4 ms·

States do the same with toll roads. It’s weird to think that the state Highway you drive on is owned by some private equity company. https://www.npr.org/templ

States do the same with toll roads. It’s weird to think that the state Highway you drive on is owned by some private equity company. https://www.npr.org/templates/story/story.php?storyId=5695395 https://www.npr.org/templates/story/story.php?storyId=569539...

mindslight 4y ago
It's "weird" because it should be straight up illegal. Anything developed with public money or eminent domain should be off the table for selling to a private entity. If private investment wants to own parking spots or highways, it can pay to create them itself. Private investment should result in development, not rent seeking on things that were already developed. Law should be fully mutable and not subject to privately owned restrictions. Any terms that have been written in to keep the city from doing things like lowering parking rates should be considered unenforceable. And since the city is no longer getting revenue from the meters, citizens should vote to eliminate the parking fees. Furthermore, most long term debts or contracts that a government could enter into should be repudiatable due to the principle agent problem - specifically the corrupt incentive of politicians to favor short term benefits and ignore long term liabilities. There should be very limited exceptions such as purely financial bonds that are voted on directly, and even those should have time limits of a few decades.
- MikePlacid 4y ago
  > should be off the table for selling to a private entity. It’s not sold, it’s leased.
  - katbyte 4y ago
    99year leases should not be allowed
    - gruez 4y ago
      98 years then?
  - mindslight 4y ago
    I laid out rough guidelines starting from basic concepts. Applied to this case, the right to the revenue is being sold (as per the title). This interest is indeed part of what has been created with public funds. In general we should want capital to stay distributed throughout many different actors, especially our governments, rather than them being hollowed out and the assets centralized into the financial markets. For example, all throughout this thread there are people pointing out the newly created difficulties of implementing specific policies (for example bike lanes), due to the inflexibility created by divestment.
hibikir 4y ago
There are significant risks on some of those deals, as, if the toll highway doesn't get enough traffic, governments will lack the political will to let the road decay, and often will end up buying back the highway, and paying for the repairs. So if the highway goes well, the company makes money hand over fist, and it all looks like a giant scam. If it goes really badly, the government takes a bath, and it all looks like a bunch of waste. So ultimately it's very difficult to set up a deal that lasts very long and doesn't seem like a regulatory mistake, one way or the other. Also note that this isn't purely a US situation: Some form of privatization of toll roads happens all over the world, and success rates are also not all that great
- BitwiseFool 4y ago
  In Texas the state government does not want the toll roads to become public because the revenue collected from gasoline taxes and vehicle registration is not enough to pay for their upkeep.
  - MereInterest 4y ago
    I’m not quite following your argument. If the gasoline taxes and vehicle registration aren’t enough to pay for the upkeep of newly public roads, why wouldn’t they continue to be funded as they currently are? There’s nothing to say that public roads must be toll-free roads. The tolls could even be lowered from their current values, receiving from the maximum drivers are willing to pay to minimum required for upkeep.
    - mr_toad 4y ago
      Raising tolls won’t get you any votes, so there’s always a temptation to collect less revenue than is needed.
    - BitwiseFool 4y ago
      I'm not arguing for anything in particular, just relaying what I've heard about the situation. One of the compromises that allowed for the construction of several major toll roads decades ago was that they would eventually become public and toll-free. But, this can be delayed by implementing continual capital improvements and making sure the road is never fully paid off.
neom 4y ago
Highway 407 in Ontario is high on the list of nice deal badboys: "SNC-Lavalin Group Inc. will sell 10.01 per cent of its stake in 407 International Inc., the private consortium that controls the profitable tolled highway in north Toronto, for an expected $3.25 billion, the company announced Friday. That’s more than a billion than what the government earned 20 years ago – for selling the leasing rights to the entire highway. In 1999, the Ontario government leased Highway 407 for the next 99-years for $3.1 billion, or $4.4 billion in today’s dollars. At the time, it was the largest privatization of a public asset in Canadian history. But in hindsight, it may be considered one of Ontario’s biggest financial missteps, considering the SNC-Lavalin sale pegs the value of the highway at at least $30 billion. The company running the 407 reported revenues of $1.4 billion in 2018" ...they sold the 10% to... Ontario's pension fund... https://www.yahoo.com/now/worst-deal-ever-the-407-is-worth-30-b-today-ontario-sold-it-for-31-b-in-1998-181642680.html https://www.yahoo.com/now/worst-deal-ever-the-407-is-worth-3...
- cmrdporcupine 4y ago
  Totally. I came into this thread just to post about the 407, but figured I'd search to see if anybody else had mentioned it already. What a sad fiasco.
- MonkeyMalarky 4y ago
  Came here looking for the highway 407 comment! Speaking of privatization, how's it going with Hydro One? And you must be so excited for the upcoming privatized surgeries...
burkaman 4y ago
Same with national parks, the federal government sold recreation.gov to Booz-Allen and now they get to collect lottery application fees and processing fees for their mediocre website from millions of people every year forever.
oh_sigh 4y ago
For the past 20 years or so, Colorado has raised taxes in order to pay for a commuter train from Denver <-> Boulder. After the funds were collected, they decided to use it to build a toll/HoV lane on the highway between those two cities(US-36) and offer an occasional bus service. And then sell the rights to some Australian company.

