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Daniels says investors overpaid on Indiana Toll Road

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Indiana Gov. Mitch Daniels says foreign investors "overpaid" for their lease of the Indiana Toll Road five years ago.

The Spanish-Australian investor group Cintra-Macquarie is in danger of defaulting on loans it used in the 2006 toll road deal, according to a May article in The Financial Times.

IBJ reported in 2009 that toll road investors were struggling because of the economic downturn.

Their troubles mean the state got a better deal than it would have had it waited a few years to lease the toll road, Daniels said Wednesday.

"It means they overpaid," the governor said. "That's why you hold an auction, sometimes you hit the jackpot."

Daniels on Wednesday marked the five-year anniversary of the lease, and said the state is insulated from any financial problems under the deal it crafted.

Much of the money from the 75-year lease has already been spent on highway projects throughout the state, but $500 million was placed in an investment fund that collects interest to pay for future road construction.

In addition to making the state money, the lease also saves the state money by helping it avoid maintenance costs on the toll road.

Rep. Vernon Smith, D-Gary, said he opposed the leasing of the toll road in 2006 and still thinks that the state shouldn't have pawned off a valuable resource.

"We've got to understand, any time we get privatization people have to make a profit," Smith said. If they don't earn money, "we have a situation where we have an unstable commodity that we really don't have any control over."

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  • A little story to contemplate
    I recently moved back to IN from Texas where the state was negotiating with Cintras/Macquire to build a series of highways called the Trans Texas Corridor. These are no ordinary highways. They're over 1/4 mile wide, with rights of way for toll lanes, pipelines, high tension wires and high speed rail. The idea was to take land from ranchers and other property owners and just hand it over to Cintras/Macquire to profit from. That's how government works in the USA these days, even in states like Texas that claim to be free. Here's the deal. The TTC was being built to help large corporations move cheap goods from Mexico into the US. That's the same reason they want I-69. Make no mistake about it. I-69 is not about your motoring convenience. It is about moving NAFTA goods from Mexico into the heart of the USA. It needs to be killed, just as Texans killed the Trans Texas Corridor
  • Nobody in No. Ind.
    Nobody in Northern Indiana uses the Indiana Toll Road. I lived there for years and everyone I know avoided it. That was back in the good old days. I can't imagine that much has changed.
  • So?
    So they default on their loans. That's their problem. They default and then the State gets to take the toll road back for free or for pennies on the dollar, and then elect to re-use the toll revenue stream.

    Hard to believe the investor group can't make it work. That road is in shambles and hasn't seen any improvements, and the tolls have all gone up. I would bet some execs have been living it up and have been abusing that cash cow.
  • Bad Deal
    Most of the money taken from the toll road is scheduled to go to Gov. Daniel's baby I-69 extension. This means we took a road that generated some revenue for itself to invest in a road that will generate no revenue for itself while people are still paying for the tolls on the origional road. He suckered people in northern Indiana by making them not only pay more for the toll road, but now they get to pay their taxes to take care of another road in Southern Indiana. Roads are a terrible investment which are garunteed to lose money and you Gov has made a living off of it. Good thing he has budddies in the road building industry to profit.
    • Brilliant move!
      Governor Daniels saved the state's economy with this visionary deal. He brought in several billion dollars which enabled us to improve our infrastructure, get out of debt, improve our credit rating and set the state on a path of financial viability. While our neighboring states are in the red and sending their governors to prison, we should be celebrating Governor Daniels and thanking our lucky stars that he is leading our state.
    • Underpayment Not Overpayment
      It's silly to say the investment group overpaid after only 5 years into a 75 year lease that has clauses that have built in toll rate increases that will make this very profitable after they recoup their required capital investment in 10 years.

      Short term cash flow problems after making long overdue capital investments are not a surprise.
    • Really!
      As the crossroads of America, should we not be continually upgrading our roads or infrastructure? Much of that transaction created a financial surplus, which has allowed Indiana to stay in the black for most of this economic downturn.
    • Not so bad
      Joe, there are some things you haven't considered in your scathing of the governor. First of all, the tollway was not at asset. It was a liability. It cost the taxpayers far more than they recieved in return. Cost of maintaining highways isn't cheap, and the tolls hadn't been raised in years. Second, Governor Daniels managed to get the investors to overpay for the tollway. Third, I'm not sure who you think builds and maintains the state roads, but that money comes from taxpayers. So when the governor built more roads (something I don't think we need, but oh well) he was spending the investor payment instead of taxes. The one point I agree with you on is that more roads aren't a panacea. We should have invested at least some of the money in transportation alternatives that can decrease demand for more road.
    • Daniels.....HA
      He is such a joke. We have built roads for decades and it hasn't exactly made Indiana the prime spot for business and qulity of life so what does our fearless leader do? He auctions off an asset and instead of using the funds to improve the state, he builds more roads to take care of............genius at work.

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