Cintra’s Private Toll Road Backed By $430 Million in Federal Funds Goes Bust

Governor McAuliffe (D-Virginia) recently said that Cintra & Co would assume all of the risk for the I-66 widening project.  But is that really the case?   Will there be enough people willing and able to pay the high tolls required to fund I-66 while leaving a big return on investment?

Another private road recently went bankrupt this fall, and threatens to leave U.S. taxpayers holding the bag for $430 Million in taxpayer secured TIFIA loans.  Like I-66, Spain’s Cintra was also the builder/operator of Toll 130 in Texas.  It also suffers from poor  quality according to inspection reports. Streetsblog USA describes more:

Cintra (Concesiones de Infraestructuras de Transporte) and construction company Zachry Corp., decided to build a toll freeway between San Antonio and Austin.   The two companies obtained $430 million in federally-backed TIFIA loans, and promised to share toll revenues with the state of Texas and pay $25 million upfront.

Today, four years after the road opened, it is bankrupt.

Cintra and Zachry put up $197 million — about 14 percent of the cost. But that stake was packaged and sold to investors (in the case of the Zachary Corp., to three investment funds overseen by a Australian firm). Since some construction contracts went to Ferrovial, Cintra’s parent company, the firm may have managed to make money even though the road did not.

The highway appears to have exacerbated flooding problems for the community of Lockhart. One resident told the Express-News that she now has to tie her propane tank to a tree to keep it from floating away when it rains.

Construction quality was not good. Just two years after the road was complete, an inspection found 160 pavement defects, though some of those have since been repaired.

As for Texas 130, it remains to be seen how much of the $430 million in TIFIA funds will be recovered. When pressed by the Express-News, U.S. DOT refused to comment. (Streetsblog USA)

Will the new construction quality of the VDOT owned free lanes be acceptable or shoddy on I-66?  The location of the future I-66 express lanes will take over the existing and recently reconstructed I-66 lanes that taxpayers built.  The free lanes will be shifted away from the median into the expanded right of way, as the green arrow peak lane disappears.

So under the Public-Private Partnership, the private company gets the well-built public infrastructure (including a very deep concrete  foundation under I-66 between U.S. 50 and the Beltway) that will last for decades or more, while the public will end up with the private concessionaire’s construction of the free lanes.  Hopefully the quality will be better than the pothole pitted free I-495 lanes through Annandale and Tysons Corner that TransUrban gave us in 2012.

No doubt we’ll hear how Cintra’s Route 66 will be much better built/run than Cintra’s Route 130.

Read the complete article from Streetsblog USA

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