The Maryland Transportation Authority has thrown some cold water on the idea of leasing the Intercounty Connector as a relatively pain-free way of raising money to pay for other projects – saying such deals are too complex to enter into without extensive study.
In a position paper sent to the legislature, the authority does not rule out privatization deals but warns “they are not easy and should be approached prudently.”
The authority’s statement comes in response to a bill from a Republican
delegate that would require the state to issue an invitation for bids for
the ICC and the Express Toll Lanes being built on Interstate 95 by the end of the year, but it also addresses one of the ideas raised by Senate President Thomas V. Mike Miller in a comprehensive transportation revenue bill.
Miller has proposed a study of the merits of entering into a long-term lease of the ICC to provide near-term funds for large transportation projects.
Jack Cahalan, a spokesman for the authority's parent Maryland Department of Transportation, said the department would not oppose such a study. He added, however, that the department would prefer any such study to be broadened to include all eight of the state's toll facilities.
The authority did not take a position on the other bill, introduced by Del. Mark N. Fisher of Calvert County, but the paper's clear implication was that seeking bids on the ICC and I-95 lanes now would be risky and expensive.
According to the paper, the authority owes $2 billion on the ICC and $1.1 billion on the I-95 toll lanes. It said the revenues from those projects, as well as its other toll facilities, are pledged to bondholders in a trust agreement that calls for all the money to be pooled to satisfy those debts.
Complicating the privatization issue is the relatively brief period for which the authority has travel data on the ICC, the main part of which was completed in 2011, and the fact it has none on the Express Toll Lanes, scheduled to open in 2014.
According to Cahalan, any lease agreement "would be viewed very cautiously by the bond holders and credit rating agencies" who would be concerned that proceeds would be used for non-toll projects.
If the credit agencies disapproved of a deal, they could downgrade the authority's bonds, Cahalan said. If the bond holders were unappy, he added, they could sue for breach of contract.
"The bottom line is the devil is in the details and it's hard to reach firm conclusions without full due diligence," Cahalan said.
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