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Sunday, May 11, 2008
Australia: Toll Tunnel Achieves Junk Bond Status
The Lane Cove tunnel in New South Wales, Australia took another step toward bankruptcy last Thursday. Moody's Global Credit Research downgraded the underlying rating of the project to Ba3 -- junk bond status -- citing the toll route's failure to generate sufficient traffic. Analysts suggested the tunnel would be bankrupt by the end of next year.
"It's wrong of [state Roads Minister] Eric Roozendaal to claim taxpayers will be unaffected," NSW Opposition Leader Barry O'Farrell said in a statement. "Each of these bungled deals reduces the attractiveness of NSW for private sector investment -- without such investment taxpayers either have to foot the bill or suffer poorer services."
As part of a non-compete agreement, the state roads minister ordered a nearby free route, Epping Road, narrowed from three general purpose lanes to just one in order to force drivers to pay to use the tunnel. The roads department also paid tunnel operators $25 million in compensation so that it could delay the ultimately ineffective measure until after state elections. This payment was equal to eight full months of collections from drivers.
"The Lane Cove Tunnel can't attract patronage because the wallets of commuters are already being emptied by toll roads," Shadow Minister for Roads Duncan Gay explained. "Taking the M2, Lane Cove Tunnel and Harbour Bridge brings the cost of driving to work to $85.20 a week, or $4089.60 per year. That's a heavy burden for working families struggling with rising interest rates and petrol prices."
The Lane Cove Tunnel stretches 2.2 miles to connect the M2 Motorway with the Gore Hill Freeway in Sydney. It opened in March 2007 at a cost of A$1.1 billion. As traffic failed to meet predictions, revenue slumped. Cheung Kong Infrastructure this March wrote off its $113 million investment in the route as a loss.
Saturday, May 10, 2008
US Lawmaker Ties Gas Tax Break to Moratorium on Pork Projects
A congressional Republican wants to tie the issue of gas tax relief to a moratorium on earmarked spending. US Representative Paul Ryan (R-Wisconsin) on Friday unveiled his tax holiday plan before the House Budget and Transportation Committees. Over the past several years, earmarks have grown into a tool to force state transportation departments to build projects -- often unrelated to transportation -- in particular congressional districts. Most often, powerful members of appropriations committees and vulnerable incumbent representatives receive the greatest share of these projects. (View US Department of Transportation Inspector General report on earmarks.)
"By clinging to this broken earmark practice, Congress is picking pork over paychecks, and pork over potholes," Ryan said in a statement. "Simply saying no to earmarks for the remainder of the year could give folks... some relief at the pump this summer and fix the Highway Trust Fund's deficit."
Ryan's proposal would impose a nationwide suspension of the 18.4 cent federal gasoline tax from Memorial Day through Labor Day while actually increasing funding for the Highway Trust Fund. By changing House and Senate rules to prohibit introduction of earmark amendments, the legislation would achieve a savings of $14.8 billion -- more than would be lost by the suspension of the gas tax. A new Joint Select Committee on Earmark Reform would be responsible for ensuring members do not find ways to circumvent the spending moratorium.
Earmark reduction is a tough sell on Capitol Hill, but the Club For Growth reports thirty-nine House members and seven senators have signed a personal pledge to avoid earmarks. Often these earmarks divert gas tax away from road projects into spending on items including museums and trolleys.
"For far too long, taxpayers have been footing the bill for billions upon billions in wasteful Washington spending that our nation neither needs nor can afford," House Minority Leader John Boehner (R-Ohio) said in endorsing Ryan's bill.
The full text of the legislation is available in a 65k PDF file at the source link below.
Source:
H.R. 5995 (Congress of the United States, 5/8/2008)Friday, May 09, 2008
Toll Hikes Used to Boost Foreign Company Profits
Drivers in North America are paying higher fees to cover the red ink of a Spanish infrastructure firm. Global toll road giant Cintra announced yesterday that its first quarter revenue had jumped 15.3 percent thanks in part to toll hikes on roads in the US, Canada, Chile, Ireland and Spain. Despite collecting 881 million Euros (US $1.4 billion) from drivers last year, the company failed to make a profit. The company lost 16 million Euros (US $25 million) in the first quarter of this year.
