Posted on 06/11/2017 11:05:39 PM PDT by Tolerance Sucks Rocks
Investors are hoping to seize upon the $1 trillion infrastructure plan proposed by President Donald Trump to transform the nation’s highways, bridges, and tunnels into assets they can monetize by adding tolls and other user fees.
The Trump infrastructure plan, which the administration plans to roll out this week, is centered on the idea of “asset recycling,” which refers to the process of securing new infrastructure spending by leasing the operations of existing public property to private operators.
The privatization-centered scheme has the nation’s largest toll operators salivating. Transurban, Cintra, and TransCore, three major toll operators, have retained federal lobbyists to influence the upcoming plan.
Transurban, which operates Washington-area Beltway tolls, has been accused of price gouging and predatory debt collection practices. In one lawsuit, a driver claimed that she was charged $3,413.75 for unpaid tolls, fees, and fines after Transurban failed to accept her initial payment for $104.15 for missing tolls on the Beltway toll lanes. Washington Post writer Fredrick Kunkle assailed Transurban for “price gouging” after the company hiked its rates to $30 during a winter snowstorm.
During an investor day presentation last month, Transurban’s Jennifer Aument, in charge of North America operations for the Australian company, hailed the Trump infrastructure plan as an opportunity for toll operators like Transurban to expand.
“The people that Trump has put in his administration, they are people who get our business,” Aument said. Trump, Aument added, had appointed several individuals who “were personally involved in working on Transurban’s projects under the Bush administration,” including the Beltway express lane tolls.
Watch:
At least one prominent Trump official involved in the infrastructure plan has recent financial ties to toll operators. Jeffrey Rosen, the deputy secretary of the Department of Transportation, previously provided legal services to Kapsch TrafficCom North America, according to his ethics disclosure. Kapsch TrafficCom provides tolling technology to several public agencies, including the Port Authority of New York and New Jersey.
The concession model has been used in the past to finance infrastructure deals without raising taxes or securing other sources of revenue.
Former Indiana Gov. Mitch Daniels negotiated a deal in 2006 to lease a stretch of Indiana highway to a consortium of investors. The money raised from the deal financed construction in other parts of the state, while the investors were promised toll proceeds for 75 years. The Indiana Toll Road went from $4.65 to $8 for a car traveling the length of the highway, with semitrailers now paying double.
The public-private partnership model now favored by Trump administration officials is being spearheaded by White House economic adviser Gary Cohn and Transportation Secretary Elaine Chao. “We like the template of not using taxpayer dollars to give taxpayers wins,” Cohn told reporters on Friday, explaining his preference for the asset-recycling approach.
But many fear that such privatization schemes simply shift the burden from taxpayers to motorists and truckers, while creating a two-tier system that unfairly impairs the ability of low-income drivers from accessing the nation’s interstate highway system. In the process, a small group of investors reap the most rewards.
Cohn and Chao, notably, have ties to the financial firms positioned to exploit the tolling of America’s highways. Cohn is the former chief operating officer of Goldman Sachs and Chao is a former board member to Wells Fargo. Both firms have expressed interest in toll road deals. Though both Cohn and Chao have said they will recuse themselves from matters that directly affect their former companies, it is unclear if they will recuse themselves from private-public infrastructure policies that will attract interest from investment banks.
The rush to embrace a public-private model based on tolling and other private financing methods is seen as a political winner that can bring infrastructure-friendly Democrats together with Republicans concerned about the cost to taxpayers. But the short-term solution based on political expedience may have long-lasting societal impacts.
Alan Pisarski, a travel consultant, noted in a recent column that the fundamental justification for the interstate system was to connect America for military, economic, and social reasons. There was a reason the first 50 years of the national highway system prohibited tolling.
“Where do those people and trucks go if they are priced off the interstate highways by tolling? What national interest can justify that action?” Pisarski asked.
Agree - tolling would be a huge benefit to business, as it would clear off the ‘lower priority’ users (like people going to see a movie), and leave the lanes open for businesses users. For them, having their hardware stuck in traffic is way worse than paying a toll to keep their stuff moving.
But society would change drastically, and if I were a Leftist, getting tolling imposed would be right up there with Cap-and-Trade - which is to drive up the cost of certain products so only the ‘more essential’ users could afford them.
So don’t be surprised if the Left, and maybe even the Dems, do get behind Trump on this. It’s a GREAT WAY to shut down the country, or at least drastically control its growth. Just in Houston, having a toll road less than 10 miles south of downtown set growth there back 20 years...land sat empty for decades because people just didn’t like having to pay to go buy a bottle of milk. Only now, after all the freeways areas fully built up, are people now moving into that area.
Squeezing.
Because they were just too high. It is only sand, water, horsepower, fuel and people.
Fracing was so profitable it was attracting all kinds of vulture capitol. It was so profitable that several operators were seriously considering building their own frac spreads.
This cost reduction is not one of cost sharing it is reducing profit.
What is also fails to mention......
THE COUNTRY IS BANKRUPT!!!! STOP WITH THESE LIBERAL SPENDING BOONDOGGLES!!!!
States should take care of their own roads bridges etc with the money they already collect. The Government should ONLY spend the money revived via he taxes. If they don’t have it TOUGH! Stop spending future generations away into further debt we cannot afford!
Controlling our activity is the unavowed purpose of tracking devices and replacing fuel tax with a mileage based use tax.
