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Indiana Toll Road Owner Files for Chapter 11

Started by DanTheMan414, September 24, 2014, 03:22:43 PM

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lordsutch

Quote from: froggie on September 25, 2014, 01:19:28 PM
The negative aspect with the state taking it back over is that they'd have to sink money into getting the Toll Road condition back to an acceptable level, not to mention pay for ongoing maintenance.  If they haven't used all their Major Moves money, then they'll have something for the former.  If they have, then what are they going to shift or drop in order to fix the Toll Road?

Isn't that what, well, the tolls are for? Issue bonds to pay for the capital improvement and pay them back with the toll revenue + whatever you're raking in from service plaza concessions.

At least Indiana was smart and it was the private investors who took the bath, unlike the idiotic PPPs in Virginia.


Mr_Northside

Quote from: lordsutch on September 26, 2014, 12:40:20 AM
At least Indiana was smart and it was the private investors who took the bath, unlike the idiotic PPPs in Virginia.

Huh?  It seems like the PPP's in VA, at least the Beltway HOT's, resulted in massive new infrastructure improvements, including lanes (with their own exits) that didn't exist prior, and a lot of reconstruction of the "free" portion as well (I've read people praising an interchange redesign with I-66).
Have the "private investors" done similar massive infrastructure improvements to the ITR since taking it over?  I don't recall reading anything indicating they have (I've never been to the State of Indiana), and people seem to now be complaining over the condition of the highway. 
I don't claim to know how any of the deals some of these various states have made with private entities will work out over the LONG haul, I'm just wondering how the private investors in Indiana have taken a "bath", opposed to the "idiotic" PPP's in VA.
I don't have opinions anymore. All I know is that no one is better than anyone else, and everyone is the best at everything

hbelkins

I just wonder how much traffic on the Indiana Toll Road is in-state traffic vs. out-of-state or long-distance traffic. If the majority of the traffic is out-of-staters, Indiana doesn't really have an incentive to do a lot of improvements to the road, since those out-of-staters don't vote in Indiana.


Government would be tolerable if not for politicians and bureaucrats.

lordsutch

Quote from: Mr_Northside on September 26, 2014, 02:38:42 PM
Quote from: lordsutch on September 26, 2014, 12:40:20 AM
At least Indiana was smart and it was the private investors who took the bath, unlike the idiotic PPPs in Virginia.

Huh?  It seems like the PPP's in VA, at least the Beltway HOT's, resulted in massive new infrastructure improvements, including lanes (with their own exits) that didn't exist prior, and a lot of reconstruction of the "free" portion as well (I've read people praising an interchange redesign with I-66).
Have the "private investors" done similar massive infrastructure improvements to the ITR since taking it over?  I don't recall reading anything indicating they have (I've never been to the State of Indiana), and people seem to now be complaining over the condition of the highway. 
I don't claim to know how any of the deals some of these various states have made with private entities will work out over the LONG haul, I'm just wondering how the private investors in Indiana have taken a "bath", opposed to the "idiotic" PPP's in VA.

This was a reference to the construction of VA 895 and the money-pit US 460 studies, both of which were structured in ways that the state (= taxpayer) has been on the hook for at least some of the losses; in the case of US 460, the state's out nearly $300 million and there isn't even an inch of pavement and there probably never will be. Here's how it happened.

At least in the ITR situation it's the creditors and shareholders that will ultimately have to pay. The jury's still out as you say on the beltway HOT lanes.

cpzilliacus

Quote from: roadman on September 24, 2014, 07:11:18 PM
It's unfortunate, because years ago the Indiana Toll Road IMO was one of the best toll facilities in the country.

In the 1980's, the ITR had the smoothest pavement I had ever driven on - anywhere.
Opinions expressed here on AAROADS are strictly personal and mine alone, and do not reflect policies or positions of MWCOG, NCRTPB or their member federal, state, county and municipal governments or any other agency.

cpzilliacus

Quote from: cabiness42 on September 24, 2014, 04:06:01 PM
Quote from: agentsteel53 on September 24, 2014, 03:57:05 PM
want more customers?  increase speed limits.

