The Facts About Toll Road Privatization and How to Protect the Public
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The Facts About Toll Road Privatization and How to Protect the Public Appendices B and C: Completed, Underway and Proposed Privatization Projects U.S. PIRG Education Fund Private Roads, Public Costs The Facts About Toll Road Privatization and How to Protect the Public Appendices B and C: Completed, Underway and Proposed Privatization Projects U.S. PIRG Education Fund Written by: Phineas Baxandall, Ph.D. U.S. PIRG Education Fund Kari Wohlschlegel and Tony Dutzik, Frontier Group Spring 2009 Acknowledgments The authors thank Robert Puentes of the Brookings Institution, Ellen Dannin of the Penn State Dick- inson School of Law, Dennis Enright of NW Financial, and Michael Likosky of New York University’s Institute for Public Knowledge for their thoughtful review and insightful suggestions. Thanks also to Josh Bogus for his research support in the early phases of this project. Finally, thanks to Susan Rakov of Frontier Group and to Carolyn E. Kramer for their editorial assistance. U.S. PIRG Education Fund thanks the Ford Foundation for making this project possible. The authors bear responsibility for any factual errors. The recommendations are those of U.S. PIRG Education Fund. The views expressed in this report are those of the authors and do not necessarily reflect the views of our funders or those who provided editorial review. Copyright 2009 U.S. PIRG Education Fund With public debate around important issues often dominated by special interests pursuing their own nar- row agendas, U.S. PIRG Education Fund offers an independent voice that works on behalf of the public interest. U.S. PIRG Education Fund, a 501(c)(3) organization, works to protect consumers and promote good government. We investigate problems, craft solutions, educate the public, and offer Americans meaningful opportunities for civic participation. www.uspirg.org Frontier Group conducts research and policy analysis to support a cleaner, healthier and more democratic society. Our mission is to inject accurate information and compelling ideas into public policy debates at the local, state and federal levels. www.frontiergroup.org For additional copies of this report, or to obtain a detailed listing of completed and proposed road priva- tization projects across the country, please visit www.uspirg.org. Cover: Photo by Geoffrey Holman, istockphoto.com; photo modification by Harriet Eckstein Traffic sign images that appear on pages 5, 6, 17, 27, 27, 29 and 37 are from the Manual of Traffic Signs, by Richard C. Moeur (http://www.trafficsign.us/) Copyright 1996-2005 Richard C. Moeur. All rights are reserved. Design and layout: Harriet Eckstein Graphic Design Table of Contents Appendix B: 1 Completed Privatization Projects Appendix C: 8 Privatization Projects Proposed or Underway Appendix B: Completed Privatization Projects State: Alabama Contract Type: design, build, finance, oper- Road: Alabama River Parkway/Montgomery ate and maintain Expressway Project Details: A 4.5-mile privately built Concessionaire: Built by United Toll tollway in Montgomery County. Systems, purchased by Macquarie in 2006 Cost/Financing: COSTS - $4 million (U.S. and later by American Roads. DOT) Contract Type: design, build, finance, operate Status: Opened in 1998. Now owned by and maintain American Roads (American Roads). Project Details: A 12.5-mile privately built Controversy: A 50-cent toll hike in 2007 tollway in Montgomery County. triggered a consumer boycott of the road, Cost/Financing: COSTS - $12 million which led to a 50 percent decrease in traf- (U.S. DOT) fic. (Mullinax) Status: Opened in 1998. Now owned by Sources: U.S. Department of Transporta- American Roads (American Roads). tion, Federal Highway Administration, Sources: U.S. Department of Transporta- U.S. Toll-Based Highway Improvements: tion, Federal Highway Administration, 1992-2008, January 2009; American U.S. Toll-Based Highway Improvements: Roads, Emerald Mountain Expressway, 1992-2008, January 2009; American Roads, downloaded from www.emeraldmoun- Montgomery Expressway, downloaded from tainexpressway.com, 29 January 2009; www.montgomeryexpressway.com/, 29 Kenneth Mullinax, “Bridge Boycott January 2009. Taking Toll on Profits,” Montgomery Ad- vertiser, 24 March 2007. State: Alabama Road: Emerald Mountain Parkway State: Alabama Concessionaire: Built by United Toll Sys- Road: Black Warrior Parkway/Tuscaloosa tems, purchased by Macquarie in 2006 and Bypass later by American Roads. Concessionaire: Built by United Toll Appendix B Systems, purchased by Macquarie in 2006 taken over by Orange County Transporta- and later by American Roads. tion Authority. Contract Type: design, build, finance, oper- Contract Type: originally built as a de- ate and maintain sign, build, finance, operate and maintain Project Details: A 7.5-mile privately built project tollway in Tuscaloosa County Project Details: CPTC entered into a lease Cost/Financing: COSTS - $25 million agreement with Caltrans to construct and (U.S. DOT) operate a toll facility in the median of an Status: Opened in 1994. Now owned by existing highway (Lowenthal). American Roads (American Roads). Cost/Financing: (1) COSTS - $126 million. Sources: (1) U.S. Department of Transpor- (2) FINANCING - CPTC provided $139 tation, Federal Highway Administration, million in financing in exchange for a 35- U.S. Toll-Based Highway Improvements: year lease (Lowenthal). 