Eric Mink has an excellent article in the Post-Dispatch today about the proposed Mississippi River bridge. It is carefully researched and thorough and I agree with much of it, though not all of it. He quotes from a study funded by East-West Gateway that concluded there will not be enough drivers willing to pay the toll to make a toll bridge a viable option. On this blog I have previously mused as to whether we really needed the billion-dollar bridge with so many free bridges available and thought that the smaller, MLK-coupler idea could work well, as a toll or free bridge. In the interest of brevity, I am not going to focus on the many parts I agree with, 'cause that's boring, but on his comments about Public-Private Partnerships.
Mink writes about P 3's that have built other major roads around the US:
In March 2004, the Government Accountability Office issued a report examining six major P3 projects in the United States. (www.gao.gov/new.items/d04419.pdf) Overly optimistic traffic and revenue projections figured in three of the six. In its planning stages, the Dulles Greenway outside Washington, D.C., projected first-year traffic at 33,000 vehicles per day; it got 10,500. Today, after 12 years in operation, it has yet to turn a profit, and, according to a story last week in the Washington Post, "its debt has nearly tripled."
Another P3 project, the Southern Connector toll road in Greenville County, South Carolina, projected first-year traffic at 28,000 vehicles per day; it got about 14,000. Two years after it opened in 2001, Standard & Poor's downgraded its rating on Connector bonds to "junk" status.
And using a slightly different measuring unit, the Pocahontas Parkway in Virginia, according to the GAO report, projected 840,000 transactions per month (one vehicle passing through one toll point) for 2003 but got only about 400,000; its bond ratings were downgraded. Both the Pocahontas and Dulles roads have since been bought out by Australian companies.
What Eric's article is missing is why this is such a bad thing that some of these projects, and we should carefully note that 3 of the 6 measured projects are apparently doing very well, are not doing as well as projected? To my, this is nothing but capitallism at work. The roads are not going to disappear because the bonds have been lowered in status. Who cares if the highway bond is junk if the road is in good condition, and I see nothing in this article or elsewhere that says the roads in question are in disrepair. In fact, a new compnay just purchased two of the roads above, so someone thinks they are a good investment. A P 3 is formed, it invests in roads, some of them dont' generate as much traffic as expected, the P 3 needs to decide what to do now: lower the toll, etc. This happens in capitalism and the communities still have the roads that private money financed. So that is my main question about an overall great article from Mr. Mink.