In an article republished in today’s Bacon’s Rebellion newsletter (a product of the Thomas Jefferson Institute for Public Policy), the Reason Foundation’s Bob Poole discusses the bankruptcy of two public-private partnership toll projects, one in Brisbane, Australia, and the other in San Diego. In both cases, taxpayers emerged whole.
The bottom line here is that start-up toll projects are inherently risky. They are not for the faint-hearted nor for well-meaning amateurs. The best way to deal with that riskiness is to shift it from general taxpayers to sophisticated investors who are prepared to balance the occasional loss in exchange for solid, long-term returns in other cases.
There’s a lesson for Virginia as the McDonnell administration ramps up plans to finance more highway construction by means of public-private partnerships: Watch the risk!
As an aside, TJI soon will be moving its newsletter from the db4.dev.baconsrebellion.com domain, where it has resided since the days I published it, to TJI’s own website and will rename it the Thomas Jefferson Journal. At that point, I will move this blog to the dev.baconsrebellion.com domain. So, brace yourselves for a change in address… and design.