CROWN POINT | Lake and LaPorte County officials blame their loss of the Indiana Toll Road on misdirection and hostility from downstate officials.
"I think the citizens should be outraged the state wouldn't support our package to bring the toll revenues back into Indiana," Lake County Commissioner Roosevelt Allen, D-Gary, complained last week after IMF Investors, a global investment firm announced they clinched acquisition of the 157-mile bankrupt highway.
County officials expressed disappointment that creditors and state regulators approved the deal before their bid to take it over could get out of the gate.
Allen said, "We weren't expecting a decision so fast. They misled us. We met with the Indiana Finance Authority, did all of this work, which we finished well within the time frame, but apparently they made up their minds before we returned home."
County officials only joined the hunt several weeks ago with an untested plan to run the highway through a nonprofit company they say could have reaped millions of dollars in Toll Road fees to local government.
They drove their bureaucracies to assemble an underwriter, an administrative team and the votes to put their offer on the table. But by then, the ink already was dry on the IMF victory announcement.
Julio Garcia, head of IMF infrastructure, said his consortium won, because it has been in the business of acquiring and maintaining highways, airports, maritime ports, highways and other Public Private Partnership facilities for two decades and has long been eying the Indiana Toll Road as a golden opportunity in the North American transportation market.
"I have a team in New York very strongly versed in toll roads who have been studying the road with Michael Kulper, one of our executive directors, who was the founding president of Trans Urban Group in North America (a major toll road investor) and ran that business for 10 years," Garcia said.
Backed by 30 Australian and 65 U.S. pension plans, they threw down a $5.725 billion bid, approved by the IFA. Garcia said, "We plan to work hand in hand with the IFA and others in Indiana."
An exasperated Allen said the state ignored public disapproval in 2006 when it gave up the highway's operation and collection of tolls to ITR, an Australian-Spanish consortium. ITR was overwhelmed with debt and went bankrupt late last year
"That concessionaire didn't do very well with maintenance of the Toll Road, which is in horrible shape," Allen said. "We made a bona fide effort with reputable American firms, so why would you go back to a foreign competitor again?
"I would like Gov. Pence to use his overwhelming influence over the Indiana Finance Authority to support our bid. How can you claim to be all-American and when they have an opportunity to do something that is patriotic and beneficial to the citizens of Indiana, do the opposite?" Allen said.
Approved firm defends its plan, debt structure
A spokeswoman for Pence didn't return a call seeking comment. Garcia said, "Our firm is Australian, but we have had a New York office for eight years and a lot of the funds going into this are not only American money, but also state pension systems. It is benefiting retirees in the U.S."
Shaw Friedman, the LaPorte County attorney, complained Wednesday, "We were treated better by the Special Creditors’ Committee than by our own Indiana Finance Authority, which has been unremittingly hostile to the notion of a public bid from the outset ... the fact the agency issued a press release rubber-stamping the IFM deal within hours of the announcement without seeking to leverage their approval for any benefits to the state or our counties is further evidence of their bias, predisposition and hopeless incompetence."
Stephanie McFarland, a spokeswoman for the IFA, said Friday its legal, financial and engineering experts, provided input on all proposals, and Friedman’s bid was among those prequalified as "a viable option." She said it was the bankrupt highway's creditors that selected winning bid.
She said her agency didn't issue a press release, but only confirmed IFM's bid was prequalified in response to media questions.
Local officials question whether IFM's bid was so high that it will raise tolls significantly higher or will demand the state subsidize its operation if traffic volume on the Toll Road doesn't grow.
Garcia said they will honor conditions in the Toll Road contract they are assuming, that forbid asking for government subsidies or raising tolls above inflation rates.
Local officials said there have been so many toll roads in financial difficulty, they wouldn't be surprised if IFM's venture ends in bankruptcy, too.
Garcia said, "We have used a very sobering and conservative view of what growth will be like and have shaped our debt structure where it can be supported." He said IFM's debt will be half the amount that sank ITR's business and he is confident the market will view it as having little risk of default.