A Denver area toll road, that didn’t get the traffic projected during planning, has been leased to a foreign corporations for 99 years.
A foreign-owned toll-road operator agreed Wednesday to spend at least $800 million on the 99-year lease of the Northwest Parkway – with the expectation that the highway will complete the beltway around metro Denver with an extension to Interstate 70 and C-470.
A consortium led by the Portuguese toll-road firm Brisa Auto- Estradas will pay the Northwest Parkway highway authority $503 million to buy out all the existing bond debt of the 4-year-old toll highway.
The consortium will pay an additional $100 million if the parkway is extended and $200 million in operating expenses.
The deal gives the new operator the right to raise the toll for cars traveling the full 9 miles of the current highway to $3 when the deal is final in October. The full-length toll now is $2.
The toll would be capped at $3 until the end of 2009.
The remaining $300 million is contingent on the completion of the beltway. The corporation is especially insistent that the part that goes to the airport be connected.
The Ed Board at the Denver Post is giving their support to the sale, Troubled toll road’s sale is best of a bad situation.
When the privatization plan was proposed last year, The Post editorialized that we could support it if it met several key tests, including that bondholders were paid in full and taxpayers didn’t have to bail out the parkway. Wednesday’s final lease agreement meets these tests, albeit at the cost of leasing the roadway to private investors for 99 years, rather than the 50 years we had originally hoped to see. At the end of that time, the tollway will revert to the local governments that now support it and that will continue to exercise some oversight over the next century.
For the first few years, motorists shouldn’t notice much difference. Brisa/CCR does have the right to raise the toll across its full length from the current $2 to $3, but the authority was planning such a hike anyway. We suspect that by 2030 or 2040, tolls will rise substantially higher under the private operators than they would have been set by the politically constrained tollway authorities. But if the parkway had defaulted on its bonds, its creditors would have taken it over and been free to set higher tolls in any case. The choice, in short, was privatization by order of a bankruptcy court or the plan negotiated with Brisa and CCR. Obviously, we prefer the negotiated solution.
With the parkway’s future assured, attention turns to the remaining gaps in the northwest corridor. Brisa/ CCR has agreed to add $60 million to its investment to bridge U.S. 36 and link Interlocken and the Jefferson County Airport to the existing parkway if – but only if – an expressway is built to link that airport with Colorado 93. Arvada has strongly supported such an expressway, which would leave just a 7-mile gap to reach C-470. But the city of Golden sits squarely in that gap and is bitterly opposed to becoming the final link in the beltway system.
Beware the T&R study – stands for traffic and revenue study – that accompanies any proposed toll road.Â They’re tales of low tolls and cars as far as the eye can see.Â In reality they’re much differnt, as this case shows.Â T&R studies deserve heavy scrutiny. As the Denver Post series showed. Most of the T&R studies are done by consulting firms who will benefit from the road being built. Therefore it’s in their interest to make the numbers rosy to ensure the road is built. Once it’s built they’ve made their money and the municipality is left holding the bag. This should be a lesson to all of us, not just in Central Texas, but all over the state.