To privatize or not to privatize? Some say it’s only way Illiana gets built

With government funds in short supply and general distaste for a gas tax increase, is privatization the only way to go for major transportation projects such as the proposed Illiana Expressway?

Yes and no, experts said Monday at a Northwestern University forum on public-private partnerships.

“Public-private partnerships aren’t free,” investment banker Tom Lanctot said. “There’s no (public private partnership) fairy or money tree. The private sector is looking to earn a return on their investment. (With infrastructure) some people find that profit motive to be distasteful.”

But collaborating with the private sector is the reason Denver residents will get to ride on a commuter rail line linking Denver International Airport with the city’s downtown as part of a $2.2 billion transit program.

“It’s been a tough project, I don’t deny it,” said Denver Regional Transportation District executive Richard Clarke, “but it’s going to open in 2016.”

Illinois and Indiana approved legislation in 2010 enabling the two states to form a partnership with private contractors to build and operate the so-called Illiana Expressway although they haven’t pulled the trigger yet.

The Illinois Department of Transportation announced Jan. 18 that it had identified a recommended route to the Illiana corridor, which will link up I-55 near Wilmington in Illinois to I-65 in Indiana. The next step is to hire consultants to study financing, including the public-private option, said IDOT Secretary Ann Schneider, who attended the conference. The expressway is expected to ease interstate truck traffic on the Tri-State Tollway and other area roads.

It’s expected that the Illiana would have to be tolled to pay for its construction, but whether the Illinois tollway would undertake that responsibility or if it would fall to the private sector is a question mark.

“We are currently conducting a financial and legal evaluation of the Illiana project to determine what the tollway’s role could be, if any. We believe the project could be an excellent opportunity for a public-private partnership, but we are still in the process of our review,” tollway spokeswoman Wendy Abrams said.

The city of Chicago has experienced mixed success with public-private partnerships, transferring power for parking meters, which proved to be controversial, and the Chicago Skyway to the private sector. The city is currently considering privatizing Midway International Airport.

And while the public may be distrustful of corporations taking over infrastructure, there’s reason for investors to think carefully also, experts explained at Northwestern’s Sixth William O. Lipinski Symposium on Transportation Policy and Strategy.

The 75-year lease of the Chicago Skyway started in 2006. The investors actually saw a decline in traffic the first few years with the completion of construction on the Dan Ryan Expressway and the recession, Chicago Skyway Toll Bridge CEO Fernando Redondo told participants. “2012 was the first year we experienced some growth,” he said.

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