NCPA - National Center for Policy Analysis


March 31, 2010

San Diego's South Bay Expressway filed for Chapter 11 bankruptcy protection after being open for business less than three years:

  • Macquarie Infrastructure Group, the Australian firm that owns the expressway, assured federal highway officials that 60,000 paying customers would use the road daily.
  • In fact, only 22,600 did so, leaving the project without enough revenue to sustain its debt obligations.

Proponents of toll roads insist that allowing private companies to charge motorists to drive on roads represents the free market solution to America's transportation woes.  But the South Bay Expressway failure shows that plan is a road to nowhere, says the Washington Times.

Estimates based on rosy scenarios are the norm in the world of tolling schemes:

  • A Texas Department of Transportation study completed last year found that a majority of toll road projects overestimated traffic levels in the first five years by at least 20 percent to 30 percent.
  • Because public transportation agencies generally cut deals with private tolling companies behind closed doors, such detailed forecasts are not available for public review until long after the contract is signed.

In a true free market environment, the projects would follow the law of supply and demand, dropping rates to attract new customers.  Instead, the foreign companies operating these roads are hiking tolls as fast as they possibly can -- the opposite of what one would expect in a truly competitive marketplace, says the Washington Times.

Source: "Editorial: The trouble with tolls," Washington Times, March 30, 2010.

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