Well, well, well. Those high-occupancy-toll (HOT) lanes are really turning into quite the bargain for Virginia taxpayers, eh?
...under an agreement Virginia signed with the private companies building high-occupancy toll lanes on the Capital Beltway, the state could be liable for millions of dollars a year if too many carpoolers, who will be exempt from tolls, use the lanes.The carpool subsidy is in addition to the $409 million that taxpayers are investing in the $2 billion, 14-mile project, expected to break ground next week.
Under the 80-year contract signed in December, when gas prices were much lower, Virginia officials insisted that carpools of three or more people and buses be allowed to use the lanes for free and offered to reimburse 70 percent of the tolls carpoolers didn't pay.
At the time, transportation officials estimated that the provision would cost the state $1 million a year. The carpool subsidy will continue for 40 years or until the builders make $100 million in profits, according to the contract between Virginia and Transurban, an Australian company, and Fluor Corp. of Texas. The subsidy kicks in when carpools exceed 24 percent of the traffic on the lanes.
"Oh, you're kidding!" said Corey A. Stewart, the Republican chairman of the Prince William Board of County Supervisors, who carpools to the District several times a week and said there are better ways to spend the state's limited transportation dollars. "We're paying to build a road for private companies, and now we're continuing to subsidize the private company. This just gets worse and worse."
Yes, very possibly for the first time, I agree completely with Corey Stewart -- this HOT Project from Hell really does get "worse and wozrse" the more you look at it.
First off, this is large-scale corporate welfare at taxpayer expense, just like the no-bid deal to Bechtel on the rail-to-Wiehle...er, Dulles project. As an added bonus, this deal reeks of corruption and crony capitalism. As Doug in Mount Vernon wrote on July 3, "Dominion, Transurban.....how can he defend this kind of politics where monied special interests are OBVIOUSLY paying to get the results they want, regardless of whether it's what's best for the Commonwealth of Virginia and its citizens?"
Second, the incentives in this particular case are completely perverse; encourage carpooling, save energy, help the environment...and get PENALIZED?!? What. The. You-know-what?!?
Third, why are we putting billions of dollars into new roads anyway, at a time when we should be investing in smart growth and in non-fossil-fuel-based modes of transportation?
Fourth, are these HOT lanes for rich people really the way to go, when lower income people are already hurting? Doesn't this just provide wealthy people the ability to buy their way out of traffic jams, while everyone else sits there and stews?
Finally, the HOT lanes are a sign of public policy failure - in this case, the failure of Virginia's political "leadership" to allocate adequate public funding for important public projects. Instead, they've thrown their hands up in the air and thrown a wad of cash (and incentives) to the private sector. As Coalition for Smarter Growth executive director Stewart Schwartz says, "If we are going to pay this money ourselves, why not build it ourselves and keep the tolls for ourselves?" Good question, Mr. Schwartz. Does anyone have any answers, or does this really just get "worse and worse?"
Anyway, good summary - it pulls together many of the problems with this project and the problems that drove this project. Pathetic and desperate all around.
As usual, everyone is interested in the details when it is far too late to do anything about it.
To be fair to Transurban, the HOV payment is so that they make a return. No private entity would have entered into the deal if they couldn't make money.
Government should not bend over backwards to provide a private company an almost risk free venture at the expense of our tax dollars and our (formerly) public roads. If the company is not willing to step up with the risk then too bad - we should have to make due without 'em. Instead, our leaders are so desperate for any solution, or any appearance that they've found a solution, that they're selling out and handing these guys a fantastic deal. The whole thing stinks of desperation and lack of leadership all around.
Although in this case, I think it's more likely that a bunch of politicians and career VDOT employees decided that they must do something. Anything. So a terrible deal came along, it was the only deal they could grab, so they did. And such desperation usually results in a bad deal.
Perhaps, we need another audit of VDOT?
The risk you mention is a real risk. Utilization of the facility could decrease, their estimation of project use could be way off. The number of people who opt to pay the toll, might be much lower than expected. Though with incomes in FFX County and current traffic on 495, that is probably a less likely scenario. But they do bare risk, Transurban has plenty of competition to this facility. Equally, rising maintenance costs could outstrip their ability to effectively pass those costs on to toll payers. But on the upside, there is a revenue sharing with VDOT component in the agreement if it is a great success.
Again to the HOV payments, if HOV use exceed the target level, then that means less toll traffic will be on the road. That means that Transurban wouldn't be earning its return. And like any private enterprise, they would not be entering into this arrangement if they were not going to earn money from it. It is the same as when you procure services yourself from a private entity. Also, you neglect to mention that Transurban will be providing us service in return. They will be operating the facility and maintaining it to VDOT standards. Something the state does not have the money to do (not even Kaine was requesting this money in his transportation proposal).
The issue that you and I both ultimately have is with the PPTA. But Virginia(politicians of both parties) made this choice, and we have been unable to agree on how much to fund even road maintenance. So, this is what is left for new construction.
All that said, this deal is done. The agreements are signed. Governor Kaine already issued the following press release last December:
Addressing congestion with new solutions is critical to our economic well-being and quality of life. With this agreement, the Department of Transportation and their private and federal partners are addressing congestion on Virginia's busiest highway. Less than a year ago, working with the General Assembly, funding was committed to this project to help make it a reality. Our public-private partnership programs continue to demonstrate that we can meet the demands of our residents, visitors and businesses. By working together, we can manage congestion and provide new travel options for residents and businesses of Northern Virginia.
Not relevant to your comment, but my beef with politicians. It is ridiculous for any of the county board chairs to play dumb about this. Either they are admitting incompetence or trying to shield themselves from public backlash (aka cowardice). Own it people, own it!