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Public interest group cautions against Ohio turnpike lease

Category: Public Private Partnerships

Link to article here.

11/15/2012
Ohio Turnpike lease: Consumer group wants answers first
By This email address is being protected from spambots. You need JavaScript enabled to view it. , Land Line associate editor

A consumer group that has written extensively on the pros and cons of public-private partnerships wants Gov. John Kasich and his state-hired consulting firm to think long and hard before deciding to lease the Ohio Turnpike to private investors.

The national Public Interest Research Group and its Ohio affiliate have released eight questions they want to see answered before the consulting firm KPMG makes a recommendation later this year concerning the fate of the turnpike.

The questions, issued Thursday in a media conference call, include “What’s stopping the state from introducing the cost-saving measures it anticipates a private operator would make?” to “What downsides might result if higher tolls divert traffic onto secondary roads and local communities?”

Ohio PIRG’s Tabitha Woodruff and U.S. PIRG’s Phineas Baxandall hosted the call, with guests that included Gary Suhadolnik, former executive director for the Ohio Turnpike Commission.

The hosts pointed to the 75-year Indiana Toll Road lease as a case in point for asking their questions. That lease, signed in 2006, brought the state of Indiana $3.85 billion in upfront cash from private investors from Spain and Australia. In exchange for the cash, the investors keep the tolls and maintain the 157-mile roadway until the year 2081.

The Ohio Turnpike, at 231 miles, may not even generate as much in a lease as the shorter Indiana Toll Road, and officials aren’t saying how long a possible lease could last. That should become apparent in the KPMG report due to the governor’s office by the end of December.

The hosts of the media call said the Ohio Turnpike brought in $251 million in revenue last year, with this year’s projection pegged at $270 million.

Truckers have diverted from the Ohio Turnpike in the past when toll rates went up. Some were lured back onto the pike after officials increased the speed limit.

Ohio is paying KPMG $2.85 million to study options for the turnpike, which could include keeping operations the same, rolling turnpike operations into the state DOT, and leasing the pike to private investors for a cash infusion.

Earlier this year, Gov. Kasich said he would take no less than $1 billion for the pike, which is the equivalent of one-year’s worth of federal funding for transportation in the Buckeye State.

Suhadolnik said truckers account for 60 percent of Ohio Turnpike revenue while making up 20 percent of the traffic.

“I don’t dispute there is a funding problem for roads in Ohio, but I question why the Turnpike users should pay for those,” he told the group.

The Owner-Operator Independent Drivers Association is opposed to the privatization of public roadways, citing toll rates, maintenance issues, and lack of public accountability once a roadway goes to the private sector.

In Indiana, the biggest public-private lease to date for a roadway, truck tolls that were below $15 in 2006 climbed to more than $32 in 2011 as part of the lease agreement. Future tolls through 2081 will be indexed each year to inflation, or 2 percent, whichever is greater.

Indiana got a few years’ worth of highway funding out of the $3.85 billion. A recent study showed that the lease will have outlived its public benefit just 13 short years after being signed.

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