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Private Toll Operators Salivate Over Donald Trump’s Infrastructure Plan
The Intercept ^ | June 6, 2017 | Lee Fang

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.


TOPICS: Business/Economy; Constitution/Conservatism; Government; News/Current Events; Philosophy; Politics/Elections; US: Indiana; US: Virginia
KEYWORDS: assetrecycling; cintra; elainechao; ethics; fines; garycohn; hotlanes; indiana; indianatollroad; infrastructure; investors; lease; mitchdaniels; p3s; ppps; tolls; transcore; transportation; transurban; travel; trump; userfees; virginia
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To: Tolerance Sucks Rocks
What this article doesn't mention is that some of these public-private partnerships have been financial disasters -- for the "private" side of the equation. There are several reasons for this:

1. The tolls they have to charge to make these investments pay off are high enough to deter a lot of motorists from using the road. I believe this is what has happened in Indiana over the last few years.

2. There were around 40,000 fatalities in motor vehicle crashes on U.S. roads in 2016, and many more serious injuries. In a country filled with lawyers like this one, every one of these crashes is a potential enormous financial exposure for private companies operating a toll road. There was a landmark case on one of these toll roads in the last couple of years, where the private toll company failed in its attempt to have its civil liability in a serious crash waived under the state's "sovereign immunity." The court ruled that sovereign immunity only applied to a government, not a private company operating a public road under a contract with the government. If I was an investor I would look at a ruling like that and eliminate any toll road investment from consideration.

3. Related to #2 ... As an operator of a public road you have no control over who uses your road. We have states giving driver's licenses to illegal aliens, and toll road operators have no way to control who uses these roads, how competent they are as drivers, or even whether these cretins are licensed to drive, or their cars are even registered and insured. Who in their right mind would want to conduct business under those conditions?

21 posted on 06/12/2017 3:37:48 AM PDT by Alberta's Child ("I was elected to represent the citizens of Pittsburgh, not Paris." -- President Trump, 6/1/2017)
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To: Spktyr

I look at a situation like that, and I wonder what would ever motivate a toll road operator to have any interest in it at all.


22 posted on 06/12/2017 3:41:36 AM PDT by Alberta's Child ("I was elected to represent the citizens of Pittsburgh, not Paris." -- President Trump, 6/1/2017)
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To: Dilbert San Diego

It is a horrible, crony capitalist, plan.


23 posted on 06/12/2017 3:43:55 AM PDT by 9YearLurker
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To: Dilbert San Diego

It is a horrible, crony capitalist, plan.


24 posted on 06/12/2017 3:43:58 AM PDT by 9YearLurker
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To: Spktyr

Is that why Houston has something of a seemingly similar ring-road scheme of both toll and non-toll roads?

If so, it’s horrible.


25 posted on 06/12/2017 3:45:09 AM PDT by 9YearLurker
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To: vooch

And just how many private company executives work on a 40 to 50-year perspective? Get real!


26 posted on 06/12/2017 3:46:23 AM PDT by 9YearLurker
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To: vooch

Also, in our current world, where by definition it is crowded where new capacity is needed, such private toll roads in essence work as private monopolies—taking away whatever theoretical basis for lower costs there might have been.


27 posted on 06/12/2017 3:47:39 AM PDT by 9YearLurker
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To: Dilbert San Diego

The gas taxes don’t go away. The income taxes don’t go away. No taxes go away. We just get to pay for the privilege of using the roads that were already constructed so we can go to work and school.


28 posted on 06/12/2017 3:47:46 AM PDT by Bryanw92 (If we had some ham, we could have ham and eggs, if we had some eggs.)
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To: wideminded

there are plenty of state highways and alternative routes literally dozens of alternative ways to get anyway without using a interstate.

If your argument is you like road socialism and like driving subsidies to continue, because damn it I want to drive whenever and wherever I want for nil cost, then you ain’t a conservative. :)

Trust the free market because the free market sets you free.

Unregulated fully privatized interstates is a solution


29 posted on 06/12/2017 3:54:18 AM PDT by vooch (America First)
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To: vooch

>>privatization is a good thing. the free market does everything better than the government; everything.

