Testimony on Public Private Partnerships by Susna Zingle, Lake County resident, to the Senate Appropriations Committee II
By Guest Author- July 20, 2006
Good afternoon, and thank you for letting me speak today. I am a resident of Wadsworth, in NE Lake County, and have followed transportation issues within the region for some time. The issue of selling or leasing the tollway to raise money for projects within the state is complex and fascinating. Today I will address three main concerns – cost, local control, and planning issues.
Selling the tollway to raise money to support existing State obligations seems to be a move of desperation – somewhat akin to a family resorting to selling the TV and the car to pay the credit card bill. It raises significant amounts of cash in the short term but has long term implications that can’t be avoided. It is an exorbitantly expensive means of raising money.
First, in such a transaction, new costs are introduced that will immediately and permanently increase tolls. I don’t believe that a private corporation can sell bonds as cheaply as can the toll authority (whose bonds are tax exempt). That additional interest will have to be incorporated into the tolls for the next 20 or 30 years. No homeowner goes looking for the most expensive mortgage on the market.
Next, the toll authority must only cover its costs; a private company is going to expect to profit from its efforts. Some newspaper articles claim the equity companies are looking for returns as high as 25%. The profit will have to be incorporated in the tolls.
Additionally, I expect that the acquiring corporation will expect to raise tolls throughout the life of the agreement. The Chicago Skyway tolls immediately rose 50 cents to $2.50; by 2017 they will reach $5.00, more than doubling from their current levels.
The impact on Lake County residents is immense. Already, a driver who uses the tollway from Antioch to Lake Cook Road on a daily basis pays over $1000/year in tolls – per car. We talk a lot about affordable housing in Lake County, but I maintain it's not just the cost of housing, it is the cost of living here that exacerbates the problem. Double those tolls, and people will simply not be able to afford to go to work.
Our business leaders are concerned with Lake County’s competitiveness in the marketplace. I am compelled to point out that when you cross the WI border, I-94 is a freeway. Similarly, at the southern end in Cook County, I-94 is a freeway. Lake County is at a substantial disadvantage already.
I can’t imagine how we can see into the future clearly enough to negotiate all toll pricing issues for the next 50 to 99 years without review and approval at the time of the increase. Certainly cost of living increases are a part of it; but so is increasing traffic (and increasing revenue), so should be the efficiency of the corporation. We spent years pointing out the money being wasted by the tollway – the $1200 leather chairs, the proposal for an $80,000 conference table. With a private corporation, will we be able to see into the inner workings enough to be able to judge?
The ramifications are significant – one author estimates that Macquarie-Cintra will make $133 billion over the life of the Indiana lease; for which Indiana gets $3.8 billion. The items we bought with the upfront money will be long forgotten while we continue to pay for no benefit for the next several generations. Surely there’s a better way.
If the sale must go forward, one suggestion may be revenue sharing with the state once the corporation has recouped its original investment. A second would be to negotiate price increases at the time they are requested, as you would with any other contractor in the state.
My second concern is for local control. The tollway is not an isolated roadway, it is an integral part of our transportation network. Changes on the tollway impact our roads and transit, and vice versa. How do we protect ourselves from changes on the tollway, and how do we require changes on the tollway when needed. For example – some contracts include non-compete clauses, so the tollway becomes the only viable option for travelers. In Lake County, US Route 41 closely parallels the tollway, as do the Canadian Pacific, Union Pacific and Metra Union Pacific railways. There are plans to introduce commuter traffic to the Canadian Pacific, and to improve Metra and 41. Would these plans have to stop to protect traffic levels on the tollway? We do not now have any of the common traffic management techniques on the tollway – HOV lanes, bus only lanes, reversible express lanes, metered ramps, etc. How do we ensure that, as transportation science becomes more sophisticated that we benefit? How do we incorporate these changes with planning for IDOT managed roads? And, say, if the corporation were to become too aggressive with congestion pricing and all the trucks move over to 41, how do we say stop? Will the tollway be able to relocate toll booths at will or add toll booths where none now exist? There’s more, but I think it’s clear.
I don’t believe the state can wash its hands of responsibility for the operation of the tollway, it is a public asset that is key to our lives. We had tried for years to achieve greater tollway accountability than that granted solely by the governor’s appointments to the board. A handing-off of the tollway to an outside entity will not give us even that assurance. It’s irresponsible. It will have to be a close partnership.
And last, I have concerns with planning issues. Lake County legislators had just started to work together to find funding for our roads and transit last year. These tentative first steps were encouraging, as previously we just collapsed under partisan and regional bickering. IDOT couldn’t begin to tell what we wanted, so it spent its money elsewhere. Now, with just a hint that money might come into the state, our legislators, like greedy children waiting for the piñata to burst, are assuming that untold wealth is going to shower down on us and they are resurrecting bad ideas from the past. The planning process promised to residents is a fraud and a waste of time. We will lose the opportunity to do something meaningful and immediate while we chase impossible and damaging highways. I mean the extension of Route 53.
I don’t believe public opinion has changed. During a recent public hearing on the east/west leg (“120 bypass”) only 26 residents said build as planned. Over 150 residents said spare Almond Marsh and the heron rookery. At a series of similar hearings, over 600 comments were received asking for improvements to state and local roads, within those, 153 comments for Route 45. 192 comments requested improvements to intersections. Way down the list, 103 comments requested 53. But, with our legislators, the 100 trump the rest.
I suspect our legislators aren’t the only ones creating a wish list. If the tollway is sold, any use of the funds will have to have a truly massive regional benefit, and not be frittered away on small individual projects. And that intent needs to be expressed strongly now, so we can focus on those things we truly can do.