FAQ: Can you give examples
of Failed Toll Roads?:
A.
We
need to stay focused on the central issue which is that Daniels
is proposing something never before proposed, namely a
privately-run rural interstate tollroad. You can't compare that
to the skyway, to the Dulles tollroad, to the Orange County
tollroads, etc. But even so, virtually all of those
projects, which have far better numbers than I-69 would have, are
failing.
Wouldn't it be easier, and be far less defensive, to ask
them instead to give an example of a modern private toll road in
this country that has succeeded without massive public financial
support?
Because there aren't any.
But here is some information too:
Highway tiff
threatens Canada-EU trade deal
OTTAWA
-- The government of Spain has warned that it will veto a
proposed trade agreement between Canada and the unless the Ontario
government allows a Spanish company to raise tolls on the province's
Highway 407.
More...
Don't miss this one!
>From Wikipedia, an online encyclopedia
About Highway 407 in Canada
As part of a controversial plan to finance revenue for tax cuts, the highway
was sold to a conglomerate of private companies in 1999 for $3.1 billion.
The deal included an unprecedented 99-year lease agreement, unlimited
control of the highway and its tolls, as well as a clause protecting the
corporation from any competition, not the least of which includes a ban on
construction of any nearby provincial highways that may reduce toll revenue.
When purchased, the highway ran from the junction of Highway 403 in
Mississauga to Markham Road in Markham. Extensions westward to the Queen
Elizabeth Way and eastward to Highway 7 and Brock Road in Pickering were
constructed by the corporation, as mandated in the lease agreement. Both of
these extensions were not part of the original Highway 407 plans, rather,
these protected corridors were to be future, non-tolled 400-Series highways.
The westward extension from Highway 403 in Mississauga to the Queen
Elizabeth Way in Burlington was initially intended to be part of Highway
403.
Today, the highway is valued at over $10 billion, and the Progressive
Conservative party has been heavily criticized for the poor terms of sale
including underestimating the value of the road. Many "905ers" in the
rapidly growing Greater Toronto Area who had been expecting to be served by
a much-needed non-tolled Highway 407 consider its sale and skyrocketing toll
rates a sellout and this significantly eroded the Conservative's formerly
strong support base in that region. The CAA considered the 407 contract a
fiasco and adopted a platform where they would not support the tolling of
any new or existing highways. Even though the succeeding Liberal government
have been unsuccessful in their attempts at legal action against the 407 ETR
operators, the contract still reflected badly upon the opposition
Conservatives who defended it. Current Conservative leader John Tory has
distanced himself from his predecessors on this issue and has said that he
would not have sold Highway 407 if he had been Premier.
The company, known as 407/ETR International Incorporated is 30% owned by the
Australian Macquarie Infrastructure Group, one of the largest private
developers of toll roads in the world.
>From National Union of Public and General Employees:
When politicians sell out citizens, you get Highway 407
An arbitrator says Ontario highway operator can charge any tolls it likes
Toronto - When governments put the welfare of corporate friends ahead of
citizens, you get Highway 407, the 108-kilometre toll road operated north of
Toronto by a private company called 407 ETR.
In 1999, the former Conservative government of Mike Harris, then serving a
five-year term as premier, gave 407 ETR a 99-year lease to run the toll road
as a private business, charging motorists whatever it liked.
Recently, the company jacked up tolls by as much as 200% at peak hours. Now,
an arbitrator has ruled that the contract signed with 407 ETR by the Harris
government was so airtight the company has every right to do so, and the
public be damned.
The current Liberal government of Premier Dalton McGuinty plans to appeal
the ruling but there is no guarantee it will be any more successful than it
was at arbitration.
In other words, Mike Harris and his corporate pals in cabinet did such a
first-class job of selling out citizens that 407 ETR may be able to thumb
its nose at every elected government in Ontario until the year 2098 -
another 94 years.
Company crows
The company was quick to crow over its victory.
