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Follow TURFMore DOUBLE TAXATION and Robin Hood financing schemes being contemplated by lawmakers against the taxpayers of Virginia. Public private partnerships (P3s) are the most expensive, most anti-taxpayer, sovereignty-destroying way to do toll roads. Gov. McDonnell ought to take a page out of the playbook of Gov. Nathan Deal in Georgia -- it's not worth selling-off state sovereignty to get a road built. Under NO circumstances should the profit margins of private corporations supercede the public interest! P3s put taxation in the hands of corporations whom the public cannot hold accountable for out of control taxation. They also grant state-sanctioned monopolies to private interests who then control public infrastructure for a half century or more! There is no 'softening' a P3 to make it acceptable enough, scrap it and let the State build it!
Midtown Meltdown
Posted on March 30, 2012 by James A. Bacon| 6 Comments
by James A. Bacon
Bacon's Rebellion blog
The controversy over tolls on the $2.1 billion Midtown Tunnel/Downtown Tunnel project in Hampton Roads is spreading statewide as transportation advocates in other parts of Virginia ponder the implications of what it means for them. In a missive distributed yesterday Robert Chase, president of the Northern Virginia Transportation Alliance, warned that one “rumored” scenario under consideration by House-Senate conferees would be to renege on the $2.1 billion public-private partnership agreement with Elizabeth River Crossings (ERC), even if it meant triggering multimillion-dollar penalties.
Hampton Roads legislators are up in arms over the deal, which would slap tolls on users of the two tunnels and the Martin Luther King Expressway later this year in order to finance major improvements that aren’t scheduled to be complete for two years. Two weeks ago, the Virginian-Pilot reported, Del. Chris Jones, R-Suffolk, was researching how the contract could be terminated as an option of “last resort.”
If Chase is correct, Jones’ idea has morphed from a research project into an option under consideration by House and Senate budget conferees in Richmond. Jones, as it happens, is one of the six House conferees, as is Johnny Joannou, D-Portsmouth, whose district is at ground-zero of the controversy. Under the Jones scenario, writes Chase, the state “would legislatively scrap the $2.1 billion Hampton Roads Midtown-Downtown Tunnel PPTA contract and mandate that only a new Midtown Tunnel be built entirely with state funding through over $1 billion in federal GARVEE financing.”
Needless to say, that idea won’t play well in Northern Virginia, or anywhere else for that matter. Conferees are weighing the idea of providing an additional $300 million, plus $150 million already agreed upon, to defray the cost of the Rail-to-Dulles METRO rail project in Northern Virginia, but half or more of that project financing still will be paid by commuters on the Dulles Toll Road. It’s an open question how NoVa lawmakers will cotton to an arrangement that extracts $4 tolls from Dulles Toll Road commuters for a rail service they aren’t even using while Norfolk commuters get a new tunnel for free.
Notes Chase:
Scrapping the PPTA deal would mean breaking a legally binding contract with the consortium, incurring financial penalties and totally circumventing the Commonwealth Transportation Board/state and local planning and approval processes. Not a real private-sector confidence builder for a state with virtually no construction dollars desperate to attract private sector investment. …
Virginia has already committed $400 million to the Downtown/Midtown/MLK Extension project to buy down tolls. To provide the total $1 billion (and allow Hampton Road residents a toll-free trip) the Commonwealth would have to add another $600 million in GARVEE funds or essentially all of the $1.2 billion in authorized GARVEE bond funds for the next 10-12 years to a single Hampton Roads project. (GARVEE bonds are repaid from future federal revenues meaning that about $100 million/year in future federal revenues will go to a single Hampton Roads project as opposed to being leveraged across many throughout the state.)
Transportation officials say that this would most likely kill Northern Virginia’s I-95 Express HOT Lanes project for which GARVEES are targeted and potentially several others including the Route 7/Belmont Ridge Road Interchange and the Leesburg Bypass/Sycolin Road interchange.
In sum, scrapping the ERC contract would derail the McDonnell administration’s entire transportation grand strategy, which is based upon leveraging the borrowed dollars through public private partnerships. Accordingly, the chances of the governor going along with the Jones scenario are just about zero. I would conjecture that Jones doesn’t really want to un-do the ERC deal, he’s just using the prospect of disaster as leverage to extract enough money from the state to offset tolls until the tunnels are built.
Two lines of argument would support such a bid. First, it is entirely unreasonable by any standard to ask people to pay tolls for transportation improvements they are not using. (Admittedly, that argument didn’t work for Dulles Toll Road commuters, so it may not be a strong one.) Second, if the state is forking out up to $450 million for the Rail-to-Dulles to provide toll road relief, it’s hard to argue that it can’t afford a measley $100 million or so for Hampton Roads.
