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Wilbur Smith & Associates (the company that did the traffic & revenue or toll viability study for this bankrupt toll road) projected overblown traffic counts where barely a third ever showed up. They also based the success of the road upon PURE speculation that further development would occur around the toll road (yet the market busted). This stuff has very little science and a whole lot of guesswork behind it. There was a court case in the 90s where a Judge challenged the flawed thinking that driving habits remain the same under a tolled versus non-tolled scenario.
This is the big achilles heel of the toll road advocates. They often think that the same level of traffic (or close to it) will show up whether its tolled or not (thinking if they keep the free routes congested enough or give people no other viable alternatives, they'll just "have to pay" because they have to get to work somehow). But common sense tells us when you have to pay more for something, naturally people try to avoid the new tax even if it means a more circuitous route, moving closer to work, or staying stuck in traffic.
This is why toll road policy is failing. It's basically no different than real estate speculation or day trading, except that, for the most part, it's being done with taxpayer money. Instead of building a network of massively underutilized roads, let's fix our congested freeways and move on. "Innovative financing" ought now to be code for "risky failure."
Greenville SC Southern Connector toller files for bankruptcy
Posted on Fri, 2010-06-25 02:06 , Toll Road News
Connector 2000 Association developer and operator of the Greenville Southern Connector tollroad filed for bankruptcy today in US Bankuptcy Court in nearby Spartanburg, South Carolina. The filing done under chapter 9 of the US Bankruptcy code that handles broke government entities has been expected for some time.
The Association defaulted on debt service in January.
Moves in the state legislature to bail out the lenders went nowhere.
No equity investment is involved since this was one of a bunch of not-for-profits that were all the rage as "innovative finance" in the 1990s. All have crashed. They were promoted by developers who made their money in the construction and had no interest in the viability of the roads as ongoing businesses.
Revenues from the Southern Connector are not sufficient to service the debt, the Connector 2000 Association toiler says in its US Court filing because actual traffic and revenues are "substantially less than projected."
"The debtor is insolvent" their lawyers say bluntly in the Ch 9 filing. $500m was borrowed. Equity was zero.
Court papers note Wilbur Smith Associates projected 21k/day in the opening year but fewer than 7.5k showed up.
Traffic and revenue has remained about a third of that forecast by WSA when the association launched the tollroad project in this small South Carolina town in the late 1990s. The highway on the southern/southwestern fringe of the city only made sense as an access and development road. The road is too indirect to provide any time savings for long-distance traffic which has stuck to the free interstates.
A semi-belt route, 2x2 lanes and 16 miles, 26km long the Southern Connector tollroad has interstate designation I-185.
Tolls for 2-axle vehicles are $1.00 cash, 75c transponder and 50c at the ramp plazas which are unattended. Tractor trailers pay $3.00/$2.25 sat the mainline plazas and 50c at the ramps.
Trouble is for most trips through the Greenville area the main drag untold I-85 remains much more direct and quicker. And even for east-west trips traversing the Greenville area to points south the old I-85/I-385 combination was quicker than transiting I-185. It swings too far out.
The pike failed also because it was conceived as catering to continued development of Greenville as a light industrial and warehousing hub on the Atlanta-Charlotte corridor in the mid-1990s, just when that particular bubble was bursting. Most of the land on either side of the Connector remains undeveloped.
Revenues are running at barely $5.5m/yr and toll transactions 12.5k/day. Tolls are taken at two mainline and three ramp toll plazas along the road so vehicles on the road are substantially less than the transaction number.
The last annual financial report available is for 2008.
Designers, engineers, lawyers, consultants and construction companies made their money in the development and construction and left the resulting mess to Connector 2000 Association a phony public-private entity without any real owners. So much for "innovative finance" as touted by ARTBA and other DC lobby groups.
Lehman Bros NY which collapsed in Sept 2008 was the principal promoter of Southern Connector bonds.
The road opened Feb 27, 2001. First tolls were collected March 13, 2001. It continues in operation using toll revenues to pay for operational expenses.
see http://www.southernconnector.com/
filings
http://www.southernconnector.com/Zfilings.htm