During this time, traffic dipped 8.9 percent on the Chicago Skyway and 6.1 percent on the Indiana Toll Road. In an earnings statement, Cintra blamed bad weather and the "betterment" of free alternative routes such as the Dan Ryan Expressway in Chicago for reducing profit. The weakening dollar also cut into the Spanish company's revenue from US motorists.
Those American motorists are now paying significantly more as a result. In 2005, Governor Mitch Daniels (R) leased the Chicago Skyway to Cintra and the Australian tolling firm Macquarie for the next 99 years. The consortium hiked tolls 20 percent earlier this year, charging motorists $3 each to drive the 7.8 mile route.
In April, Cintra raised toll rates for drivers on the Indiana Toll Road by 21 percent. In another hike, the company nearly doubled the toll for motorists who do not use an electronic toll transponder. The cash price for driving the length of the route jumped to $8, up from $4.65.
In Canada, Cintra won the right to set whatever rates it chooses on the 407 ETR toll road in a 2005 Ontario court decision. Since then, Cintra has raised the toll by nearly 30 percent. Cintra also owns the newly opened SH-130 toll road in Texas.
Missouri: Red Light Camera Mayor Freed
The former mayor of St. Peters, Missouri was released into supervised custody last month after spending a year in prison on felony bribery charges. Shawn Brown, 36, received an eighteen month sentence after pleading guilty in October 2006 to soliciting a bribe from red light camera vendor Redflex. A Federal Bureau of Investigation (FBI) sting caught him demanding $2750 from the Australian company in return for his approval of a lucrative photo enforcement ordinance (read indictment).
Brown has transfered to Dismas House, a community release center in Saint Louis that contracts with the federal Bureau of Prisons. The program allows prisoners, primarily drug addicts, to be gradually released back into society with an emphasis on rehabilitation and job training. Participants can hold outside jobs and spend increasing amounts of time unsupervised on the way toward home confinement before discharge. Brown's final release is scheduled for August 1.
Since April 2007, Brown had served time in the Federal Prison Camp in Duluth, Minnesota. The minimum security facility featured dormitory housing, relatively few prison guards and no perimeter fencing. Brown could enjoy as many as eight three-hour visits from friends and family each month. The facility had a gym and a theater that showed current movies once a week. He also had access to recreational activities that included tennis, football and art classes.
Although Redflex cooperated fully with authorities in this case, rival vendor Affiliated Computer Services has been accused of acting on the wrong side of the law. The company had faced trial in Edmonton, Canada for bribing police officers to land a lucrative photo enforcement contract.
Thursday, May 08, 2008
Colorado: Freeway Photo Radar Approved
The Colorado state legislature gave its final approval last week to legislation allowing the use of speed cameras in highway work zones. The move was part of a series of bills designed to raise $18.1 million annually for the state budget through increased traffic fine amounts and expanded ticketing operations. The latest measure was approved by a 61-2 margin in the state House and 22-12 in the state Senate. Governor Bill Ritter (D) has indicated his intention to sign the bill into law next week.
The new program will first create a "work zone" where speed limits are lowered and fines doubled for up to four hours before any worker actually shows up. During this time, conventional police enforcement would issue newly boosted fines of up to $540 each. Once a highway worker arrives, a private company can activate photo radar vans capable of issuing thousands of citations per day. The Colorado Department of Transportation would pay this company a bounty for each ticket it is able to issue using gas tax money.
The legislation then makes it possible for police to ticket any vehicle that passes a speed camera van that is parked on the side of the road if the motorist had been in an adjacent lane and failed to "move over" to the left. Several states already require motorists to take similar actions for marked ambulances and police cars, but Colorado will become the first to add "privately owned vehicles as are designated by the state motor vehicle licensing agency necessary to the preservation of life and property." Tow trucks "approved by the public utilities commission" would also fall under this broad definition of safety vehicles.
In 2006, Illinois pioneered the concept of using freeway work zone speed cameras to generate millions in the name of protecting construction workers. Studies show that only 15 percent of freeway construction zone injuries are actually caused by automobiles. The vast majority of work zone "vehicle" accidents were found to involve workers injured by their own construction equipment.
A full copy of the legislation is available in a 55k PDF file at the source link below.
Source:
House Bill 1036 (Colorado General Assembly, 4/30/2008)
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