MEDIA MAULING Interwest AZ, SC projects survive...just

MEDIA MAULING

Interwest AZ, SC projects survive...just

Interwest Management’s toll projects in two states (SC, AZ) seem to have survived the mauling they got in FORBES magazine and some local media (see TR#17 July 97 p1). Interwest president Richard Carr was described in the major business fortnightly journal as having a “dubious past” based on two bankruptcies and lender law suits alleging fraud in two ‘non-profit’ sewer projects. The toll road projects were described as “moonshine” because the developer Interwest was to receive big fee money up-front while a local non-profit was in danger of being left with a lemon road defaulting on debt. Some similar reports ran in local newspapers.

The fuss does seem to have a factor in a major personnel change. In Arizona, at least, Carr has been removed from the Interwest project, subsequent to the derogatory media reports. The project is now under the control of Robert Farris, a former Federal Highway administrator and Washington DC consultant of unblemished reputation. State officials say they are very happy with the new arrangements and that Farris has been well received at public meetings held recently on the South Mountain toll road project proposed by Interwest. The group has suggested 3 alternate alignments for the L-plan road (sometimes called Loop 202) on the southwest fringe of the Phoenix Valley area, (1) a close-in Pecos Rd alignment 36km long along the edge of the Ahwatukee residential area, and (2) 39km and (3) 40km alignments slightly further south. The close-in route faces substantial local opposition from homeowners in Ahwatukee though traffic forecasts suggest it will garner the most traffic especially in the early years. The southerly and longer routes will cost more but they go through the Gila River Indian community which wants the toll road for its economic development potential.

One official has characterized the alignment as “right through the parking lots of future casinos” which state law often makes most attractive to Indian tribal nations.

Interwest’s local Arizona Transp Group has hired Wilbur Smith Assoc to do a traffic analysis of the alternates and environmental assessments. Arizona DOT expects the group to produce a recommended alignment and supporting analysis by December. That could allow a formal agreement to be signed for a franchise. (Contact Suzanne Sale, AZDOT 602 255 7441)

South Carolina: Similarly in SC the Interwest Southern Connector proposal appears to be surviving bad press but fundamental financial issues may still defeat it. Officials there told us the project now depends on a detailed financing scheme from its financier Lehman Bros and this may still not pan out. Estimated cost of the 25km 4-lane toll road in the southwest segment of Greenville SC pop 700k (see TR#17 July 97 p1) is up from $180m to $240m and there have been major revisions in revenue projections. The state is offering to contribute $20m, but as in all ‘non-profit’ proposals the developer puts in no equity. In essence no equity exists! That leaves the bondholders holding the primary risk, though there is to be a ‘contingency fund’ the basis of which remains vague. A local newspaper quoted officials as saying the “acid test” for Interwest’s Southern Connector will be the rating the proposed bonds get from the Wall Street rating agencies and that they are quite likely to be non-investment grade or ‘junk’ ratings.

Officials expect financing details “shortly.” (Contact Bob Farris Interwest 202 879 3973, Jim Taylor Lehman Bros 212 526 2455, Larry Duke SCDOT 803 737 1240, Richard Few Interwest Carolina 864 242 6440)