Privatizing Infrastructure Nightmares

Via Naked Capitalism, a Truthout article with "gotcha" clauses in infrastructure lease deals:

The truth is that, rather than making money on just tolls and fees, private contractors make their money through big tax breaks and by squeezing state and local governments for payments for the life of the contracts….

But that’s not all. Infrastructure privatization contracts are full of “gotcha” terms that require state or local governments to pay the private contractors. For example, now when Chicago does street repairs or closes streets for a festival, it must pay the private parking meter contractor for lost meter fares. Those payments put the contractors in a much better position than the government. It gets payments, even though Chicago did not get fares when it had to close streets…..

Highway privatization contracts also often include terms that forbid building “competing” roads or mass transit. Some even require making an existing “competing” road worse. For example, the contract for SR-91 in Southern California prohibited the state from repairing an adjacent public road, creating conditions that put drivers’ safety at risk. A proposed private highway around the northwest part of Denver required that local governments reduce speeds and install speed humps and barriers and narrow lanes on “competing” roads to force drivers to use the privatized road….

Virginia decided to promote carpooling to cut down on pollution, slow highway deterioration and lessen highway and urban congestion. As a result, Virginia must reimburse the private contractor for lost revenues from carpoolers, even though not all of the people in a car would otherwise have driven individually….

But contractors have not always done a good job in keeping their agreements.

Shortly after it took over the Indiana Toll Road, the private contractor put sand-filled barrels in turn-arounds with no notice to the state. State officials begged and pleaded for the barrels to be removed, so police and emergency crews could get to accidents and deal with other public safety problems as quickly as possible. Those pleas fell on deaf ears, while the turn-arounds remained blocked for months.

Just assume that in any deal, the public is taking it hard.  It will be interesting to see on the15th when Kasich introduces the new budget whether he is proposing any privatization ideas.  I'll bet even up that he is.