Pa. Turnpike privatization offers due today

Pennsylvania Gov. Ed Rendell is scheduled to receive bids today from several consortia to operate the Pennsylvania Turnpike under a long-term concession, and plans to announce a winner on Monday.

But that's not the end of the story. The idea has been mired in controversy ever since he proposed it more than a year ago to generate more than $1.7 billion per year to pay for road, bridge and transit repairs and upgrades and will need approval by the state legislature.

Lawmakers blocked Rendell's original outsourcing proposal in favor of a public financing model that would have the Turnpike Commission raise money for statewide road maintenance and transit needs. The plan would increase revenues by seeking authority from the federal government to toll Interstate 80. Rendell believed the legislative plan, which would annually raise $950 million for a decade, did not meet the state's pressing financial needs, so he opted to proceed with a public-private partnership in hopes that a final comparison of the numbers would convince lawmakers to accept the privatization model.

People will tell you anything about what something's worth, until they put it in a binding contract. The only way you get an honest number is if it's binding. So we抣l see with the bids,said Roy Kienitz, Rendell's deputy chief of staff, after an address to a transportation infrastructure conference in Washington hosted by Infocast Inc.

Kienitz said the tightness in the credit markets means that any bidder is likely to put down more equity and use less debt to finance the deal than a year ago when such deals were highly leveraged.

In his address, he said the public financing model's ability to maximize payments is shaky because it relies for 30 percent of its revenue on tolling an existing roadway. The state hopes to soon receive an answer from the U.S. Department of Transportation about tolling I-80, but expects toll opponents to drag the issue into federal court if permission is granted.

Kienitz said the potential concessionaires need to make a strong bid to overcome the legislature's instinct to side with the Turnpike Commission. 

Source: American Shipper