Spanish-American consortium bids $12.8 billion for Pennsylvania Turnpike

| Monday, May 19, 2008

A consortium that includes a Spanish toll operator and a subsidiary of U.S.-based Citibank has bid $12.8 billion to lease the Pennsylvania Turnpike for 75 years, Gov. Ed Rendell announced Monday, May 19.

Rendell said the highest of three bids he received came from a team consisting of Abertis Infraestructuras, an infrastructure investor and toll-road operator based in Spain; Citi Infrastructure Partners, a New York-based division of global financial company Citibank; and a Spanish company called Criteria CaizaCorp, which is a major shareholder in Abertis.

Abertis directly operates 2,000 miles of toll roads around the globe and is one of the largest infrastructure investors worldwide. Abertis’ U.S. holdings include control of the Orlando Sanford Airport and four other airports.

If approved by the Pennsylvania General Assembly, the proposed $12.8-billion lease would become the largest in U.S. history, dwarfing the $3.85 billion paid by private foreign investors for the Indiana Toll Road in 2006.

Rendell said he is confident the General Assembly will approve enabling legislation by the time it recesses for the summer on June 30. If that does not happen, Rendell said he would try to persuade investors and lawmakers to work toward a future deal.

The current transportation-funding model in Pennsylvania, known as Act 44, calls for the conversion of Interstate 80 into a toll road. Should a long-term lease of the turnpike be approved, tolls on I-80 would not be needed, Rendell said.

Highway user groups including the Owner-Operator Independent Drivers Association are opposed to I-80 tolls as well as Rendell’s proposed lease of the Pennsylvania Turnpike.

“These proposals, both Act 44 and selling the Pennsylvania Turnpike, do nothing to reduce congestion or increase capacity in our infrastructure,” OOIDA Senior Government Affairs Representative Mike Joyce told Land Line.

“Hopefully, lawmakers will return to the drawing board and re-evaluate how their money is spent first.”

If approved, the one-time payment of $12.8 billion from the Abertis-led consortium would be used to retire current turnpike debt, fund roads and bridges and dedicate money for 73 public-transit agencies across the state.

Rendell said the private investor would be guaranteed a 25-percent toll increase in 2009. The investor would be allowed to increase tolls by 2.5 percent each year, and all increases would be indexed to inflation.

Joyce said OOIDA members need to tell lawmakers in Pennsylvania how they feel about tolling and private control of infrastructure.

“Do taxpayers trust that they’re going to do the right thing with this money? No way,” Joyce said. “They’ve put enough burden on the backs of the highway users.”

The Abertis-Citi bid was $700 million higher than a $12.1-billion offer from a consortium consisting of Goldman Sachs and Australian toll operator Transurban. The Goldman Sachs team had the highest bid as of May 9, but Rendell extended his bidding deadline to May 16, giving the Abertis-led team the chance to increase its offer.

A bid from a third consortium, consisting of Cintra of Spain and Macquarie of Australia, was rejected May 9 because it was not within 10 percent of the highest bid, Rendell said. The consortium decided not to increase its bid.

A Cintra-Macquarie consortium currently operates the Indiana Toll Road, the Chicago Skyway in Illinois, and the 407 Express Toll Route in Ontario, Canada.

 

– By David Tanner, staff writer
david_tanner@landlinemag.com

Editor’s note: Gov. Ed Rendell’s Web site includes a press release about the bids. Click here to read that release. At the bottom of the governor’s press release there is a link to the actual lease document.

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