Indiana Will Not Reclaim Toll Road from Bankrupt Operator

Credit: Flickr, Jimmy Emerson

Credit: Flickr, Jimmy Emerson

Indiana’s state government will not attempt to reclaim the Indiana Toll Road after its operator filed for bankruptcy.

The foreign consortium which bought the rights to a $3.8 billion, 75 year lease of the 157 mile long Indiana Toll Road — which runs from the Illinois border to the Ohio border — is in agreement with its largest creditors to restructure its debt and sell operation rights to a new company.

Spain’s Cintra and Australia’s Macquarie Group Ltd. — who jointly own the Indiana Toll Road Concession Company (ITRCC) — have filed for Chapter 11 bankruptcy protection for the subsidiary. The plan calls for reorganizing its $6 billion debt load, selling operation rights, and providing secure creditors with the proceeds of the sale.

Back in September, Toll Road Oversight Director James McGoff with the Indiana Finance Authority said that the state “will vigorously enforce all of the state’s rights and remedies under the concession and lease agreement, including its consent rights with respect to potential transactions involving the concessionaire.”

One right that the state will not be vigorously enforcing is reclaiming the formerly publicly owned and managed toll road. Politicians who opposed the toll road deal have called on the return of the highway to the state.

Democratic US Senator Joe Donnelly wrote in a letter to the Indiana Finance Authority that “while I recognize that proceeds of the sale have been invested in important infrastructure programs across our state, both the Indiana Department of Transportation and the ITRCC have acknowledged that the current quality of road maintenance and service plazas have not lived up to the most basic standards of services and cleanliness expected by travelers and their families.”

“It is important that the IFA uses its authority to ensure that the toll road is managed and operated appropriately and that passengers traveling across our state have access to safe roads and quality services,” Donnelly says. “Hoosiers deserve better.”

The state maintains that the road should remain in private hands.

“In sixty years of state operation, the Toll Road never covered its costs,” Indiana Public Finance Director Kendra York wrote in a letter to Donnelly. “In 2005, the year before the road was leased, the state of Indiana did not collect sufficient tolls to support basic road treatments, or repair the deteriorating conditions of the highway and bridges. These improvements could not have been undertaken within INDOT’s budget without neglecting other parts of the state highway system.”

The standard for Northern Indiana’s primary east-west interstate is unique. No other highway in Indiana is expected to turn a profit.

Critics point out that tolls have doubled since the private company took over management. Publicly-operated toll systems in other states, including Illinois, are profitable. Conditions have likewise deteriorated under the private consortium’s management.

Donnelly has called the lease a “mess of epic proportions,” pointing to long wait times at toll booths, unsanitary bathrooms at rest stops, and cutbacks on maintenance.

Supporters of the toll road lease include US Representative Jackie Walorski, who voted in favor of the lease as a state representative.

“Today the toll road will continue to operate normally, tolls will not increase and drivers will not be impacted. That’s why it was important to negotiate a lease where the state received the payment up front,” Emily Daniels, deputy campaign manager for Walorski, told the South Bend Tribune in September. “It’s also important to remember the state of Indiana specifically provided many safeguards into the lease to protect the interest of Hoosier taxpayers.”

Meanwhile, a federal bankruptcy judge in Chicago has approved a reorganization plan that will put the 75 year lease up for auction to the highest bidder. If the plan to find a bidder fails, the bankruptcy court will move to restructure the debt.

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