Wednesday, October 22, 2014
   
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Denver inks deal with Portuguese firm, contract includes non-compete clause

Category: Public Private Partnerships

An agreement has been reached with foreign investors to take over operations of the Denver area's Northwest Parkway transportation corridor, but one critic says the contract includes a no-compete clause that will impose mandatory traffic congestion – for the next 99 years.

"It's bad enough that the Northwest Parkway Public Highway Authority and its member governments sharply increased the tolls for today's drivers, but to intentionally impose a century of congestion on future generations in exchange for this short-term bailout is shockingly shortsighted," said Golden Mayor Pro Tem Jacob Smith.


The Northwest Parkway runs around the northwest corner of the Denver metropolitan area, and connects to several other segments of a transportation corridor that is being developed about 20 miles outside of the Denver downtown. The metropolitan area has been identified as an ultimate target for construction in several different NAFTA Superhighway configurations.

Golden has been battling the plans, because the proposals have been for a new highway to bisect the historic Colorado foothills town.

Officials with the highway authority, who report daily road usage totals ranging from 1,891 to 16,451 vehicles, recently announced a 99-year lease agreement with Auto-Estradas de Portugal, S.A., which is known as Brisa.


The Northwest Parkway outside of Denver is a 70-mile per hour toll road that is a part of a transportation corridor circling the metropolitan area. It is being leased to a company that obtained a no-compete clause.
Officials in Portugal noted that it is the company's first adventure in leasing and running a toll road in the United States, although it already runs hundreds of miles of toll roads in Europe and South America.

Brisa reports it has 90 percent of the contract, while its Brazilian subsidiary Companhia de Concessoes Rodoviarias has 10 percent. The Colorado project already has about nine miles of roadway built and open for use, with another two miles yet to be constructed.

The company estimates it will invest about $543 million in the project. A different estimate came from Northwest Parkway officials, who said the company will pay off the $503 million in bonded indebtedness, and allow another $100 million for other costs.

But Golden officials, fearing the encroachment of transportation megaprojects, warned that Article 14 of the lease to privatize the Northwest Parkway operations "requires payments to the foreign corporation if certain roads or facilities are built in the area that would compete with the toll road."

"The lease provides that 'the construction of a Competing Transportation Facility' constitutes an action that gives the foreign corporation the right to terminate the lease and seek significant damages from the Highway Authority," the city said in a statement.

Such competing facilities, the city noted, would include the extension of several major arterials in the vicinity of the Northwest Parkway, certain other road projects within five miles of the highway, as well as even some mass transit projects.

"Because such damages would likely return the Authority to a financially perilous position, it will create a large impediment to future transportation projects in the area," the city said.

"This noncompete agreement intentionally ties the hands of local and regional governments and the state to address transportation needs in this area, which can only serve to further congest area roads over the 99-year term of the lease. The beneficiaries of this agreement are the Portuguese and Brazilian companies that will collect the tolls. Even then, it's unlikely they'll be able to generate sufficient traffic on the road," Smith said.

"If demand existed or was expected to materialize for the Northwest Parkway or potential extensions of the toll road, there wouldn't be a need for such a noncompete agreement. However, all the traffic studies to date show there is very little demand for a major tolled highway between Broomfield and Golden, and tolling could only pay for a small fraction of what would be needed to build such a road. The only thing that could make the noncompete agreement worse would be if taxpayers were forced to subsidize extensions of the toll road and then be forced to pay to use them," Smith said.

City officials noted that noncompete clauses on toll roads have produced difficulties in other parts of the region, and nation. In the 1990s, communities in the corridor northeast of Denver, which now includes Denver International Airport, agreed no roads would compete with the E-470 toll road there. So Commerce City was required to lower the speed limit and install traffic lights on another publicly funded corridor, Tower Road.

"According to a 2004 report from the U.S. Government Accounting Office, 'The language in the noncompete clause for the SR91 Express Lanes in Orange County, Calif., effectively prevented the state from improving the nontolled freeway lanes of SR91 until 2030 – the term of the franchise agreement – and was the subject of litigation and considerable public outcry,'" the city said.

The result there was that the Orange County Transportation Authority bought the road back from the private operator.

The contract also allows the tolls to rise from the current $2 for the nine miles to $3 over the next year, and then at least 2 percent every year thereafter.

The consortium will handle road maintenance, traffic enforcement and making improvements, and in return will take all of the tolls.

WND previously reported that North America's SuperCorridor Coalition, Inc., or NASCO, also has figured out a way to cash in on the Chinese containers passing along the NAFTA Superhighway from the Mexican ports of Manzanillo and Lazaro Cardenas to U.S. and Canadian destinations.

WND has obtained a copy of a draft preliminary joint venture contract between Savi Networks and NASCO, specifying that NASCO will get paid 25 cents for each "revenue-generating intermodal ocean cargo container" registered by the RFID sensors the communist Chinese are now installing along Interstate 35.