Bumpy Indiana Toll Road ride far from over

2010 is "catch-up" year for fee increase
2010-01-03T00:10:00Z Bumpy Indiana Toll Road ride far from overBy Keith Benman - keith.benman@nwi.com, (219) 933-3326 nwitimes.com

This summer, drivers will foot a little more of the bill for the Indiana Toll Road lease, with its private operator scheduled to do a four-year "catch-up" in toll rates for cars and motorcycles.

The adjustment will be at least 8.2 percent for vehicles without electronic tolling transponders but could be slightly higher under the terms of the Toll Road lease.

"We are four years into a 75-year lease, so this story is not over," said state Sen. Karen Tallian, D-Ogden Dunes, who opposed the lease when it was consummated in the spring and summer of 2006.

A combination of toll increases, discounts and freezes have marked the Toll Road's first three and a half years under private operation.

Truckers have experienced the most dramatic price shock, with the cost of running the length of the road increasing each April 1 from $18 when the lease was signed to $32 this year.

Until this year, car drivers have experienced only one increase. When electronic tolling was installed in 2008 the price of running the length of the road went from $4.65 to $8. However, for those with electronic transponders such as I-Zoom or I-Pass, the toll is frozen at $4.65 until 2016.

Political balancing act

The inclusion and timing of toll hikes in the Toll Road lease became a political balancing act for the administration of Gov. Mitch Daniels when it was pushing hard to sell the $3.8 billion lease to legislators and the public in 2006.

Under the terms of the lease, toll increases will not proceed on an orderly, year-by-year basis until 2016.

Until tolls for trucks were increased four weeks before the Toll Road lease was signed at the end of June 2006, it had been 20 years since tolls were last increased on the 157-mile highway.

ITR Concession Co. makes the point that it does not have the power to raise tolls on its own. All increases for the next 72 years are laid out in schedules contained in its lease with the state.

Middle of the pack

Even with the planned July increase, tolls on the road will remain middle-of-the-pack when compared to other tollways across the United States, ITR Concession officials say.

For example, it costs a car driver 5.1 cents per mile and a trucker about 20.4 cents per mile to drive the Indiana Toll Road, according to nationwide statistics gathered over the summer by the Pennsylvania Turnpike Commission. On the Tri-State Tollway in Illinois, car drivers pay about 6 cents per mile and truck drivers 30 cents per mile.

In an interview with the Times two weeks ago, ITR Concession CEO Fernando Redondo pointed out the toll increases were built in so investors eventually could make money on the $3.8 billion they paid for leasing the road. But it is not guaranteed they will make money, as the current recession demonstrates.

And it's the increased tolls, in part, that have made possible $300 million in Toll Road improvements paid for by ITR Concession, Redondo said.

Pain for truckers

Quarterly reports issued by one of the investors, Macquarie Infrastructure Group, showed overall traffic was down 9.5 percent from July 2008 to June 2009 as compared to the year before, but overall revenues increased 2.9 percent. That increase is probably the result, in part, of the sharply higher tolls paid by truckers.

And truckers feel the pain of the higher tolls.

"They've spiked up," said trucker Barry Slegers, of Valparaiso, on a recent morning at the Portage service plaza. "They've spiked up a lot."

A young, independent trucker who hauls mainly feed grain, Slegers was paying $18 to run the length of the road when he started three years ago and is paying $32 now.

However, he and other truckers admit truck tolls have risen on other roads as well. Slegers takes a big-picture view of the whole deal.

"I'm from Indiana, so I knew about it personally," he said of the Toll Road lease. "I thought it was a good deal because the state needed the money at the time.

"But I did wonder if they (investors) had the ability to pay us $3.8 billion or whatever and turn a profit in 100 years or whatever it is."

In Indiana, state legislators say they have heard surprisingly little from constituents since the highway was privatized, despite how controversial it was at the time.

"I have not heard any complaints about the service or anything," said state Sen. Earline Rogers, D-Gary, a key supporter of Toll Road lease legislation passed in 2006. "I'm not certain that's been the case for everyone."

Overseeing the changes

With all the political horse trading now over, and the private startup complete, the state's relationship with ITR Concession appears to be transitioning from supportive cheerleader to hard-nosed overseer.

Two weeks ago, the Toll Road Oversight Board, made up of local officials from the Toll Road region, received the results of the first independent audit of the road's condition and operations. The report pointed out problems with traffic management in construction zones and with pavement at truck rest areas.

Redondo, of ITR Concession, said his company will review the audit findings and improve anything that falls short of the standards laid out in the lease. He said his company has tried to do that from its first day of operating the highway.

Toll Road Oversight Board Chairman Leigh Morris, a former LaPorte mayor, said the audit and further monitoring doesn't mean the oversight board is trying to catch ITR Concession in any wrongdoing.

"We have a systematic effort to make sure all requirements of the lease are being met," Morris said. "It's the effectiveness of the oversight process that results in it all being favorable or unfavorable to the state."

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