He just published an article personally attacking anti-toll group leaders across the nation, and he had a extra special below-the-belt attack saved just for yours truly. He’s responding to the populist anti-toll revolt taking place in America, and he can’t help but go on the attack because these grassroots efforts are finally making progress. He’s lashing out in response to a 5-page cover story in the Weekly Standard that slammed the new rage among transportation think tanks like Reason, called HOT lanes. It stands for High Occupancy Toll (HOT) lanes. Sometimes they convert existing HOV lanes into toll lanes, other times they’re new lanes but only open to carpoolers and those who pay tolls.
The author, Jonathan Last, used many of the same terms to describe this wrong-headed policy as the anti-toll groups do – government picking winners and losers, crony capitalism, privatized profits, socialized losses, Lexus lanes, etc. If the shoes fits, and it does, it’s not hard for liberty-minded people to come to the same conclusions all by themselves. They can spot a scam when they see one. But Poole asks, ‘Where do these ideas come from?’ Or more to his point, who is promoting ideas in opposition to his libertarian ivory tower theory-world of road pricing?
His answer is a nasty attack on grassroots advocates attempting to save the middle class from the biggest, most expensive tax grab in our lifetimes. This isn’t the first time I’ve encountered Poole or the Reason Foundation. I ran into Poole in the halls of the Texas Capitol when our anti-toll group, Texans Uniting for Reform and Freedom (TURF), was asking legislators to sign onto a public private partnership (P3) moratorium in 2007. I’d enter a legislator’s office and there he was lobbying lawmakers to support P3s and disregard the public outcry. The original moratorium passed with a vote of 169-5. It’s been a rough road for P3s in Texas ever since, and it’s about to get rougher.
The problem, according to Poole, is the ‘bogus arguments’ anti-toll leaders are making. Poole even calls them ‘malicious’ arguments. Not only are the anti-toll arguments not ‘bogus,’ Poole offers no evidence that the arguments are false and instead launched ad hominem attacks, denigrating activists for being housewives, specifically ‘crusading housewives.’
He asks where did journalist, Mr. Last, gets his ideas?
“My research has found a growing network of grass-roots, right-wing populist groups opposing tolling and public-private partnership (P3) concessions. One of the originators of many bogus arguments on these subjects is a San Antonio housewife, Terri Hall, founder of the group TURF. Her efforts helped bring about a two-year moratorium on concessions in Texas in 2007. This year she led a successful effort to change the platform of the Texas GOP from pro-tolls to anti-tolls. And her anti-tolls, anti-P3 agitation appears to have swayed GOP gubernatorial candidate Greg Abbott (the likely successor to pro-tolls Rick Perry) to adopt anti-toll positions.
“But Terri Hall’s grass-roots activism has consequences far beyond Texas. Similar right-wing populist groups are actively opposing P3s and tolling in Florida, Georgia, and North Carolina. Each is also led by a crusading housewife, and their websites use many of the same terms (toll-tax, crony capitalism), arguments (abridging state sovereignty, most of the funding is from taxpayers, etc.) and materials (such as the video “Truth Be Tolled”).”
First, Poole gives these ‘populists,’ journalists like Last, and Texas Attorney General and gubernatorial candidate Greg Abbott no credit for coming to the same conclusions independently. Anyone who analyzes the contracts and the data can see the same rip-off and draw the same conclusions – housewife or not. P3s are anti-taxpayer and a colossal transfer of wealth from taxpayers to a handful of private toll concessionaires and their buddies who finance them.
Anti-toll leaders have used the terms ‘crony capitalism’ and ‘boondoggle’ because P3s and the way toll roads are being done today are exactly that. Our arguments are based on statutes, Texas Department of Transportation (TxDOT) commission meetings, TxDOT documents, and the P3 contracts themselves.
The fuss over P3s
What’s the big deal about P3s? They sell-off our public infrastructure to private, even foreign, corporations in very long-term sweetheart deals (50-99 years) designed to extract the highest possible tolls from the traveling public. How high? How about 95 cents a mile, $24/day, or nearly $6,000/year in new taxes on driving (that’s per commuter, not per household).
These contracts contain non-competition clauses that penalize or prohibit the expansion of surrounding free routes, artificially lower speed limits on free routes and increase speed limits on the tollways, force taxpayers to pay the private toll operator for losses in revenue (due to carpoolers, uncollectable tolls, natural disasters), use heaps of taxpayer subsidies and loan guarantees, and guarantee handsome profits.