1992-2008, January 2009; (2) American Status: The road is now owned and oper- Roads, Tuscaloosa Bypass, downloaded from ated by Orange County Transportation www.tuscaloosabypass.com, 29 January Authority. 2009. Controversy: The agreement had a non- compete clause that prevented Caltrans from making improvements on compet- State: Alabama ing roadways. When Caltrans needed to Road: Foley Beach Express make safety improvements, it was even- Concessionaire: Built by Baldwin County tually forced to buy out the consortium Bridge Company, later acquired by Ameri- (Lowenthal). can Roads Sources: Testimony of California State Contract Type: design, build, finance, oper- Senator Allen Lowenthal, 24 May 2007 ate and maintain Project Details: The highway includes a 7.5-mile federally funded portion, a 5-mile State: California privately built portion transferred to the Road: South Bay Expressway county and operated free of tolls, and a Concessionaire: South Bay Expressway LP toll bridge over the Intercoastal Waterway. - Macquarie is the primary investor (Toll Roads News) Contract Type: design, build, finance, oper- Cost/Financing: COSTS - $25 million total ate and maintain (Toll Roads News) Project Details: The road extends from SR Status: Opened in 2000. Now owned by 54 in Spring Valley to Otay Mesa Road American Roads (American Roads) near the international border crossing (All Sources: (1) “Investor Pike: Foley Beach Business). Express Opens in Coastal Alabama,” Toll Cost/Financing: (1) COSTS - The project Roads News, 3 August 2000. (2) American cost $840 million (All Business). (2) FI- Roads, Beach Express, downloaded from NANCING - private investment was the www.beachexpress.com, 29 January 2009. main source of financing, in exchange for a 35-year lease (Toll Roads News - San Diego) State: California Status: The road officially opened on No- Road: SR 91 Express Lanes vember 19, 2007 (All Business). Macquarie Concessionaire: The California Private was initially granted a 35-year concession, Transportation Company (CPTC) origi- however they have since requested an nally developed the road. It has since been extension. The legislature has agreed to a 2 Private Roads, Public Costs 10-year extension, subject to local support. in exchange for a 99 year lease (Toll Roads Local governments have indicated that they News). (4) TOLLS - Tolls increased want to relax restrictions on the expansion immediately from $2 to $3, and beginning of parallel roads, so negotiations are under- in 2010 they will increase annually by at way (Toll Roads News - San Diego). least 2% of the CPI or GDP (CoPIRG). Controversy: The project was late and Status: The road opened in 2004 and nego- overbudget, for a variety of reasons. The tiations for a lease began in April 2007. concession was finalized in 1991, but it took Controversy: The Authority must com- 16 years to build the road (Toll Roads News pensate the concessionaire if previously - Schwarzenegger). unplanned road or transit projects are Sources: (1) “South Bay Expressway, San built in the corridor and hurt revenues. Diego’s First Toll Road, Opens,” All Busi- The concessionaire recently stated that it ness, 16 November 2007. (2) “San Diego’s believes a proposed project violates this South Bay Expressway Opened Monday,” agreement (Leib). Toll Roads News, 23 November 2007. (3) Sources: (1) CoPIRG, Northwest Parkway “Schwarzenegger Making New Push for White Paper, 10 December 2007. (2) Ir- PPPs & Union Critic Hits Two Toll Road vin Dawid, “Colorado Toll Road Goes Concessions,” Toll Roads News, 28 November Private,” Planetizen, 18 April 2007. (3) 2007 Jeffrey Leib, “Toll Firm Objects to Work on W. 160th,” Denver Post, 23 July 2008. (4) “Colorado Highways: Public Highway State: Colorado Authority Tollways,” MESalek.com, 4 Road: Northwest Parkway September 2007. (5) “Northwest Parkway Concessionaire: Owned by Northwest Colorado Toll Concession Finalized with Parkway Public Highway Authority, Financial Close,” Toll Roads News, 19 No- representing Broomfield, Lafayette and vember 2007. Weld counties. Leased to companies from Portugal and Brazil - Brisa Auto-Estradas de Portugal SA and Companhia de Con- State: Florida