses the
Hudson.
Other toll roads are constantly rebuilding and widening to handle
increased traffic, e.g. parts of the Garden State parkway have been
widened from four lanes to ten, and much of the NJ Turnpike from 6 to
12. Passenger car tolls on the western half of the Mass Pike were
removed for a while but they're back, too.
There are some new privately built roads. VA 267, from Dulles Airport
to Leesburg is private. The Dulles toll road is run by the airport
authority which is semi-private. The 407 in Toronto is private,
although its toll transponders for some reason don't interoperate with
E-ZPass despite using the same technology.
The Indiana Toll Road and Chicago Skyway have 75 and 99 year leases
respectively to private operators that collect the tolls and maintain
the roads. It remains to be seen how successful they are.
The tolls on the Connecticut Turnpike, now part of I-95 and I-395,
were removed when the bonds were paid off, but they're considering
putting them back on to pay for improved maintenance.
The oddest is the

Post by jgar the jorrible
I think any that are left wouldn't be economically feasible if they
started today.

Maybe, although 267 isn't that old.

Thanks for an informative post.

Politics... well, I won't go there, except to say they might be on a shorter life cycle than the concrete, in either direction.

jg

[Stop-IL-TollwayRipoffs]

Post by John Levine

Post by jgar the jorrible
Both Orange County and San Diego have had to buy back toll roads after both subsidizing them and passing laws to
limit widening of freeways to force use. Toll roads don't effing work!

Odd, they work just fine from Ontario, Quebec and Maine to Florida and
as far west as Chicago.

The current new construction by the IL Tollway of IL-390 required it to take over the taxpayer built Elgin/Ohare expressway, and get Federal funding to pay for the new interchange with I-290. Many drivers are vowing to avoid it, as the Ohare ending has no planned airport access.

[T.J. Higgins]

Post by jgar the jorrible
Both Orange County and San Diego have had to buy back toll roads after
both subsidizing them and passing laws to limit widening of freeways to
force use. Toll roads don't effing work!

There's been some political activity in Tennessee about this topic
recently. In a proposal allowing public-private partnerships, roads
and bridges have been removed "at the behest of the roadbuilder's
lobby." It now only applies to mass transit projects.

<http://www.waff.com/story/31466856/roads-removed-from-tennessee-public-private-partnership-bill>

[John David Galt]

Post by jgar the jorrible
Both Orange County and San Diego have had to buy back toll roads after both
subsidizing them and passing laws to limit widening of freeways to force use.
Toll roads don't effing work!

They don't work as long as the taxpayers can still be called upon to
build some roads and will sometimes do it. But once "free" freeways are
no longer being built, and existing ones start getting tolled, then toll
roads will have a level playing field and will work fine.

[Yoshavion]

And who knows what will happen with the I-77 toll lanes now that this happened...