Toll regulation on the Chicago Skyway
As we watched traffic on the Skyway late October around 2pm there was a steady stream of trucks but tiny compared to the numbers on the Borman/Kingery/Tristate
Execs of Cintra and Macquarie go here if they got their forecasts wrong.
Seven pages cover toll setting - a Schedule 6 almost at the end of the 50mm (2in) thick book which comprises the full in the Chicago Skyway Lease and Concession Agreement between the City of Chicago and Skyway Concession Company LLC (SCCL), the operating company for Cintra and Macquarie, who are due to take over operations of the pike on financial close which must be before the end of the year. The schedule begins by stating very explicitly what has been at issue in Toronto on 407ETR, namely that subject to other provisions "the Concessionaire shall, at all times during the term, have the right to establish, collect, and enforce payment of tolls..." (Sect 1,a, p6-1)
There is explicitly no basis for any arbitrary interference in the concessionaire's right to set tolls - as claimed by the populist McGuinty regime in Ontario province in Canada for the tollroad operated there by the same Spanish-Australian tollster.
Exempt from tolls on the Skyway will be fire trucks, police cars, diplomats, ambulances and city of Chicago vehicles. (Sect b, p6-1)
SCCL have to give the city at least 90 days notice and the public 60 days notice of toll changes. Temporary discounts however require only one day's notice. (Sec 2 p6-2)
The guts of constraints put on SCCL toll setting are in the remaining six pages called Section 3, Tolling Level Requirements which sets maximum toll rates subject to an exception for variable tolls. The present toll of $2.00 for 2-axle vehicles and $1.20 per axle for others will remain in place until Jan 1, 2005. There are then six terms of toll regulation.
Term 1: 2005 through 2007 the maximum toll for 2-axles will be $2.50, but other vehicles tolls' remain the same as now, $1.20/axle.
Term 2: In the second regulatory term beginning 2008 a more complex formula kicks in. For 2008 through 2010 there are nominal maximum rates of $3.00 for 2-axles, and $1.80 per axle for others (a 50% rise). But there is also the provision that if the Jan 2005 toll rates for any vehicle class adjusted for inflation are greater than the nominal rates, then the greater inflation adjusted rates will become the cap.
Term 3: 2011 and 2012 see another 50c raise in the 2-vehicle max to $3.50 and other vehicles staying at $1.80/axle. Again if the inflation-adjusted rates are greater than the nominal rates they apply as the cap. In effect some toll rates are simply inflation-adjusted since there is no increase in nominal toll rates. Transitioning to two year periods allows the 50c increases in car tolls to occur more frequently.
Term 4: 2013 to 2014 is notable for the steep increase allowed in >2-axle vehicles to $3.00/axle from $1.80 and there is also the 50c increase in allowed 2-axle tolls to $3.50.
Term 5: 2015 and 2016 sees the 2-axle cap at $4.50 and the per axle toll for multi-axle vehicles (+2) at $3.60/axle. In both these terms if inflation adjusted tolls are greater than nominal they prevail as thew cap.
Term 6: 2017 for the remaining 86 years of the concession through 2103 the nominal toll rate maxima are $5 for 2-axles and $4.20/axle plus an annual increase of the greater of two different measures of inflation - CPI or GDP/person - and 2%.
2004 to 2017 the allowable nominal rates for cars go up 2.5 fold and for commercial vehicles by 3.5 fold. By my calculation using Excel those are compound average annual increases over 13 years of 7.3% and 10.1%/yr - quite substantial!
Car tolls for the 12.6km (7.8mi) trip go from $2.00 now to $5.00 in 2017 or from 16c/km (25.6c/mi) now to 40c/km (64c/mi) in 2017.
Per axle tolls for commercial vehicles go from $1.20 to $4.20 so a tractor trailer's toll goes from $6 to $21 or from 48c/km (77c/mi) to $1.67/km ($2.69/mi).
The section explicitly gives SCCL the right to do time of day variable rate tolling, congestion-related tolling including high occupancy-toll lanes or "any other method of charging tolls" provided the maxima are kept to. (p6-6)
There are exceptions to the maximum tolls specified by these formulae for time-of-day variable rate tolling. (Sched 6, Sec 3, [d] on p6-6) This allows charges of 40% greater than the scheduled maximum rates for vehicles of 3 axles or more (commercial vehicles) so long as the concessionaire has in place equivalent discounts 8pm to 4am (nighttime) on the daytime rates. All real tolls can be rounded from the calculated allowable toll to the nearest 10c.
Fees and other charges are to be set to cover "out of pocket and documented costs and expenses" and are to be "reasonable" and subject to arbitration if contested. (p6-7)
The Skyway (I-90) competes mainly with the Kingery Expressway (I-80/I-94) and the Bishop Ford Expressway (I-94)/Dan Ryan Expressway (I-94) for the journey into the Southside and the Chicago Loop. The free expressways are about 10km (6mi) longer and far more congested than the Skyway which has six lanes too and less than half the traffic volumes. The Kingery (only 2x3 lanes) and by some measures the most heavily trucked route in the country (40k heavy trucks out of 160 total veh/day) is in process of getting a 4th lane and improvements to interchanges. Similar 4th laning and auxiliary lanes and interchange improvements are being made simultaneously to the connecting Borman Expressway (I-80/I-94) in NW Indiana, and to the TriState Tollway (I-80/I-294) to the immediate west of the Kingery.
These improvements should be complete in about 2007 or 2008 and will considerably relieve current congestion and, for a while, reduce the attractiveness of the Skyway.
Other roadworks will improve the attractiveness of the Skyway. Presently there is congestion at its westerly end where it meets the Dan Ryan Expressway a few miles south of the downtown Loop area. Ramps at the Skyway/Dan Ryan connection are being increased in capacity and the Dan Ryan itself is being extensively modernized.
Dow Jones reported from Madrid (2004-11-16) that a syndicated credit of $1,190m has been raised from European banks: Banco Santander Central Hispano, Calyon, Banco Bilbao Vizcaya Argentaria SA, and Germany's Depfa Bank. The bonds have preliminary investment grade ratings from the major raters Moody and S&P. After financing and other costs that leaves Cintra SA the lead concessionaire with 55% of Chicago Skyway Concession Company $501m to hustle up, and Macquarie with 45% $410m. Both Cintra and Macquarie are talking about doing stock offerings in the U.S. but probably next year.
Cintra's CEO Juan Bejar said in the presentation in Madrid that the group expects traffic on the Skyway to grow in the range 4% to 8%/year. That is apparently some kind of longterm estimate. Bejar said the 51k veh/day of 2001 won't be reached again until about 2007 or 2008.
Cintra is pursuing nine tollroad projects currently, Bejar said - in Portugal, Greece, Italy, Ireland, Finland and the US. The US projects are the I-35 Corridor and TX183 Dallas-Fort Worth. TOLLROADSnews 2004-11-23