"The province (meaning the McGuinty government) had alleged that the company
did not have the right to increase tolls without first obtaining the
government's approval," 407 ETR said in a weekend news release.
"Specifically, the government suggested that the company had to file a
'Change Request' in order to increase tolls and was in default for not doing
so earlier this year. 407 ETR disagreed with the government's position,
pointing out that the contract signed between the company and the government
in 1999 did not contain such terms and conditions," it added.
"We are pleased with the independent arbitrator's decision," said Enrique
Diaz-Rato, president and chief executive officer of 407 ETR. "All along, our
position has been that we are acting in compliance with the contract."
Who is 407 ETR?
A company called 407 International Inc. is the sole shareholder, operator
and manager of 407 ETR, which runs east-west just north of Toronto. In turn,
407 International Inc. is owned by a consortium comprised of the Canadian
subsidiary of a Spanish company called Cintra Concesiones de
Infraestructuras de Transporte (which is co-owned by Grupo Ferrovial and
Australian-headquartered Macquarie Infrastructure Group) and Canadian-based
SNC-Lavalin of Montreal.
Outrage - for what it's worth
The McGuinty government has expressed outrage at the ruling but whether it
will ever be able to do anything more than that is not clear.
Transporation Minister Harinder Takhar argues that the 99-year lease is so
extreme no one could reasonably expect unfettered rights to last so long.
"It's inconceivable that any government would have given a private
consortium the unfettered right to raise tolls for 99 years."
Inconceivable? ETR 407 doesn't think so and neither, apparently, did the
Harris government.
The contract does allow the province to "renegotiate" the contract with 407
ETR every five years but there is no obligation on the company to agree to
any changes - or to restrain itself from demanding exorbitant compensation
if it does.
Welcome to the modern world of privatization, a story almost always ends the
same dismal way. Corporations win, people lose.
Web posted by NUPGE: 11 July 2004
World Bank [PDF] Infrastructure Projects: A Review of
Canceled Private Projects
In
transport most of the canceled toll road projects saw the exit of the
private sector because the roads could not attract enough users to meet
the optimistic traffic forecasts. Consumers were often less willing
than had been expected to pay for the right to use the toll roads,
sometimes because the effect of alternative toll-free routes had been
underestimated.
Road Pricing
Congestion
Pricing, Value Pricing, Toll Roads and HOT Lanes
Table
8
Benefit
Summary – Toll Funded Roads
|
Objective
|
Rating
|
Comments
|
|
Congestion
Reduction
|
3
|
Increases
road capacity and reduces demand.
|
|
Road
& Parking Savings
|
-2
|
Increases
total vehicle travel and facility costs.
|
|
Consumer
Savings
|
-1
|
Increases
direct consumer costs, but reduces indirect road costs.
|
|
Transport
Choice
|
1
|
Increases
motorists’ choice if untolled roads are also available or if pricing
improves travel alternatives.
|
|
Road
Safety
|
-1
|
Induced
travel and higher traffic speeds can increase crash costs.
|
|
Environmental
Protection
|
-1
|
Induced
travel increases emissions.
|
|
Efficient
Land Use
|
-1
|
Induced
travel can increase sprawl.
|
|
Community
Livability
|
-1
|
New
urban highways may have negative impacts.
|
Rating from 3 (very
beneficial) to –3 (very harmful). A 0 indicates no impact or mixed
impacts.
California
Toll 91 Tollway Trial at a Dead End in California
But
as a result of the controversy, more toll road advocates favor creating
local agencies similar to Transportation Corridor
Agencies
to build and maintain future tollways. New toll roads would be financed
with tax-exempt bonds on a stand-alone basis -- taxpayers would not be
responsible for repaying any debt if toll revenues fall short. And
there would be a less restrictive "non-compete" clause: They would only
be compensated for any revenue loss caused by improvements near the
toll roads.
