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Foreign companies are anxious to manage America's infrastructure,
Nevada included.
The Nevada Department of Transportation is seeking introduction of
toll roads in the state with a 19-mile "pilot" project in Las Vegas that will be paid for mostly by private
investment, and also will require changes in Nevada laws.
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More than 100 years ago, Nevada
had many private toll roads. Then, at the beginning of the 20th century, the toll roads became outdated and controlled
by government authorities. Toll roads completely disappeared in the state.
However, after many decades, now
it appears toll roads in Nevada will possibly be coming back.
The emerging question is who will be
in control of the Nevada toll roads of the 21st century?
July 2, 2008 Updated February 6, 2009
By Robert
L. Candiotti
From the 1850s to the 1880s, Nevada had an extensive system of toll roads, also referred to as
"turnpikes" because customers paid the fare, and the long lumber plank, or pike, blocking the
entrance was then turned at the toll house to allow the customer access to the private road.
For the past few years, there has been talk
about establishing toll roads in Nevada. Nevada has no toll roads now, but the state does have a strong history of private
roads for travelers.
Actually, even way before the Nevada toll roads, there were toll roads in the eastern
United States. As far back as 200 years ago, entrepreneurs in the eastern part of the nation created private roads that travelers
could use for a fee.
According to Wikipedia, "The first major toll road in the United States was the Philadelphia
and Lancaster Turnpike, built in the 1790s, within Pennsylvania, connected Philadelphia and Lancaster. In New York State,
the Great Western Turnpike was started in Albany in 1799 and eventually extended, by several alternate routes, to the Finger
Lakes region."
Out West, in Nevada, toll road development did not begin for another half century, but then
toll roads in Nevada quickly became very common. In the second half of the 1800s, when travel was difficult and dangerous
for those wishing to make their way across the rough land and mountainous terrain of Nevada, toll roads were constructed.
The builders of the toll roads included stage coach operators, miners and ranchers.
Records show 117 toll roads were created in Nevada from 1859 to 1880. Some were roughly hewn, and others were laid
down better. For example, sandstone was used for an early toll road between Carson City and Empire.
In the second half of the 1800s, stages, such as this one, traveled on the
abundance of toll roads in Nevada. After the establishment of railroads, the usefulness of toll roads rapidly declined.
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The construction of railroad lines, though, brought about the
end of the usefulness of toll roads. Toll roads could not compete with the advanced technology and speed of the railroads.
Toll road construction in Nevada declined in the 1870s.
Of course, by the beginning of the 20th century, the country
was turning to the automobile for transportation, and state highway departments were established to oversee major roadways.
In 1956, the Federal-Aid Highway program was established. The U.S. government started paying 90 percent of highway
construction costs. The states - from coast to coast - were only responsible for 10 percent. With a unified federal highway
system, tolls could not be charged.
And, according the current Nevada law, tolls cannot be levied on motorists.
But the Nevada Department of
Transportation is lately making an organized public relations effort to promote the construction of a 19-mile "demonstration,
or "pilot," toll road project in Las Vegas, which would link I-15, Interstate 215 and U.S. Highway 95.
When the Nevada Legislature meets again in 2009, elected officials will have to approve new state laws allowing road tolls
and automated enforcement of private road fees.
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| Toll roads, or turnpikes, exist currently in other states. NDOT wants to try one in Nevada. |
The Nevada Department of Transportation appears definitely
committed to making its pitch for a revolutionary 21st century toll road. And, not surprisingly, the New York banking/investment
management firm Goldman Sachs - which has become famous in the financial world for its establishment of the "infrastructure
fund" - is involved with the promotion of a public-private toll road partnership in Nevada.
In the
Las Vegas Review-Journal, in a story by Francis McCabe on April 11, 2008, the state Department of Transportation's
recommendation for establishment of a 19-mile pilot project toll road is described. It is called a "public-private
partnership" paid for mostly by private investment. In the article, Transportation Department Director Susan Martinovich
is quoted as saying to the department's Public Private Partnership Advisory Panel, "There has been a lot of
talk [about toll roads], there have been a lot of meetings, here is an opportunity to try it."
Significantly,
it is noted in the Review-Journal story, Goldman Sachs was part of the presentation to the subcommittee. Goldman
Sachs said the 19-mile "demonstration project would cost an estimated $1.4 billion, of which 88 per cent could be paid
for by private entities."
It should be stressed Goldman Sachs has no minor interest in the creation of toll
roads in America. On December 28, 2006, a Goldman Sachs news release announced it had established its first "Infrastructure
Partners fund with more than $6.5 billion in committed capital. This is Goldman Sachs' first fund dedicated to making
infrastructure investments and will make such investments globally."
