Is Leasing Toll Roads A Smart Move?
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