It's already 70 across the entire state, and I have a hard time seeing how increasing it will attract any more drivers.  The cost of the tolls and the condition of the road are the main factors in decreased usage. 

You'd be hard pressed to find anybody who isn't using the road now but would if the speed limit got increased to 75 or 80, especially since you very rarely get pulled over for going 80 as it is.

I have not driven the ITR since the 1980's, but when I did (and the pavement was in perfect condition then), it seemed to be an idea candidate for a speed limit of 80 MPH. 
Opinions expressed here on AAROADS are strictly personal and mine alone, and do not reflect policies or positions of MWCOG, NCRTPB or their member federal, state, county and municipal governments or any other agency.

Brandon

Quote from: cpzilliacus on September 26, 2014, 09:47:58 PM
Quote from: cabiness42 on September 24, 2014, 04:06:01 PM
Quote from: agentsteel53 on September 24, 2014, 03:57:05 PM
want more customers?  increase speed limits.

It's already 70 across the entire state, and I have a hard time seeing how increasing it will attract any more drivers.  The cost of the tolls and the condition of the road are the main factors in decreased usage. 

You'd be hard pressed to find anybody who isn't using the road now but would if the speed limit got increased to 75 or 80, especially since you very rarely get pulled over for going 80 as it is.

I have not driven the ITR since the 1980's, but when I did (and the pavement was in perfect condition then), it seemed to be an idea candidate for a speed limit of 80 MPH. 

I just drove it Tuesday.  It needs work - badly.
"If you think this has a happy ending, you haven't been paying attention." - Ramsay Bolton

"Symbolic of his struggle against reality." - Reg

froggie

Quote from: lordsutch
Quote from: froggie
The negative aspect with the state taking it back over is that they'd have to sink money into getting the Toll Road condition back to an acceptable level, not to mention pay for ongoing maintenance.  If they haven't used all their Major Moves money, then they'll have something for the former.  If they have, then what are they going to shift or drop in order to fix the Toll Road?

Isn't that what, well, the tolls are for? Issue bonds to pay for the capital improvement and pay them back with the toll revenue + whatever you're raking in from service plaza concessions.

Theoretically, yes.  But then you bump into the question of does INDOT have enough bond capacity to be able to issue these bonds, or did they tap themselves out due to Major Moves?

JREwing78

Quote from: Brandon on September 27, 2014, 12:34:14 AM
Quote from: cpzilliacus on September 26, 2014, 09:47:58 PM
I have not driven the ITR since the 1980's, but when I did (and the pavement was in perfect condition then), it seemed to be an idea candidate for a speed limit of 80 MPH. 

I just drove it Tuesday.  It needs work - badly.

Agreed. It's been in pretty sketchy condition for a number of years, including before the lease with ITR Concession Co. Between Valparaiso and Portage, it's also in need of widening to 3 lanes in each direction.

The sad thing is, east of Valparaiso, it's generally a less stressful drive than I-94 through Michigan. And at $5 a trip, it's not a hardship for me to choose the Toll Road over I-94. But the road condition is actually BETTER on toll-free I-94, and there's less congestion through Indiana. ITR is not doing a good job making the Toll Road worth the premium to drive.

I get that the money hasn't been there to make investments. I get that. But with a toll road, you've gotta get traffic through the toll booths; it's the only way the investors can win at this game. There's a lot of toll revenue out there for the ITR to snatch up if they used long-term thinking. However, precious little of that is in evidence here.

It'd almost be worse if Indiana got the road back early. They've used their chunk of change to make useful upgrades to their highways, but in 20 years the maintenance bill is going to come in, and there's no answer on how to pay for it.