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| Mark Florian, COO of Goldman Sachs, has reportedly visited 35 states to "help spur" toll roads. |
In a very informative article in the January, 2007, issue of Mother
Jones magazine, titled "The Highwaymen," it is stated that the chief operating officer of Goldman Sachs'
municipal finance division, Mark Florian, has personally gone to 35 American statehouses to promote the expansion of toll
roads in this country. Referred to as possibly "the most tireless of the privatization advocates," Florian knows
the spread of toll roads is very lucrative for Goldman Sachs. Florian was an advisor to Chicago and Indiana on their
toll road projects. He knows, says Mother Jones, the Chicago Skyway deal "yielded $9 million in fees for Goldman
Sachs."
So, is there anything wrong with Goldman Sachs making money spreading the Gospel of Toll? A major
toll road deal in Indiana, which netted Goldman Sachs $20 million for advisory fees, is controversial. Admits the
Indiana governor, Mitch Daniels, public opinion ran strongly against the toll road plan. Quoting the Mother Jones
piece, "'The public was ignored on this; public opinion was ignored on this,' says Dave Menzer, an organizer
at Citizens Action Coalition, an Indianapolis-based advocacy group. 'I think that increasingly the public feels like what's
driving politics, what's driving these decisions, is multinational corporations and deal-makers like Goldman Sachs, Merrill
Lynch, and Morgan Stanley. They're the ones making tens of millions of dollars ultimately at the public's expense.'"
Most of the private companies eager to gain footholds in America's toll road markets are foreign companies. With
broader experience than U.S. firms, foreign companies have operated toll roads in South America, Europe and Australia. One
of the largest is an Australian firm named mig. It runs roads in the United Kingdom, Canada and Germany. In
2005, on Australian television's Business Sunday, CEO Stephen Allen stated, "The attractive market to us
is the U.S....We're well positioned in what we think could be a huge market."
It says in Mother Jones
that mig's annual report shows a photo of a very sad terrier all alone at home at 6:10 p.m. That photo says BEFORE.
Another picture shows a happy terrier with a good-looking couple. The photo says AFTER. The copy says, "Our
motorways deliver people to places faster than if they used the often heavily congested, slower alternative routes."
A KNPR State of Nevada story on June 13, 2008, about Nevada toll roads, had a guest, R. Scott Rawlins,
deputy director and chief engineer of the Nevada Department of Transportation, who said basically the same thing. His department
clearly is a strong proponent of the 19-mile demonstration toll road to be argued to the Nevada Legislature in 2009.
Many times Rawlins used the words "reliable" and "reliability."
"We can provide the traveling public with reliable trip time," he said. "We want to give people a reliable
trip when they need it." He spoke of "reliable options." And he said people will not use it "five days
a week. It's when they need it." His sub-text seems to be if people can just get there on time, they will
not care much about who controls the infrastructure or how much extra it costs.
He says NDOT has its thinking cap on. It all sounds great. Rawlins states, "We're looking at innovative solutions
for our transportation needs."
However, also on the program was Todd Spencer, Executive VP, Owner-Operator
Independent Drivers Association (OOIDA). His group opposes privatizing roads.
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| OOIDA says a single truck owner-operator pays $16,500 user fees annually. |
Spencer says few people in America understand how highways have
been traditionally financed. He also points out, from the very beginning, the federal highway system was organized to work
with user fees totally - not private money.
Spencer claims, since 1991,
there has been "massive diversion of that highway money into other things." He says 40 per cent of the $40 billion
of annual highway user revenue goes to things other than highway infrastructure. If you "pump private money into the
problem, it is not going to solve that situation," he states, since "highway money has been squandered for 40 years
by our elected officials."
Spencer is not alone in opposing private control of toll roads.
In the Mother Jones piece, John Schmidt, associate attorney general in the Clinton administration and counsel to
Chicago on the privatization of the Chicago Skyway, says financial rewards can be enormous. "You're buying the infrastructure
of the economy, and it's enormously valuable," states Schmidt. Because of the absence of privatized infrastructure,
foreign companies have "been buying toll roads in Chile and in France. Now, they suddenly have the opportunity to come
into this country."
Further along in "The Highwaymen," Dennis
Enright, infrastructure expert at NW Financial, says "the problem with public-private deals is the companies will
cherry-pick the most profitable roads and leave much of the public stuck in the slow lane." Enright continues, "The
private operator's fidelity is to his stockholders - not to the people who use the road. His duty is to get the most possible
revenues out of the asset."
Right now, IvanpahValley.com is studying
the views of those for and against the introduction of toll roads in Nevada.
IvanpahValley.com is not opposed
to toll roads in Nevada. In fact, IvanpahValley.com thinks toll roads will be necessary if Ivanpah Valley Airport is eventually
built. Still, the radical change brought on by "public-private partnership," and the privatization of
American infrastructure, must be considered and weighed carefully by the Nevada Legislature in the 2009 session.
Does Nevada need to offer up its highway infrastructure for long-term leases, or
can it conceivably create toll roads entirely through public funding? There is bound to be a lot of news about Nevada toll
roads emanating from Carson City next year. The 75th Regular Session of the Nevada Legislature will begin on February 2, 2009.
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