Transportation infrastructure: Spanish group makes highest bid for Pennsylvania Turnpike lease
Jeff Berman, Group News Editor -- Logistics Management, 5/20/2008
HARRISBURG, Pa.—Pennsylvania Governor Edward G. Rendell said yesterday that a $12.8 billion binding bid submitted last week for a 75-year lease of the Pennsylvania Turnpike was the highest bid submitted for the endeavor.
The bid was made by Citi Infrastructure Investors and Albertis Infraestructuras of Barcelona, Spain and Criteria CaixaCorp.
A statement from Governor Rendell’s office said that this lease payment would be allocated towards road and bridge repair and support 73 public transit agencies throughout Pennsylvania.
“Leasing the turnpike will deliver more per year than the I-80 tolling plan,” Rendell said. “Pennsylvanians will get more and pay less, and that’s a good deal as far as I am concerned. I hope the legislature will give this proposal the serious consideration it deserves so all Pennsylvanians can begin benefiting from the additional funding.”
By leasing the Pennsylvania Turnpike, Rendell said that Pennsylvania would be able to limit toll increases, with a 25 percent increase in 2009 and a 2.5 percent of inflationary increases as a cap thereafter.
Rendell’s office added that this lease would produce more funding for roads, bridges, and public transit systems than Act 44, which was passed by the Pennsylvania General Assembly and signed into law by Rendell in July 2007. As part of Act 44, the Pennsylvania Department of Transportation and Pennsylvania Turnpike Commission said last October that they had entered into a 50-year lease agreement for Interstate-80. Along with producing more funding for these initiatives, Rendell’s office said the concessionaire would implement a capital investment plan for more than $5.5 billion.
Under these original terms, the Pennsylvania Turnpike Commission was to transfer $83.3 billion to the Pennsylvania DOT for statewide transportation projects, and the Commission said this initiative would generate $33 billion for I-80 improvements—and other transportation projects—over the next 50 years, which would have brought the total investment to $116 billion.
And an October report from the Pittsburgh Post-Gazette indicated that Pennsylvania state officials requested expedited approval for this project from the Federal Highway Administration to make I-80 the country’s third pilot interstate tolling project permitted under a federal transportation act, which, if approved, would add the 311 miles of I-80 to the 5,244 miles of tolled highways and bridges operating in the United States. The paper added that this plan calls for cars to pay 8 cents a mile and 18-wheel tractors to pay 30 cents a mile, which would put border to border tolls at $25 and $93, respectively, beginning in 2010. An Associated Press report said these tolls would generate roughly $500 per year, adding that these tolls were a major component of Act 44, which is expected to produce $940 million annually for the state’s transportation needs.
But with this week’s news regarding the Pennsylvania Turnpike lease bid, it appears that final acceptance of the winning bid will require enactment of legislation by the Pennsylvania General Assembly and require modification of Act 44. Rendell’s office said that if the lease is approved, the Pennsylvania Turnpike would make annual payments to the Pennsylvania DOT averaging $944 million per year for ten years and larger amounts thereafter. But if permission is not granted to toll I-80, these payments would be in the $450 million per year range with no escalation.
The potential to limit or cap tolling would likely be well-received by Pennsylvania’s constituents, shippers, and carriers. The AP report said that repealing tolls has become a priority for many people and businesses along the highway, as well as the lawmakers who represent them.
But some feel that any type of tolling and private interest leasing agreements or public-private partnerships will do more harm than good for shippers and carriers.
“Anytime you have things like tolling or public-private partnership on existing highways, we feel the public will lose out eventually, because transportation costs will go up,” said Wayne Johnson, chairman of the National Industrial Transportation League’s (NITL) Highway Transportation Committee, in an October interview. “These costs will then be passed on to the buying public through increased prices and products, and those highways that are already in place and have been paid for with tax dollars..for the state to lease those out to a third party and in the past those third parties has almost been given a blank check to charge what they will to maintain a road and keep it viable for public transportation.”
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