Chinese investors helping build major US road link
Updated: 2014-12-02 11:33
By Paul Welitzkin in New York(China Daily USA)
The Pennsylvania Turnpike's Delaware River Bridge, currently part of Interstate 276, carries traffic into New Jersey from Pennsylvania. It will be an important component in the Interstate 95 link. Provided to China Daily
The Pennsylvania Turnpike Commission is hoping to get Chinese investors to fund half of the cost of a key connection point for the Pennsylvania Turnpike and Interstate 95 (I-95), a major highway in the eastern United States.
The Turnpike Commission, based near Harrisburg, Pennsylvania, and the Delaware Valley Regional Center (DVRC) have formed a limited partnership to raise $200 million of the $416 million needed to build an interchange between the turnpike and I-95 in southeastern Pennsylvania.
The commission wants wealthy foreign investors, including the Chinese, to invest $500,000 apiece. In return, the investors can claim the investments for their applications for the EB-5 program, which grants immigration visas to foreigners who invest at least $500,000 in US projects creating at least 10 jobs.
"We provide the commission with the expertise and resources to manage the investors," Young M. Ban of DVRC told China Daily. The DVRC is staffed by personnel like Ban who also are employed at the Swarthmore Group, a Philadelphia-based investment firm.
"We have successfully filled our first tranche raising $50 million from 100 investors," said Ban. He said a majority of the investors are Chinese, and DVRC intends to launch a second tranche soon.
Investors will be loaning the commission the money for a five-year period. The loan will be backed by toll revenue. The Turnpike Commission has an A1 rating from Moody's and an AA rating from the Fitch Group, according to the DVRC website.
A report in The Philadelphia Inquirer said the Turnpike Commission will save about $35 million over traditional borrowing costs over five years and pay a 2 percent annual interest rate, about half the current rate for municipal bond-borrowing.
Why does the commission have to seeking funding from Chinese investors when it collects tolls from drivers using the Turnpike on a daily basis?
"The needs for the PA Turnpike's capital program exceed toll revenues collected, specifically for larger projects such as expansions, reconstructions and new interchanges - including the I-95 link," the commission said in an email to China Daily. "Therefore, the commission commonly finances larger capital projects by issuing bonds, and we use toll dollars to repay those bonds. So it is accurate to say that tolls pay for these infrastructure improvements because the tolls pay the debt that funds the project."
The PA Turnpike/I-95 Interchange Project is expected to create more than 5,000 new full-time jobs. The first stage includes building high-speed connections to the Pennsylvania Turnpike and I-95 in Bucks County, a new mainline toll plaza, and mainline widening. The completion of stage one will make the north-south I-95 continuous throughout the East Coast from Maine to Florida.
The other stages include the remaining six ramp movements of the new interchange, completion of the mainline widening and an additional bridge over the Delaware River parallel to the existing bridge. Stage 1 construction activities will proceed through 2017. Construction of the latter stages hasn't been scheduled.
Money raised from foreign investors (including the Chinese) through EB-5 has been used to fund other projects in the state at Temple University Health System and Comcast Corp in Philadelphia.