Paving the Way for Profits
What's more, the assumption behind this trend is that private entities can build and operate roads more effectively than governments can, and that shareholders can realize the maximum benefits from their investments by selling to private firms. These assumptions haven't always held true. The tunnel under the English Channel, built by a private company, has repeatedly run into trouble. Its debt was restructured in the 1990s, and it declared bankruptcy last year. Last month-13 years and billions of dollars in bad debt later-the company operating the tunnel was finally awarded an investment-grade ranking.
When the projected levels of traffic and tolls didn't materialize at the Dulles Greenway, its finances had to be restructured in 1999. (In August 2005, the owners eventually sold out to Macquarie for $617.5 million.) In August, Texas walked away from a deal to lease State Highway 121 to Cintra and a group of investors advised by JPMorgan for 50 years because the North Texas Tollway Authority, a state agency, offered substantially more. While disappointed, Cintra, which believes its offer "was the best option for both the State as well as Dallas-Ft. Worth," said it will "continue working in Texas and the rest of the United States to offer the most efficient solutions to help the public sector improve its highways" and reduce congestion. Sal Costello, founder of AustinTollParty.com and TexasTollParty.com, which oppose the proposal to turn 121--currently a free highway--into a toll road, says, "The only folks that want the toll roads are people who profit from it, the construction company, the toll-road operator and developers that see it as a endless slush fund."
Finally, there are signs that private owners won't do much better than governments in alleviating chronic delays. When Macquarie gained control of the South Bay Expressway project in California in 2002, it promised the road would open in late 2006. In July, the company said it could open by the end of September. Well, September has come and gone, and as the construction photos show, the South Bay Expressway is still very much a work in progress. The reason: "The contractor that was hired to build the project got behind on the construction schedule," said a Macquarie spokesperson. This week, Macquairie promised it would open on Nov. 19.
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Posted By: J Neal @ 10/21/2007 5:40:50 PM
Comment: Here we go again, giving all our hard earned money to some other country. What is wrong with keeping it here for us. We are having alot of problems right here at home and then you go and put our money into there hands and see what they do to us, bomb us,and we paid for it.If we get people in the goverment that can do the job right, keep the money here in the us to help us out, we (as a country) do alot better in the foriegn market. If we hve to privatise the roads then do it with our (US) money and stop giving it to others. Think of our country for once and not some one elses.
Posted By: scottk1234 @ 10/21/2007 9:07:08 AM
Comment: The roads should be privatized! The purpose of government is to provide military, police, and judical system, and not to provide all of the other "perks" that we are all so accustomed to getting. Do you realized that we are paying roughly $1100 per year in interest on our 9 trillion dollar debt for every man, women, and child in this country? We are adding another $5.50 to the debt for every man, women, and child every day. If this isn't stopped, this country will become backrupt and the interest we all pay to borrow money will become very high and could destroy the economy. The government needs to stop spending money on things not essential to the function of a proper government and go back to the system of government the founding fathers had intended. It's no wonder cities such as Chicago have no money to maintain the roads. The bank account is empty from all of the spending on social programs. Eventually countrys such as China and Saudi Arabia, the countrys who fund our deficit spending the most by buying bonds, will realize that the U.S. will never pay the money back and will cut us off. Then we'll really scramble to find money to build and fix the roads!