PUBLIC DEBATE:No-compete provisions of 91X project

Poole’s piece continued: “In all such projects, the key to being able to sell the bonds is producing a deal that presents only normal risks—construction cost overruns, shortfalls in early-year traffic, etc. The specific terms of the franchise agreement are critical factors in being able to sell the bonds to investors.

“For that reason, nearly all toll road bonds are protected by some form of non-compete provision. After all, if there were no limit on what the public sector could do, in theory it could build enough nearby free lanes to attract nearly all the toll road’s paying customers, leaving the bondholders with little or none of their promised interest payments. So without such provisions, it is very difficult if not impossible to sell toll road bonds. For this reason, the public-sector toll roads in Orange County (Eastern, Foothill, and San Joaquin Hills) are similarly protected.

“Honest people can disagree about when a proposed lane addition is needed for safety reasons, as opposed to simply improving traffic flow and reducing congestion, but the underlying principle remains. If Caltrans has the ability to add unlimited amounts of free capacity, no one is likely to buy toll road bonds. And there will be no toll roads.

“Those who hate tolls and toll roads will be happy with that outcome. But they should pause to consider how California is going to cope with the addition of 15m people and their cars over the next two decades. Our choice is either massive increases in the gasoline tax (paid by everyone, no matter where they live or drive) or greater use of tolls and toll roads (which you have a choice whether to use).

“The California Transportation Commission puts (needs to 2010) at around $100 billion. There’s no way we’re going to meet those needs via tax increases alone. Private investors are willing and able to put billions into California infrastructure; they’re already doing so in fast-growing Florida, Texas, Virginia and Washington. But they will only do so if we create a framework that makes such investment feasible.

“A comprehensive public-private partnership law that includes a reasonable degree of protection from state competition with toll lanes is an essential tool for coping with California’s growth in the 21st century.”

UNSOLICITED PLUG: There is no-one in the US with anything approaching Bob Poole’s qualifications (advanced degrees in both engineering and economics), his history of interest in toll roads (going back 30 years), his innovatory ideas (he hatched the toll buy-in idea of HOT lanes), his effectiveness as an advocate of road tolls (he is credited with persuading key civil servants and politicians to move for toll roads in Texas and southern California), his record of publications (www.rppi.org), or his knowledge of toll roads (He has read TRnl from #1... No, seriously, he reads everything). And as a respected Los Angeles-based national thinktank, Poole has high credibility as a no-ax-to-grind independent commentator. The most knowledgeable executives and PR/lobby people in the toll business already refer journalists, politicians and others to Poole for an articulate, knowledgeable, commonsense, and principled perspective on toll road issues. Others should too. (Contact Robert Poole 310 391 2245 bobp@reason.org)