Posted on 07/03/2006 5:37:03 AM PDT by A. Pole
50 years ago President Dwight D. Eisenhower signed into law the 1956 National Federal-Aid Highway Act and since 1990 referred to as the Dwight D. Eisenhower System of Interstate and Defense Highways. He authorized the connectivity of 41, 000 miles of high quality highways across the United States. It would be financed by a combination of the Highway Trust Fund, federally imposed user fees on motor fuels and state user fees.
Eisenhower was prompted to persuade the nation’s people to build the interstate highway system, as a matter of national security. Although not at war at the time, he believed it was imperative the interstate be designed for mass evacuation of cities in the event of a nuclear attack, in the era of the Cold War. The Act dictated that one out of every five miles must be straight, in order to use as airstrips in times of war or other catastrophic emergencies. And to that end, the success of national defense was dependent upon the navigability of large numbers of military personnel and their equipment during such a crisis. And even today, 75% of the interstate highway system represents the Strategic Highway Corridor Network (STAHNET) utilized by the U.S. military.
And while in 1956 there was the fear of nuclear threat from the then Soviet Union, today’s national security, often referred to as homeland security, remains similarly threatened in an era where the threat of terrorism looms. Yet, at such time that it would appear imperative that U.S. strategic infrastructure such as the interstate highway system remain under American control, it is but one more public asset available for sale under the guise of Public-Private Partnerships. Unlike domestic privatization, however, states throughout the country are negotiating contracts solely with foreign corporations and conglomerates, primarily in Europe, Australia and Asia, in order to finance the maintenance, modernizing and extension of U.S. interstates.
As funding from federal gas taxes and state user fees have fallen behind the inflated costs associated with road construction and maintenance, more and more state governors and lawmakers no longer see the operation of roads solely as a public responsibility. However, the reason states initially took over handling roads at the beginning of the 19th century was because many roads, bridges and canals had previously fallen to bankruptcy in the hands of private owners.
According to the Secretary of the Department of Transportation, Norman Mineta, “We are like a poker game. We are inviting people to the table and saying, ‘Bring money when you come.’” And Mineta believes, “A big part of the answer is to involve the private sector more fully – not just as a contractor or vendor, not merely as a financier, but as a partner in the funding, management and expansion of our transportation infrastructure.” Yet when those partners are exclusively foreign entities, a whole new dimension is added to the management of the U.S. interstate highway system. It is unprecedented.
The deal which started a flurry of more than 18 proposed foreign financed interstate highway projects across the nation over the past year in amounts of over $25 billion was in Chicago, IL in December 2004. Chicago Mayor Richard Daley proposed an agreement to lease the Chicago Skyway for $1.83 billion dollars to Cintra-Macquarie Consortium, a Spanish-Australian conglomerate, doing business as State Mobility Partners in the U.S. The deal, finalized in January 2005, gave Cintra-Maquarie a 99-year lease for which it is responsible for the maintenance and structural quality of the 8-mile elevated structure.
In exchange for its upfront payment, Cintra-Macquarie will collect and keep all money from tolls from the Skyway and will be able to raise tolls as incorporated under the terms of the agreement. The company is modernizing toll collection with an electronic transponder system. Until the technology is fully operable, toll collectors have been newly but temporarily recruited. But instead of earning an average hourly wage of $20.00 as their predecessors did, they are paid a $10.00 to $12.00 hourly wage. And as contracted, the Skyway offers the buyer an asset without having to deal with improvements or debt.
Following the situation in Chicago, Indiana Governor and former Office of Management and Budget Director for President Bush in his first term, Mitch Daniels, explored a similar arrangement for Indiana’s $2.8 billion shortfall in its transportation budget over the next ten years. Daniels was able to get his highly contested proposal through the state legislature as well as the courts where it was challenged by a citizen advocacy organization.
