The board of the financially ailing Northwest Parkway toll road voted this morning to accept a deal with a Portuguese-led foreign group for a long-term takeover of the 11-mile roadway.
A partnership of Brisa Auto-Estradas of Lisbon and Companhia de Concessoes Rodoviarias of Sao Paolo, Brazil, will take over the parkway, which forms the northwest segment of the metro beltway. The agreement is to be finalized by the end of August.
The length of the deal wasn’t immediately disclosed but the parkway sought proposals for a minimum 50-year takeover.
While details of the agreement still need to be hammered out, it would allow the parkway to pay off its $416 million in bonds and much of the start-up loans made by Boulder County, Broomfield, Louisville, Lafayette and the Interlocken Consolidated Metropolitan District.
Local officials, in order to sell the bonds to build the road, used inflated traffic and revenue (T&R) estimates. When the T&R didn’t show up and they couldn’t pay the bonds, they made a deal with a foreign corporation. Here’s what the Parkway’s Executive Director said back in 2006:
Its director, Aurora City Councilman Steve Hogan, said that before seeking outside investors in the road, he didn’t believe the optimistic forecasts for its profit potential. But, he said, he treated those estimates as a tool to persuade bond experts to give the debt a favorable rating, not as a solid predictor.
“My personal opinion was that the numbers were probably a little high,” said Hogan, who thought the projections for the critical, early years could be as much as 25 percent above the mark. He expected bond raters to trim the revenue estimates and base their ratings for investors on more realistic projections, but they did not.
In the modern world of financing toll roads, those are the rules of the game, he says.
The numbers were more than a little high:
At The Denver Post’s request, DRCOG returned to its 2001 data and calculated that, had it been asked at that time to predict employment for the toll road’s corridor, it would have projected about 80,000 jobs in 2004. Bailey-Campbell’s colleague predicted there would be 109,654, or 37 percent more.
For 2010, DRCOG would have predicted about 110,000 jobs. The Northwest Parkway had said 190,370, or 73 percent more.
The present-day figures show neither projection was correct, but DRCOG was closer to reality: In 2005, DRCOG found that there were 65,243 jobs in the corridor.
One more quote from the article from today’s sale:
“This deal is complex and addresses all of the issue of concern to the authority,” particularly debt, said Steve Hogan, the parkway’s executive director.
The deal calls on Brisas to either retain or offer severance packages to the authority’s current employees except for Hogan.
“As of today I’m looking for a new job,” he said.
Well, that’s something. This community is now saddled with a toll road that will now, no doubt, have outrageous tolls on it so this corporation can make it’s money back plus a 12 – 15 % profit.
The lesson here is that our elected officials will do and say anything, and in this case go along with estimates they know are wrong, just to get the road built. Somehow in their eyes, the long-term cost doesn’t matter because they believe what they’re doing is right. One day the people will recognize their farsightedness in getting this road built, no matter the cost. Once the road is built though it’s the local communities problem, they’re the ones that have to pay for it.Â Then all those responsible need to do is find another job and community to scam.
I wonder if this has happened anywhere else?