Capitol Wire: Professor calls leasing the turnpike "risky" at hearing

I continue to cover the State Capitol for Capitol Wire, a service for which you don’t have a subscription, so I can only give you a taste. This is part of a post-graduate internship with the Pennsylvania Legislative Correspondents’ Association.

HARRISBURG (June 27) – Leasing the Pennsylvania Turnpike in the current financial market was called “risky, volatile and unpredictable” by one professor who studied the proposal and spoke at a House Transportation Committee hearing Thursday.

“Why sell your prize asset in a buyer’s market?” Dr. Patrick J. Cusatis, an assistant professor of finance at the Harrisburg campus of the Pennsylvania State University, asked the committee.

Cusatis was one of two Penn State professors who were hired by House Democrats to review the Rendell administration’s proposal to enter a 75-year lease with a consortium comprised of the Spanish multinational Abertis Infraestructuras SA and Citi Infrastructure Investors, a subsidiary of Citibank, for $12.8 billion.

The proposal calls for investing that $12.8 billion, and using the investment returns to fund roads, highways, bridges and mass transit systems.

Cusatis called details of that plan “ridiculous.”

A representative of global financial services firm Morgan Stanley, which has been retained by the administration to broker the deal and process its budgetary impact, was conciliatory towards the researchers but countered their assessment.

“We think this is a terrific market to do this,” said Rob Collins, the head of infrastructure and executive director of Morgan Stanley’s mergers and acquisitions group. “Infrastructure is countercyclical.”

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