|
sponsored by
|
| Friday, April 20, 2007 |
|
SPONSORED LINKS |
The market can fund our new infrastructureHere we go again. Gov. Jim Gibbons has appointed yet another study group to ponder the insoluble problem of conjuring up $3.6 billion out of thin air to keep our infrastructure competitive. The problem is really simple. We don't want to raise taxes but we don't have the money. Amid the spacious roads of Carson City, our political leaders have begun to dream dreams of fairy godmothers named Goldman Sachs or Macquarie Bank swooping down, waving a magic wand to build us the bridges and highways we need. But it won't work and here's why: For the kind of money we need to raise, we'd need an existing, proven asset that can be "monetized" or turned into a "profit center."
Recent public-private infrastructure deals involved very different assets. They are guaranteed to make money because people will pay to use them. The Indiana Toll Road, for example, was sold for $3.8 billion and the buyers knew they were guaranteed daily revenue of $360,000. The private freeway to Dulles Airport outside Washington, D.C. is the only way to get there and it brings in $150,000 a day. The private buyers of public infrastructure much prefer to buy a road or, better still, a bridge that is the only route to a place people have to go. If you're going to be sure of the investment, it's obviously much better to have a monopoly. Asking any infrastructure investment fund to build an express lane on an existing freeway, as the governor has suggested, just won't cut it. The investors will want a very deep discount to make up for the money they won't get when the free lanes aren't jammed ... not to mention what they can't obtain from all those stubborn people who would rather sit in traffic than pay the toll. Plenty of drivers will still be looking for a free ride. But there's a great public-private deal that would fund all Southern Nevada's transportation needs: Sell McCarran Airport. A subsidiary of Australia-based Macquarie Bank already owns the executive air terminal. But we could auction off the right to McCarran's revenue for the next 50 or 100 years and easily produce the money we'll need for other transport needs. If we arranged an auction to privatize McCarran, we'd have at least six bidders kicking the tires and a minimum of three bidders who would probably put serious money on the table. A number of foreign investment banks already specialize in these deals and American bankers are looking to join their ranks. With so much private equity money looking for good investments, one or two consortiums may also join the auction. If the gambling companies want to be sure their opinion is heard in the future of the airport, they too can make an offer. Selling airports is not a new idea. Britain, Italy, Denmark and Australia have all done it in recent years. Sydney Airport, which handles 26 million passengers a year, was sold in 2002 for more than $4 billion. The bidders will have to figure out exactly how much the right to operate McCarran is worth over the next few decades. The highest bidder would then sign the agreement and the tourist experience would remain pretty much as it is now. I'm betting that the right to operate McCarran would attract a premium because so many people want to visit here and so many more have to come here on business. It's a natural. Any money we didn't need to build infrastructure could go to pay down the county's unfunded pension and health obligations. Three or four decades ago, McCarran needed tax money to ensure that the tourist economy grew. That's no longer true. It's time for Clark County to look for an exit strategy and put the public investment tied up there where it's really needed. Freeways and bridges are by far the most productive investment the county can make now. imylchreest@lvbusinesspress.com | 871-6780 x319 |
 | |||||
|
|
|
|||
| |||||
Copyright © 2009, Las Vegas Business Press | Privacy Policy