SOUTH BEND, Ind. (AP) — Critics of privatizing the Indiana Toll Road said they are worried that the operator’s bankruptcy filing this week will result in less money being spent on the highway.
Chicago-based ITR Concession Co. is seeking to sell the toll road lease to a new operator, saying in its filing to the U.S. Bankruptcy Court in Chicago that it can’t afford the debt payments from the 2006 deal under which its parent company, the Spanish-Australian consortium Cintra-Macquarie, paid Indiana $3.8 billion for the rights to run the highway and keep the toll revenue.
Democratic state Sen. John Broden of South Bend, who voted against the lease deal in the Legislature, said Monday he doesn’t believe assurances that the bankruptcy won’t mean any significant changes to the highway’s operations.
“If someone buys this they are going to immediately be confronted with the question of how can we run this thing cheaper?” Broden said. “They are going to look for cost savings and cost savings are going to come in the form of fewer employees.”
ITR now has about 220 full-time and 60 part-time employees for its operations running the 157-mile tollway crossing northern Indiana, according to the bankruptcy filing.
Republican Gov. Mike Pence said Monday he expected “business as usual” on the highway despite the bankruptcy filing.
ITR said its financial trouble originated from the 2008 recession leading to a drop in interstate trucking, a major source of revenue for the highway. The company said it collected $196 million in toll revenues last year while making $193 million in debt payments. ITR failed to make a $102 million interest payment that was due in June.
ITR spokeswoman Amber Kettring said any new operator would have to follow the requirements for highway maintenance and operations set out in the 75-year lease and its restrictions on changes to toll rates.
“They are limited to the formula that we have to use,” she said. “So we can’t just arbitrarily raise rates.”
Shaw Friedman, an attorney from LaPorte, said he believed state officials should intervene on behalf of residents in the bankruptcy case.
“The state’s interests are certainly not represented by the hedge funds, banks and lienholders,” said Friedman, a former general counsel of the state Democratic Party.
John Letherman, president of northern Indiana’s Elkhart County Council, said he still believed then-Gov. Mitch Daniels got “a great deal” for the state with the toll road lease and that ITR’s bankruptcy won’t make much difference to the typical traveler.
Any potential buyer will likely take over the debt from the ITR investors “at a discount,” said Letherman, a governor’s appointee to the Indiana Toll Road Oversight Board. “Some people win and some people lose in a free economy.”
Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.