mindslight 4y ago

It's "weird" because it should be straight up illegal. Anything developed with public money or eminent domain should be off the table for selling to a private entity. If private investment wants to own parking spots or highways, it can pay to create them itself. Private investment should result in development, not rent seeking on things that were already developed. Law should be fully mutable and not subject to privately owned restrictions. Any terms that have been written in to keep the city from doing things like lowering parking rates should be considered unenforceable. And since the city is no longer getting revenue from the meters, citizens should vote to eliminate the parking fees. Furthermore, most long term debts or contracts that a government could enter into should be repudiatable due to the principle agent problem - specifically the corrupt incentive of politicians to favor short term benefits and ignore long term liabilities. There should be very limited exceptions such as purely financial bonds that are voted on directly, and even those should have time limits of a few decades.

MikePlacid 4y ago
> should be off the table for selling to a private entity. It’s not sold, it’s leased.
- katbyte 4y ago
  99year leases should not be allowed
  - gruez 4y ago
    98 years then?
- mindslight 4y ago
  I laid out rough guidelines starting from basic concepts. Applied to this case, the right to the revenue is being sold (as per the title). This interest is indeed part of what has been created with public funds. In general we should want capital to stay distributed throughout many different actors, especially our governments, rather than them being hollowed out and the assets centralized into the financial markets. For example, all throughout this thread there are people pointing out the newly created difficulties of implementing specific policies (for example bike lanes), due to the inflexibility created by divestment.

hibikir 4y ago

There are significant risks on some of those deals, as, if the toll highway doesn't get enough traffic, governments will lack the political will to let the road decay, and often will end up buying back the highway, and paying for the repairs. So if the highway goes well, the company makes money hand over fist, and it all looks like a giant scam. If it goes really badly, the government takes a bath, and it all looks like a bunch of waste. So ultimately it's very difficult to set up a deal that lasts very long and doesn't seem like a regulatory mistake, one way or the other. Also note that this isn't purely a US situation: Some form of privatization of toll roads happens all over the world, and success rates are also not all that great

BitwiseFool 4y ago
In Texas the state government does not want the toll roads to become public because the revenue collected from gasoline taxes and vehicle registration is not enough to pay for their upkeep.
- MereInterest 4y ago
  I’m not quite following your argument. If the gasoline taxes and vehicle registration aren’t enough to pay for the upkeep of newly public roads, why wouldn’t they continue to be funded as they currently are? There’s nothing to say that public roads must be toll-free roads. The tolls could even be lowered from their current values, receiving from the maximum drivers are willing to pay to minimum required for upkeep.
  - mr_toad 4y ago
    Raising tolls won’t get you any votes, so there’s always a temptation to collect less revenue than is needed.
  - BitwiseFool 4y ago
    I'm not arguing for anything in particular, just relaying what I've heard about the situation. One of the compromises that allowed for the construction of several major toll roads decades ago was that they would eventually become public and toll-free. But, this can be delayed by implementing continual capital improvements and making sure the road is never fully paid off.

neom 4y ago

Highway 407 in Ontario is high on the list of nice deal badboys: "SNC-Lavalin Group Inc. will sell 10.01 per cent of its stake in 407 International Inc., the private consortium that controls the profitable tolled highway in north Toronto, for an expected $3.25 billion, the company announced Friday. That’s more than a billion than what the government earned 20 years ago – for selling the leasing rights to the entire highway. In 1999, the Ontario government leased Highway 407 for the next 99-years for $3.1 billion, or $4.4 billion in today’s dollars. At the time, it was the largest privatization of a public asset in Canadian history. But in hindsight, it may be considered one of Ontario’s biggest financial missteps, considering the SNC-Lavalin sale pegs the value of the highway at at least $30 billion. The company running the 407 reported revenues of $1.4 billion in 2018" ...they sold the 10% to... Ontario's pension fund... https://www.yahoo.com/now/worst-deal-ever-the-407-is-worth-30-b-today-ontario-sold-it-for-31-b-in-1998-181642680.html https://www.yahoo.com/now/worst-deal-ever-the-407-is-worth-3...

cmrdporcupine 4y ago
Totally. I came into this thread just to post about the 407, but figured I'd search to see if anybody else had mentioned it already. What a sad fiasco.
MonkeyMalarky 4y ago
Came here looking for the highway 407 comment! Speaking of privatization, how's it going with Hydro One? And you must be so excited for the upcoming privatized surgeries...

burkaman 4y ago

Same with national parks, the federal government sold recreation.gov to Booz-Allen and now they get to collect lottery application fees and processing fees for their mediocre website from millions of people every year forever.

oh_sigh 4y ago

For the past 20 years or so, Colorado has raised taxes in order to pay for a commuter train from Denver <-> Boulder. After the funds were collected, they decided to use it to build a toll/HoV lane on the highway between those two cities(US-36) and offer an occasional bus service. And then sell the rights to some Australian company.