Orange
County Grand Jury Review of 91 Toll Road Funding
Camino Colombia Toll Road
The toll road was foreseen by promoters as, "a generator of
regional economic activity."
After three years of waiting, the expected traffic never
arrived. Drivers in large numbers refused to pay the $3 per car and $16
per 18-wheeler truck toll. The road only carried 13-percent of the
traffic that had been projected to use it.
The Camino Colombia Toll Road failed and the bondholders
foreclosed on their $75 million note.
The high-yield bond
bubble is bursting all over the U.S.
The biggest problems
are toll roads. Of the 10 major ones constructed since the mid-1990s,
nearly half carry far less traffic than projected. Some $4 billion in
toll-road bonds risk default over the next five years unless they're
refinanced, estimates Robert H. Muller, a municipal bond analyst at
J.P. Morgan Securities Inc.
In the EU, "tax breaks violated rules on state aid only if they were
targeted at
specific sectors or companies — which is not the case with regard to
Spain's rules on goodwill write-offs."
It looks like he has won. But
will a private toll or PPP road be
attractive to private investors without massive subsidies from the
taxpayer?
A study commissioned by Peter
Batchelor from the
Department of Infrastructure in 1999 concluded motorists would have to
pay $8 per trip for the road to be economically viable.
How many
cars are likely to use the proposed freeway? According to the
environmental effects statement on the proposed freeway, providing it
was toll free, there would be only 100,000 trips a day on parts of the
freeway and virtually no trips covering the full distance between
Frankston and Ringwood.
According to the panel report,
"the EES
has based all traffic modelling and evaluation on the assumption that a
Scoresby freeway will be a 'free road' and will not be subject to
tolls. The panel considers if consideration is given to making the
freeway subject to tolls . . . the conclusions drawn in the modelling
and economic evaluation sections in this report to be void and this and
any other analysis undertaken in the EES would need to be repeated."
If
a toll is put on the road, the traffic will be even less than shown in
the EES, and the tolls would have to be astronomical to make it a
paying proposition.
Public-private partnerships
have been promoted by groups whose ultimate goal is
privatization.
So far privatized roads in the US have not been successful. These
public-private roads projects are intended to test ways to make
privatization work. Fortunately, we have some examples of
private-public roads projects already in existence. They provide a
basis for predicting how these projects will play out.
Free-market think tanks also
argue that toll roads benefit everyone
because they reduce traffic on existing roads, causing traffic on
existing roads to flow more efficiently.
It is therefore no
small irony that local governments in Colorado have agreed to
deliberately impede traffic on existing highways near a toll road in
order to protect the toll roads' investors.
Robert Poole, Director of
Transportation, Reason Foundation. Poole was extolling privatizing
highways as the solution to drivers’ woes. Poole was wrong, as it
turned out. So far, these public-private partnerships have been failures.
Yet,
despite the failures, the drumbeat for privatization continues.
Failures do not mean reconsidering the wisdom of privatization. Failure
only means changing the rationales for privatization and keeping up the
fight.
The
poster child for noncompete agreements is California SR 91.
The private contractor and the state agreed that public highways near
SR 91 would not be maintained or improved until the year 2030. In other
words, the state was to allow the state highway to crumble for decades,
forcing the public onto the private toll road. But California found it
could not leave the roads to deteriorate and endanger drivers’ lives.
When the state fixed the nearby roads, the private owner sued for
breach of contract, and the public learned the true cost of the private
road. The public was furious and turned against the project and the
government that had agreed to it.
Super Slab,-- Colorado Front Range Toll
Road Company
WARNING!
This site may contain more satire than some peope can handle!
This
is the Government study that has lead to the Push for Privately Tolled
Highways
The United States Department
of Transportation’s Report to
Congress on Public-Private Partnerships
(December 2004) is also sanguine about privatization. It says its goal
is “identifying the impediments to the formation of large,
capital-intensive highway and transit projects involving public-private
partnerships” and working “with States and local entities to identify
and eliminate existing impediments.” DOT sees its role as attempting
“to provide a resource document for States interested in using
public-private partnerships as a method of procurement.
