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Local Governments Asking for Toll Plan Delays

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HOT lanes, in real life.

HOT lanes, in real life.

On Sunday, Cornelius Commissioner Dave Gilroy sent out an email outlining many of his concerns with the proposed HOT lane corridor on I-77 between Charlotte and Mooresville. As a result of his efforts, Cornelius Commissioners on Monday unanimously passed his resolution to ask the State of North Carolina to delay for 90 days the financial close of toll lanes on I-77.

Early this morning, Mecklenburg County Commissioner Jim Puckett posted that he is communicating with his fellow BOCC members in an effort to follow the Cornelius Town Board’s lead and pass a similar resolution.

Puckett writes, “I would like to place a resolution on our next meeting (May 12, 2015) agenda regarding a request for Gov. McCrory to delay the contract process as relates to the tolls on I-77 for 90 days to receive further public input and debate in light of the continuing changes that have occurred since the original public meetings and discussions. I need two additional commissioners to agree for it to be placed on the agenda and this email is a request to see if two of you would agree. The exact wording of course to be determined for your approval prior to official request for inclusion on agenda.”

As these efforts pick up steam, hopefully the state will actually start listening.

Below is the text of Gilroy’s original email.

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Hello Everyone,

Our Cornelius Town Board meets tomorrow night. Many good things are going on including a fairly disciplined FY 2016 Town Budget in the making (more on that soon). However, the huge I-77 Tolls project is going from bad to truly ugly as we near the final green-light on May 17th. My apologies for the length of this newsletter – again dedicated entirely to I-77 Tolls; hopefully you can find read a few minutes to catch up on this critical issue which will impact the quality of all of our lives in the coming decades.

For the past 4 years, I’ve vehemently opposed building Tolls throughout the I-77 north corridor for many common sense reasons so many citizens clearly recognize. The hard facts point to the potential for this project to be devastating for the majority of Cornelius citizens (whom I’m sworn to represent):

  1. We can and should clear the obvious bottleneck on I-77 from south Huntersville to Mooresville where the highway is still only 2 lanes even 40 years after it was built. Debottlenecking I-77 with 2 new General Purpose (GP) lanes in each direction would cost less than 20% of this pending I-77 HOT Lanes project
  2. Total Toll payments are projected to be $13 billion over the 50-year  life of NCDOT’s contract, not counting penalties and fees. That is all money drained from family budgets and our regional economy. Less than 1% of this total would be enough to build 2 additional General Purpose lanes throughout the stretch of I-77 that bottlenecks today. Incredibly, NCDOT’s Director of Technical Services Roger Rochelle validated this forecast in front of our Town Board several months ago, but explained that “the cost is not as high when you adjust for inflation”. The room broke out in laughter of course
  3. Travel times in the free GP lanes are expected to nearly double in less than 20 years. NCDOT’s modeling pegs round-trip Mooresville to Charlotte and back commute time at 1 hour and 21 minutes for 2015 (the year the Toll lanes were expected to open when NCDOT’s infrastructure/engineering consultant, Stantec, published their Technical Memorandums for the project). This round-trip commute in the general purpose lanes is forecast to take 2 hours and 21 minutes by 2035
  4. Initial tolls are expected to be $9 one way in to Charlotte and $12 back out for a total of $21 round-trip per day. This means that ordinary commuters, most of whom are not rich, will need to pony up $420 per month to commute to Charlotte on weekdays using the new lanes. The Tolls are then forecast to escalate to over $42 round-trip in by 2035, meaning commuters at that point need to budget an additional $840 per month.
  5. Drivers will not be able to get on and get off the Toll lanes at each exit as we do freely today. This traffic flow disruption will have major implications for citizens and especially local businesses in terms of convenience, easy access, and whether you are forced to pay a higher toll or drive further than you need because you can’t get on or off at your preferred exit
  6. Taxpayer bailout is highly likely based on the contract requirements for taxpayers to subsidize Toll revenue shortfalls (up to $75 million) and approximately $300 million coming from government-backed loans. HOT Lane projects elsewhere (even in much higher population density areas) have consistently required bailouts (more on this below).

