There’s something wrong with “Major Moves”. The corporations of Macquarie and Cintra have stated that they expect to receive a return of 13 percent, on money invested, each year of the Toll Road lease.

In previous letters to the Indiana Senators I included a table to show my estimate of what the corporation that wishes to lease the Toll Road must receive each year in tolls in order to sustain a profitable operation of the Road. Here are my estimates:

This represents approximately a $55 average toll per vehicle. (From published figures income was $88 million for 2005. At $10 average toll per vehicle that calculates to about 9 million Toll Road users last year. In five of the last seven years the Toll Road lost money.)

From an article in Finance News (Australia) Jan. 25, 2006, written by Robert Clow, I learned that both Macquarie Infrastructure Group and Cintra said they expect to generate a return of 13 percent each year on the equity they contribute to the lease. That amount consists of those entries that appear above the “Maintenance and Salaries to service the road” line shown in my table. The total of those first three items shown in the Table comes to $432 million or 11.2 percent of the $3.85 billion lease amount. Macquarie and Cintra expect a greater return (13% of invested funds or $500 million per year) than I included in the above table. Where is that profit to come from?

The Indiana Department of Transportation completed a study entitled “Rate Review and Revenue Study” about the Toll Road and that the study was completed and presented last August. That study, if released to us, would allow us to determine the real “worth” of the Toll Road lease. It has not been released. Why not? Who is holding it up? I want a copy of that study. I paid for it.

Why was the normal procedure for the sale or lease of public property not followed and submitted to a regulated public bid process as required by law? Why did this bill, HB 1008, specifically exempt this process in this massive public lease of property and why did it also exempt similar future transaction such as this. This means that the future construction or lease contract for I-69 will also not have to face public scrutiny via a public bidding process. Something is beginning to smell.

Then there are other questions: Does the lease require the state to allow nearby competing roads to deteriorate to increase Toll Road use? Does the state have to pay “Shadow Tolls” a subsidy paid to the corporation for vehicles that use nearby roads to escape the Toll Road? What about actively obstructing nearby competing public roads as Colorado has agreed to do? Is that in the lease?

What about I-64? Will it be turned into a Toll Road to increase the traffic on I-69 when it is built?

Robert Muller, Morgan Securities, Inc., states that today there are $4 billion in toll-road bonds that risk default over the next five years unless they are refinanced. Why would the Indiana Toll Road authority expect any results other than decreased usage when the tolls are significantly increased to achieve the above expected return on investment?

It is beginning to look like my $55 average toll per vehicle is not far in error.

In my February 9 letter to all Indiana Senators I showed that a toll such as this will extract $37.5 billion from the Indiana Toll Road users over the next 75 years. If the present toll were merely increased to that amount, an average of $55 per vehicle, that amount of money would be returned to the Indiana economy. That would make a total of $75 billion difference (improvement) in the Indiana economy over the next 75 years. When the velocity of money is factored in, that would mean a $375 billion improvement to the Indiana economy over the next 75 years. Indiana cannot afford this huge hit to its long-term economic health if this lease is approved.

More questions: What about law enforcement on the Toll Road. I understand the Indiana Highway Patrol will be employed to enforce traffic laws but what about inside the private property along the Road inside the fences? Who will ensure that drug and alcohol laws are enforced? What about gambling and prostitution? Who enforces those laws along the Road and who pays? Who arrests illegal foreigners who are apprehended? Is the corporation prohibited from selling its interests to China, Saudi Arabia or Pakistan? A Chinese corporation Hutchison-Wampoa effectively controls access to the Panama Canal. Does the lease prevent Macquarie-Cintra from transferring control of the Road to that corporation?

One Senator assures me that Indiana law will be in force, but I must ask the question. The same consortium has leased the Texas Interstate, I-35, a closed road leading from Brownsville (no customs at the border) to the Inland Port at KellyUSA, thence northward to another Inland Port at Kansas City, thence to another Inland Port in the Dakotas that services the road up to Edmonton, Canada. What is the difference in operation of the Indiana Toll Road and the Texas Toll Road (called the TTC) if both are operated by the same consortium? Is the Indiana Toll Road scheduled to be the first part of a connector between Interstate I-35 and I-69?

For your information: Interstate I-35 consists of a 1200-foot right of way with six lanes of automobile traffic, three in each direction; four truck lanes, two in each direction; four train tracks, two in each direction, and a 200 foot median where power lines, water mains, gas lines and other utilities can be installed. Is that what I-69 is scheduled to also look like?

More information: I just learned that I-69 is scheduled to go directly through Indianapolis, not around it.

Back to the questions: If there is an emergency of any type who will ensure that the Road stays open? Does the corporation have the right of eminent domain to expand the Road? Who enforces traffic laws against foreign truckers protected by the NAFTA treaty? Who profits if an Inland Port is created at the junction of the Toll Road and Interstate 69? Is that subject even addressed in the lease?

What is the penalty Indiana must pay if it decides to build a massive 1200-foot wide cross road over the Toll Road? Will the services along the Road remain in present hands or be converted to corporation-owned services? Who services trucks that break down along the Road, a private company or a corporation-owned service agency? Who provides medical services along the road on a daily basis? Who provides it in an emergency should a tornado ruin ten miles of the Road and hurt a thousand people? If the corporation of Macquarie-Cintra fails, who will take over the operation of the Road?

There are so many questions and problems with this lease that I must ask each Senator to carefully consider exactly what this lease will cost Indiana if it is approved. As best as I can tell, using these revised figures, the cost to the Road users will be $588 million per year or about $44 billion over the life of the lease. If that amount were to stay in the state and the velocity of money (5X) factored in it would mean a boost to the Indiana economy of $220 billion over the next 75 years. If the actual difference to the economy is calculated it comes to about $440 billion over the next 75 years.

My suggestion: Straighten out the Toll Road management problem and raise the toll so that it returns an appreciable amount to State coffers over the next 75 years. If Macquarie-Cintra can receive a return of 13% on the Toll Road, Indiana can certainly do the same thing.