November 20, 2009 / 12:55 AM / 10 years ago

UPDATE 1-Conn privatizes highway rest stops, no cash payment

(Adds Carlyle comments, paragraphs 3-8, 11)

NEW YORK, Nov 19 (Reuters) - Connecticut Republican Governor Jodi Rell said on Thursday that the state agreed to a 35-year public-private partnership to upgrade service plazas along major highways.

The partnership between the Department of Transportation and private equity giant The Carlyle Group [CYL.UL] is expected to reap $500 million for the state over the life of the deal.

Barry Gold, a New York-based Carlyle partner, said by telephone that the agreement was the first of its kind in the United States though similar models are used overseas.

A backlash against public-private partnerships in the United States developed after some groundbreaking deals, in Chicago and Texas, for example, were criticized for allowing developers to benefit at the taxpayers’ expense.

Unlike some of those deals, Connecticut gets no upfront cash payment, Gold said. Such arrrangements often required the state or city to relinquish ownership with a long-term lease.

Connecticut will get about half the $500 million as revenue sharing. About $250 million more will be spent by its private partners to improve the facilities.

The model could be used to help raise the billions of dollars U.S. states and cities need to improve roads, bridges, tunnels and other infrastructure but cannot afford.

Some 23 service plazas along the Connecticut Turnpike, or Interstate 95, the Merritt and Wilbur Cross Parkways and Interstate 395 will be upgraded and all of them will get new fast-food restaurants: Subway and Dunkin’ Donuts.

Carlyle has a stake in Dunkin’ Donuts. Subway, the world’s No. 2 fast food restaurant chain by sales, is represented by developer Doctors Associates/Paul Landino.

McDonald’s Corp (MCD.N) is the main fast-food restaurant at Connecticut’s rest stops now.

The project is also expected to add 250 jobs over five years, boosting the total workforce in the plazas to 1,000. (Reporting by Tom Ryan and Joan Gralla; Editing by Gary Hill)

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