Indiana Toll Road Deal Getting It Right With P3

By Kyle Hannon
Greater Elkhart Chamber of Commerce

It’s time to appreciate what’s going on with the Indiana Toll Road. A major $300 million reconstruction project is mostly finished, using a local company. It will be completed ahead of schedule, below budget and at no cost to taxpayers.

During a ribbon-cutting ceremony last week, U.S. Secretary of Transportation Elaine Chao joined Indiana Gov. Eric Holcomb to celebrate the completion of the Interstate 80/90 Push project that the Indiana Toll Road company says will make the road faster, smoother, safer and “future ready.” Several state lawmakers were on hand along with employees from Rieth-Riley, who completed the work.

We are always happy to have our state lawmakers on hand to celebrate projects that they enabled. We are always happy to have the governor visit our area to celebrate our region’s role in the state’s progress. As nice as that is, this ribbon-cutting was special because a presidential Cabinet member was on hand to cut the ribbon. In my 15 years of ribbon cuttings, I don’t recall that happening before.

The speed and cost of the project are due to something called a P3, which stands for public-private partnership. As Chao noted, the Interstate 80/90 Push was a perfect example of how a P3 works. In theory, the cooperation between government and the private sector will make projects more efficient.

In reality, there are complications in steering a long-standing public service toward the private sector seeking to make a profit. Our area knows it better than other Hoosiers. We probably feel more ownership over the Indiana Toll Road than other communities feel about their roads.

Hers’s a quick review of how we got here:

  • The 157-mile Indiana Toll Road was completed using public funds in the late fall of 1956, connecting The Chicago Skyway to the west with the Ohio Turnpike to the east.
  • In 2006, then Indiana Gov. Mitch Daniels proposed leasing the Indiana Toll Road to a Spanish-Australian consortium for an upfront payment of $3.8 billion for 75 years. The idea, dubbed as Major Moves, was approved by the Indiana Legislature.
  • The consortium assumed the responsibility of maintaining and operating the Toll Road for the right to collect tolls.
  • Elkhart and St. Joseph counties each received $40 million as a result of the lease agreement. The lease of the Toll Road would help repair and build roads throughout Indiana, including improvements to U.S. 31 between South Bend and Indianapolis.

Initially, many locals were opposed to Major Moves. The Elkhart Chamber was concerned about using proceeds from our Toll Road throughout the state. But as the plan progressed, we realized the road was not “sold.” The Chamber supported Major Moves, and Elkhart County is still using a fund it created with its $40 million.

Privatizing the operation of “our” Toll Road is still a sore spot for a lot of people. Think of what can happen when a private, for-profit company takes control. Isn’t it much safer when it is in the hands of government?

That depends. How much do you trust the free market? When a private company controls the tolls, it can and will increase them. But if tolls increase too much or too fast, people will find alternative travel routes. The private company has to price the road so people keep using it. When the tolls are controlled by the state, tolls are determined by politics. I have more confidence in the free market.

Will the private company maintain the road? The lease agreement was pretty specific about maintenance. It was detailed enough to specify how long roadkill should remain on the side of the road. But beyond the lease agreement, market forces are powerful. The private company has to keep the road maintained so people will use it, hence the recent $300 million outlay for improvements.

Public-private partnerships don’t always work ideally. But in this case, the Indiana Toll Road partnership has led to substantial improvements paid for by users, not taxpayers.

That’s a good thing. As Holcomb told construction crews last week, “Don’t put your hard hats away. We’re just getting started.”

Kyle Hannon is president and CEO of the Greater Elkhart Chamber of Commerce. He can be reached at khannon@elkhart.org. This article was first published in the South Bend Tribune.

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