End Of The Infrastructure Privatization Craze
"Privatization, the selling of public airports, bridges, roads and the like to private investors, looks like a boom that wasn't.
What happened? The financial crisis, for starters. The easy money that Wall Street was counting on to finance its purchases has largely disappeared. Then the Obama administration unintentionally damped interest with its $787 billion economic stimulus package, a windfall that local governments are now racing to spend.
Now the deals are falling apart. In April, a much-anticipated $2.5 billion plan to privatize Midway Airport in Chicago collapsed after a group of investors was unable to obtain debt financing. The deal, which had been in the works for four years, was to have been the first in a Federal Aviation Administration project that would have allowed up to five major airports to move into private hands.
The biggest was the failure last fall of the largest deal proposed to date - a $12.8 billion lease of the Pennsylvania Turnpike. Postmortems into that failed effort show that privatization advocates vastly underestimated the political opposition the deal would stir up in the Pennsylvania legislature.
Late last month plans to privatize "Alligator Alley," a 78-mile stretch of Florida highway collapsed when no bidders showed up. The failure has had a ripple effect - in Mississippi, state officials have pushed back the bidding schedule for a new 12-mile toll road
The stimulus money, as well as other infrastructure money promised by Congress, has provided temporary relief for cash-poor municipalities.
Chicago Sun Times: City could have gotten nearly $1 billion more for parking meters, report says:
"Chicago's 36,000 parking meters were worth nearly twice as much as the $1.15 billion Mayor Daley got when he rammed through a 75-year lease in a few days without analyzing what the system was worth, the city's inspector general has concluded. A steep schedule of rate hikes and operational problems have turned the deal into a nightmare for motorists.
Inspector General David Hoffman says the lease was a financial disaster as well."
Thanks to Transportation For America blog