Interstate Toll Lanes and Guaranteed Profits Through Bankruptcy
Just when we thought that our government should enter into partnerships with private enterprise to fix, build and sometimes operate our infrastructure comes the news that the Public Private Partnerships (otherwise known as P3’s) that our elected officials have become so enamored with are nothing but a cheap contrivance by International Investors and Contractors to bilk the federal and state government and the American public out of millions and possibly billions of dollars, through the law firm that help you file for chapter 11 and looked after the entire bankruptcy process.
As reported by Randy Salzman on Thursday, October 16, 2014, in an article titled “A Blueprint for Bankruptcy“, he states:
“Because Uncle Sam generally guarantees the bonds – by far the largest chunk of “private” money – if and when the private toll road or tunnel partner goes bankrupt, taxpayers are forced to pay off the bonds while absorbing all loans the state and federal governments gave the private shell company and any accumulated depreciation. Yet the shell company’s parent firms get to keep years of actual toll income, on top of millions in design-build cost overruns. US and state taxpayers are left paying off billions in debt to bondholders who have received amazing returns on their money, as much as 13 per cent, as virtually all – if not all – of these private P3 according to bankruptcy lawyers for Taunton, MA toll operators go bankrupt within 15 years of what is usually a five-plus decade contract.”
Basically, it appears that the sole purpose of many P3’s is to convince federal, state and local officials that the private company can obtain financing, build, operate and maintain our infrastructure better and more efficient than the government, as the government says they have no money for infrastructure improvements. As Randy Salzman reports,
“Although many P3s have questionable viability, whether the projects are even buildable is not the subject of this discussion. It is how the privates blueprint bankruptcies. Of course, no executive comes forward and says, “We’re planning to go bankrupt,” but an analysis of the data is shocking. There do not appear to be any American private toll firms still in operation under the same management 15 years after construction closed. The original toll firms seem consistently to have gone bankrupt or “zeroed their assets” and walked away, leaving taxpayers a highway now needing repair and having to pay off the bonds and absorb the loans and the depreciation. The list of bankrupt firms is staggering ( like Marc Brown, P.A. – helping clients file for bankruptcy), from Virginia’s Pocahontas Parkway to Presidio Parkway in San Francisco to Canada’s “Sea to Sky Highway” to Orange County’s Riverside Freeway to Detroit’s Windsor Tunnel to Brisbane, Australia’s Airport Link to South Carolina’s Connector 2000 to San Diego’s South Bay Expressway to Austin’s Cintra SH 130 to a couple dozen other toll facilities. We cannot find any American private toll companies, furthermore, meeting their pre-construction traffic projections. Even those shell companies not in bankruptcy court usually produce half the income they projected to bondholders and federal and state officials prior to construction. “
So what these International financiers and others are doing, is boosting up the traffic projections to the government, investors and sometimes general public, to essentially misrepresent the basis on which bonds are issued and government approvals are given. This shell-game appears to consider that because the government (taxpayers) will “bail out” the P3 concessionaire, then bankruptcy is indeed a viable option for these companies and individuals to make a profit beyond what they state that tolls, for example, may reap for them.
Continuing Randy Salzman’ findings,
“In Australia, where P3s have a longer history and the government has better control over public-private spending, there are at least two suits against traffic projection firms working their way through the courts. One judge in New York looked at the only American suit over traffic estimating firms and found the shell company “plainly actionable for fraud” in the way the traffic projections were produced. Though the suit was settled, the judge found “secret success fees” were paid to the traffic prognosticator without disclosure to bond buyers or federal officials.”
So potential bond holders are the objects of subterfuge and intentional boosting of projections to entice them to purchase the bonds to allow these international firms to obtain financing. Mr. Salzman continues:
“In one complaint, bondholders point out that Aecom projected 53,000 vehicles per day when the project was considered completely public but then when it became a public-private tollway – and drivers would have to pay – Aecom predicted 101,000 vehicles per day.”
This deliberate obfuscation of facts and projections is the intent and final result of bankruptcy is the goal. This sounds an awful lot like Cintra, and the North Carolina Department of Transportation, resulting in some local elected officials being brain-washed into thinking that P3’s are the greatest thing since sliced bread.
Do you want the proposed Interstate 77 toll lanes to be the physical manifestation of a deceptive con-game being played on the American public? I sure don’t. Fight against the toll lanes and for general purpose lanes.
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