Recently in PA Turnpike / tolling Category

I keep looking at the turnpike leasing deal in retrospect and try to envision where the deal would be if it had fallen into the Citi money machine.
(The process - greenmesh 6/2008-10/2008)

Our choice was a blind, one-track business model designed to make money or government inefficiency.

Even with tolls recently rising on the turnpike, the consumer got the better deal with keeping things status quo for now.

Tolls would have gone up anyway. Citi recently sent out interest rate increases to consumer card holders after receiving federal money designed to help ease credit. (greenmesh 12/14)

News on Citigroup, one of the investors courting the turnpike last fall...

Vikram Pandit may soon be forced to carve up Citi to plug the hole in its balance sheet from what could be as much as $150 billion in toxic assets.

The changes now afoot contradict what CEO Vikram Pandit has been telling the market for months--that he wouldn't split up Citi. But as the economic and credit climate has deteriorated, the government--Citi's largest shareholder, with a 7% stake--is likely nudging Pandit to shift his strategy and raise more capital. And the 52-year-old executive has little choice but to follow orders. businessweek.com (1/14)

Turning over the turnpike to private investment was supposed to turn profit potential into quick cash for government. How quickly did that turn around into government giving Citi taxpayer money after Citi failed to make sound long-term business decisions. We were then told that these banks owned so much that it sentenced the taxpayer to doom if they failed.

Citi has been told by government to raise cash by selling pieces of it's vast holdings.

You have to wonder what kind of decisions Citi would have made concerning the turnpike's long-term lease... bridge repairs, safety concerns; retaining the value of the investment in the final years of the lease deal.

The irony of all this is that doing business like this has poisoned the trust of the same consumers (investors) who brought these businesses great wealth and is the fuel that will burn them away along with my 401-K.

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I am sitting in Rome, New York.

Rome has seen better times. Property taxes here are about twice what I pay in Manchester Township. I am currently ten minutes from The New York State Thruway.

Abertis Infraestructuras SA of Spain and Citigroup Inc. withdrew their $12.8 billion offer to operate the 537-mile (864-kilometer) Pennsylvania Turnpike last week after state lawmakers delayed a decision on legislation needed to allow the transaction to go forward. bloomberg

Maybe Citi is busy now trying to scuttle a deal between Wachovia and Wells-Fargo (AP) who they claim jumped their deal. The deal Citi is trying to stop between Wells-Fargo and Wachovia would save taxpayers from paying billions from the Federal Deposit Insurance Corporation (FDIC) to bail-out another bank.

New York is struggling with the same issues with roads and bridges as Pennsylvania and is looking for new ways of funding. Options include a new push to lease out The New York State Thruway and the Tappan Zee Bridge, golf courses, state parks and the lottery. watertowndailytimes.com

I like the idea of leasing when in the case of the Tappan Zee Bridge that is in need of replacement. In this scenario, a company must front the costs and will reap benefit over time.

In other scenarios, the inefficiency of government (our tax dollars) is transferred into private profit and long term uncertainty at the whim of private control.

The question remains. Can we trust the private sector with running our infrastructure any more than inefficient government. At least with government, I still have a vote.

We need to think long-term investment, pay cash up front for current expenses, take responsibility for use, and stop handling finances with smoke and mirrors.

After we are done hiding future costs in lease deals and creating special interest groups to defeat tolling we are left with one big problem - The infrastructure is crumbling and it needs not only money now, but a long-term investment solution so we don't have to panic and sell the back 50 acres of the farm every 10 years to get out of debt.

The trucker associations are cheering, the local residents who don't want a fee to get out of town are happy, and businesses who somehow think people will stop coming to the I-80 corridor are thrilled. I have never figured out the last one; when there are only two major east and west routes in Pennsylvania and one has already been tolled for the past 75 years.

Gov. Rendell is again pleading for a quick infusion of cash from the Abertis-Citi consortium in return for questionable long-term investment for Pennsylvanians.

The Feds rejected the plan to toll the turnpike because I-80 tolls "appear to have been predetermined by the Pennsylvania General Assembly based on considerations largely unrelated to the true costs" of operating and maintaining I-80. philly.com

It sounds like the The Federal Highway Administration needs to broaden their definition of what tolls can be used for and those who drew up the current toll plan need some better lawyers who understand the federal guidelines, unless they were just trying to push the evolution of the way tolls can be used and hoped for some creativity.

President Bush has suggested that agencies become more creative in coming up with ways to fund highways, making a political u-turn from veto mode to approve an $8-billion rescue plan for the federal highway fund. latimes.com

The reality is that our roads and bridges are crumbling. We need to come up with ways to finance public transportation. As everyone tries to grab a bit more of their share of the pie the cost of living spirals upward. Someone has to pay for the surfaces that transports and profits private enterprise.

Pennsylvania taxpayers need the best deal over the long-haul. I define long-haul as generational and not the next five years.

So here are our choices:

• Lease out the turnpike and get the fat check in the mail NOW!!. Long term profit and control for the next century goes to global private business.


• Raise taxes for everyone to pay for crumbling roads and public transportation.


• Have a point of use charge, tolling, that narrows the "tax" to transportation for transportation needs and targets the true cost of long-haul trucking and driving millions of private vehicles on public roads.

What drives my opinion of the Pennsylvania Turnpike leasing deal
(greenmesh 8/08)
Leasing the Pennsylvania Turnpike is a bad idea - part 2
(greenmesh 8/08)
Why can't "WE" keep making a profit on the turnpike?
(greenmesh 6/08)

The Pennsylvania Turnpike is part of my American heritage. Rolling into a toll booth, I look at it as the gateway to a national treasure of transportation history.

