Michael West - The Australian - September 27, 2006
AUSTRALIA'S toll road projects, including Sydney's Cross City Tunnel, Lane Cove Tunnel and the M2, will not survive without continuing government subsidies and are likely to fail anyway, leaving taxpayers to foot the bill for billions of dollars in debt, a transport conference will hear today.
Reopening criticisms of toll road financing he first made a year ago, a paper by Sydney academic John Goldberg claims the modelling on which the projects are engineered is to maximise profits to investment banks rather than provide the best possible service for motorists. A copy of the paper - "The fatal flaw in the financing of private road infrastructure in Australia" - obtained by The Australian, says the Cross City Tunnel (CCT), Lane Cove Tunnel (LCT) and M2 (Hills Motorway) projects are "not likely to be able to amortise (pay down) debt by the end of the concession periods".
"The analysis shows that the probability of insolvency is generally very high even if the time value of money is ignored.
"Unless the government has guaranteed the project against failure, equity investors will lose heavily," says the report.
Dr Goldberg cites the experience of the Sydney Airport Railway public-private partnership (PPP) project which collapsed in 2000 leaving taxpayers to foot the $800 million bill.
The NSW Government has refused to make public the toll road project documents, except for the CCT, claiming it does not want to breach confidentiality agreements with the operators.
If there is no government guarantee, Dr Goldberg claims superannuation funds and investors might be liable for the debts in the event of collapse as they owned units in the stapled trust structure.
Dr Goldberg's analysis is based on Macquarie Bank's base case model for the M2 project.
Spokespeople for the LCT, Transurban (M2, M7, and City Link in Melbourne) and the CCT rejected Dr Goldberg's thesis yesterday. "We didn't agree with Dr Goldberg last time he made claims like this and we don't agree now," said Transurban's general manager corporate affairs, Mike Roberts.
Some 40 per cent of City Link's revenue and 35 per cent of M2 revenue consists of government subsidies under the infrastructure bond scheme.
Dr Goldberg claimed the traffic forecasts for the CCT had been made to fit in with the investment case for the project.
"Even if the traffic projections were to be met, there would be insufficient cash flow to amortise (pay down) debt and pay equity dividends," says the report.
Last year's paper from Dr Goldberg was rejected by the toll road operators and Macquarie Bank executive Warwick Smith complained to University of Sydney vice-chancellor Gavin Brown demanding that the university dissociate itself from the academic. Professor Brown subsequently issued a press release dissociating the university from Dr Goldberg.
Read more in The Australian
Showing posts with label public private partnership. Show all posts
Showing posts with label public private partnership. Show all posts
Tuesday, July 24, 2007
Thursday, July 12, 2007
We need Renters' Bill of Rights
By Faith Chatham - July 11, 2007
Tax-assisted or tax abated housing has been one of the more common public private partnerships for many decades. The abuses in this system are legendary. Despite many Federal and state regulations for rent subsidy vouchers, there appears to be little transparency to alert potential renters to the practices of apartment owners before they move in. Citizens on fixed incomes frequently discover that apartment management companies and owners are deliquent in paying for vital services and refuse to keep the units up to code. These discoveries are usually made after the resident has depleted limited resources in moving into a complex.
There is no requirement that apartment owners disclose to potential tenants:
1. Failures within the last year to correct code violations before the inspector has returned for a reinspection.
2. Crime in the complex.
3. Who owns the complex.
State law requires that nursing homes post complaints against their establishment and nursing home code violations, (and their resolution) in a public place and make them available to all potential new residents VEFORE the paperwork is signed for a resident to move into the home. A similar law is needed for apartment complexes.
Apartment investors frequently hide behind management companies. It is difficult to know who actually owns an apartment complex.
For decades it has been acknowledged that many investors get tax abatements and/or tax exempt bonds to construct low income or senior/handicapped housing and switch the housing to regular housing as soon as the bonds are paid off. The tax payers investment in private public partnerships for subsidized housing frequently yields greater return to the investor than to the taxpayer or targeted group needing housing assistance.
The news media occasionaly covers stories of tenants having their electricity, garbage pickup or water turned off although they have paid their rent. Tenants have a difficult time learning of financial difficulties of landlords until it has escalated into a crisis. When the garbage trucks had not emptied the dumpster for over a week at my complex, I called the disposal company and was told that unless I was the owner or authorized representative of the owner they would not tell me if the owners had paid their bill. Residents who have submetered electricity have similar difficulties learning if the complex has paid the electric utility bill.
