As Indiana Toll Road Operator Fails, Indiana Media Ignores The Obvious About Illiana Expressway

The private operator of the 156-mile Indiana Toll Road is filing for bankruptcy on Monday because the vehicle traffic and tolls paid by motorists and truckers proved insufficient to make the business of running the toll road a profitable enterprise. Meanwhile, Indiana and Illinois officials are moving ahead with plans to construct yet another toll road, the Illiana Expressway, further south of the ITR to connect I-65 in Indiana with I-55 in Illinois just outside the southernmost edge of the Chicago metropolitan area.

Illinois and Indiana are relying on a private operator to build the toll road under a public-private partnership agreement (P3). The highway is expected to cost $1 billion to build, or about $2.8 billion dollars less than the private operator of the ITR paid to lease and manage the toll road for 75 years; however, Illinois is kicking in a minimum of $250 million upfront for the project, while Indiana will kick in up to $110 million. The goal of the Illiana Expressway is to alleviate heavy truck traffic on the I-80/I-94 corridor. The Indiana leg of the 47-mile road is 14 miles, while the Illinois segment spans 33 miles.

One of the chief complaints of critics is the lack of traffic and revenue studies to establish the viability of the highway. Illinois Department of Transportation officials assume toll rates will need to be substantially higher than the current rates charged on other area toll roads to generate sufficient revenues for the P3 operator. It is unclear why motorists and truckers would pay more to use a toll road farther outside the metropolitan area. Unlike the leasing of the ITR, the P3 agreement for the Illiana Expressway places all of the financial risk squarely on the backs of the taxpayers of Indiana and Illinois. If traffic and tolls fail to generate enough money to guarantee a minimum income stream for the P3 operator, the respective states have to make up the difference, which would mean fewer highway dollars for projects elsewhere in the state.

Not surprisingly, a national research organization, PIRG, has placed the Illiana Expressway on its list of top highway boondoggles. PIRG says the $1 billion estimated cost to construct the road could wind up costing three times that much. PIRG believes traffic will be too low due to high tolls, leaving taxpayers in both states having to chip in at least $1 billion in additional subsidies to maintain the required revenue stream for the P3 operator. According to PIRG, road travel has leveled off and is declining in many areas, making new highway projects even more dubious.

Despite great cause for concern, Indiana media has been all but silent on the project, while the project has received far more attention in the Illinois press, which has largely been negative. It doesn't help that Gov. Pat Quinn's transportation agency is embroiled currently in a patronage hiring scandal that has become a major issue in his re-election campaign this year. Illinois Transportation Secretary Ann Schneider, who played a key role in negotiating the bi-state agreement with Indiana for the Illiana Expressway, was forced to resign earlier this summer over the growing scandal.

UPDATE: Reports on today's bankruptcy filing confirm the financial woes of the operator was due to declining traffic on the toll road:

ITR Concession has seen traffic volume plunge by about 42 percent on the Indiana highway since taking over operations in 2006, according to data on the Macquarie Atlas website.

First-half revenue increased about 5.2 percent from last year, including a 7.2-percent jump in the quarter ended in June, according to a Macquarie Atlas statement. Traffic gained only a third of 1 percent over last year’s first-half figures, with a 3.2-percent drop in the first quarter due to bad weather.

Toll rates for passenger cars paying cash increased 30 cents, to $10 for a full 157-mile trip on July 1, according to an ITR statement. Rates for a typical semi-trailer truck rose $1, to $39.70.

Travelers using an electronic toll-collection system pay only $4.65 for a full trip, the same rate since 1985. Electronic collection accounts for more than 70 percent of toll receipts, according to the Macquarie Atlas documents.

An Indiana Finance Authority agreement that runs through June 2016 freezes toll rates for electronic users and refunds ITR the difference between the electronic rate and the cash price.

“The IFA has been aware of negotiations between the operator and its lenders, so we anticipated this could be a possibility,” Indiana Gov. Mike Pence said Monday in a written statement. “But Hoosiers can expect business as usual on the Indiana Toll Road.”

This news should prompt Gov. Mike Pence to cancel the Illiana Expressway, but he won't because too many campaign contributions are on the line from highway contractors and that's all that matters.