THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, August 9, 1996 TAG: 9608090001
SECTION: FRONT PAGE: A16 EDITION: FINAL
TYPE: Editorial
LENGTH: 59 lines
Private enterprisers can build toll roads and toll crossings, but not always profitably. This has been so since the early days of the republic. The toll expressway between Leesburg and Dulles International Airport demonstrates the iffyness of private-sector road projects.
Creditors - the commonwealth of Virginia among them - may have to take over the 14.5-mile, $358 million expressway unless Road Investors II, which operates the facility, arranges a restructuring of its debt today. Eleven months after the Northern Virginia throughway opened to traffic, its operator cannot come up with a payment of $7 million in interest to bond holders and a $3.6 million payment to Virginia's treasury.
There's much enthusiasm for privatizing many programs entrusted to governments and supported by tax revenue and other legislated fees. Privately financed, owned and operated prisons increase in number, a medium-security facility in Virginia being among the latest additions to the list. Many municipal, town and county governments contract with private companies for trash pickup and disposal. Public (and private) colleges and universities save money and often improve selected services by having private companies provide them - food services, most conspicuously.
Privatization of public services can be a good deal for taxpayers and contractors. Privately financed toll roads paid for by those who use them seem to be an attractive option for governments reluctant to raise the gasoline tax when grass-roots anti-tax sentiment runs strong.
But even roads and crossings owned and operated by public authorities and financed by the sale of tax-free bonds to be paid off by toll revenue aren't always a sure bet for investors.
The Chesapeake Bay Bridge-Tunnel failed for years to pay interest on the riskiest bonds in the mix sold to underwrite the multimillion-dollar venture. Holders of bridge-tunnel C bonds clamored unsuccessfully for the Virginia General Assembly to bail them out. Speculators who bought the C bonds cheap from investors who dumped them made a killing when the bridge-tunnel eventually redeemed them.
``Turnpikes'' - toll roads - proliferated in the United States between 1795 and 1810. Commerce in the young nation was booming. Commodities and people needed to be transported. Virginia's government borrowed heavily to build railroad lines, canals - and turnpikes.
Entrepreneurs constructed turnpikes in the Northeastern United States. Millions of borrowed dollars produced thousands of miles of roads. The nation benefited. But horse-and-cart traffic tended to be too light to reward investors. By 1815, most turnpike stocks were worthless.
The James River Bridge, built by private investors, opened in 1928. Bond holders had to take it over when the venture didn't pay off as scheduled. Virginia took it in a couple of decades ago.
Whatever the fate of the Dulles-Leesburg expressway, Virginia has gained a road. But don't look to private investors to speed road building, which daily falls farther and farther behind the demand for more and better roads in Hampton Roads no less than Northern Virginia.
Road building, experience says, is a governmental responsibility. Virginia's government needs to accelerate repair, improvement and expansion of the state's road network. That calls for again raising the state motor-fuel tax, and sooner rather than later. by CNB