Many of us have spoken out at every opportunity in recent years to oppose this project, with no impact on NCDOT’s bureaucratic inertia. We believe that the I-77 HOT Lanes will lock the vast majority of ordinary citizens in the Lake Norman region into a terrible choice between adding a new $420-840 per month expense to their family budget or suffering through decades of congestion in the free lanes far worse than even what we have today. This unfairness is horrific.

And yet, unbelievably, the news from the last couple of weeks has made all of this even worse:

  • Inexplicable new NCDOT contract terms. Our Cornelius Town Board was informed Friday of a mysterious contract provision requiring Cintra to be paid potentially tens or hundreds of millions of additional taxpayer dollars if any General Purpose lanes are added from Exit 28 to Exit 36 during the next 50 years. All former versions of the contract (prior to the one actually executed) explicitly required that any future transportation projects in the I-77 Toll corridor already shown in existing regional transportation plans would NOT trigger “compensation events” for Cintra. Nobody in government can yet explain how the contract changed in the final hours before execution
  • HOT Lane bankruptcies around the country. As one analyst summarized recently,

“Of course, no executive comes forward and says, “We’re planning to go bankrupt,” but an analysis of the data is shocking. There do not appear to be any American private toll firms still in operation under the same management 15 years after construction closed. The original toll firms seem consistently to have gone bankrupt or “zeroed their assets” and walked away, leaving taxpayers a highway now needing repair and having to pay off the bonds and absorb the loans and the depreciation. The list of bankrupt firms is staggering, from Virginia’s Pocahontas Parkway to Presidio Parkway in San Francisco to Canada’s “Sea to Sky Highway” to Orange County’s Riverside Freeway to Detroit’s Windsor Tunnel to Brisbane, Australia’s Airport Link to South Carolina’s Connector 2000 to San Diego’s South Bay Expressway to Austin’s Cintra SH 130 to a couple dozen other toll facilities. We cannot find any American private toll companies, furthermore, meeting their pre-construction traffic projections. Even those shell companies not in bankruptcy court usually produce half the income they projected to bondholders and federal and state officials prior to construction.” (Randy Salzman of Thinking Highways). See more detail here.

Salzman also explains how Cintra’s Spain-based parent company, Ferrovial SA, can leave a bankrupt local shell company (“I-77 Mobility Partners LLC” in our case) behind, while still doing just fine overall due to complex and poorly understood contracting provisions, design/build cost overruns, upfront operating/financing fees, revenue-impacting “compensation events”, tax receivable agreements, and other schemes put together by highly experienced and sophisticated financial engineers facing off with our NCDOT managers who readily admit that this contract is the first of its kind in NC. Even more disturbing is the pattern seen around the country where state DOT personnel end up leaving government for private sector jobs with transportation contractors in subsequent years

  • I-85 HOT Lane example Toll rates. Last week, this Atlanta commuting road hit a new record high for tolls – $11.00 for a one-way trip on the 16-mile stretch of road. NCDOT downplayed their own very similar forecasted rates for I-77 (summarized above), calling them “dynamic” and “unknown”, but we need only look down I-85 a couple hundred miles to see the truth about what’s coming here
  • $3 billion of new money through “Connect NC” highway bonds. Perhaps most offensive was the Governor’s proposal two weeks ago for a new $3 billion transportation bond package to “further extend” the benefits of the Strategic Mobility Formula (known to prioritize projects which would reduce congestion on major highways exactly like our section of I-77). This news makes an outrageous lie out of the only argument ever put forth by Toll advocates which has garnered even tepid support – the view that there is no money available for decades to widen I-77 without Tolls.
  • 94% opposed to Tolls in local polling. A recent Cornelius Today poll of our citizens is indicating that 94% of us (sample of approximately 700 voters) do NOT want this I-77 Tolls project to go forward with final financial closing in two weeks.

What can be done? I will try to pass a resolution this week to request a 90-day stay prior to financial close, to allow for an independent audit of this 50-year contract in light of recent unexplained irregularities in the contracting process. Such a resolution, at Cornelius level, will unfortunately amount to little more than a symbolic gesture. The reality is that only our state legislators can step in at this 11th hour… Please contact Senator Jeff Tarte and Representative John Bradford.

 

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