The contracts do not have to go to the lowest bidder either. Texas lawmakers have replaced competitive low-bid contracting with ‘best value’ bidding that allows the contracts to be steered to the well-connected from an already tiny pool of global companies. The first three Texas P3s went to the same Spain-based company, Cintra, with direct ties to Governor Rick Perry’s office. Lobbyist Dan Shelley worked for Cintra, became the chief legislative liaison for Perry in 2005 when he landed the development rights to a massive network of P3s toll roads known as the Trans Texas Corridor for his former employer, then went back to work for Cintra. How is that anything but cronyism? Shelley and his daughter still lobby for transportation clients in the Texas Capitol.
But perhaps the worst aspects of P3s are the fact they use eminent domain for private gain and surrender control – in essence, state sovereignty – over our public infrastructure to private corporations. In 2012, Georgia Governor Nathan Deal cited this as his reason to pull the plug on P3 concessions calling them ‘ill-conceived sell-outs.’ Those are tough words that didn’t come from a housewife.
Let’s breakdown some of the other the so-called ‘malicious’ arguments of anti-tollers.
1) P3s use massive sums of taxpayer subsidies.
This is absolutely a fact. In examining just Cintra’s three P3s in Texas, the vast majority of the project funding comes from the taxpayers. On State Highway 130 (SH 130) that runs parallel to Interstate 35 between San Antonio and south Austin, a $430 million federal TIFIA loan was secured for the $1.3 billion project. TIFIA loans are backed by the U.S. federal taxpayer. If the traffic doesn’t show up to pay the toll revenues necessary to retire that debt, it’s you and I on the hook for it.
On the Interstate 635 contract in Dallas, the total project cost was $2.6 billion with $2 billion of that price tag coming from the taxpayers. Cintra landed an $850 million TIFIA loan, $615 million in Private Activity Bonds (also a federal program, special tax-exempt bonds just for these toll road deals), and $490 million in gas taxes from Texas taxpayers.
On the project dubbed the North Tarrant Express in Ft. Worth, Cintra snagged 7 different stretches of highway in one bid. They finagled the development rights which gave Cintra the right of first refusal on all of them under two ‘best value’ bidding procurements (here and here). What a deal!
So Interstate 820, Interstate 35W, and segments of State Highway 121 and State Highway 183 are all part of the sweetheart deal wrapped up in one big package with a bright green money-colored bow, courtesy of the taxpayers. Out of a total cost of $3.7 billion for the projects, $2.8 billion came from the taxpayer: $1.2 billion in TIFIA loans, $673 million in PABs, and nearly $1 billion in other unspecified ‘public funds.’ Segment 3B was 100% funded by taxpayers. All told, $1 billion in all Texans’ gas taxes went into the I-635 and North Tarrant Express projects, yet they’ll still be charged a toll to use it. This is clearly double taxation.
Cintra’s SH 130 is already in technical default according to Moody’s investor service, experiencing less than half the projected traffic. When it goes bankrupt, the taxpayers go bankrupt with it. Poole claims the private operator takes on the risk for the debt service on this money, but that hardly qualifies as a true transfer of risk from the public to the private sector. We’re on the hook for it, therefore it’s the taxpayer at risk. End of story.
This same funding scam is repeated on virtually every P3 across the country. Only tiny bits of the private toll concessionaire’s own money, known as private equity, is put into the deal. Some funding is the private toll revenue bond investors’ capital (which is still not Cintra’s own skin in the game). If the traffic doesn’t show up, those bond investors take the hit for that, but there’s no penalty to Cintra for that loss. So Cintra is risking precious little of its own capital, leaving taxpayers and other investors (including public pension funds) vulnerable for its projects.
But revenue bonds are getting harder to come by since toll managed lanes (toll lanes down the middle of an existing freeway) are not financially feasible. With free lanes alongside the toll lanes and congestion generally only bad enough to make people pay tolls just a few hours a day, the tolls collected on managed lanes are inadequate to repay cost of construction and retiring the debt. Hence, the massive injection of taxpayer subsidies. Even Fitch ratings warns “toll roads with meaningful untolled competition, especially those designed to relieve congestions, could be vulnerable because their value would diminish with lower traffic growth” in its report last year. The private guys won’t risk their own capital for such loser projects, but the government is only too willing to risk our money.
So Poole can in no way honestly claim that the private operators are taking on the risk.
Continue reading here.