Indiana Toll Road Owner Files for Chapter 11

[02 Park Ave]

I drive from NJ to Chicago several times a year.  I've never had a TSA/ebola/FAA fire problem.

[vdeane]

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.

Is NYSDOT not typical then?  Our AADT figures just factor in weekdays (6 AM Monday through 12 PM Friday).

[ysuindy]

I received a notice today from the Bankruptcy Court regarding the ITR filing.  I presume its due to my EZ Pass being purchased from and held through the ITR.

[Brandon]

I received a notice today from the Bankruptcy Court regarding the ITR filing.  I presume its due to my EZ Pass being purchased from and held through the ITR.

Interesting....

Does this mean that EZ Pass accounts held through the ITR could be held as assets in a BK filing?
If so, then could users stand to lose whatever money is in said account?

[NWI_Irish96]

I received a notice today from the Bankruptcy Court regarding the ITR filing.  I presume its due to my EZ Pass being purchased from and held through the ITR.

Interesting....

Does this mean that EZ Pass accounts held through the ITR could be held as assets in a BK filing?
If so, then could users stand to lose whatever money is in said account?

I was up all night worrying about whether or not I'll ever see my $5 again.

[trafficsignal]

Worse news - the toll road rest areas smell bad!  A state rep was "repulsed"!   

http://www.ibj.com/officials-raise-stink-about-smelly-toll-road-toilets/PARAMS/article/49817

[theline]

^^ Mrs. theline and I just got back to South Bend from a California vacation. We experienced many public rest rooms along the way, and found ones on the ITR to be the dirtiest. Oddly enough, the ones at O'Hare airport were the cleanest. (We flew from there to LAX.)

I fear the rest room conditions are just a harbinger of what we will see on the ITR over the coming years. Thanks, Mitch!

[Indyroads]

Another success story for Republican patronage - I mean - privatization.  Not!

It's unfortunate, because years ago the Indiana Toll Road IMO was one of the best toll facilities in the country.

Just goes to show that privatization of transportation facilities isn't the panacea that some politicians may think it is.

Privatization paved the way for many much needed projects elsewhere in the state, making it a good deal. Additionally governments are also just as capable at mismanaging funds and resources as private companies are. It is a shame that the private company didn't do a better job than it is currently doing. Just shows you how greed causes these things whether it is government greed, corporate greed or personal greed. Greed is bad and it always hurts the little guy.

Its too bad they aren't filing chapter 7 instead of 11 then the road could go into recievership and the state could get it back. However they are trying to reorganize. Maybe sue to this the state could negotiate a transfer o fthe lease to a new more responsible operator that will do the right thing.

[SEWIGuy]

Another success story for Republican patronage - I mean - privatization.  Not!

It's unfortunate, because years ago the Indiana Toll Road IMO was one of the best toll facilities in the country.

Just goes to show that privatization of transportation facilities isn't the panacea that some politicians may think it is.

Privatization paved the way for many much needed projects elsewhere in the state, making it a good deal. Additionally governments are also just as capable at mismanaging funds and resources as private companies are. It is a shame that the private company didn't do a better job than it is currently doing. Just shows you how greed causes these things whether it is government greed, corporate greed or personal greed. Greed is bad and it always hurts the little guy.

It was great for Indiana.  Not so great for the owners of the company.

I think it goes to show that due to the near universal nature of their usage and the economies of scale, that highways are best owned by governmental agencies.  There is a reason that private bridges and turnpikes disappeared.  There is a reason that 99.9999999999% of roads are owned by the public.

[NE2]

There is a reason that private bridges and turnpikes disappeared.

Railroads.

(Actually, a fair number survived into the 1910s-20s, at least in Pennsylvania and Virginia.)

[dave069]

Worse news - the toll road rest areas smell bad!  A state rep was "repulsed"!   

http://www.ibj.com/officials-raise-stink-about-smelly-toll-road-toilets/PARAMS/article/49817

I'm surprised state reps are JUST NOW noticing the problem with the travel plazas. They've been going downhill for a while now. They're stinky, dingy looking, and some have REALLY overpriced gas even by today's standards. Personally I also wish they still had Fazoli's in the travel plazas like they did when I was younger.

[theline]

"State won't try to reclaim toll road": http://www.southbendtribune.com/news/local/state-won-t-try-to-reclaim-toll-road/article_86ba38ed-279d-5797-8c2a-2f7500db583c.html

A state official says no effort will be made to reclaim the Indiana Toll Road from its private operator that filed for bankruptcy protection last month.
. . .

