Is Leasing Toll Roads A Smart Move?

A key factor in toll road lease agreements is shifting risk from the public sector to sophisticated investors.

The city of Chicago recently sold its Chicago Skyway toll road. The winning bidder is paying Chicago $1.83 billion in return for a 99-year lease and operating rights. In announcing sale of the Skyway, Chicago Mayor Richard Daley said running a toll road 'is not a core function of city government.' A key factor in these agreements is shifting risk from the public sector to sophisticated investors who are better placed to take on such risks. This is especially important for start-up toll roads, like the 73, which are inherently high-risk endeavors. Although Orange County's taxpayers would not be at risk if the 73 went bankrupt (only its bondholders would directly suffer), it would hardly help the county's still-recovering bond rating to have a major toll-road bankruptcy occur within its public sector.

Related documents from the Reason Public Policy Institute: Policy Brief: 91 Express Lanes a Financial Success and Policy Brief: Orange County Toll Roads Largely Successful.

Thanks to Chris Steins

Full Story: Leasing 73 could be smart move

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