Canadian Consulting Engineer

Province and engineering consortium disagree over Highway 407 tolls

An Ontario court has decided that despite the objections of the provincial government, SNC-Lavalin and other owners...

January 10, 2005   Canadian Consulting Engineer

An Ontario court has decided that despite the objections of the provincial government, SNC-Lavalin and other owners of the 407-toll road in Toronto are entitled to increase the rates for vehicles travelling along the highway.
The 407 highway stretches 108 kilometres east-to-west above Canada’s largest city.
The former provincial Conservative government completed the first 69 kilometres of the toll expressway in 1998, then sold it to a private consortium a year later. SNC-Lavalin, the largest consulting engineering company of Canada, is part of the consortium that now owns and operates the route. The other parties are two foreign companies, Cintra Concesiones de Infraestructuras de Transporte and Macquarie Infrastructure Group.
Highway 407 was built as the world’s first openly accessed, electronically controlled toll highway. Since it opened, traffic has increased to the point where it sees 330,000 vehicles a day on average, up 40% compared to 1999. When the consortium tried to raise the rates by 1 cent per kilometre, the current provincial government objected and tried to block the fee hike in court. However, on January 6 a Justice of the Superior Court of Ontario upheld an independent arbitrator’s decision that the consortium was free to increase the charges by the terms of their contract.
An editorial in the Toronto Star was highly critical of the private company owning the toll highway and say it is a “chilling thought” that the company has the lease for another 93 years. In “No More 407 deals,” the editors point out that tolls on the highway have risen 200 per cent in five years.
The 407 consortium, however, argues that the public and the government are getting good value for money. It notes that the government built the highway for $1.6 billion but sold it for $3.1 billion — making a profit of over $1.5 billion. It says it has invested $710 million to lengthen and enhance the highway, extending it by 40 kilometres in less than two years. It needs to raise rates to keep traffic flowing, and to pay for maintenance and operations, including snow plowing.
The consortium also argues that toll rates are reasonable compared to others in the U.S. The Highway 407 peak toll for light vehicles is now 14.95 cents per kilometre. In comparison, a toll highway on Route 91 in California charges 54 cents per kilometre, and the Skyway in Chicago charges 25 cents per kilometre.
The provincial government of Ontario is said to still be seeking ways to control the toll rate hikes.


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