News your connection to The Boston Globe

More foreign firms invest in US highways, bridges

WASHINGTON -- Roads and bridges built by US taxpayers are starting to be sold off, and so far foreign-owned companies are doing the buying.

On a single day in June, an Australian-Spanish partnership paid $3.8 billion to lease the Indiana Toll Road.

An Australian company bought a 99-year lease on Virginia's Pocahontas Parkway, and Texas officials decided to let a Spanish-American partnership build and run a toll road from Austin to Seguin for 50 years.

Few people know that the tolls from the US side of the tunnel between Detroit and Windsor, Canada, go to a subsidiary of an Australian company, which also owns a bridge in Alabama.

Some analysts welcome the trend. Robert Poole, transportation director for the conservative think tank Reason Foundation, said private investors can raise more money than politicians to build new roads because these kind of owners are willing to raise tolls.

``They depoliticize the tolling decision," Poole said. Besides, he said, foreign companies have purchased infrastructure in Europe for years; only now are US companies beginning to get into the business of buying roads and bridges.

Gas taxes and user fees have fueled the expansion of the nation's highway system.

Thousands of miles of roads built since the 1950s changed the landscape, accelerating the growth of suburbia and creating a reliance on motor vehicles to move freight, get to work, and take vacations.

In 1956, President Eisenhower pushed to create the Interstate Highway System for a different reason: to move troops and tanks and evacuate civilians.

The Bush administration's plan to let a foreign company manage US ports met a storm of protest in February. But plans to sell or lease highways to companies outside the United States have not met such resistance.

John Foote, senior fellow at Harvard's Kennedy School of Government, said the government can take over a highway in an emergency, but he objects to selling roads to raise cash.

That is just what Chicago has done.

Last year, the city sold a 99-year lease on the 8-mile Chicago Skyway for $1.83 billion. The buyer was the same consortium that leased the Indiana Toll Road -- Macquarie Infrastructure Group of Sydney, and Cintra Concesiones de Infraestructuras de Transporte of Madrid.

Chicago used the money to pay off debt and fund road projects. Skyway tolls rose 50 cents, to $2.50. By 2017, they will reach $5.

The Indiana Toll Road lease is a better deal, Foote thinks, because the proceeds will pay for urgent projects such as road and bridge improvements. That need is precisely why cities and states have begun to look to foreign investors.

Between 1980 and 2004, people drove 94 percent more highway miles, according to Federal Highway Administration statistics. But the number of new highway lane miles rose by only 6 percent.

Washington is not likely to provide more funds to build roads. The federal highway fund, which will have a balance of about $16 billion by the end of 2006, will run out in 2009 or 2010, according to White House and congressional estimates.

About half the states now let companies build and operate roads. Many changed their laws recently to do so.

So Illinois lawmakers are examining privatizing the Illinois Tollway; New Jersey lawmakers are considering selling 49 percent of the state's two big toll roads, and a gubernatorial candidate in Ohio wants to sell the turnpike.

Patrick Bauer, the Indiana House's Democratic leader, says such deals are taxpayer ripoffs. Bauer says he believes Macquarie-Cintra could make $133 billion over the 75-year life of the Indiana Toll Road lease -- for which Indiana got $3.8 billion.

``In five, maybe 10 years, all that money is gone, and the tolls keep rising and the money keeps flowing into the foreign coffers," Bauer said.

Today (free)
Yesterday (free)
Past 30 days
Last 12 months
 Advanced search / Historic Archives