Try to read one of these offers from a coalition of
companies seeking a lease on public roads, tunnels or the port (built by your
money, by the way) and the numbers, legalese and jargon give you a headache.
Where’s the transparency? I tried digging into the finances
of the construction of the Mid-Town Tunnel, but I was left with a sense of
desperation and despair.
I tried to get the major backer, Australian conglomerate Macquarie
Group, to explain. Futile.
I tried to get Virginia Dept. of Transportation officials to
explain. Another exercise in futility.
I really knew who was in charge when a spokesperson at
Macquarie told me that if I didn’t get answers from Virginia Dept. of Transportation, this person would
call the agency and make sure they gave me answers.
So what makes you think the Route 460 project – a four lane
divided highway between Suffolk and Prince George County, costing $1.8 billion –
would be any different.
So we hand over a major public asset to a private consortium
for 40 years. They run it, they collect the money and they pay their investors.
Does the public really have a say?
Public money built the roads, tunnels and the port. So,
essentially, the public owns these assets. We pay gas taxes to fund them. We
pay extra taxes when we buy a car or truck to finance new roads, tunnels and
docks.
If you can decipher the financing on the Route 460 project,
let me know. Here it is, as outlined on VDOT’s office of 3Ps Web site.
Following each statement on financing is how I interpret them.
·
Public funding from VDOT – $753 million to $930
million
I suspect the money will be siphoned from the Commonwealth
Transportation Fund or another pot of money. In effect, this is money that
could have gone for fixing the bumps on the highways or another vital congested
corridor in Hampton Roads.
·
Public funding from the Virginia Port Authority
– up to $250 million
·
Route 460 Funding Corporation of Virginia - $285
($216 net proceeds) million from the sale of tax-exempt bonds.
The bond traders on Wall Street must love these agreements. Fees pile
up and they make off with millions in bonuses for themselves and for their firms,
such as Goldman Sachs. Note that tax payers are no longer the stakeholders or
investors.
·
VDOT has
applied for a $422 million Transportation Infrastructure Finance
Innovation Act loan (These are low interest government loans for nationwide
transportation projects. State and local governments, railroads and private
entities are eligible for the loans.)
It’s unclear as to who pays the
debt service on these bonds. Will the state pay and if so will the money come
from the budget or the Commonwealth Transportation Fund?
·
A
non-profit corporation called the Route 460 Corridor Funding Corporation of
Virginia will issue tax-exempt bonds to finance the project.
I
don’t know of any non-profit that can legally issue bonds, especially
tax-exempt bonds. Is this an error?
·
The
funding corporation will collect the tolls, and manage the toll collection
system over the course of 40 years.
Four decades. Two generations.
Do you think our grandchildren will remember this exercise in political and government
irresponsibility?
If you want a
clearer picture of how public-private partnerships evolved, read the following
article at http://money.cnn.com/2007/09/17/news/international/macquarie_infrastructure_funds.fortune/index.htm
It was written in 2007 by Bethany McLean, the co-author of
the The Smartest Guys in the Room,
which exposed the corruption behind the demise of Enron by top officials, and
co-author of All the Devils Are Here,
a profoundly disturbing narrative on the 2008 financial crisis.
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