Hidden Ball Play

[don]

Cash-strapped states weigh selling roads, parks

By MARTIGA LOHN, Associated Press Writer Martiga Lohn, Associated Press Writer Sat Dec 27, 3:39 pm ET


ST. PAUL, Minn. – Minnesota is deep in the hole financially, but the state still owns a premier golf resort, a sprawling amateur sports complex, a big airport, a major zoo and land holdings the size of the Central American country of Belize.


Valuables like these are in for a closer look as 44 states cope with deficits.
Like families pawning the silver to get through a tight spot, states such as Minnesota, New York, Massachusetts and Illinois are thinking of selling or leasing toll roads, parks, lotteries and other assets to raise desperately needed cash.


Minnesota Gov. Tim Pawlenty has hinted that his January budget proposal will include proposals to privatize some of what the state owns or does. The Republican is looking for cash to help close a $5.27 billion deficit without raising taxes.


GOP lawmakers are pushing to privatize the Minneapolis-St. Paul International Airport and the state lottery. Both steps require a higher authority — federal legislation in the case of the airport, a voter-approved constitutional amendment for the lottery. But one lawmaker estimated an airport deal could bring in at least $2.5 billion, and the lottery $500 million.
Massachusetts lawmakers are considering putting the Massachusetts Turnpike in private hands. That could bring in upfront money to help with a $1.4 billion deficit, while also saving on highway operating costs.


In New York, Democratic Gov. David Paterson appointed a commission to look into leasing state assets, including the Tappan Zee Bridge north of New York City, the lottery, golf courses, toll roads, parks and beaches. Recommendations are expected next month.


Such projects could be attractive to private investors and public pension funds looking for safe places to put their money in this scary economy, said Leonard Gilroy, a privatization expert with the market-oriented Reason Foundation in Los Angeles.

Looks like we're getting there by a slightly different route but the destination sure looks like an IMF- dictated "re-structuring"

And they said it couldn't be done :rolleyes:

[Slimprofits]

Re: Hidden Ball Play

Slow Economy Could Revive Prospects For Infrastructure Public-Private Partnerships

18 December 2008

Article by John P. Cogan, William F. Weld, Daniel P. Haley and José Luis Vittor

Lawfirm of McDermott, Will and Emery

All parties with an interest in any facet of the public infrastructure market should take heed and prepare for an active period characterized by significant opportunity.

On December 3, 2008, the Joint Transportation Committee of the Massachusetts Legislature held a three-hour informal hearing on the potential of Public-Private Partnerships (PPPs) to fund transportation infrastructure projects in Massachusetts. A potential lease of the Massachusetts Turnpike (the Pike), the state's only major toll road, received the most attention from participants. Panelists included Leonard Gilroy of the Reason Foundation; John Schmidt, who served as counsel to the City of Chicago in the recent Chicago Skyway PPP; and representatives from Macquarie Capital Advisors and Cintra, Concesiones de Infraestructuras de Transporte SA, two major international entities that have been active in U.S. infrastructure PPPs, including the Chicago Skyway and the Indiana Toll Road.

[..]

Massachusetts faces not only a large budget deficit (estimated at well over $1 billion), but also significant debt obligations tied specifically to its transportation system. The Turnpike Authority is currently struggling with financial viability as it sinks under the weight of more than $2 billion in debt incurred to fund the Central Artery Project (the Big Dig). That debt, which devours a large part of Pike toll revenues, recently caused a downgrade of the Pike's bond rating to just above junk status and prompted Governor Deval Patrick to support a massive proposed toll increase. These developments, and the resulting public outcry, convinced Senate Transportation Committee Chairman Steven Baddour (D-Methuen) to organize the recent hearing on potential Pike privatization.

[..]

The apparent surge in "public-side" interest in infrastructure PPPs might be viewed as an ironic case of poor timing, coming as it does in the midst of an historic economic downturn that has featured an unprecedented freeze on the credit markets and a virtual halt to large-scale financings. Several panelists at the recent Massachusetts Transportation hearing delivered precisely the opposite message, however. "This is a strong market," said John Schmidt, Chicago's counsel in the Skyway lease. At a time when there are seemingly few safe investments, he said, "infrastructure is a stable, valuable long-term asset." As evidence for the proposition that the market remains highly viable for infrastructure PPPs, he noted that the winning bid for Chicago's Midway Airport, consummated in September 2008 as the downturn was well underway, netted $2.5 billion, an amount that was considerably higher than expectations.

Macquarie's Christopher Voyce echoed Schmidt's assessment of the market, testifying that "demand remains strong" for these "long-term, inflation-linked investments." And the Reason Foundation's Gilroy noted that $100 billion in assets amassed for the purpose of public infrastructure investment remains unexpended.

side note: That ex-gov. Weld is involved amounts to a slap in the face for anyone that has or currently lives in Massachusetts. He knows a little something about the debt obligations tied specifically to the transportation system.

[Spartacus]

Re: Hidden Ball Play

selling public assets like that is suspect and will backfire, IMHO. The government might get a short term cash infusion, but it's long-term bad news.

if sold assets fail to perform, the private company can simply stop putting money in, let it deteriorate & threaten to shut it down (hold it for ransom with a sob story and legions of lobbyists[*]) if the public doesn't cough up, leaving a public resource un-useable.

Peterson wants to LEASE stuff? Even worse than selling. What's the private incentive to repair & maintain it?

Cash-strapped states weigh selling roads, parks

[*] I bet the companies that buy the sold assets pay the lobbyists more than the construction / maintenance workers