Dobbs demagogues at toll concessions again - with COMMENT

CNN anchor Lou Dobbs and reporter Lisa Sylvester were at it again last night (Oct 8) beating up on toll concessions, this time the Virginia DOT's negotiations with Transurban and Fluor for building toll lanes on the Capital Beltway.

A transcript follows with comments interposed (PSam for Peter Samuel):

DOBBS: Coming up next here, outrage over state and local government efforts to turn over vital U.S. infrastructure assets paid for by taxpayer dollars, of course, to foreign companies.

PSam: Their efforts are to turn over day to day responsibility for the road and the right to toll to best value bidders under detailed conditions laid down in concession contracts. The facilities so far concessioned to private investors have NOT been paid for by US taxpayers. The Chicago Skyway, the Indiana Toll Road, the Pocahontas Parkway VA, the NW Parkway CO have received no taxpayer support. They were financed by public toll authorities selling bonds in the capital markets. Those bonds were serviced by toll revenues. No taxpayer money.

Companies based in Spain and Australia are most experienced in toll concessions so it is not surprising they have outbid US groups.

DOBBS: Lisa Sylvester will have the report -- Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Lou, state governments have found something new to outsource, the very roads that we all drive on. These public and private partnerships are gaining in popularity, but critics say these deals a dead end for taxpayers -- Lou.

PSam: Nothing new at all about outsourcing roads. The first highways through the Appalachians for example were outsourced to joint stock companies who built and maintained the National Pike (now roughly I-70) and the first real roads between Philadelphia and Pittsburgh via Lancaster. Most of our first highways were under toll concessions or charters. The ferries and bridges across major rivers were private too.

Toll charters as concessions-in-perpetuity raised capital equivalent to the interstate system in the first half of the nineteenth century.

In the 1920s a toll charter produced the Ambassador Bridge, still privately held and the major trucking route between the US and Canada.

DOBBS: Lisa will have that report coming up here tonight.(COMMERCIAL BREAK)

DOBBS: Our federal government and many state governments have absolutely no apparent respect for the American taxpayers or the citizens that those institutions represent.

PSam: the lack of respect for taxpayers lies in the present broken tax-and-grant system of gas taxes and earmarked grants that the likes of Rep Pete DeFazio operate as rackets. Bridges to nowhere, interchanges in return to contributions to campaign funds and all that. That's where taxpayer abuse lies.

DOBBS: A foreign company is about now to acquire toll rights to another major highway in this country.

PSam: Distortion suggesting toll rights are being granted on the existing Beltway. Transurban of Melbourne Australia and Fluor of California are negotiating the right to build four new tolled lanes in the middle of the Capital Beltway with their own dedicated interchange ramps - a highway inside a highway - in return for the right to toll the four new lanes.

On I-95/395 they are negotiating construction of major additions to an existing HOV facility in return for the right to toll vehicles not eligible for HOV travel.

DOBBS: And as Lisa Sylvester reports, the outsourcing of our roads, highways, our infrastructure, will cost American taxpayers a great deal in the long run.

PSam: baseless assertion. There is no long term liability. On the contrary in the long term after the end of the lease period, or earlier if the concessionaire defaults, the state will get full rights to a facility financed, built and maintained by investors for free.

What costs taxpayers very heavily is the present mismash of tax-based funding administered by politicians and bureaucrats - that toll concessions can substantially replace.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Private companies are hitting the roads, snatching up highways with long-term leases, the latest venture, the Washington, D.C.-area beltway.

PSam: Snatching up is absurd. The Capital Beltway concession proposal goes back to 2003. It is four years in the making and still not done.

see http://www.tollroadsnews.com/node/318

SYLVESTER: An Australia/U.S. consortium would expand the beltway in Virginia. In exchange, it would control this new section of the highway for the next 75 years, pocketing future toll revenue.

PSam: Good and accurate that. It acknowledges the consortium will expand the Beltway, add its own lanes. But how do you square this with the inflammatory and stupid statement by Dobbs a minute ago that taxpayer-funded facilities are being turned over?

SYLVESTER: Critics say this public-private partnership negotiated by the State Department of Transportation benefits investors, but not taxpayers.

STEWART SCHWARTZ, COALITION FOR SMARTER GROWTH: I think the DOTs are heading too quickly into this for short-term gain, but giving away a lot over the long term, effectively mortgaging our future.

PSam: Too quickly? Four years and still not finalized. For people like Schwartz who hate automobiles and roads ten years of negotiation, or 15 years, would be "too quickly."

He doesn't want the extra lanes built, ever.

He wants a future of congested roads in the absurd hope that people will ride bicycles instead of driving cars.

SYLVESTER: The Coalition for Smarter Growth, an environmental group, says turning over highways to a private concern means less oversight over setting of tolls, less flexibility in other transportation projects and less money for future highway improvements.

PSam: Lisa, there will be no oversight of toll rates on this project, zero. Officials have said this repeatedly, since variable tolls will be set to maintain free flow, and you can't have free flow and rigid caps or controls on toll rates. As for less flexibility and less money for future projects, environmentalists have a long record of getting stuff exactly wrong.

If private capital is tapped for roads there will be more gas tax money left over for other improvements.

SYLVESTER: Virginia is among the states that has either completed or is in the final stages of a private-public partnership. At least five more states are considering similar arrangements. These partnerships have hit roadblocks in three other states, Texas, Pennsylvania and New Jersey. But supporters of these deals say they're necessary because states can't afford to update crumbling infrastructure.

