Authorities in two northwest Indiana counties are scheduled to decide over the next several weeks whether to proceed with a proposal to lease the Indiana Toll Road after the Australian-Spanish consortium that leased it went bankrupt.
The plan announced Friday by the Lake and LaPorte county commission presidents calls for the counties to form the Northern Indiana Toll Road Authority, a not-for-profit public-benefit corporation that would issue billions of dollars in bonds to buy the Toll Road lease from its creditors. If the counties are the high bidders, they are expected to seek approval to issue bonds from the Indiana Finance Authority.
The highway would be run by a board of directors, consisting of Lake and LaPorte county officials, and non-elected professionals in the fields of hospitality, tourism, transportation, education and health care who would be appointed by county officials.
The county commission presidents say that under the plan, the counties would be entitled to receive annual payments of $5 million to lease the 157-mile highway and would divide any excess revenue for the next 67 years.
"This is a win-win for our taxpayers if we can succeed," Lake County Commission President Roosevelt Allen, D-Gary, told The Times of Munster.
Taxpayers in the two counties would not be financially liable if revenue did not live up to expectations because it would be funded with non-recourse revenue bonds, county officials said. Non-recourse bonds mean that creditors could not seek assets from the counties other than those pledged as collateral.
Chicago-based ITR Concession Co. filed for bankruptcy in Chicago last year, saying it couldn't afford the debt payments from the 2006 deal under which its parent company, the Spanish-Australian consortium Cintra-Macquarie, paid Indiana $3.85 billion for the rights to run the highway and keep the toll revenue.
Other northern Indiana counties that the Toll Road passes through decided against trying to take part in the proposed deal by Lake and LaPorte counties.
Investment bank Piper Jaffray & Co., of Minneapolis, estimated last fall the Toll Road could produce between $38 million and $53 million per year after operating and maintenance expenses.
"Our financial advisers at Piper Jaffray continue to believe as they did in November that with the low cost of capital involved in a municipal debt-financed bid, we can be highly competitive in the bid process for the Toll Road lease," Decker told the Post-Tribune of Merrillville.
Completed bids must be submitted by March 15.