TOLL ROADS WITH A CASH-OUT OPTION
December 16, 2005
State and local governments are singing a new tune in operating toll roads: selling or leasing them for cash and letting private companies run them.
The governments plan to use money from the transactions to build new roads, repair old ones or pay for other programs.
The idea has caught fire since Chicago leased its Skyway -- an 8-mile elevated highway that carries traffic from the city to the Indiana border -- for $1.8 billion in cash to Spanish and Australian investors in January.
- The Skyway had lost money for decades and only recently had turned profitable, generating $40 million in tolls and $20 million in profits last year.
- The price for the 99-year lease was more than twice as much as any other company bid.
Now other governments around the country are examining what their toll roads are worth and wondering whether they can get a Chicago-style windfall -- or at least a good deal.
Among the deals being studied:
- Indiana would connect the 157-mile interstate across northern Indiana to the Chicago Skyway and operate it as a toll road; the state is soliciting bids that are likely to top $2 billion.
- Harris County, Texas operates 83 miles of toll roads in the Houston area that could be worth more than $10 billion; investment banker Goldman Sachs told county commissioners in September that the system could generate a $7 billion upfront payment.
- Virginia plans to lease its 14-mile road near Washington, D.C., for 50 years; the state is studying four bids of about $1 billion each.
Source: Dennis Cauchon, "Toll roads with a cash-out optionGovernments look at leasing highways to private sector," USA Today, December 15, 2005.
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