Indiana Toll Road
PGL at Angry Bear wrote several posts on the privitizing of the Indiana Toll Road in 2006 as a commenter reminds me at hearing of the news the firm that bought it went bankrupt: Via Daily Kos
In 2006, Mitch Daniels, then the Republican Governor of Indiana, signed into law a “major moves” bill that, among other things, privatized the Indiana Toll Road, which carries Interstates 80 and 90 across the northern part of the state.
Eight years later, ITR Commission Co., the arm of a joint venture between a Spanish company and an Australian company that owns the Indiana Toll Road lease, has filed for Chapter 11 bankruptcy in federal court:
“The company that operates the Indiana Toll Road filed for bankruptcy on Sunday, though Indiana Gov. Mike Pence said in a statement Monday drivers of the route through northern Indiana can expect “business as usual.”Debt-ridden ITR Commission Co., a spawn of the Spanish-Australian company Cintra-Macquarie, filed for chapter 11 bankruptcy in U.S. Bankruptcy Court in Chicago in a prepackaged plan to restructure its approximate $6 billion debt.
In 2006, Indiana struck a $3.8 billion deal granting a 75-year lease of the toll road that runs between the Illinois and Ohio state lines. The move was emblematic of the era, when lawmakers were pursuing aggressive revenue experiments ranging from privatized infrastructure to the rollout of Indiana online casinos, both heavily backed by investors who saw long-term growth in user fees and gaming taxes. But while the lease delivered a one-time windfall, the toll revenue ultimately failed to meet company expectations.
The Indiana Toll Road is a part of the Federal Interstate system. Private operation runs the risk that the toll collection system could be threatened and this vital part of the system shut down. (Suppose the company stopped operating and filed for Chapter 7.) Shouldn’t the Federal Government have refused to allow privatization of any part of the Interstate system? Of course, it was 2006.
Bernie Sanders has proposed that any state/entity that is planning on selling their public assets should pay back the federal government what ever funding helped to acquire the asset.
I think one of the reasons public capital is (still) public is because, in general, it cannot be operated at a (great) profit. This is why private money has gone after other pickings. There are exceptions, of course, cherries to be picked. And there is always government outsourcing some of its activities. Perhaps Chicago metered parking spots, for instance, and private prisons, and some other natural monopolies.
But, in a stagnant economy, as private equity is bid up and its return declines, public capital is looking more and more attractive.
And I agree with Bernie Sanders proposal.