Opinion: Two Responses on One Public-Private Tollroad Project
Brad German and Barbara Coufal: To Really Create Jobs, State Should Turn to Shovel-Ready Public Works Projects
Jennifer Russel’s recent guest commentary on the $11 billion plan to expand I-495 and I-270 for private-for-profit tollways is baffling [“Opinion: Public-Private Road Projects Will Boost a Flagging Economy,” Maryland Matters, April 23]. It is baffling why anyone should be thrilled when time ran out for the Maryland Senate to take up bills — overwhelmingly approved by the House of Delegates — to beef up taxpayer protection and oversight of public-private partnership projects, like this one.
This means for the time being there is no way to ensure the promises being made about the project to the public and elected officials are kept. As any business person knows, a promise that isn’t in writing and that can’t be enforced is meaningless.
The Maryland Department of Transportation is already scuttling some of the for-profit tollway’s marquee promises. Example: MDOT canceled the promise that contractors would pay union wages in an amendment to its request for qualifications from would-be bidders.
MDOT has also walked back the critical crowd-pleasing promise that taxpayers won’t have to pay a dime of the mammoth project’s costs. MDOT made explicit in a March document, called a “Transaction Summary,” that the state would share in the financial cost.
Another promise — that only tollway users would pay for the construction of the $11 billion road over the next 50 years — was further undercut when the Washington Suburban Sanitary Commission said moving water and sewer pipes to make way for the privatized toll roads would cost its customers nearly $2 billion in extra charges. What other costly surprises await Maryland residents and businesses? The abrupt end to the General Assembly session will make it much more difficult to find out.
That’s important for two reasons.
First, that taxpayers, on average, cover 44% of the funds for P3 projects sold as 100% privately financed, according to the Congressional Budget Office. Second, P3 toll lanes are, at the end of the day, more expensive to taxpayers than traditional financing, according to the U.S. Department of Transportation and other researchers.
What about the promise to use toll revenues for local mass transit? At this point, it isn’t clear if Montgomery and Prince Georges counties would see any real money until after the tollway company pays off its other obligations, like the project bonds (which can always be refinanced). Funding mass transit is a good promise and worth making clear and enforceable.
Next, Russel failed to mention decades of experience that adding lanes to roads ultimately leads to more traffic not less. Or the fact that privatized, for-profit tollways are designed to monetize congestion, not reduce it in any meaningful way for working families. That’s why it’s unlikely Transurban, other bidders or investors would be interested without a very firm promise of substantial, predictable and profitable congestion on I-270 and I-495 for the next 50 years (and bailouts if the predictions fall short).
Unfortunately, until the General Assembly strengthens state law, the public, other agencies and elected officials have no way to independently verify the private traffic and revenue studies MDOT is largely relying on to justify this $11 billion pig-in-a-poke.
Last point. Contrary to Russel’s claim about the impact of COVID-19 on commutes, this pandemic is providing our region with a successful proof-of-concept for mass teleworking. At the same time, traffic is collapsing on P3 roads across the world, leading to downgrades on some P3 tollway bonds and calls from tollway companies for taxpayer support.
Given the privatized for-profit tollways are at least two years away from moving dirt, the uncertainty of future commuting levels, the dubious cost-benefit and the fragility of P3 promises, there is no reason to rush ahead on a project that may already be obsolete, will worsen global warming, take away houses and hundreds of acres of parkland, degrade our streams and rivers, and provide little hope of fulfilling its basic promise for shorter rush hours.
We should instead turn to genuine, financially sound and shovel-ready public works projects to create jobs now.
–BRAD GERMAN AND BARBARA COUFAL
The writers are current co-chairs of Citizens Against Beltway Expansion.
Ross Capon: Maryland Needs Transit, Not More Beltway, I-270 Lanes
Jennifer Russel’s guest commentary has it backward when she argues that coronavirus strengthens the case for the $11 billion plan to add toll lanes from the American Legion Bridge up the Beltway and I-270 to I-370 [“Opinion: Public-Private Road Projects Will Boost a Flagging Economy,” Maryland Matters, April 23].
The medical crisis has caused telecommuting to skyrocket, casting doubt on the financial viability of this supposedly taxpayer-free, public-private partnership project. Ford CEO Jim Hackett says Ford’s telecommuting population zoomed from about 1,000 pre-Christmas to 125,000, “and the productivity is high” [Barron’s, April 20]. Individuals nationwide are rethinking commuting. Corporations see opportunities to save on office space. Traffic is collapsing on P3 roads across the world, leading to downgrades on some tollway bonds, and calls and lawsuits from tollway companies seeking taxpayer support.
The medical crisis also argues against new construction that would further worsen air quality, increase our vulnerability to respiratory diseases and ignore U.N. Secretary-General Antonio Guterres’ call to “build back better” by providing “the framework for more inclusive and sustainable economies and societies.”
Contrary to Maryland Department of Transportation claims, the tollway project will cost taxpayers. Due to a 1958 Washington Suburban Sanitary Commission/State Highway Administration agreement, WSSC customers would have to pay up to $2 billion to move WSSC facilities to make way for the new lanes.
As well, MDOT has walked back claims that taxpayers won’t pay any project costs. MDOT’s procurement plan includes “sharing of risks … to provide an offeror [a bidder] confidence that their solution may be implemented.” MDOT also has canceled the promise that contractors would pay union wages.
The recent General Assembly session failed to pass bills to force accountability, so there is no protection against further broken promises — whether unknown, or already known but concealed, as WSSC’s $2 billion was until January.
Even before the coronavirus crisis, according to a Congressional Budget Office report, taxpayers paid substantial amounts toward P3 projects elsewhere that had been promoted as 100% privately financed.
The prospect that highway demand may not recover to pre-crisis levels is a red flag for taxpayers who will be on the hook if private investors start construction but can’t finish. Indeed, P3 economics were dicey even pre-crisis; investors preferred an all-Beltway project through Silver Spring but encountered political obstacles.
The unenforceable, recent promise to give some toll revenues to counties for mass transit is nice, but the most relevant transit projects are state, not county, responsibilities. These include improved MARC Brunswick line service and transit across the American Legion Bridge.
This project will offer congestion relief only to the relative handful of drivers willing to pay stiff, Virginia-style tolls. Indeed, the P3’s viability depends on maintaining enough congestion on the non-tolled lanes to incentivize toll-lane use. MDOT has concealed the results of its computer model calculations of expected toll rates and profit-and-loss for each segment.
Given the General Assembly’s failure to protect taxpayers and assure accountability for this 1950s-style project, citizens must continue to fight hard against this project, including with strong rebuttals to the forthcoming draft environmental impact statement. Relentless public pressure, and perhaps investors studying harsh economic realities, is needed to force a reluctant MDOT to shift to badly needed transit investments.
The writer is a 40-year resident of Montgomery County, past president of the Wyngate Citizens Association and president emeritus of the Rail Passengers Association, formerly the National Association of Railroad Passengers.
Did someone forward this to you?
Get your own daily morning news roundup in your inbox. Free. Sign up here.