SEWIGuy

The thing is that Indiana doesn't have to take it over.  And if they do, they can at a bargain basement price.  If they do that, they can bond out future toll proceeds to make improvements to the road.  Indiana could come out looking like roses with this.

billtm

Why can't Indiana just find another more responsible company to take care of the road? :confused:

SEWIGuy

Quote from: billtm on September 27, 2014, 09:42:44 PM
Why can't Indiana just find another more responsible company to take care of the road? :confused:


The problem is that Indiana doesn't legally own it.  It isn't their decision to make.

jnewkirk77

Quote from: SEWIGuy on September 27, 2014, 09:44:25 PM
Quote from: billtm on September 27, 2014, 09:42:44 PM
Why can't Indiana just find another more responsible company to take care of the road? :confused:


The problem is that Indiana doesn't legally own it.  It isn't their decision to make.

Wrong! They DO own it. What is in place is a lease, and if there is a default on the operator's end, Indiana gets back control and can choose another operator if they want.

oscar

Quote from: jnewkirk77 on September 28, 2014, 08:58:33 PM
Quote from: SEWIGuy on September 27, 2014, 09:44:25 PM
Quote from: billtm on September 27, 2014, 09:42:44 PM
Why can't Indiana just find another more responsible company to take care of the road? :confused:

The problem is that Indiana doesn't legally own it.  It isn't their decision to make.

Wrong! They DO own it. What is in place is a lease, and if there is a default on the operator's end, Indiana gets back control and can choose another operator if they want.

Only if there is a default on the operator's obligations to the state -- but the main obligation (to give the state a lot of money up-front in exchange for the lease) has already been fulfilled.  A default on obligations to bondholders would not necessarily give the state a right to repossess, so long as the operator continues to operate the toll road or transfers operation to some other company acceptable under the lease. 

Poor maintenance and other quality issues could be a default on obligations to the state, if the lease so provided.  My hunch is that the state's main interest was in getting more money to spend on other roads, and placed less priority to holding the operator to more than bare minimum quality standards (especially if toll road travelers are mainly out-of-state).  The lease perhaps could have been better structured to promote quality, but that seems not to be what this lease was about. 
my Hot Springs and Highways pages, with links to my roads sites:
http://www.alaskaroads.com/home.html

SEWIGuy

Quote from: jnewkirk77 on September 28, 2014, 08:58:33 PM
Quote from: SEWIGuy on September 27, 2014, 09:44:25 PM
Quote from: billtm on September 27, 2014, 09:42:44 PM
Why can't Indiana just find another more responsible company to take care of the road? :confused:


The problem is that Indiana doesn't legally own it.  It isn't their decision to make.

Wrong! They DO own it. What is in place is a lease, and if there is a default on the operator's end, Indiana gets back control and can choose another operator if they want.


You are correct.  Calm down.

froggie

I got the same distinct impression as Oscar...that the state's primary motivation was to get the money, which they've now received and spent.

trafficsignal

The entire lease agreement is located on the Indiana Finance Authority's website, here:
https://secure.in.gov/ifa/2328.htm

I do not necessarily enjoy or have the time to read 80 pages of legalese, but skimming the document there are standards for minimum level of service, and a requirement for a yearly check, as well as several widening projects to be completed by 2008.  I do not, however, see any minimum smoothness requirements, and it seems that the capital improvements portion of the agreement hasn't been updated since end of 2005.  There were tables included in the bid showing $X of capital improvements within 3, 25, and 75 years, so presumably they included typical pavement maintenance in their bid.

The Nature Boy

Isn't I-90 along the Indiana Toll Road? If I'm going from Boston and New York to Chicago, I imagine I'd be on the Indiana Toll Road. How does it NOT have enough traffic?

SEWIGuy

Quote from: The Nature Boy on September 30, 2014, 05:53:53 AM
Isn't I-90 along the Indiana Toll Road? If I'm going from Boston and New York to Chicago, I imagine I'd be on the Indiana Toll Road. How does it NOT have enough traffic?


