Pennsylvania accepts bid to lease Turnpike

June 2, 2008
Gov. Edward G. Rendell (D-PA) has announced that the state has accepted a $12.8- billion binding bid to lease the Pennsylvania Turnpike to private interests for 75 years

Gov. Edward G. Rendell (D-PA) has announced that the state has accepted a $12.8- billion binding bid to lease the Pennsylvania Turnpike to private interests for 75 years, the latest development in a long-standing debate over the appropriateness of privatizing infrastructure.

A group made up of three companies—Citi Infrastructure Investors, Albertis Infraestructuras and Criteria CaixaCorp--made the winning bid. According to Gov. Rendell, the lease will provide more funding for roads, bridges and public transit systems than Act 44, the state law which currently imposes tolls on Interstate 80.

The bid must be approved by the Pennsylvania General Assembly, which would then need to modify Act 44. If Act 44 were modified, the Turnpike Commission would make annual payments to the Pennsylvania Department of Transportation averaging $944 million per year for ten years.

“The matter is now in the hands of the State House and Senate Transportation Committees, who must analyze the concession agreement that’s been submitted for their consideration, said Pennsylvania Turnpike Commission CEO Joe Brimmeier. “We have full confidence that committee leaders and members will weigh transportation-funding options based on what works best for all citizens of the Commonwealth.”

“This is a great day for Pennsylvania,” Gov. Rendell said. “We urgently need new funding for road and bridge repair, and a turnpike lease will help us meet that need. Under the terms and conditions we set, the turnpike will be upgraded and tolls will be no higher than the Turnpike Commission will charge. Where Pennsylvanians will see a major difference is on our other roads. Road repair all over the state will accelerate and we will be able to cancel the plan to impose tolls on Interstate 80.

“Leasing the turnpike will deliver more per year than the I-80 tolling plan,” Gov. Rendell said. “Pennsylvanians will get more and pay less, and that’s a good deal as far as I am concerned. I hope the legislature will give this proposal the serious consideration it deserves so all Pennsylvanians can begin benefiting from the additional funding.”

According to Gov. Rendell, the lease payment would be 13% higher than the maximum that would be made from tolling. Leasing the road will limit toll increases, protect the turnpike workers’ collective bargaining agreement, ensure scheduled turnpike improvements are completed and maintain the condition of the turnpike, the Governor said.

“The commonwealth will retain ownership of the turnpike while the concessionaire will be held to the highest operating standards,” Gov. Rendell said. “They also plan to put more than $5.5 billion of their own money into repairing and upgrading the road, and will have to meet strict quality standards imposed by the commonwealth.”

However, such privatization efforts are a contested issue and have been vocally opposed by several trucking groups, notably the American Trucking Assns. (ATA) and the Owner-Operator Independent Drivers Association (OOIDA).

According to ATA president & CEO Bill Graves, not only are these deals bad policy, the people are against it, citing a 2007 poll that found that 59% of Pennsylvania voters opposed leasing the Turnpike with 31% in favor.

“While the discussions tend to center on financing concepts and the great public benefits from concession fee revenue, what often gets lost or ignored is the impact of these deals on the users of the toll facilities and on the general public,” Graves said.

“Private toll road operators need not be concerned about the social impacts of toll rates on low-income workers, or on the costs to businesses that depend on the highway for transporting employees, customers, goods or services,” Graves added. “Nor do private operators care about the extent of traffic diversion to lesser quality, usually less safe, roads. Their sole concern is to maximize the toll road’s profitability within the confines of the lease agreement and the law.”

The plan has also been met with local resistance, as Republican State Senators Joe Scarnati and John Gordner have countered with ideas to solve Pennsylvania’s infrastructure funding concerns.

Scarnati has proposed repealing the authority to toll I-80, planning for up to $1 billion in additional debt to be issued over the next 20 years to fund long-term transportation projects and continuing to rely on the Pennsylvania Turnpike Commission to fund most of the revenue used to support public transportation.

“I have stated time and time again, that I did not support tolling I-80, but realized that Pennsylvania was faced with a transportation funding crisis,” Scarnati said. “After tremendous input from various individuals and groups, I realized that we needed an improved plan that will meet the demands of our motoring public without placing any area at an economic disadvantage. I believe my plan will do just that.”

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Justin Carretta

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