The
push to privatize highways is part of a one-two punch by conservative
ideologues. First, promote legislation to starve state governments so
they cannot afford to build and maintain roadways. As roads crumble and
citizens grumble, use these failures as proof that government is
incompetent - and that the competent private sector should be allowed
to save our roads. As the Council of State Governments (CSG) Eastern
Regional Conference observes in Transportation
Trend: For sale: Roads and bridges available for lease.
United States General Accounting Office
Report to Congress
Highways and Transit -- Private Sector Sponsorship of and INvestment in
Major Projects Has Been LImited.
A PDF
of the report to Requesters from the GAO regarding private tolling
during the development of the latested FHWA funding bill.
http://www.firericwilliamson.com/tollrisks.htm
He
calculates
the gas tax equivalent from toll/mile -- interesting. He also lists toll
increases - a problem easy to understand . There are links to
references
http://www.southbendtribune.com/apps/pbcs.dll/article?AID=/20060123/News01/601230314
This
article
does an excellent job of summarizing the worst toll/ppp failures
http://rru.worldbank.org/Documents/PublicPolicyJournal/125ruste.pdf
This is a world
bank analysis of the Mexico toll/ppp failures
Among the causes
were an overestimate of the truck traffic and the public's
unwillingness to pay tolls
http://lsb.scu.edu/~dklein/papers/privateTollRds.html
Interesting
comparison
of 1800's and 1990's toll roads - it does list the expected %profit for
5 toll/ppp's -- academic paper written in 1992
Pennsylvania Turnpike Tolling a
dismal use of Public Funds
http://www.pennfuture.org/files/event_camp/monfayettereportb_42402.pdf#se
Glitch puts New Hampshire automated tolling cameras on hold
http://www.landlinemag.com/todays_news/Daily/2005/Oct05/102805.htm
They
may look alike from a distance, but even identically worded license
plates in New Hampshire might be completely different – and that’s a
problem for the state’s automated tolling system.
According to The
Associated Press,
the problem lies in the fact that New Hampshire’s Division of Motor
Vehicles allows more than one vehicle owner to have the same wording on
their plates, so long as the plate type – such as a veteran plate or
moose-emblazoned environmental plate – is different.
To
a human patrol officer, the difference in the plates is noticeable. But
to an automatic tolling camera – such as the ones used on the state’s
toll roads – the war veteran with a “BRN2RN” personalized plate looks
the same as the moose lover’s plate with the same wording.
The
DMV has put the automated ticketing system, which is manufactured by a
Dallas, TX, based company, on hold until they can find a reliable way
to identify like-numbered tickets.
Officers told The AP
they have no idea how many duplicate plates are out there.
When good toll-road ideas turn bad
Using private investment to build toll roads can cause
problems.
http://www.dfw.com/mld/dfw/news/13690544.htm
Today, 17 states are negotiating about $35 billion worth of
private
toll-road projects. Elected leaders see private investment as a
palatable alternative to raising gas taxes to pay for roads.
But some early examples of private projects didn't go so well.
Transportation officials in Texas and other states, who
collectively
are privatizing at least $36 billion in toll-road projects, say they
can prevent similar mistakes by negotiating contracts that protect the
public.
Here are some examples of early private toll-road projects
that
seemed like good ideas but went bad, based upon reports from the
toll-road industry, newspapers and other sources.
Camino Colombia, Laredo -- Investors spent about $90 million
in the
1990s building a 22-mile truck bypass from the Mexican border around
Laredo, but traffic was only 13 percent of projections. Some critics
say the downfall was high tolls of up to $16. Others say planners
misjudged the way trucking companies use border crossings.
