Citigroup Study Supported Act 44, Citigroup Makes Millions

As many who have been following the Act 44/I-80 Tolling fiasco are aware, the Turnpike Commission used a Citigroup Analysis to support their push for Act 44, tolling of I-80, and to undermine competitive bidding of a lease. This analysis is referenced in their "Response to Request for Expressions of Interest".

See Footnote 3 (page 2) and especially Footnote 12 (page 5) stating "The Citigroup Analysis should be read in its entirety to understand the assumptions and qualifications in the results stated therein. A copy of the Citigroup Analysis is on file with the Pennsylvania Turnpike Commission."

There are several pecularities with this:

1) While the Commonwealth Foundation and others have tried to obtain this study, we have been rebuffed by the Turnpike Commission (in spite of their insistence that the study be read). See denial letter here.

2) The Turnpike Commission has reported they paid nothing for the Citigroup analysis.

While such an arrangement may seem odd on the surface, it all becomes clear after reading this story:

The remaining $11.6 million is to be used for capitalized interest, insurance and costs of issuing the bonds, including $230,000 to Dilworth Paxon, a Philadelphia law firm; $137,500 to Cohen & Grigsby, of Pittsburgh, the underwriter counsel; $10,000 to Hopkins & Co., of Oak Park, Ill., financial underwriter; and an amount not yet determined to Citi, part of Citigroup Inc., of New York City, senior underwriter for the bond issue.

In other words, as senior underwriter Citigroup stood to make millions off of Turnpike Commission bonds, but only if Act 44 were approved, and (wink-wink) only if the study they conducted supported Act 44 borrowing and tolling I-80.