Cracks appearing in privately built toll roads

Even toll roads originally built as private businesses are failing to demonstrate promised cost efficiency.

In San Diego County, California, the South Bay Expressway filed for bankruptcy in March, three years after it opened late and over budget. The for-profit company running the toll road blames the recession for its low traffic, but drivers have publicly blamed the company's steep toll increases.

The South Bay Expressway deal in 1991 was the first US road-building project by Macquarie, the Australian investment consortium. It also was the first to receive a federal loan through the Transportation Infrastructure Finance and Innovation Act, and now owes US taxpayers $170 million.

As one planning expert told the San Diego Union-Tribune, "The idea was to see if the private sector could succeed in building highways. But ... history is teaching us that it is more complicated than we thought."

The Texas transportation department, for years an eager road privatizer, now faces a funding crisis and admits that private roads are more expensive to build and operate than public roads. At a state legislative hearing in February, Texas DOT Executive Director Armando Saenz acknowledged that the need for profit raises costs.

State Rep. Jim Dunnam (D-Waco): "Overall, it's cheaper to do it (build toll roads) with public money than with private sector financing, because nobody's making profit."
Saenz: "Correct."