Charlotte Learns About Toll Lanes… Sort Of
At their regularly scheduled city council meeting this past Monday, Council members had the opportunity to learn about the I-77 toll lanes. NCDOT made a “managed lanes” presentation. The council asked lots of pointed questions, which is good. It’s the answers we take issue with.
They heard the usual rhetoric about “giving drivers a choice” and how the lanes will just become re-congested if we don’t make people pay to use them. They also heard more than one “misleading statement,” as these things have come to be called.
For example, when asked if the state can be sued if the project underperforms, NCDOT Spokesman (and former City Councilman) Warren Cooksey said, “Neither the state of North Carolina, nor any of its officers or anyone else associated with the government of the state of North Carolina or any local governments is on the hook for the debt.”
When pressed, he admitted the state could be on the hook for $75 million if toll revenues fall short. Kudos to the Council for doing their homework.
But the next statement was a doozy. When asked about potential liability to the state, he said, “the absolute worst-case scenario – everything falls to pieces – the state of North Carolina has a 26-mile improvement on I-77 for a grand total of $163 million.”
Ummm, except that’s just not true. If Cintra defaults, the contract contains umpteen pages detailing how they’ll get paid. In all but a few exceptional circumstances, you the taxpayer will be bailing them out for eighty cents on the dollar. When addressing the Cornelius Town Board back in July, an NDCOT official estimated the payoff amount at around $300M.
We thought the City Council ought to know about that and a few other items, so we sent them a letter today:
Dear Mayor and Council Members,
Thank you for taking the time to learn more about the I-77 managed lanes project. Several salient points were omitted during Monday evening’s presentation and we feel compelled to address them here:
- Except in certain narrow circumstances, upon default Cintra is entitled to compensation equal to eighty cents on the dollar of the remaining outstanding debt.[1] NCDOT has publicly stated this amount to be ~$300 million(2).
- This $300 million is in addition to the $88 million taxpayer contribution and $75 million DRAM. Thus, the total cost to the taxpayer is more on the order of $450 million. This is significantly greater than the “absolute worst case scenario” of $163 million described at the meeting.
- One quarter of project costs are tolling-specific and unrelated to road construction.[3] Construction costs are estimated at $448 million.[4] Therefore the cost to the taxpayers in the case of a Cintra default is approximately the same as if the project had been built with public funds.
- We submit that a general purpose lane solution through the Lake Norman region would cost the taxpayer approximately $100 million, far less than the anticipated taxpayer contribution to private toll lanes.
- Much has been made of the $88 million public contribution being leveraged to build $655 million in infrastructure. We remind the Council that the project requires use of all of the remaining the publicright-of-way, plus $88 million public dollars to build private toll lanes for the benefit of a private company and private toll lane customers.
- Toll lanes are by their nature exclusive. Toll rates are set such that 90- 95% of motorists using the public road decide against using the toll lanes. Toll lanes necessarily cater to the small fraction of customers with adequate means or motivation. We submit that public policy catering to less than a tenth of the public is poor policy.
As NCDOT continues to press forward with similar managed lanes projects through Charlotte, we hope you keep these concerns in mind. Please do not hesitate to contact us with any questions.
Respectfully,
[1] Executed Comprehensive Agreement, Exhibit 15, Section D.
[2] Presentation by Rodger Rochelle to the Town of Cornelius, July 7, 2014
[3] Report to JLCGO, p. 5, April 24, 2014
[4] Ibid.
We need your help! If you like PunditHouse, please consider donating to us. Even $5 a month can make a difference!
Short URL: https://pundithouse.com/?p=16570
