Foreign Companies Buy U.S. Roads, Bridges
Foreign Companies Are Buying Up
American Highways and Bridges Built by U.S. Taxpayers
by Leslie Miller, The
July 15, 2006
Roads and bridges built by
U.S. taxpayers are starting to be sold off, and so far
foreign-owned companies are doing the buying.
On a single day in June, an
paid $3.8 billion to lease the
Indiana Toll Road. An Australian company bought a
99-year lease on Virginia's Pocahontas Parkway, and
Texas officials decided to let a
build and run a toll road from Austin to Seguin for 50
Few people know that the
tolls from the U.S. side of the tunnel between Detroit
and Windsor, Canada, go to a subsidiary of an Australian
company which also owns a bridge in Alabama.
Some experts welcome the
Poole, transportation director for the conservative
think tank Reason Foundation, said private investors can
raise more money than politicians to build new roads
because these kind of owners are willing to raise tolls.
"They depoliticize the
tolling decision," Poole said. Besides, he said, foreign
companies have purchased infrastructure in Europe for
years; only now are U.S. companies beginning to get into
the business of buying roads and bridges.
Gas taxes and user fees have
fueled the expansion of the nation's highway system.
Thousands of miles of roads built since the 1950s
changed the landscape, accelerating the growth of
suburbia and creating a reliance on motor vehicles to
move freight, get to work and take vacations.
In 1956, President
Eisenhower pushed to create the interstate highway
system for a different: to move troops and tanks and
The Bush administration's
plan to let a foreign company manage U.S. ports met a
storm of protest in February. But plans to sell or lease
highways to companies outside the United States have not
met such resistance.
John Foote, senior fellow at
Harvard's Kennedy School of Government, said the
government can take over a highway in an emergency. But
he objects to selling roads to raise cash.
But that is just what
Chicago has done.
Last year, the city sold a
99-year lease on the eight-mile
Chicago Skyway for $1.83 billion. The buyer was the
same consortium that leased the
Indiana Toll Road Macquarie
Infrastructure Group of Sydney, Australia, and
Cintra Concesiones de
Infraestructuras de Transporte of Madrid, Spain.
Chicago used the money to
pay off debt and fund road projects.
Skyway tolls rose 50 cents,
to $2.50; By 2017, they will reach $5.
Indiana Toll Road lease is a better deal, Foote
thinks, because the proceeds will pay for urgent
projects such as road and bridge improvements.
That need is precisely why
cities and states have begun to look to foreign
Between 1980 and 2004,
people drove 94 percent more highway miles, according to
Federal Highway Administration statistics. But the
number of new highway lane miles rose by only 6 percent.
Washington is not likely to
produce more money to build roads. The federal highway
fund which will have a balance of about $16 billion by
the end of 2006 will run out in 2009 or 2010, according
to White House and congressional estimates.
About half the states now
let companies build and operate roads. Many changed
their laws recently to do so.
So Illinois lawmakers are
examining privatizing the Illinois Tollway, New Jersey
lawmakers are considering selling 49 percent of the
state's two big toll roads and a gubernatorial candidate
in Ohio wants to sell the turnpike.
Indiana Gov. Mitch Daniels,
who championed his state's toll road deal, now wants
investors to build and operate a toll road from
Indianapolis to Evansville.
Patrick Bauer, the Indiana
House's Democratic leader, says such deals are taxpayer
Macquarie-Cintra could make
$133 billion over the 75-year life of the
Indiana Toll Road lease for
which Indiana got $3.8 billion.
"In five, maybe 10 years,
all that money is gone, and the tolls keep rising and
the money keeps flowing into the foreign coffers," Bauer
Orange County, Calif., got
burned by a toll-road lease
for a different reason.
The road, part of
state Route 91, was built
and run for $130 million by
California Private Transportation Company, partly
owned by France-based Compagnie
Financiere et Industrielle des Autoroutes. The toll
road opened in 1995.
Seven years later, Orange
County was looking at gridlock. But it could not build
more roads because of a provision in the lease. So it
bought back the lease for $207.5 million.
To encourage more domestic
investment in highways, former Transportation Secretary
Norman Y. Mineta made a pitch to Wall Street on May 23.
"The time is now for United
States investors including our financial, construction
and engineering institutions to get involved in
transportation investments," said Mineta, who left
office July 7.
U.S. companies are getting
Antonio-based Zachry Construction Co., along with
Cintra, received approval
on June 29 for a 50-year lease to build and run a toll
road from Austin to Seguin for $1.3 billion.
That is part of Texas Gov.
Rick Perry's vision to attract more than $80 billion in
private funds for roads by 2030. He wants a new tollway
from Oklahoma to Mexico and the Gulf Coast, and one from
Shreveport, La., and Texarkana to Mexico.
Cintra-Zachry reached a
$7.2 billion deal last year to develop the project's
Not everyone in Texas buys
the idea. Harris County officials recently voted against
selling three toll roads. Also, independent
gubernatorial candidate Carole Keeton Strayhorn opposes
Perry's toll road plan.
"Texas freeways belong to
Texans, not foreign companies," she said.