Private Roads, Rising Tolls, E-Z Pass and FasTrak -- It's a Waste of Money for an Asphalt Society We Need to Abandon ASAP

At the end of August, California's regional planning agency San Diego Association of Governments (SANDAG) met to publicly discuss buying back the 10.5-mile South Bay Expressway from Australian global investment banking titan Macquarie Group for $344 million. That's more than $50 million than a bankruptcy court recently declared it was worth, but a steal of a deal compared to the $847 million in public and private dollars it actually cost to build on its way to being what you might call an "unprofitable road."

The South Bay Expressway connects Chula Vista to downtown San Diego and the Mexican border, both a short seven miles away. And someone actually got paid nicely to make an expensive transportation corridor that has never entered the black ever since it became one of California's first toll roads built via public-private partnership. But the message holds: When it come to toll roads, the contracting economy has reset revenues and expectations alike. And when it comes specifically to the South Bay Expressway, even some SANDAG board members are suspicious about the overall payoff.

"We have a hell of a lot of projects on the books,” county supervisor Bill Horn said. “I support it but I am concerned about the total operation, how much cash is left." As he should be, given the relative rise of gas prices, flattening of the housing and retail markets -- Chula Vista's economy is mostly based on small businesses and tourism -- and other 21st-century new normals. But Horn shouldn't be alone in his worries. 

Voters looking to Republican elite candidate Rick Perry might want to read up on his failed Trans-Texas Corridor, a 4,000-mile traffic and utilities supercorridor that was formally canceled by the Texas Legislature this year after vigorous public outcry. Or the $3.8 billion public-private Ohio Turnpike leasing supported by Republican governor John Kasich, the ex-Fox News talking head. And then there is Florida governor Rick Scott's proposal for the suspiciously named and privately owned "Heartland Parkway" project, a 146-mile stretch the state has no money to pay for. This from the same guy who gave back over $2 billion to the Obama administration because he didn't believe in a high-speed rail project that would have both worked and provided the type of congestion relief he evidently believes Florida needs so badly. No wonder American Automotive Association members doubt that toll fees aren't routed toward infrastructure improvements.

"In general, toll roads are profitable over the long term," Neil Gray, director of government affairs for the International Bridge, Tunnel & Turnpike Association (IBTTA) told AlterNet. "It may not be a high rate of return, but traffic volumes are generally consistent, barring major external influences like fuel price spikes or the present economic doldrums."

Those are a lot of bars. Gray noted that the first absolute decline in national vehicle miles of travel happened from 2007-2008 -- the temporal epicenter of the Great Depression rerun, if you will -- and that setting toll rates "is typically a hot political issue. There are almost 100 toll agencies in the United States, and in any given year there are some that will be seeking a rate increase."

 

But even IBTTA, a global forum of toll operators and related industries whose mission is to enhance toll-financed transportation, is fuzzy on the industry's overall costs and payoffs.

 

"Our data on this is fragmentary and somewhat dated, because we are in the process of trying to bring our records up to the present," Gray explained. "Toll collection in the U.S. is in the realm of $11 billion per year. If I were to guess at the worldwide collections, I would very conservatively place it at $30-35 billion-plus. Cost is a complex question. As bonded assets, there is a fiduciary responsibility on the part of the toll agencies to preserve the asset on the bondholder's behalf. Because they are self-funded, they operate outside of state budget controls. There is the cost of toll collection, as well as the cost of operating the roadway, and capital costs if they are engaged or planning any major enhancements or expansions. In any given year, a toll agency may technically show a surplus, but if this is part of a reserve buildup to support a capital improvement it can't really be construed as profit."