South Houston, about the only place left to go that is cheap to develop. The North in the woods along Grand Parkway is not fodder as well as is Katy Prairie that was once protected from becoming the new airport (a rational place to build one). I recall 30 years ago asking a reator why South Houston was not a good place to live, wrong color he said.
Instead of Katy Prairie for a new airport they cleared hundreds of acres of pine forest and shoe horned in the new runways to build about the oddest major airport in the country with some of the worst highway access. The road in from BW8 is like driving over tilting ice flows. As for the terminal, no matter how much lipstick you put on a pig it still squeals and looks like a pig.
That is simply incorrect. The number we used in the industry for Pennsylvania in particular was $10,000 per year per lane-mile. That number is 20 years old, too -- so I'm sure it's much higher today. If you assume I-80 has a cross-section of four lanes for its entire length of about 310 miles, that's $12.4 million per year just for I-80 alone. That doesn't include the tens of thousands of lane-miles of state roads all over Pennsylvania. According to the PennDOT website, the agency is responsible for 40,000 roadway miles and 25,000 bridges in Pennsylvania.
Keep in mind that the figure I presented above only accounts for regular maintenance such as vegetation control, snow removal, minor repairs for potholes and guardrail replacements, keeping rest areas in order, etc. That number doesn't include any of the big-ticket capital projects such as road reconstruction and bridge replacement, either.
That flies in the face of the whole idea of an Interstate Highway System and a designated National Highway System. There's actually a proposal in Congress to do something like this, but the strongest opponents to this are conservative members of Congress from states in the interior of the U.S.
That’s true — but remember that a private company would have implemented those electronic toll collection systems decades ago, not now.
Eventually, they will need a universal toll tag for all toll roads throughout the country.
Bad juju, now they’ll have the ability to track all your movements.
I’ll put it another way, YES they are responsible for interstate highway but we DO NOT have the money, in now way, no how. Otherwise this would not even be a topic for discussion. Use the money that already goes to this fund and get their damn hands out of my pockets. Why should I care about some local road or bridge in disrepair in California because THEY DECIDED to appropriate those funds to something other than “infrastructure repair”
This is and always was a liberal spending boondoggle. Just because Trump does it does not make it better. It’s still money we don’t have
Go back and research the history of our national road laws. It's pretty fascinating. The first Federal road was legislated as one of the conditions Ohio demanded before it would join the U.S. in 1803. Ohio was really the first U.S. state that had no historical links to the Atlantic Ocean (Vermont, Kentucky and Tennessee had previously been provinces or territories of original Thirteen Colonies with ports on the Atlantic), so this was a real turning point in our nation's history when it came to a Federal role in building and maintaining roads.
Thank you and I shall
Well this issue is not pure capitalism. It is pure cronyism, the kind that pumps dirty money stolen from the public into the D.C. swamp.
Obviously one of those “the devil is in the details”, but from what I know so far, I favor the proposal:
1. Most obviously, it’s a way to get a $1 trillion in needed infrastructure improvements without $1 trillion in new federal taxes and debt.
2. Prioritizing projects that can be privately-financed imposes a degree of objective market discipline on the choice of what to fund, and what not to fund.
3. Shifting some of the burden of paying for roads onto users as opposed to taxpayers is fair and effective. The specific users of a road have a much bigger stake in its upkeep than the general public.
4. A certain amount of congestion management via tolling is warranted IMHO. In very few other places do we allow the quality of a scarce resource to deteriorate because we refuse to allow demand and scarcity to affect its price.
Yes, if it’s done wrong, it could just be a disastrous boondoggle, but that’s true of anything. I trust that there are smart people in the Trump Administration who will make sure that it’s done well.
why re-bid when full privatization means you’ve sold the land and improvements ?
$12.4 million makes my point...when you knock it down to cents per vehicle mile. It is CHEAP! That’s why companies like Cintra will pay BILLIONS to the government for the right to set up tolling (and keep that revenue).
“That’s true — but remember that a private company would have implemented those electronic toll collection systems decades ago, not now.”
...and yet the government did also - at least in Texas. We’ve had transponders for decades...as long as any private operator has had them. I guess the difference is, though, being that the public toll roads are still accountable, at least to some extent, they do try to accommodate people that don’t have transponders.
Well, I agree with you but the argument one person was making claimed pure capitalism.
Yup, it is cronyism and Goldman Sucks is right in the middle of it as per usual. GS is one of the reasons I didn’t favor one of the candidates who had a GS member as a bed partner.
GS hang around every administration like gouls or vultures to see what they can do to “help”. They help alright. They help themselves to every dime they can get. Heck, they’ll even settle for pennies and steal the nickles out of a dead man’s eyes.
To confirm your reservation that some of the P2P deals have turned sour we only need to look at the thread below with its links to the Indiana deal.
http://www.freerepublic.com/focus/f-news/3560078/posts
“...why re-bid when full privatization means you’ve sold the land and improvements ?”
So generations of people are not STUCK with a the results of an often-corrupt bidding process. Again, if the road is already there, then no need for these multi-decade ‘leases’...and if the road is not there, give them 10 years (at most) to build and operate it. If they can’t get the job done and make a profit, it’s THEIR PROBLEM, not the public’s problem.
Yup. The "tolls go away eventually" mantra is a huge lie. It used to be true. Then we got a "tollway authority". Once they happened it was obvious that it would never happen again.
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