Indiana Toll Road Lease Learns from History, Protects Future Generations
| DOI | http://doi.org/10.1111/j.1540-6210.2012.02673.x |
| Date | 01 November 2012 |
| Published date | 01 November 2012 |
| Author | Troy Woodruff |
864 Public Administration Review • November | December 2012
Troy Woodruff
Indiana Department of Transportation
Professor John B. Gilmour’s article “ e Indiana
Toll Road Lease as an Intergenerational Cash
Transfer” does not account for several impor-
tant factors in analyzing the fairness of the 2006
Indiana Toll Road Lease to future generations.
In addition to an up-front payment of $3.8 billion,
the lease agreement requires future benefi ts of main-
tenance and capital improvements valued at $4.4 bil-
lion. To date, the operators have invested more than
$330 million in electronic tolling, a new state police
post, added lanes leading into Chicago, and other
capital improvements. A seven-member Oversight
Board meets quarterly to monitor compliance with
the lease and operating standards. If the private opera-
tor breaches the agreement and is unable to cure the
breach, the state may terminate the lease and keep the
$3.8 billion.
More than 50 years of history should not be dismissed
when speculating what revenues would have been if
the Indiana Toll Road had remained under political
management. e Toll Road was never debt free, with
nearly $200 million in unpaid bonds at the time of
the lease. Because tolls had not increased in 20 years,
it lost money in three of the last fi ve years in which it
was publicly operated, including a loss of $16 million
in 2005. Prior to the lease, the road had generated a
total of $254 million for other purposes over its entire
history.
Compare this to the fi rst fi ve years of the lease, in
which all of the bonds were paid off and investment
income exceeded $755 million. Because Indiana
has $2 billion in reserves, none of the $3.8 billion
was needed to plug a short-term hole in the state
budget. Instead, amid a global recession, Indiana was
investing in long-term infrastructure and economic
development projects throughout the state that will
strengthen the economy for generations to come.
e Indiana Department of Transpor tation has
adopted an asset management approach that extends
the service life of roads and bridges for decades longer
than was previously possible. To prepare for the time
when these assets need to be rehabbed or replaced, a
Indiana Toll Road Lease Learns from History,
Protects Future Generations
Commentary
Troy Woodruff is chief of staff for the
Indiana Department of Transportation,
where he is responsible for leading the
agency’s operations, communications, local
programs, and legislative affairs divisions.
Woodruff previously served as the depart-
ment’s deputy commissioner of operations,
where he was responsible for all construc-
tion, maintenance, and traffi c operations
statewide. Previously, Woodruff represented
southwest Indiana as a member of the
Indiana House of Representatives and as a
fi eld representative for Congressman John
Hostettler.
E-mail: indot@indot.IN.gov
Public Administration Review,
Vol. 72, Iss. 6, pp. 864–865. © 2012 by
The American Society for Public Administration.
DOI: 10.111/j.1540-6210.2012.02673.x.
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