The Ohio Turnpike Sale/Lease Proposal and Northwest Ohio
Governor Kasich recently proposed the sale or lease of the Ohio Turnpike – a proposal that has the potential to raise money for infrastructure projects for which there are no current state or federal funds available. The likelier of the two scenarios – leasing – would bring in the desired revenue, yet ensure that through the lease agreement the turnpike is adequately maintained and toll increases are minimized.
The physical presence of the turnpike in our part of the state has been helpful from an economic development standpoint to any number of businesses. It helped to attract North Star Steel to the area. Convenient exits along the route have been credited with helping Sauder Woodworking grow its business. BAX Global’s logistics development and the UPS terminal in Maumee’s direct connection for its trucks, one of the few such quick connections in the country,
have been real positives in northwest Ohio.
According to recent statements by Ohio Department of Transportation Director Jerry Wray, revenue from the sale/lease of the turnpike would be used to fund projects in the northern part of the state, a development that could support a number of infrastructure enhancements designed to further advance Northwest Ohio’s economic growth.
As with any new proposal, there are already groups coming out and choosing sides on the turnpike issue. In contrast, while neither has taken a formal position at this time, both the Toledo Regional Chamber of Commerce and The Toledo Area Metropolitan Council of Governments (TMACOG) have a long-standing interest in infrastructure matters and can lend useful perspectives to the ongoing discussion of the turnpike’s future.
In the wake of the public discussion, TMACOG has produced Summary Recommendations regarding the turnpike that provide important information and considerations should the ownership structure change from its current setup (the complete report is available at www.tmacog.org):
TMACOG Summary Recommendations Regarding the Ohio Turnpike
The state of Ohio is considering leasing the Ohio Turnpike, or possibly shifting it to the Ohio Department of Transportation. This is a key transportation asset in northern Ohio and changes in its operations directly impact the transportation system and economic competitiveness in the region.
In the event that the state of Ohio goes forward with a lease or otherwise changes how the Ohio Turnpike is administered, the Toledo Metropolitan Area Council of Governments (TMACOG) offers the following recommendations.
Regarding the process to lease or otherwise change the Turnpike administration:
Transparency should be maintained throughout the process. Open access to the full text of request for proposals, asset valuation methodology, and other contract provisions should occur in a manner that allows for public evaluation and input prior to completing a lease or new operating arrangement.
Revenue produced should be limited to the following types of investments:
• Highway infrastructure improvements that yield a benefit commensurate with the length of the lease.
• Improvements to air, rail, and water port facilities as well as intermodal and other infrastructure projects that foster economic development and job creation. Projects in northwest Ohio fitting this description are summarized in the document Transportation Legislative Agenda 2010-2011 as posted at www.tmacog.org.
Owing to the greater share of support paid into the asset by toll-paying northern Ohioans (historic and future), revenue produced should be allocated as follows:
• The transaction should produce a net gain for northern Ohio in terms of overall transportation funding over the term of the lease. Toll or lease revenue should not supplant other revenue.
• Northern Ohio counties and jurisdictions that are adjacent to the Ohio Turnpike should receive a majority share.
Toll rate changes should be handled as follows:
• To discourage traffic diversion and to encourage a greater reliance on operating efficiencies and traffic growth rather than toll increases to achieve profits, the amount and timing of toll increases should be limited.
• Operating standards should be set to the same or better standards than are currently in force.
• No other roadways in Ohio should be defined as competitive roads nor have restrictions placed on future improvements.
• The agreement should stipulate the conditions under which current and future access points may be added, removed, enhanced, or otherwise changed.
• The agreement should have clear definitions as to what constitutes delays and defaults and enforceable provisions regarding dispute resolution and remedies.
• The agreement should require open bid process for contracts and “Buy Ohio” guidelines.
• The length of the lease term should be kept relatively short—20 to 40 years—to allow flexibility for technological and societal changes that will inevitably occur.
From the Toledo Regional Chamber of Commerce 2010-2012 Legislative Agenda:
For economic development to take place, the area’s transportation infrastructure should ensure the expedient movement of people, cargo, and information. As new projects are implemented, they should improve the flow of traffic and intermodal applications as well as enhance the area’s reputation as a transportation hub. To accomplish this goal, the chamber will focus its efforts on the following areas:
• Support new funding for road construction and infrastructure improvements.
• Monitor the area’s ability to complete projects funded as a result of the Toledo Metropolitan Area Council of Government’s Transportation Improvement Program (TIP) to ensure that highway and transit dollars allocated to the area are used.
• Continue to support the viability of Amtrak and increased service through Toledo.
• Advocate implementation of the Midwest Rail Initiative with the Chicago-Toledo-Cleveland corridor as a high priority.
• Support area efforts for expanded intermodal service.
• Promote efforts to preserve abandoned rail lines for future use.
• Support the Governor’s rail grade separation program and use of funds for projects in our area, especially the Vickers rail separation.
• Promote efforts to protect and enhance the airport’s ability to expand, consistent with the airport’s master use plan.
• Encourage federal legislators from the St. Lawrence Seaway states to advocate more strongly for seaway infrastructure needs, especially to enhance intermodal and short sea shipping in the region.
How to learn more
For more information on the Ohio Turnpike Proposal, contact Carol Van Sickle, Vice President of Public Affairs for the Chamber.