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?