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PA Turnpike Lease Saga Coming To A Head

The mother of all toll road leases appears to come to a head next month, and though the chances of the near $13 billion lease of the the 537-mile Pennsylvania Turnpike to Citigroup-Abertis team are most uncertain, the PA saga is worthy of study.
August 28, 2008, 5am PDT | Irvin Dawid
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"Next month, the Pennsylvania legislature is expected to vote on a $12.8 billion deal struck between the governor and a group of private investors to lease America's oldest major toll road, the 537-mile Pennsylvania Turnpike.

If it passes, the deal would be by far the largest ever of its kind in the U.S. Under these arrangements, known as public-private partnerships, investors lease or buy roads, bridges or other infrastructure, operate them independently and collect tolls.

As much as states need money to fix their roads and bridges, Wall Street firms are eager to supply it. With the industry's core businesses in distress from the credit crisis, so-called infrastructure funds -- which have already raised more than $160 billion, according to Morgan Stanley -- have emerged as one of the most promising growth areas in years."

"By early 2008, the field of bidders had been narrowed to two groups: the Citigroup-Abertis team and one led by Goldman Sachs Group Inc. In a second round of bidding, Pennsylvania gave the teams one week to come up with their final offers. The Citi group's $12.8 billion bid won.

With less than three weeks to go until the Pennsylvania legislature returns from summer recess, Gov. Rendell says he plans to meet with as many lawmakers as he can to win them over. Most opposition comes from his own party. Prominent unions have also condemned the plan. The governor sounds less than enthusiastic about its odds. "This is very high on my list of priorities," he says. "There's still a decent chance it will pass."

Thanks to Mark Boshnack

Full Story:
Published on Tuesday, August 26, 2008 in The Wall Street Journal
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