Because my guess is that the New York to Chicago (and beyond) traffic makes up a small percentage of those who could use the ITR.  That regional traffic, and traffic that are heading more southeast, use other options.

froggie

INDOT doesn't have any counts more recent than 2011, but based on that year, the ITR never goes above 36,700 vpd anywhere, with all of the eastern section (east of US 131/IN 13) less than 20,000 vpd.  In short, not enough traffic to cover the debt they took on to pay the state and acquire the operating rights/revenue.

thefro

http://www.nwitimes.com/news/local/govt-and-politics/auditor-candidate-wants-state-action-on-toll-road-bankruptcy/article_32b074a9-ea7f-556a-aa1e-331218b50425.html

Probably just election season talk, but...

QuoteThe Democratic candidate for state auditor is demanding Attorney General Greg Zoeller directly intervene in the Indiana Toll Road bankruptcy case to protect the state's financial interests.

Mike Claytor, a certified public accountant from Carmel, said Tuesday that federal bankruptcy courts modify contacts and lease agreements all the time, and warned Indiana could be forced to repay some of the $3.8 billion it received when the state leased the Toll Road in 2006 to the now-bankrupt private operator.

"Our state administration took the $3.8 billion payment, a 75-year value of the Toll Road, and spent it all in eight years," Claytor said. "If the bankruptcy court starts asking for some of that money back, we might have to sell I-69 in order to buy the Toll Road out of bankruptcy."

Claytor said since the Republican attorney general is willing to go to court repeatedly to prevent gay Hoosiers from getting married, he ought to be similarly willing to intervene in the Toll Road case with billions of dollars at stake.

A Zoeller spokesman did not return a request for comment.

Kendra York, director of the Indiana Finance Authority, told state lawmakers last week her agency is closely monitoring the bankruptcy case filed Sept. 21 by the Indiana Toll Road Concession Co., but she is certain the 2006 lease protects the interests of the state and Hoosier motorists.

Under no circumstances will Indiana be required to repay the lease proceeds, and tolls only will increase according to a pre-set schedule, she said.

In addition, the IFA must consent to any new company taking over the Toll Road lease to ensure the operator can maintain and improve the 157-mile highway running from Northwest Indiana through South Bend and into Ohio.

The bankruptcy court is scheduled to rule Oct. 28 on the Toll Road operator's pre-packaged Chapter 11 bankruptcy plan.

JREwing78

Quote from: froggie on September 30, 2014, 08:03:42 AM
INDOT doesn't have any counts more recent than 2011, but based on that year, the ITR never goes above 36,700 vpd anywhere, with all of the eastern section (east of US 131/IN 13) less than 20,000 vpd.  In short, not enough traffic to cover the debt they took on to pay the state and acquire the operating rights/revenue.

Given the number of times I've driven in bumper-to-bumper traffic on the Toll Road between Valparaiso and Portage, that seems rather incredible. Clearly they are not measuring weekend traffic levels.

froggie

They are.  The daily traffic volumes that state DOTs typically factor in all days of the week and average them.  Hence why it's often called Average Daily Traffic (ADT).  Those that mention AADT (or Average Annual Daily Traffic) factor in seasonal variability into the average.

Furthermore, if it's a case of a holiday or summer weekend where there are a lot more travelers (presuming this is what you ran into), given the span of a full year it's not an often occurrence and gets averaged out by the often-lower off-season weekend values.

jeffandnicole

Quote from: The Nature Boy on September 30, 2014, 05:53:53 AM
Isn't I-90 along the Indiana Toll Road? If I'm going from Boston and New York to Chicago, I imagine I'd be on the Indiana Toll Road. How does it NOT have enough traffic?

Most people are going to fly that distance.  They're not going to drive it. 

SteveG1988

Is it just me or do the curves seem banked weird, like they are a little too flat for the speeds you are going?

When was the last time it was redone?
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