A bid was accepted by the state of Indiana in the amount of $3.8 billion and an agreement was arrived at with Cintra-Macquarie, the same operator of the Chicago Skyway. The lease agreement will provide for the operation and maintenance of the 157-mile Indiana Toll Road, a part of the interstate highway system, for a period of 75 years. The deal is expected to close on June 30, 2006. The Indiana Toll Road will also have an upgraded electronic toll system installed, eventually ending the need for toll workers.
Here are just a few of the many other projects either approved or proposed across the country. In Virginia, the rights to manage, operate and maintain the Pocahontas Parkway, an 8.8-mile toll road outside of Richmond, were bought for $611 million by the Transburban Group, also an Australian entity in its first foray into U.S. road management. A lawmaker in New Jersey has proposed selling a 49% interest in the New Jersey Turnpike and Garden State Parkway to a private investor.
In August 2005, the same Macquarie Infrastructure Group took over operations of the Dulles Greenway Toll Road which operates between suburban Virginia and Washington, D.C., for the amount of $533 million. And the anticipated widening and extension of the Trans-Texas Corridor which runs 316 miles and parallel to I-35 in Texas, is slated to be built by Cintra, the Spanish company, and Zachry Construction, out of San Antonio, TX, who plan to invest $7.2 billion.
But windfall upfront payments while attractive to states to reinvest in other transportation projects, have their limitations and pitfalls too. States will need to learn how to enforce and write explicit contracts. And the proceeds from the sale or lease of roads should be earmarked for specific projects. Non-compete clauses are often inserted in such contracts such as inducing lower speed limits on parallel free roads to drive traffic to the toll road. Others fear that operators will only maintain those parts of the route which remain profitable.
Other issues which are arising more often after the fact is the increasing worry that the public will have less and less input over the use of its public assets. Such is the case in Colorado and California where the enforcement of maintenance matters have already become problematic. Immediate increases in tolls and applied on a perennial basis, with higher tolls applied at rush hours have not sat well with commuters.
However, questions will continue to arise in a process still in its in infancy. Yet states must have the ability to learn from mistakes made in doing business in this brand new way. Will a private firm maintain the roadways as well as the U.S. government? Will a foreign corporation care about the needs of the American people? And will selling off public assets to pay debts now be regrettable down the road? One would think that Eisenhower would have thought so.
Copyright 2006 Diane M. Grassi
contact: dgrassi@cox.net
Low wage bump
How kewl is it to have a transponder in everyones car?
Not.
(((sigh)))
I hope the British don't get control of the highways here! Everytime I go back for a visit, the roads get worse and worse and more crowded. The Highways Authority (a sort of governing body) just acts like the proverbial ostrich and sticks its head in sand hoping problems will go away. Perhaps the germans should run them - that way we can all drive at 100mph like they do over there!
We don't have any toll roads here in Michigan (yet) but I know I'll oppose them every step of the way.
I am in total agreement with you. We are fighting the TTC here in Texas. I wonder where all the Bushbots are when crap like this rears it's head.
I could never understand why there was a need for 5 or 6 toll workers at every toll station. A credit card / cash machine could handle the majority of the traffic. One toll worker to handle the odd payments.
Is there any part of America that's not for sale to the highest bidder these days?
The Indiana Toll Road has been rented out for a lot of money. Lest people forget, this very highway was a source of scandal from the very beginning which is BEFORE the Interstate Highway System was reported out of committee in Congress.
Part of the problem is the fantasy wages that people often believe. When I tell people that I used to be in the UAW they assume that I made at least $20 an hour. I didn't, I made just over $12 an hour.
A toll road makes sense. A freeway, paid for by Indiana folks, which would primarily serve interests in Illinois, Ohio, Pennsylvania, New York and Michigan would be crazy doncha' think!?
Here's a solution for the rest of the country - Don't have toll roads! We don't have them in Michigan and get by just fine without them.
"What's good for General Motors is good for the USA."
Actually a lot of truck drivers avoid stretches of toll road by using Michigan freeways en route to northern Wisconsin, Minnesota, and southern Ontario. Many times a longer route is a cheaper route.
Our main highways aren't great and are constantly under repair but that has more to do with poor design than anything.
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