Indiana Toll Road lease: Five years later

| 6/28/2011

Before Gov. Mitch Daniels leased the Indiana Toll Road to private investors in 2006, professional trucker Randy Nace would occasionally use the tollway even though it carried a $14 toll. Several toll increases later, with truckers set to pay $35.20 starting Friday, July 1, residents like Nace are reminded of why they fought so hard against the privatization deal.

“I still think it was the wrong thing to do,” Nace said from his truck on Monday. He says he’s managed to survive cost increases and the economic downturn in part by avoiding the Indiana Toll Road.

Five years ago this week, on June 29, 2006, Gov. Mitch Daniels leased the tollway to Cintra of Spain and Macquarie of Australia in exchange for $3.85 billion in cash. To date, it’s still the largest privatization deal involving a U.S. roadway and certainly one of the most controversial.

“I don’t think the people really wanted it, but they went ahead and did it,” said Nace, an OOIDA member who makes his home in Monticello, IN.

Nace and a group of plaintiffs filed a lawsuit in 2006 in an attempt to block the lease deal while it was still in the Indiana Legislature. OOIDA supported the plaintiffs in their fight against the toll road lease.

Even though they didn’t win, the plaintiffs showed resolve and helped educate the public about long-term roadway leases built on profit margins.

The 151 percent toll increase realized during the first five years of the Indiana Toll Road lease was part of a guarantee to the investors. After this year, investors will continue to increase tolls at or above the rate of inflation, likely around 3 percent.

When highways become profit centers, the end user is left holding the bag.

“Indiana’s got some of the roughest interstate highways in the nation,” says Nace.

In the U.S. House and Senate, lawmakers are currently drafting long-term legislation that could set rules for tolling in the future. Indications are that the House version could emphasize more public-private partnerships for roadway infrastructure.

Nace says instead of selling off the nation’s highways, lawmakers should heed the philosophy of President Eisenhower.

“We ought to start an ‘Ike Was Right’ campaign – because that’s how we’d like to see highways funded,” he said. “There’s no need to have any toll roads at all. It could all be taken care of at the fuel pump.”

Financial woes?
According to reports, the consortium that leased the Indiana Toll Road in 2006 isn’t on great footing right now. The Financial Times says the Cintra-Macquarie consortium, doing business as ITR Concession Co., has been burning through an account that is supposed to act as a buffer against $4 billion in loans, according to the article, which adds that the company could end up in default.

Land Line has not been able to independently verify the claim, but the recent economic downturn and decline in traffic on the roadway certainly cannot be good news for the operators.

“I don’t think they reaped as much from the investment as they thought they would,” said owner-operator Mark Elrod, an OOIDA life member from Peru, IN.

He says he hasn’t used the Indiana Toll Road at all since it was “sold” in 2006, although he admits he’s not in the region very often.

Elrod points out that the legislation that created the Indiana Toll Road in the 1950s stated that the tolls would come off once the roadway was paid off. That obviously hasn’t happened, and it’s not about to happen anytime soon because the Cintra-Macquarie lease is scheduled to last through 2081.

“It shouldn’t be a lifelong cash cow,” Elrod said.

The issue of privatization brings out all sides, but one thing most truckers agree on is that existing taxpayer highways should not be converted into toll roads.

“I’m not against a public-private partnership if it’s done right,” Elrod said. “One thing I’m definitely against is tolling existing roads.”

Tolling wouldn’t bother truckers so much, Elrod says, if the projects involved new highways or lane capacity, also known as “greenfield” projects. He says greenfield projects paid for with tolls would be OK as long as highway users benefit and the tolls are removed once construction is paid for.