Wednesday, September 10, 2014

Public roads for private profit? I don’t think so.

by Dennis Gallagher, Denver Auditor

i-70 1A controversial public private partnership (P3) plan by the Colorado Department of Transportation to allow a private company to build toll lanes on U.S. 36 between Denver and Boulder and collect the tolls for fifty years is just the edge of the wedge. The reconstruction of I-70 through central Denver is next.
Unfortunately, the U.S. 36 deal is a fait accompli but it shouldn’t have been.
These so-called P3 plans that allow greater private sector participation in the delivery and financing of transportation projects are not about benefitting the taxpayers and the travelling public – They are about benefitting private companies! The US 36 (* we need to be consistent with either U.S. 36 or US 36) deal calls for the private company to invest a mere $425 million and plow and maintain the highway in return for collecting the tolls for the next fifty years. CDOT justifies this deal by saying that it is the only way to get the work done. Really?
In the late 1940s there was no direct route from Denver to Boulder. To address this issue the Colorado Legislature passed a bill authorizing what was then the Colorado Department of Highways to build a limited access highway and operate it as a toll road to recoup the cost of construction. In 1952, the Denver-Boulder Turnpike opened featuring a toll of twenty five cents. $6.3 million in bonds had been sold to be repaid over thirty years despite a feasibility study that said that the road would not pay for its cost and maintenance over that period of time. The study was wrong.
Toll revenue far exceeded expectations and the predictions of some experts. In 1967, fifteen years ahead of time, the bonds and $2.36 million in interest were paid off and the toll was discontinued. The Boulder Turnpike – US 36 was free and clear.   This was accomplished, not by some private firm, but by the citizens of the state of Colorado.
What is the lesson in that for us today?
What if that twenty-five cent toll had not been discontinued in 1967 but allowed to go on?
Between 1968 and 2013, that twenty-five cent toll (adjusted for inflation) would have generated over a Billion Dollars in revenue: $1,112,059,866 in 2013 dollars to be exact.
The lesson?
If tolling is the only way to build and maintain a highway, the state of Colorado is more than capable, without a for-profit private company, of generating the necessary revenue.
But what about I-70?
CDOT is again trotting out the rationale that the only way to pay for the reconstruction of I-70 between Brighton Boulevard and Colorado Boulevard .is to involve a private company to manage toll lanes. They may say otherwise – that this is about managing traffic not collecting tolls - but the truth is the tolling is to attract private investment.
I don’t believe that toll lanes are necessary. Based on traffic trends over the last five years I don’t believe the additional lanes are unnecessary. If they are,
and CDOT does need additional money – for phase 2 to Tower Road and phase 3 to Pena – the state can again do what it did with the Boulder Turnpike a variation of which it did more recently with I-25 – T-Rex.
With the Boulder Turnpike it issued revenue bonds that would be repaid with toll revenue; with T-Rex, the state issued Transportation Revenue Anticipation Notes (TRANS) – in essence revenue bonds – that were to be repaid with anticipated federal highway dollars.
T-Rex was completed on time and under budget by CDOT itself, there was no public/private partnership financing involved – or necessary.
The state can again issue revenue bonds - TRANS bonds - and this time the revenue stream to repay and service the debt is with toll revenues rather than anticipated Federal Highway dollars.
Why institute a toll, collect the toll and give that money to a private entity?
Like everything else about this reconstruction project, it makes no sense, and cannot be justified.
I am concerned at this abrogation to the private sector of governmental services. Are we to yield all of our responsibilities and privatize all government functions?
It’s time for governmental leaders to stop shirking their duty; it’s time for that leadership to stand up for the people; it is time to stop this lunacy.
Public roads for private profits?
I don’t think so.


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