SPECIAL REPORT: Foreign firms bid $3.85 billion for Indiana Toll Road

| 1/23/2006

A foreign consortium has bid nearly $4 billion to lease and operate the Indiana Toll Road for 75 years, Gov. Mitch Daniels announced Monday, Jan. 23.

The state received four bids, all from foreign companies. But the $3.85 billion bid from a Spanish-Australian consortium, Statewide Mobility Partners, was clearly better than the others, Daniels said.

"Every bid offered an enormous amount of money far beyond anything the state could generate on its own," Daniels announced in a written statement.

The Republican governor had set $2 billion as the minimum bid acceptable.

"It's unprecedented," Charles Schalliol, Daniels' budget director, told Bloomberg. "This is a blowout bid for the state."

The Indiana General Assembly still must pass a law authorizing the state to lease the 157-mile route. With that in mind, Rep. Randy Borror, R-Fort Wayne, is sponsoring the leasing plan in the General Assembly.

The House Ways and Means Committee had two days of hearings last week to head comments about Borror's bill - HB1008. The panel could vote on the bill as early as Tuesday, Jan. 24.

If approved by the legislature, the state could receive the $3.8 billion in June, The Associated Pressreported.

The leasing initiative is the biggest chunk of Daniels' 10-year, $10.6 billion statewide construction plan dubbed "Major Moves."

In the next decade, the lease would help the state to cover a gap of $2.8 billion needed for road and bridge work throughout the state, as well as pay for an extension of Interstate 69 from Indianapolis to Evansville and make it a private toll road.

Supporters say road privatization is the way of the future because traditional funding mechanisms, such as the state's fuel tax, are proving more inadequate, TheIndyChannel.com reported.

Opponents say the plan turns operations of state assets to private ventures that would aim for bigger profits by raising tolls higher and higher. Others say the concept is so new that more study is needed.

House Minority Leader Patrick Bauer, D-South Bend, said that instead of calling the plan "Major Moves," it should be dubbed "risky business."

A private lease would include a noncompete clause barring the state from building a new east-west highway 10 miles north or south of the Toll Road, The Munster Times reported. And the state would have to compensate the Toll Road operator if it built more than 20 miles of east-west highway within the buffer zone.

In addition to leasing roads, the bill would give the governor sweeping authority to impose an extensive menu of toll rates. That would change existing state law that requires tolls to be uniform by distance.

Daniels wants to be able to increase or decrease tolls for a number of reasons. Among the options being pursued are peak-time rates, high-occupancy tolls, as well as adding electronic tolling.

The bill also authorizes privatizing airports, cargo ports and transit systems. The governor, however, has said he would consider paring back this portion of the legislation.

Cintra of Madrid and Macquarie Infrastructure Group of Sydney, which formed Statewide Mobility Partners, would pay the state for about 70 State Police officers to patrol the road.

While lawmakers discuss privatization and specialized tolls, plans are to go ahead and increase tolls along the Toll Road by 72 percent for cars and 120 percent for large trucks.

Daniels' office reached an agreement with the state's trucking association to phase in proposed toll increases for trucks over four years.

If the fare increase is approved after public hearings in March, the rate for tractor-trailers traveling from the Illinois line to Ohio would rise from $14.55 to $18 this year. The rate would climb to $22.50 in 2007, $27.25, in 2008 and $32 in 2009.

Passenger vehicle rates for driving the same distance would rise from $4.65 to $8 this year. No other increases are planned.

In exchange for the phased-in truck rate, the Indiana Motor Truck Association has endorsed the governor's transportation initiative.

The toll increases, which could take effect as early as April, could generate an additional $770 million in 10 years.

State officials are relying on in-state and out-of-state vehicles in their toll revenue projections. Indiana Department of Transportation figures show that 66 percent of 2004 toll road revenue came from out-of-state vehicles, 18 percent from in-state cars and 16 percent from in-state truck traffic.

Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, said the gradual phase-in is more reasonable than the alternative. But he said Indiana truckers should be receiving a credit for fuel taxes paid on toll road miles.

"Different people can have different views about appropriate toll charges, but what should infuriate every Indiana resident is the governor's plan to auction the road off to the highest bidder for up-front cash," Spencer said.

"It's a lousy idea. It's inappropriate for our roads, not to mention roads that are part of the National Defense Highway System, to be leased to foreign countries. This simply is a green light for others who would love to pick and choose and potentially toll every road in the country."

Spencer's concerns about leasing roads to foreign companies were echoed by Rep. Bauer.

"I don't think Dwight Eisenhower, a Republican, would like that very much," Bauer told Land Line, "because he sold the interstate system (as desirable), and he sold it for national security reasons."

- By Keith Goble, state legislative editor