Indiana lawmakers disagree on how this week’s Toll Road bankruptcy filing could impact Hoosiers.
Some say a 2006 agreement between the state and the Indiana Toll Road Concession Company protects consumers and the government in the event of a default. But, other lawmakers claim the Toll Road has fallen into disrepair since the privatization and worry maintenance will become even worse.
Investment group Cintra-Macquarie paid $3.8 billion in a 2006 deal to lease the toll road for 75 years. The investors filed for Chapter 11 bankruptcy Sunday.
The company has $6 billion in debt it can’t pay. In June, they missed a $102 million debt interest payment.
So, the Indiana Toll Road Concession Company wants to sell the remainder of its lease to a new operator. If that doesn’t happen, they’ll try to reorganize their debt.
Striking A Deal In 2006
Former Republican Governor Mitch Daniels came up with a plan to fund major infrastructure improvements and new construction without passing the financial burden onto taxpayers or borrowing more money.
He funneled most of the money from the $3.8 billion dollar Toll Road lease into his Major Moves initiative, which paid for projects such as U.S. 31 and I-69. So far, the money has paid for 87 projects throughout the state.
[pullquote]It’s widely said no one will probably ever make a deal this good.
–Former Governor Mitch Daniels[/pullquote]
“It’s widely said no one will probably ever make a deal this good,” said Daniels at a 2011 press conference celebrating Major Moves. “And, that’s probably right.”
Daniels said the deal would mean better roads for Hoosiers. But, the new operator faced financial challenges from the beginning.
“They paid more than at least current conditions allow them to pay back, so they’ve got a little difficulty,” Daniels said in 2011.
Decreasing Traffic Leads To Financial Trouble
According to the ITRCC’s bankruptcy filing, the Toll Road sees an average of 30,000 vehicle trips per day. But, the company says the economic collapse of 2007 led to a 10.5 percent decrease in traffic over the past seven years.
That’s made it increasingly difficult for the ITRCC to meet its financial obligations. And, the 2006 agreement with the State of Indiana prohibits them from raising tolls beyond what’s already outlined.
On top of being responsible for operations, the ITRCC also agreed to invest about $4 billion in improvements to the Toll Road. So far, they’ve invested roughly $458 million.
The company hopes to find someone to take over the remainder of their lease. They anticipate the sales process could last until August 2015. If they find a buyer, the Indiana Finance Authority must approve the new operator before the sale can be finalized.
The ITRCC will continue to operate the Toll Road during the bankruptcy process.
What The Bankruptcy Filing Means For Hoosiers
Whether the ITRCC sells its lease or reorganizes its debt, many legislators insist Hoosiers won’t be affected.
The 2006 concession agreement contains language that addresses what will happen if the operator files for bankruptcy.
“We worked pretty carefully on that bill and one of the things that the legislature inserted in that bill was that that property is owned by the state of Indiana,” said Sen. Luke Kenley (R-Noblesville). “And, we also protected ourselves in the event of bankruptcy very strongly. And, so, while I’m sorry they’re not having a good performance themselves, I think for the state of Indiana and for the consumers in Indiana, we’re fully protected in that situation.”
Kenley said the state could take back operation of the Toll Road, but he’s unsure how likely it is that will happen.
Governor Mike Pence said in a statement to expect ‘business as usual’ on the toll road, despite the bankruptcy proceedings.
But, Rep. David Niezgodski (D-South Bend) works right off the Toll Road in South Bend and he doesn’t buy that promise.
“I was very saddened to find that the conditions in those bathrooms of all the service plazas were close to deplorable,” Niezgodsi said. “I was very, very embarrassed. And, that is not business as usual.”
While the ITRCC is supposed to maintain the Toll Road for the duration of the lease, Niezgodski is worried the company won’t be able to afford to as the bankruptcy case moves forward.
“So, they maintain the general upkeep to a certain standard. But, where are the things that are going to suffer? How many people are going to lose their jobs in these service plazas?” he said.
Truck Driver Jeff Warner has the same questions. He hauls farm equipment and agricultural materials along the Toll Road up to three times per week.
[pullquote]It’s pretty much your typical Toll Road. It’s generally junk.
–Truck Driver Jeff Warner[/pullquote]
“It’s pretty much your typical Toll Road,” Warner said. “It’s generally junk.”
Warner is also worried the bankruptcy filing could impact the condition of the 157-mile stretch.
“I’d say the maintenance will probably be even worse,” he said. “I run E-ZPass, but my E-ZPass didn’t work at one of the toll booths this morning, which actually happens a couple of times a week — the sensors go bad. And, one toll alone on a semi was $71. And, this is what you get for $71.”
The Indiana Finance Authority said the ITRCC will still be held to the performance standards outlined in the 2006 agreement during the bankruptcy proceedings. That includes maintaining the roadways.