Last year, the Texas Department of Transportation bought
Camino
Colombia for $20 million and immediately began making improvements and
lowering tolls. Officials expect traffic to pick up this year and the
road to eventually be profitable.
Supporters note that it was the original investors, not the
public, that took a bath.
SR 91 Express Lanes, California -- Private investors in 1995
built
toll lanes in the median of a busy freeway connecting Riverside and
Anaheim. A few years later, county officials wanted to expand adjacent
non-toll lanes but were forbidden by a noncompete clause in their
contract. SR 91 investors didn't want non-toll roads hurting business.
The county bought back the toll lanes for $208 million to clear the
legal hurdle.
407 ETR, Toronto -- Residents and government officials have
gone to
court to try to stop Madrid-based operator Cintra and its partners from
raising toll rates and taking strict steps to punish motorists who use
the road without paying their tolls. Because of a contract between the
company and the Ontario provincial government, Cintra can block
motorists from re-registering their vehicles if they haven't paid
tolls, and some residents say their credit is shot.
Cross City Tunnel, Sydney -- Australians boycotted the
1.2-mile
tunnel rather than pay a stiff toll, roughly $2.60 in U.S. dollars.
Above ground, perfectly good lanes on city streets were shut down to
try to persuade people to try the tunnel.
Gordon Dickson, (817) 685-3816 gdickson@star-telegram.com
Australia: Toll Road
Charges People For Not Using Toll Road
Queensland,
Australia charges transponder users if they don't make frequent trips
on the toll road.
Nearly 200,000
motorists in Queensland, Australia will now be charged $10 every three
months if they fail to use a state toll road in that period. The
penalty, up to $40 annually, applies only to those who have an
electronic toll transponder. Officials put the penalty in place to
recover revenue after Queensland Motorways dropped a $40 minimum
deposit requirement for the transponders. The devices are used by about
half of Queensland motorists.
In 2003, Queensland Motorways repaid more than $100,000 in tolls after
the Courier-Mail newspaper exposed the intentional overcharging of
users. In July, tolls were raised between 10 and 50 cents on most
roads. Future tolls will automatically increase with inflation.
Opposition leaders in the state parliament condemned the quarterly
charges as a "secret tax."
Source: Drivers fined for avoiding
tollways (Courier-Mail
(Australia), 12/24/2005)
2/3/2006
Australia:
Traffic Lights Modified to Funnel Traffic Into Toll Tunnel
Traffic
lights in Sydney, Australia were modified to create gridlock forcing
frustrated motorists into a controversial toll tunnel.
Testimony yesterday in a New South Wales, Australia
parliamentary inquiry into the Cross City Tunnel uncovered evidence of
significant engineering alterations made in an attempt to force
motorists onto the toll road. Opposition leader Peter Debnam charged
the Labor government with adjusting signals at 400 intersections along
Williams Street and other nearby roads in such a way as to create
additional gridlock.
In January, Debnam's formal Freedom of Information request for full
data on traffic light timing changes was rejected on the grounds that
it might "facilitate the commission of a terrorist attack."
"It demonstrates the Labor Government’s continuing contempt for the
community and the public’s right to know," Debnam said. "It defies
belief they would attempt to use a counter-terrorism excuse to hide
their rip-off of motorists."
The parliament formed the Joint Select Committee on the Cross City
Tunnel to examine other controversial measures including road closings
forced by non-compete provisions in the contract. A community liaison
group member for the tunnel testified that the narrowing of lanes on
adjacent, free roads came as a shock to area residents.
"Suddenly overnight, like mushrooms, concrete barriers are built,"
Suzanne O'Connor testified. "They were very keen on traffic calming,
which apparently is jargon for funneling. So there was a lot of jargon,
a lot of English being abused, again I think... in an attempt to keep
the implications hidden."
Tunnel usage so far has fallen to less than half the initial goal of
90,000 motorists per day. Nonetheless, even without expected rate
increases the road is on track to make A$800 million in revenue in the
next fifteen years.
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