Whatever happens, Virginia has reached a sad state of affairs. Billions of dollars of bond proceeds are sloshing around uncommitted. The monies are not subject to the usual transportation formulas which, though flawed, at least ensure that funds are distributed around the state in a manner roughly approximating population and need. The criteria for allocating bond monies, it appears, will be he who screams the loudest gets the most money. Political considerations will supplant economic considerations, and the results will be sub-par.
Welcome to the New Dominion.
Update: Here’s another reason why the Jones scenario of cutting the cost by building just one tunnel won’t work: The improvements to the Midtown Tunnel, Downtown Tunnel and Martin Luther King Expressway are designed to work as a network. The MLK Expressway will funnel a lot of drivers off the Interstate to the two tunnels, according to my source. The plan is to provide up-to-date info about driving conditions at both tunnels to commuters on the MLK, by signs or other means, to steer them to the least congested facility. Building the components of the plan one by one won’t deliver the same congestion-mitigation benefits.
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Link to article here.
Gov. McDonnell now open to delaying tunnel tolls
By Debbie Messina
Virginian-Pilot
April 3, 2012
Gov. Bob McDonnell is considering delaying toll collections on the Midtown and Downtown tunnels, plus other undisclosed measures to soften the impact of a public-private deal that could otherwise collect tolls as early as July 1.
The administration has agreed to an amendment in a public-private partnership deal that makes postponing tolls possible.
"The amendment was negotiated with our private partner, Elizabeth River Crossings, because the governor wanted the ability to possibly delay the collection of tolls from the public," according to a statement from the governor's office. "This, as well as other initiatives, are currently under evaluation by the administration."
It indicates a shift in position. Last week, the governor's office said: "Altering this binding contract at this point would result in significant financial costs to the Commonwealth and would compound longstanding congestion issues in the region."
Last week, the administration also claimed that a toll delay would violate contract law.
Ultimately, the final decision whether to postpone tolls will be negotiated by the governor and the General Assembly. A delay would cost the state money, which would have to be appropriated by the legislature.
The $2.16 billion deal with ERC - to build a second Midtown tunnel, improve the existing Midtown and Downtown tubes and extend the Martin Luther King Freeway to I-264 - has sparked local outrage and prompted some lawmakers to try to undo the contract altogether.
A provision to postpone tolls until January 2014 was pushed through the Senate version of the budget last week by state Sen. Louise Lucas, D-Portsmouth. It did not make the House version and is now part of budget negotiations.
The amended contract with ERC allows toll postponement up until substantial completion of a second Midtown tube. It states that the Virginia Department of Transportation and ERC "will collaborate with each other to explore strategies for postponing the commencement of the imposition, collection and enforcement of tolls."
It also says the state would have to pay ERC for the lost revenue. Lucas had indicated that would be an estimated $125 million if the tolls were delayed until January 2014. During construction, about $350 million is expected to be collected in tolls through 2016, according to VDOT.
Lucas said of the governor's new position: "I am extremely happy to hear that information for as hard as we fought for the people of Hampton Roads, and Norfolk and Portsmouth particularly."
But not all lawmakers are happy.
"So we'd borrow money to pay a private concern to delay tolls?" questioned Del. Chris Jones, R-Suffolk. "This is not a good deal as it's structured."
Jones wants the scope of the project as well as the profit allowed to ERC dialed back in order to lower tolls.
Del. Kenny Alexander, D-Norfolk, said he appreciates the governor has "softened up a little bit," but added: "Postponing the inevitable is not good enough.... The whole deal is still flawed and needs revisiting."
He said the $1.84 rush-hour toll level and the fact that it can increase by 3.5 percent or more every year is troublesome. He also dislikes that the state may have to pay ERC for lost revenue if a competing water crossing is built.
Alexander and some Portsmouth residents have hired Richmond attorney Patrick McSweeney to wage a legal battle against tolls. Collecting tolls four years in advance of project completion is one of the challenges in the lawsuit, which has yet to be filed.
"The governor and administration probably determined they could not win that one," Alexander said.
Delaying tolls, he said, "will only strengthen our position because they're starting to make concessions on what we're arguing."
Meanwhile, Lucas said the prospect of toll relief doesn't resolve the broader road funding debate. Delaying tolls gives the General Assembly "the opportunity to sit down and have an adult conversation" about how to pay for the upkeep of existing roads and building new ones, she said.
The senator favors increasing Virginia's 5 percent sales tax by 2 cents and tying increases in the state's 17.5 cent per gallon gas tax to inflation. Lucas suggested she'll propose legislation to do that.
"I'm not saying people are going to be happy with it, but I know people aren't happy with tolls," Lucas said.
Pilot writer Julian Walker contributed to this report.
Debbie Messina, 757-446-2588,