PA Makes Money off Infrastructure

The City of Harrisburg is using its infrastructure to work its way to fiscal health. A partnership between New York-based Citi Infrastructure Investors, Barcelona, Spain-based Abertis Infraestructuras, and Barcelona, Spain-based Criteria CaixaCorp won a bid to lease the Pennsylvania Turnpike with a $12.8 billion, 75-year plan, Gov. Ed Rendell announced yesterday, as reported by Casey Freeman for GlobeSt.com.

If approved by state legislature, the plan could raise $1.1 billion a year for highway improvements, the largest bid for private operation of a US toll road.

"This is a great day for Pennsylvania," Rendell said in a statement. "We urgently need new funding for road and bridge repair, and a turnpike lease will help us meet that need. Under the terms and conditions we set, the turnpike will be upgraded and tolls will be no higher than the Turnpike Commission will charge."

The Rendell administration would invest $3.6 billion of the lease payment to pay for highway, bridge and public transit projects. The plan would also support 73 public transit agencies. The rest of the lease money would be invested with the Pennsylvania State Employees’ Retirement System. The administration says it expects to earn a 12 percent annual return on the investment.

In addition, the Parking Authority issued a Request for Proposals last year to invite investor interest in leasing the parking facilities. The highest offer was selected and negotiations have been occurring since.

Harrisburg Public Parking, LLC (HPP), the proposed new parking facility operator, would pay the Parking Authority $215 million in one lump sum. Reed said the Parking Authority would remain the owner of these assets and would continue to own and operate the City Island parking garage and lots. The lease would be for 75 years, and during such time the operator assumes all responsibility to maintain and rebuild these assets.

Reed also noted the that the transaction must be approved by the Parking Authority board and City Council. Further, negotiations must be completed.

At the end of the lease term, operation of the Parking Authority garages and lots return to the Parking Authority, Reed said. During the next five years, if the surface parking lot adjacent to the North 7th Street Garage at North and 7th Streets is not developed with a highrise building on the site, the Parking Authority would be paid an additional sum of $3.8 million, which is in addition to the initial $215 million lease price. In the interim, HPP will operate this lot and will pay the Parking Authority $258,000.00 per year during each of the five years to do so and whatever has been paid annually would be deducted from the $3.8 million price.

HPP will also annually pay the Parking Authority a sum to cover their administrative costs, starting at $120,000.00 per year and increasing later at the Consumer Price Index inflation rate.