Apartment complexes run financial background checks on tenants before they lease them apartments. Tenants have difficulty learning who owns the majority of the corporations which own their complexes. Without knowing who owns the complex, tenants can move from one complex trying to escape bad management and move into another one with similar problems because they have the same owners.
Slum lords who abuse the system hide behind holding companies, investment companies and hired management companies and escape the scrunity of their neighbors who are bothered by the nusiance of crime-ridden apartment complexes which have numerous sanitation and safety code violations. Some even run for political office or get appointed to city boards and commissions.
We need stiffer fines for landlords who do not correct code violations by the time the inspectors return for the reinspection. We need a tenants Bill of Rights which requires apartment complexes to disclose to ever prospective tenant before they sign a lease:
1. The code violations which were not corrected by the next reinspection for the past 12 months
2. The number of reported crimes and the types of crimes
3. Names, addresses and contact information for all investors who own at least 30% of the complex.
All tenants should be provided a release from the complex instructing trash collection and utility companies to reveal to the tenant the status of payment for services by the complex. Tenants who have submetered electricity, water and/or gas service should be allowed to learn the status of payment by the complex for those services.
4. All tenants should be allowed to form tenants associations.
5. Complexes should be fined if they advertise amenenties which they do not support or maintain. If they advertise swimming pools or gyms, but do not maintain them and allow tenants to use them, they should be penalized.
I think that a process similar to that
Tax-assisted or tax abated housing has been one of the more common public private partnerships for many decades. The abuses in this system are legendary. Despite many Federal and state regulations for rent subsidy vouchers, there appears to be little transparency to alert potential renters to the practices of apartment owners before they move in. Citizens on fixed incomes frequently discover that apartment management companies and owners are deliquent in paying for vital services and refuse to keep the units up to code. These discoveries are usually made after the resident has depleted limited resources in moving into a complex.
There is no requirement that apartment owners disclose to potential tenants:
1. Failures within the last year to correct code violations before the inspector has returned for a reinspection.
2. Crime in the complex.
3. Who owns the complex.
State law requires that nursing homes post complaints against their establishment and nursing home code violations, (and their resolution) in a public place and make them available to all potential new residents VEFORE the paperwork is signed for a resident to move into the home. A similar law is needed for apartment complexes.
Apartment investors frequently hide behind management companies. It is difficult to know who actually owns an apartment complex.
For decades it has been acknowledged that many investors get tax abatements and/or tax exempt bonds to construct low income or senior/handicapped housing and switch the housing to regular housing as soon as the bonds are paid off. The tax payers investment in private public partnerships for subsidized housing frequently yields greater return to the investor than to the taxpayer or targeted group needing housing assistance.
The news media occasionaly covers stories of tenants having their electricity, garbage pickup or water turned off although they have paid their rent. Tenants have a difficult time learning of financial difficulties of landlords until it has escalated into a crisis. When the garbage trucks had not emptied the dumpster for over a week at my complex, I called the disposal company and was told that unless I was the owner or authorized representative of the owner they would not tell me if the owners had paid their bill. Residents who have submetered electricity have similar difficulties learning if the complex has paid the electric utility bill.
Apartment complexes run financial background checks on tenants before they lease them apartments. Tenants have difficulty learning who owns the majority of the corporations which own their complexes. Without knowing who owns the complex, tenants can move from one complex trying to escape bad management and move into another one with similar problems because they have the same owners.
Slum lords who abuse the system hide behind holding companies, investment companies and hired management companies and escape the scrunity of their neighbors who are bothered by the nusiance of crime-ridden apartment complexes which have numerous sanitation and safety code violations. Some even run for political office or get appointed to city boards and commissions.
We need stiffer fines for landlords who do not correct code violations by the time the inspectors return for the reinspection. We need a tenants Bill of Rights which requires apartment complexes to disclose to ever prospective tenant before they sign a lease:
1. The code violations which were not corrected by the next reinspection for the past 12 months
2. The number of reported crimes and the types of crimes
3. Names, addresses and contact information for all investors who own at least 30% of the complex.
All tenants should be provided a release from the complex instructing trash collection and utility companies to reveal to the tenant the status of payment for services by the complex. Tenants who have submetered electricity, water and/or gas service should be allowed to learn the status of payment by the complex for those services.
4. All tenants should be allowed to form tenants associations.
5. Complexes should be fined if they advertise amenenties which they do not support or maintain. If they advertise swimming pools or gyms, but do not maintain them and allow tenants to use them, they should be penalized.
I think that a process similar to that
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