It’s too bad most of us won’t be around for the end of the Indiana Toll Road lease. Just think how much that 157-mile-long roadway will be worth when the state gets it back in 2081.
A quick review. It’s been nine years since Indiana sold a 75-year lease to a Spanish-Australian consortium called Cintra-Macquarie, which set up a company to run the Toll Road called ITR Concession Co. There were lots of people in northern Indiana who opposed the sale, and there were even a few who argued that the piece of east-west interstate across the top half of the state was worth quite a bit more than ITR paid for it.
But the sale went through, and Indiana received a cool $3.8 billion, which we’ve since used for road construction and improvements throughout the state. ITR cleaned up the road, added lanes in the highest-traffic areas of northwest Indiana and instituted electronic tolling, which offered to give frequent Toll Road drivers months or years of reclaimed life.
But the Great Recession, unexpectedly low traffic and a mountain of debt took their toll – so to speak – on ITR. In the fall of 2014, the company filed for bankruptcy, and the Toll Road was back on the market.
Then the centerpiece of the "Crossroads of the Midwest" began to look a little frayed. There were complaints about dirty restrooms, and the easternmost rest stop at Fremont closed – only portable toilets were available. Some of the social media comments from travelers were virtually untweetable.
Lake and LaPorte counties tried to put together an offer for the road, but quick as a speeding semi, another consortium rolled in with an offer that was reportedly much higher – $5.72 billion, almost all of which will go toward paying off the debts of the former owner.
Australian-owned IFM Investors last week took over ITR Concessions, which will continue to operate the Toll Road. The new owners promised to plow $260 million into Toll Road improvements – presumably including reopening the Fremont rest stop and putting a stop to Toll Road trolls trashing Indiana on the Internet.
There’s probably some economically sound reason an 75-year lease that apparently lost its owners double-rig trailers of money is worth almost $2 billion more to a buyer now, as a 66-year lease.
Oh, and if you’re thinking, somebody must be getting some money out of this deal, you’re right. Under the bankruptcy agreement, the five top ITR executives will divide $2.45 million in bonuses for getting such a high resale price. According to The Times of Northwest Indiana, a separate plan will provide up to $748,000 in retention bonuses of up to $95,000 apiece for 38 other Toll Road managers and supervisors. But you, the Toll Road driver, won’t be forgotten. You’re the one who’s paying for all this. (See chart.)
So, overall, has the deal stood the test of time? Drivers who use a lot of the new roadway it funded around the state might say yes. Others might say no.
In any case, the saga of the Indiana Toll Road has already become a cautionary tale in the annals of government privatization. How will the saga end? Our grandchildren will have to see.