Illiana Boondoggle Now Guaranteed to Cost Taxpayers At Least $250 Million

Gantry on Triangle Expressway
A recent agreement mandates electronic tolling for the Illiana, with no cash payment option. New toll roads, like this one near Durham, N.C., have electronic tolls and traffic counts far below expectations. Photo: NC DOT/Flickr

Remember the “innovative” public-private partnership Governor Quinn lauded as a way to build the “21st century” Illiana Expressway, without shifting the entire cost onto the general public? Or remember CMAP’s statement opposing the project, based on its contradictory growth projections, overestimated benefit to the region, and severe financial risk, and the multiple op-eds and articles that followed, all expressing concern about the expressway’s ability to garner enough toll revenue to pay for itself?

It appears that the Illiana project, extolled by the governor and IDOT as a way to invigorate the south suburban economy by building a privately-financed and operated expressway, will actually involve even more public dollars than we imagined.

The terms of the public-private partnership devised for the Illiana have already been condemned in the local media. The project’s backers cite the eventual selection of a private developer to design, construct, and operate the expressway as a way to relieve the public from paying for the project; indeed, its “private financing” is perhaps why the project could even be contemplated by a state with huge debts. But a Toll Sensitivity Analysis [PDF] released by IDOT last November shows that the Illiana will cost four times as much to drive on as nearby tollways. Any business would have a hard time staying open by charging four times as much as nearby, more convenient competitors.

Unless that business is road building in Illinois, of course. An agreement between Illinois and Indiana now commits a minimum of $250 million in Illinois dollars to the project. Indiana’s DOT has also committed $80–$110 million to the project; together, this amounts to at least a third of the project’s currently projected cost of $1 billion. If toll revenue fails to live up to expectations, the public may be on the hook for much, much more.

Is IDOT trying to sweeten the deal to attract road developers by promising a minimum amount of public funds upfront? What more could be done to make the project palatable to a developer, when both states have already made it clear that they’ll pay up to the entire cost?

Public-private partnerships make sense when there’s a good chance that the risks of the project will be shared — rather than just placing all the risk on the public sector and all the rewards on the private sector. As the number of vehicle miles traveled has fallen over recent years, other toll roads built using public-private partnerships have fallen far behind on revenue expectations. With Illinois’ transportation fund perilously underfunded and about to expire, it makes little sense to further burden it with a new, money-losing road. IDOT must know this, which is why they’re offering hundreds of millions upfront (plus untold billions in guarantees) to court builders.

  • oooBooo

    It would serve people well to study various other crony private toll road/tunnel deals in the USA and around the world to see how these things go. They are near universal financial failures and disasters for drivers and anyone who is in the way of the projects. Also note the various competition restrictions that typically are included in these deals.

  • C Monroe

    Like the Indiana Toll Road deal where the state cannot improve near by highways like I-94 south of the lakeshore or US 31/20 in the South Bend area because of an anti compete clause. Also there is a minimum usage clause too. US 20 freeway originally was to link up with US131 freeway that the state of Michigan is still deciding if it wants to build.

  • C Monroe

    Also the state of Indiana had to pay retroactively fares of those that used the tollway during an emergency flood situation.

  • matimal

    we need to improve EXISTING roads, not new ones.

  • rohmen

    That a government often agrees to an anti-competition clause in these type of arrangements–in effect tying their hands and stating that they will not improve other infrastructure that may impact usage that their constituents rely on, no matter how much such improvements are need–is why I just can’t get behind these type of arrangements. Privatizing infrastructure so the “marketplace” improves efficiency and lowers cost never works when these type of crony protections are built into the deal–and, as you note, they almost always are built in.

  • BeeKaaay

    But which crony gets rich off that idea?

  • Fred

    Walsh Construction.

  • Peter

    Just as a comparison: RE the Ashland BRT “The first 5.5-mile phase between 31st and Cortland is estimated at $116 million, including purchasing new buses with left-side doors, required for center-running BRT. In general the corridor will cost $10 million per mile for the street improvements and stations alone, so the entire 16-mile route will come to $160 million, not including buses.”

    If improving 16 miles of Ashland is going to cost in the neighborhood of 116 mil, why is it such a jaw dropper that constructing a new highway will cost upwards of 250mil? I understand that funding source and project priority is an issue with folks on this site, but the sheer cost of the project should not be a surprise. Are you certain that the State wont be receiving any federal assistance for this project? Thanks

  • I would bet that in the first year of operation, far more individuals will use Ashland BRT than will use Illiana.

  • One difference is that the vast majority of the $116 million BRT project will almost certainly be paid for with federal money. As Chicagoland and Illinois residents, it’s a win for us to get our share of the federal pie. This new Illiana deal guarantees that $250 million in *Illinois* dollars will be spent. The whole project is projected to cost $1 billion.

  • Fred

    At the end of the Illiana project, the state won’t even own or operate it. It’s a quarter billion dollar subsidy to a private company with further guaranteed income. Spending money never to be seen again. At the end of improving Ashland, the city will still own it and collect revenue through its use. Spending money to make money. The projects are not in any way comparable.

    If the state could build the Illiana for $250m and then reap the benefits of toll money generated, this would be a whole different story. Giving a private company a $250m subsidy on a $1b+ project is BS.

  • James

    That’s irrelevant, John. The question is whether the local dollars spent is justified by the expected return. You can’t make an argument that there are economic benefits of BRT for the local economy while not looking at the economic benefits that the Illiana will provide.

  • R.A. Stewart

    I would bet you’re right. But which one will likely be cut back or shut down in a few years–*if* it’s ever built in the first place–and which one will be with us forever?

  • Of course – just like Chicago has to pay for the parking meters when they’re unusable during street closures and festivals.

  • DOT should respond like Congressional Republicans; Every new mile of freeway needs to be offset by demolishing a mile of freeway someplace else. We just can’t afford it otherwise. Right…? Right…?

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