Private Toll Roads

Do private toll roads make sense in America?  Yes!  Maybe not all the time, but private concessionaires do serve a public good and add real value to toll facilities.

The main issue at hand, is when a public toll agency is so wildly successful that their assets become dormant.  Public finance structures are geared to protect investors…those individuals and institutions that buy the bonds sold by agencies to build roads.  To ensure bond ratings these agencies operate at a debt service coverage ratio that gives the rating agencies confidence in their revenue stream compared to their debt service.  Sometimes this coverage ratio can exceed 2.5.  When this happens, an entity can tap that dormant asset by entering into a long-term lease with a concessionaire, thereby freeing up much needed funds to reinvest into infrastructure or other public needs.

Max Crumit


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