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COLUMBUS — As the state nears the end of a study into how it can wring billions out of the Ohio Turnpike, a consumer advocacy group Thursday questioned whether such a deal makes sense and how it might be structured.
Among the options under consideration by the $3.4 million study is a long-term lease of 50 years or more with a private entity, as neighboring Indiana did in 2006.
The Ohio Public Interest Research Group questioned whether such a deal might include a clause, as Indiana’s did, that might prohibit improvements to nearby public roads seen as competition.
Among the projects being pursued by the Ohio Department of Transportation that could be helped by an infusion of turnpike lease cash are improvements to the I-475/I-75 interchange. But would that project or improvements to parallel routes such as U.S. 20 and State Rt. 2 in northwest Ohio be prohibited under any such competition clause?
“If it is structured like that, projects like that could definitely be in jeopardy,” said Tabitha Woodruff, Ohio PIRG advocate and co-author of the report.
The issue of a noncompetition clause was one of several posed by the group as ODOT prepares to release the results of the study conducted by Texas-based KPMG Corporate Finance LLC by the end of the year.
In addition to a long-term lease that would presumably generate a large upfront payment to the state, the KPMG study is looking at the idea of turning over operation of the 241-mile toll road to ODOT so that it could borrow against it. It could also propose leaving the stand-alone turnpike as it is.
ODOT offered little comment on the KPMG study.
“What we know right now is that Ohio’s transportation budget shortfall is in the billions,” said ODOT spokesman Steve Faulkner. “We cannot afford to bury our head in the sand and hope that the problem magically solves itself. Instead, we must identify and seek out alternative funding solutions that allow us to build our infrastructure, improve our economy, and create jobs.”
Gov. John Kasich began talking about leveraging the turnpike soon after he took office in 2011, at first focusing on a long-term lease like the $3.8 billion, 75-year deal Indiana consummated with a private Spanish-Australian firm for its 157-mile turnpike.
Despite the fact that the Ohio Turnpike is much longer than Indiana’s, there are doubts that today’s market would generate as much interest. Mr. Kasich initially threw out the figure of $3 billion, but he and his administration have since stopped trying to put a dollar figure on it. The governor has promised that “at least half” of the money generated would be used to finance transportation projects north of Route 30. But the rest would be used to boost projects elsewhere.
Lawmakers would have to sign off on any lease deal.
Gary Suhadolnik, executive director of the Ohio Turnpike Commission under Republican Gov. Bob Taft, voiced opposition to using tolls paid in northern Ohio to fund projects elsewhere in the state. A promise that more than half of the borrowed money guaranteed by future tolls would stay in northern Ohio is insufficient, he said.
“That’s like saying they’re going to take [your home loan] to improve homes right on your street but not your home …” Mr. Suhadolnik. “That’s just wrong.”
While Ms. Woodruff stressed that PIRG does not oppose the concept of privatization, the study questions whether the things a private operator might do to generate revenue — higher tolls, rest stop commercialization, and more electronic toll collection — could as easily be done by the turnpike commission or ODOT.
The turnpike expects to generate about $270 million in revenue this year, in part because of a 10 percent hike in tolls, but after maintenance costs and debt payments, only a small fraction of that would be expected to be left over. The turnpike carries about $570 million in debt.
Contact Jim Provance at: firstname.lastname@example.org or 614-221-0496.
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