Turnpike lease and ‘foreign’ companies

The latest news that Senate President pro tem Joe Scanarti will be introducing a “hybrid” Turnpike lease plan (Tribune Review story), which appears to be different that Senator Gordner’s legislation. While the details are still sketchy, Capitolwire (subscription) is reporting that while Scarnati’s bill would not restrict foreign companies from bidding, it would involve revenue/profit sharing with the state:

While Gordner said his plan would exclude any foreign companies or investors from bidding on the turnpike lease, Scarnati said his bill wouldn’t go that far. But Scarnati’s bill will direct some of the profits from any private turnpike investment back to the state’s coffers.

We discuss revenue sharing as an option in our report, The Emerging Paradigm, and Reason touches on that in their FAQ on leasing state toll roads. Essentially this option would net a smaller up-front payment, but potentially greater revenue in later years.

Meanwhile, Toll Roads News weighs in on the potential of barring “foreign companies” from bidding. The concerns:

1) Most potential bidders are “international” in scope? How would one define a “foreign” company? Is it based on their corporate headquarters? Shareholders’ mailing addresses?

What if they already have large operations here in the US (like several potential bidders do)? What if their shares are publicly traded on the NYSE? What if their financing package is put together with subtantial US investment, like pension funds? What if they set up a US based subsidiary to manage the Turnpike, hire workers from in-state, pay state taxes (as was the arrangment in the Indiana and Chicago leases)?

2) Ssuch a ban would likley be a violation of US trade law and trade agreements?

3) It is silly to refuse a higher bid that would “insource” investment revenue from overseas.