[The Toll Road] was responding to a request from Democratic Sen. Joe Donnelly that the agency try to take the road from Chicago-based ITR Concession Co.

. . . the state lost money on the toll road for years before ITR paid $3.8 billion upfront for a 75-year lease in 2006.

The state, however, hadn't increased tolls for 20 years, IRT has more than doubled those rates since 2008 for vehicles not using transponders.

This makes perfect sense. If I've got a business that's been a money pit for years, and I was lucky enough to unload it to some unsuspecting bum (ITR Concession Co.), the last thing I want to do is to take back all that liability. That's especially true if there is no politically-viable way to increase revenue (tolls).

The only way that they would take it would be in response to popular uprising to hold down tolls or improve maintenance by operating the road at a loss. That's not going to happen.

[Bitmapped]

"State won't try to reclaim toll road": http://www.southbendtribune.com/news/local/state-won-t-try-to-reclaim-toll-road/article_86ba38ed-279d-5797-8c2a-2f7500db583c.html

A state official says no effort will be made to reclaim the Indiana Toll Road from its private operator that filed for bankruptcy protection last month.
. . .

[The Toll Road] was responding to a request from Democratic Sen. Joe Donnelly that the agency try to take the road from Chicago-based ITR Concession Co.

. . . the state lost money on the toll road for years before ITR paid $3.8 billion upfront for a 75-year lease in 2006.

The state, however, hadn't increased tolls for 20 years, IRT has more than doubled those rates since 2008 for vehicles not using transponders.

This makes perfect sense. If I've got a business that's been a money pit for years, and I was lucky enough to unload it to some unsuspecting bum (ITR Concession Co.), the last thing I want to do is to take back all that liability. That's especially true if there is no politically-viable way to increase revenue (tolls).

The only way that they would take it would be in response to popular uprising to hold down tolls or improve maintenance by operating the road at a loss. That's not going to happen.

The tolls have already been doubled.  Would Indiana be losing money if it took the toll road back now?

[theline]

The facilities have gone downhill in spite of the toll increase. Spending will have to be increased just to catch up. I think the words of the state spokesperson speak for themselves. They've got no interest in taking it back. Could the concessionaire simply abandon it? Maybe. I suppose that would leave the state with no choice.

[mukade]

A northern Indiana county's commissioners have turned to an investment bank to lead a proposed seven-county consortium that would bid on the Indiana Toll Road's lease...

Investment bank may lead counties' toll road bid (IBJ)

[thefro]

Here's another link... the goal is to put the profits from operating the Toll Road into 1) maintaining the road & 2) local infrastructure projects in each county.

http://www.nwitimes.com/business/transportation/counties-could-bid-on-bankrupt-toll-road/article_c0ce7a03-0076-5afd-a310-04a1d9cac90a.html

LaPorte County commissioners have enlisted the help of a major investment bank in an effort to lead a seven-county consortium to bid for the bankrupt Indiana Toll Road.

Investment bank Piper Jaffray & Co., of Minneapolis, has delivered a report to LaPorte County that demonstrates Toll Road cash flow could support a public entity bid and throw off enough cash to benefit surrounding counties.

Having a nonprofit established by the seven Toll Road counties place a bid would be a better alternative than letting another private investment consortium gain control of the road, said LaPorte County Commissioner David Decker.

"The nonprofit would not be beholden to shareholders who siphon all the money off," Decker said. "We want to put money back into the road."

The Toll Road's private operator, Indiana Toll Road Concession Co., declared bankruptcy on more than $6 billion in debt in September. The company has received a federal bankruptcy judge's permission to sell the 75-year lease it holds on the road to the highest bidder. The money would be used to pay back creditors.

LaPorte County is now negotiating with Piper Jaffray to assist in potentially preparing a bid, according to LaPorte County Attorney Shaw Friedman. The county has also retained the Chicago law firm of Goldstein & McClintock.

Piper Jaffray has long experience in public financing, including the E-470 beltway for Denver, which is run by a public highway authority rather than the state. It also counts among its clients the Indiana Finance Authority and municipalities in northern Indiana.

The seven county nonprofit would have the advantage of being able to issue municipal bonds for the deal, which would be paid back solely out of Toll Road revenues, according to the Piper Jaffray report. The counties would not be on the hook for repayment if the venture failed.

About $4.1 billion would have to be borrowed in order to submit a successful bid, according to the Piper Jaffray analysis. The report contemplates a bid of about $3.7 billion.

The Toll Road would provide about $38 million for infrastructure projects in the seven counties lining the Toll Road in its first year under ownership by the seven-county nonprofit, according to the report. That would build to more than $50 million within less than 10 years.

