Northwest Parkway officials are strongly considering putting the troubled toll road up for sale or extended lease and already have a prospective buyer, a source says.
“They’re looking to privatize it,” said the source, who is familiar with recent discussions about how to solve the road’s debt problems.
Parkway officials say they will make an important announcement this morning concerning the road’s future – before they make a routine annual report to a legislative committee. The officials declined to comment Monday.
Peggy Catlin, acting director of the Colorado Tolling Enterprise and a non-voting alternate member of the Northwest Parkway board of directors, said long-term leases of toll facilities by private companies “are something that we’re going to see more and more of in the United States.”
Concession leases of toll roads are “an innovative way to provide for infrastructure,” said Catlin, who said she had not attended Monday’s board meeting of the Northwest Parkway and did not know what officials are announcing today.
Recently, an Australian-Spanish venture was accepted by Indiana officials as the preferred bidder to lease and operate the Indiana Toll Road for 75 years by paying the state $3.8 billion. The same private business team won a concession to lease and operate the Chicago Skyway for 99 years at a price tag of $1.8 billion.
The Northwest Parkway opened in 2003. The $416 million, 11-mile parkway connecting Broomfield and the E-470 toll road immediately missed the level of toll collections officials estimated.
Parkway toll booths collected $5.6 million last year. Officials told investors the road would gross $10.4 million in that period.
The shortfall means the parkway can pay for its operations but not its debt payments. Parkway officials have concluded cash flows weren’t expected to reach debt service anytime soon, the source said. And a reserve fund could run dry in a handful of years.
“They want to get out front on this,” the source said, adding that officials, after failing to refinance last year, don’t want to find themselves in default or asking their insurers for a bailout.
The Denver Post detailed the toll road’s troubles in a series this spring. The report focused on numerous revenue studies throughout the country that proved overly optimistic when roads opened.
The series also revealed that the parkway’s executive director, Steve Hogan, doubted the traffic and revenue projections sold to investors from the outset.
Hogan, who makes in excess of $166,000 at the parkway, said he thought the revenue projections were as much as 25 percent too high. But he kept his concerns to himself, he said, because he thought that during the process of selling the bonds, ratings analysts would lower the projections. They did not.
Hogan said that current use of the road suggested that collections would fall between $6.3 million and $8.5 million this year. The revenue study predicted the road would collect $17.3 million.
Attempts to reach Hogan on Monday weren’t successful.
Northwest Parkway’s revenue projections were prepared by Vollmer Associates. The Post series found that a key consultant to Vollmer’s revenue projections, Pamela Bailey-Campbell, was under contract with the parkway as its chief financial officer when the study was prepared. Campbell’s firm provided economic projections for the project corridor.
Essentially, Campbell was involved in a study that would generate more income for her, should the revenue projections convince investors to pay for the road’s construction.
Experts questioned such arrangements as potential conflicts of interest for this and other toll projects in Florida and South Carolina.
An analysis of the economic projections provided by Campbell’s firm showed those projections were dramatically higher than estimates at the Denver Regional Council of Governments, which is charged with preparing for growth in the greater metro area.
