Bankrupt San Diego tollway to receive another taxpayer bailout
A little background: the taxpayers subsidized this privatized toll road (it received the first federal TIFIA loan) for which the taxpayers lost nearly $80 million when it went bankrupt. Now local taxpayers are bailing it out AGAIN by buying it back from private investors, the second such example in California (the first was SR 91 for which the taxpayers bailed that one out seven years later -- for $207 million -- at nearly twice what it cost the private, French company to build it -- $130 million). Yet governments across the globe continue to preach public private partnerships (PPPs) and road privatization as the silver bullet to all transportation funding woes (let's not forget, the politicians are the ones who got us into the woes in the first place by habitually raiding our gas taxes for non-road uses). Here's a few more articles about the South Bay Expressway (here and here), including this scathing editorial. Road privatization is an idea whose time has come to an END. PPPs are public money for private profits, period. The taxpayers can no longer afford to pick up the pieces from this grand, unsustainable experiment.
San Diego Association of Govs likely to buy South Bay Expressway
Toll Road News
Posted on Sat, 2011-07-30 00:59
The San Diego Association of Governments (SANDAG) is buying the South Bay Expressway from the post-bankruptcy South Bay Expressway LLC for $345m, about two-thirds what it cost to build.
The SANDAG board agreed in principle to the purchase Friday but will discuss financing of the purchase at their next meeting scheduled for August 26. There have to be public hearings and a final decision by about November.
A statement today from SANDAG says: "The Board made the agreement contingent on completing due diligence and conducting a public process, during which the details of the purchase and financing options will be presented and voted upon by the Board."
SANDAG chairman Jerome Stocks is quoted as saying the privately operated pike is "good value" at $345m.
He wants to reduce tolls which presently are $3.85 by transponder and $4.00 cash for traveling the 10 miles, 16km length of the road which runs north-south across the southeast fringe of the San Diego metro area.
The South Bay Expressway (SBX) opened in November 2007 just as the economy was in sharp decline due to the burst of the housing bubble and broader financial crisis. Foreclosures were especially prevalent on either side of the SBX, construction stopped, unemployment shot up, and immigration largely ended.
An important hope in earlier years had been that burgeoning trade with Mexico would generate major truck revenues since the toll road linked to a new border crossing at Otay Mesa. There was disappointment there too.
Traffic is less than 30,000 vehicles a day, almost a half of that expected.
Macquarie which bought into the road shortly before the financial collapse put the tollroad into bankruptcy March 23 2010. It had written of any equity in the pike over a year before. After lenders had taken 'haircuts' in the Chapter 11 proceedings, the holding company South Bay Expressway LLC emerged from bankruptcy April 14 2011.
Operations have continued pretty much as normal right through the bankruptcy with toll revenues more than covering operating costs even at the worst time.
The toll concession under which the road was financed was for 35 years from opening. That means there are 31 years left, after which the road passes to California Department of Transportation.
The project goes back to a 1991 concession agreement with California Transportation Ventures (CTV), largely a Parsons Brinckerhoff company. CTV had great difficulty gaining approvals and reaching agreement with locals on the route and design of the road. After construction started there were bad relations with the builder Fluor.
Fluor sued CTV's successor SBX for hundreds of millions in claimed cost overruns.
see SANDAG statement:
http://www.sandag.org/index.asp?newsid=698&fuseaction=news.detail
SBX website:
http://www.southbayexpressway.com/
TOLLROADSnews 2011-07-29