Non-Subscriber Extract
US rides out the private road
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| 20 April 2007 |
By Alison Tucker
As traffic congestion increases, the US Federal Highway Administration (FHA) estimates that some USD50 billion per year over and above current levels of federal, state and local highway funding will be required to upgrade existing roads and bridges over the next 16 years.
Historically, US city governments have relied on cheap money coming out of municipal bond markets to fund infrastructure projects. Now, many are warming to the idea of leasing infrastructure assets to private investors, allowing cities to get cash upfront to fund expenditures without taking the always unpopular route of raising taxes.
The lease of the Chicago Skyway and the Indiana Toll Road (ITR) spearheaded this nascent trend in the US.
A 99-year lease of the Chicago Skyway was acquired in 2004 for USD1.8 billion by an Australian-Spanish consortium that includes Macquarie Infrastructure Group (MIG), a subsidiary of Macquarie Bank, and Spanish construction firm Cintra. The same consortium paid USD3.8 billion for a 75-year lease on the ITR in 2006.
Other deals followed, with the states of Virginia and Texas in particular developing innovative and aggressive road privatisation programmes.
MIG paid USD533 million in 2005 for the 50-year lease of Virginia's Dulles Greenway toll road. Last year, the state offered a 99-year lease on the underperforming Pocahontas Parkway toll road to Australian toll road operator Transurban for USD611 million.
Cintra has been carving a niche for itself in Texas with a number of deals awarded and others in the pipeline.
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© 2007 Jane's Information Group
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