Roads are a legitimate use of government. Government roads serve everyone equally. It was Roman roads that permitted the easy spread of Christianity throughout the known world in the 1st century AD. The National System of Interstate and Defense Highways is not something for private contractors and investors to squeeze revenue from and then do minimal improvements.

In a certain city, private companies ran most of the water and wastewater plants for many years. They ran them into the ground, sucking all the money out of them and putting almost nothing back into them. Finally, the city had to take them back because public health and the environment was being threatened. It has taken 20 years to repair the damage.

Private enterprise beats government at almost everything. Management of critical infrastructure is not one of them.


30 posted on 06/12/2017 3:58:17 AM PDT by Bryanw92 (If we had some ham, we could have ham and eggs, if we had some eggs.)
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To: Bryanw92

privatize interstates not all roads. just the interstates.

in the bad old days, private enterprise had neither the scope nor scale to finance, build, and maintain entities as big as interstates. Today, private enterprise has the capability in spades.

socialism for interstates has failed. Time to let the free market do its magic


31 posted on 06/12/2017 4:49:05 AM PDT by vooch (America First)
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To: 9YearLurker

every private company board of directors operates with a multi-decade horizon. It’s routine


32 posted on 06/12/2017 4:52:42 AM PDT by vooch (America First)
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To: vooch
privatization is a good thing. the free market does everything better than the government; everything.

fell for the lie did you? You some kind of child? The corrupt crony gang does things even less efficiently than the government does, and they use there extra ill-gotten gains to further corrupt DC.

You do know where this started don't you? Clinton and Gore's "Reinventing Government."

I cannot believe there is anyone left who is so dumb as to fall for this absolute and utter blood-sucking cancer of a leach on the body politic.

Wake up as to what is really happening. Do you want to drain the swamp or do you want to pour more of your hard-earned dollars into it.

There is no such thing here as free-market efficiency. It is a market driven by monopsony and monopoly. Not only are barriers to entry high, there is no entry except to well-heeled folks who buy off the government with your money. And there is an enormous information asymmetry since clueless so-called conservatives think this is "bringing free-market efficiencies to the public sector." That is the biggest laugh in this pile of garbage.

33 posted on 06/12/2017 5:07:04 AM PDT by AndyJackson
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To: vooch

You some sort of shill for these crooks?


34 posted on 06/12/2017 5:08:05 AM PDT by AndyJackson
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To: Bryanw92
How much of this money do you think has helped fund the Clinton Foundation?

Stand firm on this. I was in DC when this started. You should have seen the low-lifes who showed up with big bank-rolls when Algore started talking about privatization. He didn't get rich selling windmills to penguins.

35 posted on 06/12/2017 5:09:48 AM PDT by AndyJackson
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To: vooch
every private company board of directors operates with a multi-decade horizon. It’s routine

Oh bullshit.

36 posted on 06/12/2017 5:10:30 AM PDT by AndyJackson
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To: AndyJackson

agreed that the current approach of ‘public-private partnership’ is a crony capitalist delight.

that is why I advocate ‘full privatization’ of interstates selling land & improvements.

full privatization allows the market to operate efficiently


37 posted on 06/12/2017 5:13:00 AM PDT by vooch (America First)
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To: vooch
We tried this once before with the railroads. The result of their abuse of the granted economic power (it wasn't just the land between the left and right rails of the track), was the most massive regulation anyone has yet seen.

In the first place you have to condemn and provide the land for the right of way. And once that is done you have granted that operator a monopoly on that presumably rather long stretch of road.

38 posted on 06/12/2017 5:18:14 AM PDT by AndyJackson
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To: vooch

You’re a clown if you actually believe that.


39 posted on 06/12/2017 5:20:24 AM PDT by 9YearLurker
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To: AndyJackson

Full privatization implies no regulation

the private RRs despite their many flaws was a successful transportation system- prices plummeted and quality skyrocketed


40 posted on 06/12/2017 5:26:19 AM PDT by vooch (America First)
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