CHICAGO — Ohio is looking for advisors to help it explore privatization options for the Ohio Turnpike.
The state’s request for letters of interest marks the formal start of the effort to lease or enter into a public-private partnership to operate the Turnpike, one of several privatization proposals pushed by Gov. John Kasich.
The winning firm will help the state explore several options for the Turnpike, including various P3s and a long-term lease, and the impact of a lease on parallel routes. If the state opts to go for a long-term lease, the firm will help craft a request for solicitation of bidders for and eventually help select a winning bidder.
The advisory team must have P3 experience with brownfield leases and financial analysis experience that includes the debt market and municipal bond experience, the state said in its request for letters form.
Ohio currently operates only one toll road, the 241-mile Turnpike, running east to west through the northern part of the state. The road is operated by the double-A rated Ohio Turnpike Commission, which also sells debt for the Turnpike. It is a relatively rare issuer that last sold new-money bonds in 2001.
The state’s new 2012-2013 budget authorizes Ohio to enter into a P3 or long-term lease of the Turnpike and includes the request for letters of interest process as a first step.
Kasich has said a lease, which the budget restricts to 75 years, could generate up to $2.4 billion. Of that, the state would have to pay off $600 million of outstanding bonds, which need to be defeased in the event of privatization.
In recent talks, the governor said he wants a deal that would provide ongoing revenue to the state instead of just an up-front cash payment.
The consultant contract would cover three phases, the first of which is expected to last four months, with the second phase lasting six months, according to the request for letters of interest.
Following phases would include providing information to the General Assembly about the proposal and selecting a final bidder.
The transaction is a joint project of the Ohio Department of Transportation and the Ohio Office of Budget and Management. Compensation will be negotiated and structured on a fee-for-service basis.