LEONARD GILROY, REASON FOUNDATION: Well, governments can't even balance their budgets, and now we're supposed to believe that they can find the billions and billions of dollars to invest in the roads and bridges we desperately need?

PSam: a fig leaf of balance. A single supporter of concessions gets a single sentence into this program while the critics appear repeatedly, at length, and then the anchor and the reporter pile on too.

SYLVESTER: Yet, the toll projects are considered to be financial bonanzas. In Indiana, Spanish and Australian investors are expected to break even within the first 20 years, and reap in pure profits for the next 55 years.

PSam: only time will tell if the toll concessions are bonanzas or bummers, or something in between. As many people think the investor groups are overpaying for toll concessions and may go broke, or limp along, as think they are going to be bonanzas. Most business ventures break even a lot sooner than 20 years. Most of the concessions are being done with competitive bidding so those who bid lower than the winning price don't see a bonanza in the prices at which the concession was closed. The alternative is having politicians gamble with tax money.

SYLVESTER: Representative Pete DeFazio worries about the precedent that is being set.

PSam: Lisa, when has a politician ever worried about a precedent? DeFazio on the House transportation committee controls billions of taxpayer gas tax funds and he presently controls how and which roads or bridges-to-nowhere they are directed to. His only worry is that the states might bypass US politicians like him and raise money for roads without begging before his committee or coming to him to do their backroom deals.

REP. PETER DEFAZIO (D), OREGON: Thus far, it's fairly benign, but what happens when China wants to get a choke point to some critical points, let's say, one of our ports or something else and they want to invest? I think it's a very bad precedent.
(END VIDEOTAPE)

PSam: silly scaremongering. Toll concessionaires are not into geopolitics. They are investors interested in making a buck. They don't have any incentive, or power, to choke any port or road. The concession contracts provide that they keep the roads open and expand capacity as needed by traffic. If they tried to choke anything they'd be in immediate and blatant breach of their concession contracts. Their right to operate the facilities would be forfeited to the state.

This is so much balderdash.

SYLVESTER: Representative Pete DeFazio also takes issues because so many of these deals are negotiated in secret with very little input from voters.

PSam: no deal for tapping private capital is ever going to be negotiated if every single meeting is open and if voters have input on every detail. The deals are negotiated in excruciatingly boring detail by state officials who are answerable to voters at elections. Detailed drafts of the concessions are published so people can comment before they are signed. Elected legislators write and vote on the legislation that sets general terms for concessions.

SYLVESTER: And (DeFazio) has sent a letter to the governors warning them about some of the pitfalls...

PSam: and a rather patronizing letter it was, as if state officials are innocents. Actually it's rather the other way around. State officials have been engaged in considering these deals for around twenty years, and now the DeFazios of the US Congress have suddenly seized on this issue seeing it as something they can emote on. It's cheap politics. DeFazio takes no responsibility for state budgets, yet he wants to tell the states how they should not be fixing them.

SYLVESTER: and (DeFazio) is considering introducing federal legislation that would place more conditions on future partnerships -- Lou.

PSam: More federal conditions, that would be a big help to the states?

DOBBS: Thanks to Congressman DeFazio and others who are starting to pay attention to this and taking some action.

DOBBS: This is not a question of local taxpayers and a case of state and local government infrastructure being sold off and the federal government not receiving word or being offered a voice in this. They're simply being ignored and their interests have been completely misrepresented altogether. It is an outright ripoff of our infrastructure and assets that are paid for by the American taxpayer. It's shameless.

PSam: Shameless is this kind of demagogic journalism based in misrepresentation and emotion.

SYLVESTER: Lou, in so many cases, too, the voters, the taxpayers, they don't find about these deals until after it's signed, sealed and delivered.

PSam: What cases? What deals? Not one deal can you name that has been made public as signed, sealed and delivered. Most have gone through a long drawn out process of competitive bidding including requests for expressions of interest, request for qualifications, shortlisting, requests for proposals, negotiations, draft concession contracts, more negotiations. At each stage there has been material on websites. General media coverage has been sporadic, but anyone googling the subject is liable to arrive here.

Enabling legislation is needed for these concessions too so the legislatures have got involved. Getting laws passed in this country is hardly a secret process.

DOBBS: Well, we're going to do our very best, thanks to you, Lisa, and our other colleagues to make certain people do find out about it. Thank you very much, Lisa Sylvester from Washington.

PSam: You have totally ignored this stuff for the past decade and a half (1991 were the first concessions on Dulles Greenway and 91 Express). Now you suddenly discover it and mine it for populist nonsense.

Here is the case for tollroad privatization and concessions.

Providing road service is a classic business operation. Questions to be answered are: what is the traffic going to be, how much you can charge, how much it will cost?

You have to raise capital, get the road built efficiently, market it, maintain it, compete with alternatives routes and modes, and make enough in revenues to cover costs and get a return on the investment for the people who risked their money. Business.

Governments run a few businesses in the US - the postal service, national parks, watersupply, car parking, some ports and airports and, so far, most tollroads. That's about it. They are exceptions to the rule that business is best done by for-profit investors not politicians representing taxpayers, that business is more efficient than government at business, and that risk should be put on investors rather than taxpayers.

Toll concessions are a sensible method of laying down protections for the public interest in the details of a concession contract while turning over the day to day business risks and rewards to investors.

Original CNN transcript contained here http://transcripts.cnn.com/TRANSCRIPTS/0710/08/ldt.01.html

TOLLROADSnews 2007-10-09