By David Tanner, Land Line associate editor
Ohio officials are pushing ahead with plans to lease or sell the state turnpike to investors. The state’s Department of Transportation and Office of Budget and Management are in the process of hiring advisers to maximize the dollar value of the 241-mile toll road.
Gov. John Kasich has previously said the Ohio Turnpike could fetch $3 billion in a long-term lease. According to documents released earlier this month by the state, an outright sale of the facility is also a possibility.
The goal, according to Kasich’s recent budget, is to use the lump sum paid by investors to pay off bonds and fund improvement projects. Specific details have yet to be hammered out.
Potential advisers can submit their names to the state by Wednesday, Aug. 24. That date kicks off a four-month development period to see what the advisers come up with.
Under a possible lease, an eventual investor would control and operate the roadway for a period of time, likely decades, and keep the toll revenue for reimbursement and a built-in profit margin.
Sound familiar? Truckers and other highway users continue to battle attempts by state governments to lease or sell toll roads to private investors.
Public and political pressure helped put the lid on a $12.8 billion offer by investors to take over the Pennsylvania Turnpike in 2008.
A mere handful of states have gone the distance to lease roadways to private investors. The largest lease involving a toll road in the U.S. remains the $3.85 billion paid by investors from Spain and Australia for the Indiana Toll Road in 2006. Tolls have more than doubled for truckers so far as part of that deal, and the investors are guaranteed at least a 3 percent toll increase every year through 2081.
Other lease deals include the Chicago Skyway in Illinois, the Dulles Greenway in Virginia, the Pocahontas Parkway also in Virginia, and the 407 Express Toll Route in Toronto, Ontario.
The viability of long-term concessions for toll roads remains in question. OOIDA leadership cautions states against the “pawn shop mentality” of leasing or selling roadways to for-profit entities. As such, the Association opposes the lease or sale of the Ohio Turnpike.
Private companies are not just in the business of buying or leasing existing toll roads. Companies are also building new infrastructure using long-term concessions involving tolls. Texas is a primary example of where that is occurring. The long-term viability of this type of concession is also unproven.
The South Bay Expressway in southern California, for example, once touted as a flagship for public-private partnerships involving toll roads, filed for bankruptcy protection after just four years of operation. A quasi-public entity plans to buy the South Bay Expressway for a fraction of what the 10-mile tollway cost to build.
Copyright © OOIDA