Close on the heels of news that Interstate 69 (I-69) is underway in Texas, the Indiana Finance Authority and highway department (INDOT) has selected four private developers to submit proposals for a public private partnership (P3) on segment 5 of I-69 from Bloomington to Martinsville. The final selection is expected this fall.
I-69 was designated as high priority corridors (18) and (20) by congress in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). These high priority corridors became the conduit for global trade when NAFTA came on the scene. By 2005, congress identified more than 80 such corridors criss crossing America.
Foreign entities erode U.S. sovereignty
Whether or not these private consortiums seeking to build and operate I-69 in Indiana are foreign or domestic, P3s hand control of public infrastructure to private entities, taking the reins from taxpayers and elected officials.
P3s don’t merely contract a private firm to build the road like most procurements, the corporations gain complete operational control over the public’s highways and, usually, the power to tax by setting toll rates.
Privatized toll roads charge punitively high toll rates up to 75-80 cents a mile, especially in urban areas where the companies can exploit congestion. Publicly operated tollways charge toll rates closer to 10-15 cents a mile, precisely because taxpayers can hold these public entities accountable if toll rates escalate too high. But all bets are off when a private, for-profit company takes the wheel. P3s threaten private property rights as well since they clearly use eminent domain for private gain.
The corporations that can finance a public road up front (versus get paid by the state highway department as the work is completed like in a traditional contract) is indeed a very small group of global companies that monopolize the P3 market. For this segment 5 of I-69 in Indiana, the four developers are familiar names in the P3 world: Australia-based Macquarie and Plenary Group, Luxembourg-based Meridiam, and Spain-based Isolux.
These private entities guarantee a return on their investment through many gotcha clauses in the P3 contracts that are typically hundreds of pages long or thousands of pages when you count the addenda. The chief provision being a non-compete clause or ‘adverse event’ or ‘compensation event.’ These penalize or outright prohibit public agencies from building or expanding ‘competing’ free routes that could jeopardize the private corporation’s toll profits, jeopardizing future transportation needs. Any other event the private operator deems ‘adverse’ to its bottom line is also covered, making taxpayers responsible for potential losses. Often the taxpayers are also on the hook for ‘un-collectable’ tolls from out-of-state and international drivers.