This should give us pause. I’ve often thought we ought to experiment more with toll roads in South Carolina to help us back for our huge backlog of maintenance needs.
Then again, maybe not.
This just in from the Columbia Regional Business Report:
Developer of Upstate toll road files for bankruptcy protection
The nonprofit organization created to develop the Southern Connector toll road in Greenville County has filed for bankruptcy protection, seeking to reorganize some $300 million in debt tied to the road’s development .Piedmont-based Connector 2000 Association Inc. said in its bankruptcy filing today that it is insolvent and unable to reach a debt restructuring agreement with its creditors. According to bankruptcy records, the association owes $278 million to U.S. Bank National Association and $90.9 million to HSBC Bank USA.The nonprofit organization was created in 1996 to help the S.C. Department of Transportation finance and construct the Southern Connector in Greenville County. More than $200 million in bonds were sold in 1998 to build the 16-mile toll road, which extends from the intersection of Interstates 185 and 385 to the intersection of US 276 and I-385.The association said traffic has been significantly lower than original projections and that it has failed to pay some of the interest and principal due on the bonds.The S.C. Department of Transportation will file a response with the bankruptcy court by the end of the summer and will not comment on the case until that time, said spokesman Pete Poore.
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That was a gigantic waste of money to build that road. It serves no purpose. The DOT blew that one.
@bud
Somebody got rich. I bet if some investigative reporter checked the land that was purchased to build that road, they’d find all sorts of well-connected people.
In the land of the confederate flag, how could they ever think a toll road was a good idea?
I think it shows the folly of privatizing (even to nonprofits) core functions. Either we needed a road, and I’m guessing some engineers determined that we did, or we didn’t. Injecting the pay-or-drive-the-long-way aspect into a place like SC where no one is used to paying tolls (try the Northeast, instead!), well, that’s not even a level playing field.
The real question here is in regards to the bonds issued to finance this debacle. It says in the article that 200M of bonds were issued, I assume that those were revenue bonds, and not G.O.’s. Who ended up holding those bonds, and who will end up holding the bag? Widows and orphans? Pension funds?
I just got back from a road trip to NY. On the way up we took the NJ turnpike which is a toll road. Then I discovered I-295 runs exactly parallel to the turnpike for a good distance. The road was just as good and the travel time no greater. Yet it was free. Not sure why the NJ turnpike has so much traffic. Maybe it’s just habit.
@Joshua- The borrower was “nonprofit”–they could have been 501 (c)(3) bonds, or they could have been revenue bonds–I don’t think you can do GO bonds for a private entity….so yes, some pension fund probably will get skint.
Nonprofits commonly utilize bank letters of credit or other forms of “credit enhancement” such as bond insurance to back Bonds issued for their facilities.
@Joshua–sure, but ultimately investors pay for that, too.