The history of American transportation “public private partnerships” indicates that virtually all P3 — and perhaps literally “ALL American P3″ — shell companies go bankrupt BEFORE paying back anything on their federal loans, or paying off the “private activity bonds” which they sold to finance part of the debt.

When these firms go bankrupt, who loses? Taxpayers. 1) We don’t get paid back the money Uncle Sam lent the privates and 2) we are left to pick up paying off the bonds which were guaranteed by the state and which usually sell for at least double “junk bond” rates. Why are these bonds so lucrative? Because so many P3s (again, maybe ALL) go bankrupt within 15 years; before any highway wears out and needs significant maintenance. Therefore, it seems the private is taking a ton of risk and therefore the bonds pay very well BUT is not taking any risk. We taxpayers are.

Present Virginia Sec. Transportation Aubrey Layne recognized that his predecessor gave away Virginia’s transportation future with $6 billion (yes, with B) in 2012 P3s and has, no doubt, done a much better job negotiating Virginia’s latest P3, the I-66 project, but he’s a state official and has been interested in protecting Virginia taxpayers; not federal taxpayers. Compare, for a second, that in 2012, 460 Mobility Partners put up absolutely zero dollars for that disaster but, according to Sandy Hausman’s NPR reporting this week, the I-66 partners are putting up over $500 million (but still seeing enough of a bonanza that two companies bid on a much more stringent contract) and still, obviously, realizing a profit. Or they wouldn’t have bid! That should underline, even if nothing else, what a horrifying reality P3 transportation projects have been for taxpayers.

This P3 transportation issue is very complex but the whole idea, as promoted today by Donald Trump, that somehow the privates can build and operate something more efficiently and economically than government can SHOULD be greatly examined by the news media. And it is not being. Ms. Hausman’s reporting barely scratches the surface but it’s probably the best mainstream coverage at least in Virginia. (Bacon’s Rebellion online has done reasonable work).

Cintra, which as Ms. Hausman notes won the I-66 contract, went belly-up this spring with Texas SH-130, a tollroad from San Antonio to Austin — heavily promoted by former Texas governor and present U.S. sec of energy Rick Perry — and from the gitgo the project was absurd. It is some 20 miles east of an already existing interstate highway, I-35, which is DIRECTLY between the two cities. Instead of the “free money” that Perry promised pre-construction, virtually no driver wanted to spend an extra 40 minutes (at a minimum) using a road they had to pay tolls on instead of the most direct route. Even though Texas increased SH-130 speed limits to the highest in the nation; even though Texas bought down the tolls (wasting additional taxpayer dollars) Cintra’s shell company still went bankrupt, leaving taxpayers holding empty notes and stuck with paying off the bonds. SH-130 is so underutilized that airplanes have on at least two occasions landed on it. It generated — as almost and again perhaps ALL of the P3 transport toll roads do — less than half the traffic or income of what Cintra cronies projected when bonds were sold and federal loans obtained.

We taxpayers are told — pre construction — that tolls will pay off P3 bonds and back the notes and even honest media, like the Washington Post, parrot that line without any examination. Yet no one can find a single instance where that has actually happened; no American P3 toll road has generated the traffic or income that the privates projected which, again, is supposed to pay back taxpayers. There is no bell curve as one would expect if the forecasting of future traffic and future income was done correctly; all actual traffic is much below the projections; which then is inevitably given as the reason for the eventual bankruptcy. “For XXX reason, the drivers didn’t show up as expected and, reluctantly, the poor private had to give up the ghost” is what we’re told. Never is it suggested that maybe that was the business model.

Here in Virginia, our first P3, Pocahontas Parkway outside of Richmond has gone bankrupt TWICE in a little over a decade with both times, taxpayers losing out millions more than if we’d have built the project, and its extension, ourselves. The second bankruptcy was by a Transurban shell company. Transurban, an Australian financer, guess what, was the other bidder on the I-66 project. And guess what; another Transurban P3, the Capital Beltway Express, has already restructured its debt, a step towards bankruptcy, as it was drawing 1/5 of the tolls the private activity bonds had been sold on.

Cintra, again, is the contractor on the I-66 contract. How — if it had truly lost its own money on SH-130 — did this Spanish financier’s board of directors allow it pay over $500 million to Virginia (as we learn from Ms. Hausman’s reporting) to get another project which, the history indicates, will likely go bankrupt?

I applaud Sec Layne and Gov. Terry McAuliffe for managing to, at least, somewhat protect Virginia from another P3 scheme but the fact that Cintra and partners are willing to pony up $500+ million in this case should illustrate to Mr. Trump — and others — that P3s are designed to go bankrupt. They will obviously greatly increase our national debt. Those future bankruptcies won’t hurt Mr. Trump of course. He’s always used the bankruptcy laws to dump debt on other people — at least six times — and he won’t be in office when his $1 trillion investment fund yields yet another flood of taxpayer red ink. Besides, he doesn’t pay taxes anyway. He leaves that to the little people, like you and me.