[Brandon]

^^ I can see that.  It would be far superior to the current arrangement, and actually put the money earned from the road back into useful thing instead of lining shareholders' pockets.

[NE2]

That would be similar to the way 19th century turnpikes and railroads often worked.

[JREwing78]

There would be lots of incentive to make the road nice, as opposed to just turning a profit.

[theline]

St. Joseph County has decided not to join the consortium to purchase the toll road, at least for now. Only Lake and LaPorte Counties have signed on so far: http://www.southbendtribune.com/news/local/st-joseph-county-won-t-join-toll-road-consortium/article_b5f880c7-bd31-5e27-bb85-4e0de0a3778f.html

The St. Joseph County Commissioners didn't vote on joining the consortium, which currently includes Lake and LaPorte counties but was turned down by four other counties, at their board meeting this morning.

Commissioner Andy Kostielney said there were "too many unanswered questions" for him to feel confident in spending taxpayer money, but that he wouldn't rule out joining the consortium at a later date, should more information become available.

Commissioner Dave Thomas, however, said it's a mistake that St. Joseph County isn't becoming a charter member of the consortium, which would come with additional financial benefits, should the group be successful in purchasing the road.

Thomas thinks the road could be a major source of income for the county, apparently oblivious to the costs involved in maintaining the road.

[theline]

South Bend Tribune article: Australian firm to assume Indiana Toll Road lease, pay $5.725 billion (behind a paywall; your ability to view may vary).
http://www.southbendtribune.com/news/australian-firm-to-assume-indiana-toll-road-lease-pay-billion/article_8728c9f6-c7fa-11e4-8b92-47c23294c2c5.html

An Australian company . . . IFM Investors announced Wednesday it has agreed to pay $5.725 billion to acquire ITR Concession Co., which currently holds the Toll Road lease. ITR declared bankruptcy last year.

The Indiana Finance Authority, which oversees the highway lease, said in a news release it has reviewed the bid and is satisfied IFM can meet the responsibilities of leasing the 157-mile-long highway.

IFM head of Infrastructure-North America Julio Garcia said IFM believes the purchase "is a unique opportunity to invest in a high quality United States transportation infrastructure asset."

Maybe IFM knows something that we don't. 

Officials in Lake and LaPorte counties, which hoped to acquire the lease, haven't given up:

Attorney Shaw Friedman, representing LaPorte County, said acquisition of the lease won't become official until closing and prior to that the Indiana Finance Authority could reject the deal and reopen the process to the remaining bidders.

As a result, LaPorte County Council president Mark Yagelski said the council will meet at 6 p.m. today as scheduled to consider submitting a final bid from the two counties just in case the closing doesn't go through.

[SEWIGuy]

The facilities have gone downhill in spite of the toll increase. Spending will have to be increased just to catch up. I think the words of the state spokesperson speak for themselves. They've got no interest in taking it back. Could the concessionaire simply abandon it? Maybe. I suppose that would leave the state with no choice.

I just took the ITR this weekend for the first time in awhile.  Not only were the rest areas bad, but the road absolutely stinks and the signage all looked weather beaten and worn.  And the gas prices are ridiculous.  In comparison the Ohio Turnpike and Illinois's toll road were much nicer facilities.

My guess is that the state doesn't care all that much because most the ITR doesn't carry a great deal of local traffic and seemingly a lower percentage of in-state residence than I saw in Illinois or Ohio. 

[theline]

I wouldn't say that the state doesn't care about the ITR--the state government just doesn't have control. The concessionaire can run it pretty much the way it wants to. They do have some interest in keeping motorists happy (or at least tolerant enough to keep using it). That is reflected in the plans announced this year to replace the badly aging service plazas.

As far as gas prices are concerned, the price used to be controlled by the state. The price was limited to the average price at off-road vendors in the surrounding area. The control went away when the lease was signed and prices shot up.

[Stephane Dumas]

Slightly off-topic, I saw this new from the Fort Wayne News-Sentinel about if they should have more toll roads due to declining gas tax revenue.
http://www.news-sentinel.com/opinion/Should-we-have-more-toll-roads-

[Moose]

You should see the traffic on US6 in NE Indiana. Holy crap!

Traditionally US6 was the route of the "High and Wide". The Tollbooths made moving dimiensional loaded trucks a real pain. So they just took US 6.

But now, there is a lot of regular OTR trucks on it

Anyway, I would still sell that road in a heartbeat. That road does little to serve anyone from Indiana for local trips or long distance trips. LOL We got megabucks $$$ for something few Hoosiers actually use. And will probably end up with it again for free. Best deal ever! Let's do it again!