Illinois Business Journal Illinois Business Journal
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Missouri forging forward on toll bridge
By ALAN J. ORTBALS
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   The Missouri Legislature is rapidly rolling down the tracks to pass legislation enabling the state to enter into a public-private partnership with an "unsolicited" developer to build, maintain, manage and collect tolls on the proposed new bridge across the Mississippi River at downtown St. Louis. According to U.S. Rep. Jerry Costello, a Democrat representing Illinois, the basis for this toll road legislation is a January 2006 report by the St. Louis Regional Business Council that recommends pursuing a PPP.
   Last year, newly hired director of the Missouri Department of Transportation, Pete Rahn, announced that Missouri did not have the necessary funding to match the recently hard-won federal earmark and the bridge would have to be built with tolls or not built at all. The earmark, garnered by Costello and other area legislators, was the largest in the 2005 federal transportation bill.
   The SLRBC turned to the international investment firm of Goldman Sachs that had recently concluded transactions to sell long-term leases of the Chicago Skyway and the Indiana Toll Road to an international investment consortium. The SLRBC report assumes a development cost of $910 million and average daily traffic in the first year of operation of 47,000 vehicles. Based on those assumptions, the report concludes that a private party or parties [continue]

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Government studies of public-private partnerships that have been used to develop new infrastructure projects in the U.S. have revealed problems. Inaccurate predictions of traffic flow and toll revenue have led to bond defaults on several projects.
Rahn road still raises ire in NM
By KERRY L. SMITH
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   Missouri Department of Transportation Director Pete Rahn and a longtime Republican state senator from New Mexico disagree on whether a $108 million highway project in New Mexico is a positive example of a public-private partnership or a negative one.
   And although this road project occurred 1,000 miles away some six years ago, its relevance lies in the fact that Rahn and MoDOT are touting a public-private partnership as the answer to funding the proposed New Mississippi River Bridge.
   According to a [continue]
Studies find public-private partnerships have dismal track record in the U.S.
By ALAN J. ORTBALS
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   Two federal government reports reveal problems with developing major infrastructure projects with public-private partnerships. The U.S. Government Accounting Office published its report, Highways and Transit: Private Sector Sponsorship of and Investment In Major Projects has been Limited, in March 2004. The U.S. Department of Transportation published its Report to Congress on Public-Private Partnerships in December 2004.
   According to the USDOT report, the most significant private-sector barrier to these PPP projects is obtaining financing. The financial risks include start-up financing problems, unknown and hard-to-predict traffic levels and income streams, uncertain completion costs, general uncertainty about the economy, questions about tax treatment and depreciation, exposure to tort liability, unfavorable tax laws and the ability to obtain non-toll revenue.
   The USDOT report goes on to say that "Although transportation project costs are subject to overruns, the revenues for toll roads are generally more difficult to project because they entail more uncertainties about human behavior - such as if enough motorists are willing to pay tolls to use the road - and because the revenue stream extends farther into the future and thus is subject to more unpredictable events that may affect the demand for the road."
   Most toll road projects proposed for public-private financing, says the USDOT report, have been for new construction with no traffic patterns established for the facility. Revenue [continue]

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