Every now and again, an opportunity comes along that simply seems too good to be true.
To some, La Porte County's proposed interlocal agreement with Lake County to acquire the remaining 67 years on the Indiana Toll Road lease — in conjunction with some major worldwide financial players via non-recourse bonds — would fall into that category.
If the agreement to form the Northern Indiana Toll Road Authority is accepted by each county's respective Board of Commissioners, that organization would then enter what promises to be a competitive bidding process to acquire the potentially-lucrative lease.
In 2007, the toll road was leased to an Australian-Spanish consortium, but that effort recently went belly up, providing the opportunity to acquire the remainder of the lease via bankruptcy proceedings.
La Porte County attorney Shaw Friedman spearheaded an effort to get other counties on board in a bid to return the toll road to local ownership. As Friedman put it this week, "it could be an offshore hedge fund receiving these revenues or it could be La Porte and Lake County."
Lake County was the only entity to join the effort. Others elected not to get involved, primarily because of a fast-moving timeline.
Should the bid be successful, each county will have turned a $10,000 initial investment — required to get the process started — into a guaranteed minimum of a $5 million founders' payment each year, the first payment of which would occur at closing, which could be as early as May of this year. The $5 million comes to the county pre-debt service, further guaranteeing that money reaches the county's coffers. Over the remaining lease term of 67 years, that's a minimum of $335 million injected into the county's economy. We say "minimum" because the counties will also equally split any excess revenues. Friedman indicated that he doesn't expect that will happen for the first five to seven years following the acquisition, but after that, the numbers look "significant."
Other toll road counties can still get involved in that split of excess revenues, per a provision contained in the bid. Additional counties could be added as associate members, pending the approval of the NITRA board.
That board will consist of 10 people. Each county commission selects a representative; each county council selects a representative; each commission picks an at-large community member with experience in hospitality, tourism or transportation; and each council picks a resident with experience in health care or education. The Governor's office gets an appointment and the private operator selected to run the toll road gets a representative to round out the board.
That board will be responsible for many things, including how additional revenue received over the $5 million annual founders' payment is spent. That annual payment will go to the county to be appropriated like any other revenue would be. For a community on the rise, with revitalization efforts already underway that will require cash, this money could serve as a boon. Friedman said that, similar to when Blue Chip Casino came to the county, we have a unique opportunity here to make a significant difference.
"Many of us feel it's our turn," Friedman said. "These counties have done everything they can to get through the recession and these two counties have some of the higher unemployment rates in the state. Maybe it's time for Northwest Indiana to catch a break."
The best part for the county is that it essentially assumes zero risk, aside from the $10,000 initial investment. Attorneys and others working on behalf of the bid process wouldn't be paid until after a successful bid.
The worst-case scenario is that the bid is unsuccessful and the county loses out on $10,000. But for that minimal roll of the dice, the gains could be enormous. And even if the toll road fails, the underwriters assume the risk because of the non-recourse nature of the bonds.
Usually if something sounds too good to be true, it is. We tried hard, but simply couldn't find a downside to the county's involvement in this effort. The consortium has received letters of support from Craig Dwight, Chairman and CEO of Horizon Bank; Michigan City Area Schools Superintendent Dr. Barbara Eason-Watkins; both presidents of the La Porte County hospitals — Dr. James Callaghan (Franciscan St. Anthony Health-Michigan City) and Thor Thordarson (IU Health-La Porte Hospital); and Michigan City Mayor Ron Meer. These are all very bright people who have looked at this and also see nothing but upside.
We wholeheartedly endorse this process and wish the county luck moving forward.