Sunday, March 15, 2015

Northwest Indiana Officials Upset Over State's Quick Approval Of Toll Road Bid

Northwest Indiana officials bidding to take over at least part of the bankrupt Indiana Toll Road feel they were sold down the river by state officials who gave their quick approval to a bid of $5.725 billion to the bankruptcy trustee by Australian-based IMF Investors. Lake Co. Commissioner Roosevelt Allen (D-Gary) told the Northwest Indiana Times' Bill Dolan he feels officials in Lake and LaPorte Counties were misled by officials at the Indiana Finance Authority. "We weren't expecting a decision so fast," Roosevelt said. "They misled us. We met with the Indiana Finance Authority, did all of this work, which we finished well within the time frame, but apparently they made up their minds before we returned home."

Julio Garcia of IMF Investors tells Dolan their bid was chosen because of their experience in managing and operating public infrastructure. The company has been acquiring and operating airports, highways, maritime ports and other P3 facilities for the past two decades. He tells Dolan IMF has been eyeing the Indiana Toll Road for some time as "a golden opportunity." "I have a team in New York very strongly versed in toll roads who have been studying the road with Michael Kulper, one of our executive directors, who was the founding president of Trans Urban Group in North America (a major toll road investor) and ran that business for 10 years," Garcia said. IMF's bid was backed by 30 Australian and 65 U.S. pension plans.

Allen isn't moved by Garcia's comments. He cited public disapproval of the state turning control of the toll road over to an Australian-Spanish consortium in 2006, which soon became swamped by debt. He says the foreign-owned concessionaire did a poor job maintaining the toll road, which Allen describes as being in "in horrible shape." "We made a bona fide effort with reputable American firms, so why would you go back to a foreign competitor again?" Roosevelt wondered.  "I would like Gov. Pence to use his overwhelming influence over the Indiana Finance Authority to support our bid. How can you claim to be all-American and when they have an opportunity to do something that is patriotic and beneficial to the citizens of Indiana, do the opposite?" Allen said.

Shaw Friedman, an area attorney aiding the two counties with their bid, shared Allen's disappointment and questioned why the state didn't even use its leverage to seek any benefits for the state or local governments from IMF. "We were treated better by the Special Creditors’ Committee than by our own Indiana Finance Authority, which has been unremittingly hostile to the notion of a public bid from the outset ... the fact the agency issued a press release rubber-stamping the IFM deal within hours of the announcement without seeking to leverage their approval for any benefits to the state or our counties is further evidence of their bias, predisposition and hopeless incompetence." Northwest Indiana officials expect IMF to wind up in bankruptcy as well, but Garcia says their analysis before submitting the bid relied on "a very sobering and conservative view" and will honor conditions in the original toll road lease.

I'm still struggling to figure out how IMF could start out with nearly as much debt as the current toll road concessionaire and manage to turn a profit with annual revenues of about $230 million? Am I missing something?


Anonymous said...

The Mitch Daniels boys are still up to no good at the Statehouse. This deal is dirty as it gets. I hope the U.S. Attorney for the Northern District looks at this, and I hope the municipalities make lots of noise at the Bankruptcy Court.

I also hope this starts a wave of Northwest Indiana declaring open war on the downstate hicks.

Flogger said...

$5,750,000,000. Do I have enough zeros?? Divided by 157 miles the length of the toll road is $36,624,204 per mile.

There is an excellent article on the original sale of the Toll Road.

Per the article:
Washington's biggest financial firm, the Carlyle Group, just created an eight-member team to get into roads, bridges, etc.

Goldman Sachs & Co., which made $9 million advising Chicago on the Skyway sale and stands to collect about $20 million in fees for putting together the Indiana Toll Road deal, is raising a multibillion-dollar fund to buy infrastructure.

Our Elected Officials should have known the costs of operating the
Toll Road and should have set the tolls accordingly. However as the article states:

Ducking tax increases is what motivated the state of Indiana and the city of Chicago to sell their toll roads. Indiana was facing a $10 billion bill for updating its highway system when Gov. Mitch Daniels, a former federal budget director, came up with an alternative to paying the price -- tapping the toll road.

Anonymous said...

Good job, Flogger. You have your terms right. Republicans and other lying idiots refuse call a thing by its proper name.

The disgusting, lying, Republican scum still try to lie and claim that the Toll Road wasn't sold.

Sir Hailstone said...

And the condition of the Toll Road isn't much better than before. In fact accessibility to other roads is now reduced in order (IMHO) for vehicles remain on the Toll Road longer.
The ramps from WB Toll Road to I-80/I-94 are now gone. You must drive a couple of miles further on the Toll Road and exit at I-65 to access I-80/I-94.
INDOT then declared Cline Avenue as "unrepairable" and demolished a large section that once served as a free bypass to the Toll Road, forcing drivers to use East Chicago city streets or stay on the Toll Road. From reading on it appears East Chicago is taking bids to rebuild Cline Avenue - but it must be built as a toll road.