I have a vested interest in supporting and preserving it, whether that just means not throwing trash at it or becoming actively involved when it's threatened.

When I am empowered, I go the extra mile to care about things and look to preserve this treasure and practical function of this roadway for future generations.

It's public, non-profit status gives me a say in it's future and ensures that my toll is actually going to the generational preservation and enjoyment of it. Not to financing a capital investment group; someone else's dream or worse a shady future deal that I am inadvertently supporting with my toll.

When an investment group is pushing very hard to enguage me in a public debate they view it as a sales pitch, but the true beauty of this moment is that I still have control of the power to guide the turnpike's destiny.

Although I love free enterprise and the America dream of the freedom to grow a small business, the flow of money tends to flow faster in the direction of the most money.

Big business is rarely interested in the good of the whole, for this we have a democracy.

Interesting opinion article in the Philadelphia Inquirer:
Hidden costs will make Turnpike deal a bad one
Summary:

• Huge unseen financial incentives pull from the tax base during the deal


• Costs associated with ensuring the contract gets inforced


• With tax subsidies greatest in the first 15 years, the profit window will rapidly close, leaving the company with aging and expensive infrastructure and large debt remaining for the rest of a century.


• This deal was negotiated in secret without public input and information. Pennsylvanians had less than a month to read and digest a 686-page contract and attempt to predict and value how its thousands of conditions might affect the commonwealth through 2084

I was walking around my village today and a couple neighbors were responding to my blog entry Why can't "WE" keep making a profit on the turnpike? (6/25)

One neighbor was blaming Gov. Ed Randell for siphoning the money off to Philadelphia under the current set-up. I drop off the mail for another neighbor who often is listening to Gary Sutton. She just plain asked my opinion on the merits. I have yet to hear anyone, except the governor, say they think it's a really good idea, "it's slam-dunk" he said.

I believe the heart of the matter is a difference in perspective that has widened between the ever increasing transience of business and what the great population hopes government's long-term commitment is to them.

When you privatize a public entity ownership is moved from government to the interest of a group of investors. Government is you and me because we elect and reject those who represent us.

The Pennsylvania Turnpike Commission was created in 1937 to build, finance, operate and maintain the Pennsylvania Turnpike. The commission is comprised of five members. Four members are appointed by the Governor of Pennsylvania. So ultimately the turnpike management is an arm of government, made of people we elect and reject.

Barcelona-based Abertis Infraestructuras, Abertis investor Criteria CaixaCorp of Spain and Citi Infrastructure Investors offered $12.8 billion to lease the turnpike. (AP) I will not be on a seat of the board of directors of a company in Spain or the equally nebulous Citi Infrastructure Investors group. What is my recourse if i had a concern about the business of the turnpike or what my tolls are financing.

Meanwhile, up north 80 percent Interstate 80 needs resurfacing to replace more than half of its pavement, which was applied between 1958 and 1970. Officials proposed replacing 60 bridges within the first 10 years. Sixteen of the interstate's bridges are structurally deficient and 13 are in worse condition, which the turnpike described as "fracture critical." pittsburghlive.com

The scramble is on to get tolls on I-80 because PennDOT cannot fund a complete rebuild. Any bids on I-80? Going once, going twice... hello, any takers? Mmmm, must not be such a good deal.

From personal experience over the past 28 years of driving on it, The Pennsylvania Turnpike have been a very well maintained road in road surface and snow removal. It

The turnpike is currently a non-profit meaning they have to put the revenue from tolls into the road.

I just received a hard sell email from Pennsylvania Transportation Partners for leasing the Pennsylvania Turnpike. It seems that their plan is the "only" source and "only" plan. It will create "safety". Perhaps the most telling part of the email is "there are more than $12.8 billion reasons to lease the turnpike". I can't help to notice a the Citi logo embedded below the PTP logo in the link penntransportation.com

If the turnpike is so desirable as a lease option it is because it will be so profitable for some entity. The people of Pennsylvania should profit long-term from the proceeds of their own toll road rather than a third party extracting profit. Sure we will get a pile of money upfront, but what will we loose in funding down the road when the profits of the lease are being funned to a private party for the next greater part of a century.

It goes on to say that the deal will help finish projects and there is even a YouTube video with two guys whining in traffic congestion bashing the turnpike commission for their 67 years of control of the turnpike that has prevented privatization...(and keeping a private entity from taking a long-term chunk of the money?)

Such a hard sell... demanding an open debate of more hard sell?

I have one question for the debate: If an entity wants the turnpike so badly because it can turn a profit, then why can't the people of Pennsylvania just keep that profit - ALL the money that we will pay in tolls over the next century and use ALL of it for our roads and infrastructure. And if it's so "badly" run, as the PTP seems to say, then WE can use our democracy to petition government and make a change.

Once it's leased and the money is spent, the long-term revenue potential for consumers is history.

According to the Pennsylvania Turnpike Commission:

(April 08)
The Turnpike has already provided PennDOT with $520 million in new funding under Act 44. By the end of April, the Turnpike will have provided a total of $750 million in new funding for local roads, bridges and mass transit agencies around the state. Over the 50 years of Act 44, the Turnpike will provide PennDOT with annual average payments of $1.67 billion per year - a total of $83.3 billion.

Below is a screen shot the Pennsylvania Transportation Partners appeal.