Portsmouth Takes a Hit from Tunnel Construction

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Vehicle traffic through Downtown and Midtown tunnels. Image credit: James V. Koch. Click for larger image.

by James A. Bacon

The City of Portsmouth has been clobbered by the imposition of tolls on the Midtown Tunnel and Downtown Tunnel connecting the city to Norfolk, and hammered again by construction-related disruptions to service on the tunnels. Combined, the impact of tolls and disruption have reduced quarterly taxable sales by $24 million annually, materially harming businesses and crimping tax revenue, finds James V. Koch, president emeritus of the economics department at Old Dominion University in a new study.

In the report, “The Impact of Tolls on the City of Portsmouth: The Evidence 15 Months Later,” Koch is especially critical of the Virginia Department of Transportation (VDOT) and its private-sector partner, the Elizabeth River Company (ERC), for providing motorists inadequate warning of the interruptions to traffic disruptions, thus creating widespread uncertainty among discretionary drivers “east of the river” who might otherwise travel to stores, recreation, churches or social gatherings in the city. “In many drivers’ minds, tunnel closures have become sufficiently unpredictable that they are not going to take chances,” he writes.

Koch does not criticize the decision of VDOT under the McDonnell administration to impose tolls on the formerly toll-free tunnels in order to finance construction of new tunnel lanes and related land-side transportation improvements to alleviate some of the worst traffic congestion in Hampton Roads. Benefits will be felt throughout the region. But he does note that Portsmouth is suffering disproportionately.

Says Koch: “My rough estimate is that Portsmouth is impacted 31 percent more than Suffolk by the tolls and closures, 459 percent more than Norfolk, and 616 percent more than Virginia Beach.”

Bacon’s bottom line:  It’s no surprise that imposing tolls where there were none imposes economic pain. What I find most interesting is Koch’s conclusion that the impact of construction-related disruptions was almost as severe — $10 million of the $24 million — but could be partially mitigated if ERC and VDOT did a better job of alerting drivers, either through advertising or signage, of those disruptions. That is a management issue, not an inevitable consequence of the construction project.

Koch thinks the hit to taxable sales could get worse this year and next. However, the region should start feeling the benefits when the project is complete. As Koch writes:

When all of the construction is completed (and setting tolls aside), the cost of driving in and out of Portsmouth will decline. Vehicles will be able to travel at higher speeds, fewer traffic jams will confer time savings, travel will become much more predictable, vehicle wear and tear will decline, and there will be diminished pollution.  To the extent these reductions in costs exceed the size of the tolls being paid, they will make Portsmouth a more attractive place to live and/or to locate a business.

From a macro-economic perspective, Portsmouth may wind up better off in the long run. But that won’t be much consolation to the businesses that Koch thinks very well could go out of business in the meantime. VDOT and ERC need to act quickly to mitigate what harm they can.

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4 responses to “Portsmouth Takes a Hit from Tunnel Construction

  1. Is Portsmouth paying for the tunnel? who is paying for the tunnel?

    you talk about paying for what you use -right?

    do you see an issue here involving transportation infrastructure subsidized economic development?

    how much of the new tunnels should citizens of that area pay for – and how – what means? How much of the tunnels should the rest of the taxpayers in the state pay for?

  2. I remember not that long ago that one of the arguments coming from that region was that since that region was more prosperous than ROVA that ROVA “owed” them help .

    Then we heard that the money that belonged to Hampton was being diverted to NoVA.

    The other night at the Fredericksburg MPO meeting – it was stated that Fredericksburg is not getting back what it generates in taxes because it’s being “diverted” to ROVA, NOVA and Hampton.

    Oh and that the operator of Transurban is “lying” about their numbers … as well as screwing folks making “honest mistakes” about getting on the HOT lanes with “improperly working” transponders.

    Oh and they don’t like the fact that segments are tolled so that you’re not guaranteed the toll – for the next 30-40 miles.

    so Transurban is corrupt and ..horrors.. a “for profit” company.

    and when you mentioned higher gas taxes – then it’s the Govt that is “corrupt” and squandering taxes so we can’t have higher taxes.

    so folks in general are hating life … because the evil twins – VDOT and the “for profit” toll folks are just corrupt and up to no good – and destroying people’s ability to live in one place and commute 40+ miles to work in another place.

    Oh.. and did I forget the US460 fiasco that we’re still looking for the culprit so we can burn him at the stake for being such an idiot.

    as I survey the landscape when it comes to transportation – I find a darth of folks who are willing to deal with the funding realities and who won’t slide into conspiracy theories about why we have congestion and tolling.

    we make a deal about using the tobacco fund for economic development and how dicey that is and yet many of us think transportation money should be about economic development also.

    I won’t say it never should be – but I WILL say that it should have an ROI and the folks who want the ED should be the ones footing the bill and ensuring it does have an ROI. The idea that the ROI is a separate issue as long as someone else is funding… it.. well.. that’s pretty amusing…

    so VDOT is squandering the money so we can’t get it to do economic development with… oh my….

  3. A few points that may be worth mentioning for folks in ROVA are as follows:

    The Midtown Tunnel is presently a relatively dark, dangerous two-lane two-way artery that will have its capacity effectively doubled when the parallel tube is in place, the present tube is rehabbed and both are connected via MLK freeway extension to I264.

    The Midtown Tunnel is presently and will remain the preferred route to and from the Peninsula via Western Freeway from Monitor-Merrimac to central Portsmouth and western Norfolk. Port container truck traffic will continue to clog (if not worsen) this crossing’s usage when MTT is finished, the Patriot Crossing being probably decades away.

    Koch’s jobs graph reveals graphic differences between where some folks live and where they work. Only about 27% of Portsmouth residents work in their city; for the Beach the number is over 50% live and work in same city. This suggests an added commuting expense (read tolls) for many in Portsmouth (~ 200 work days/year X ~ $2.50/day and with a dramatic escalation in prospect in future years).

    For a South Hampton Roads population of over 1 million there are presently only six tunnel and ten bridge roadway lanes available to cross the Elizabeth River. Contrast this with the Peninsula where there are many roadway alternates. We love our SHR waterways but crossing one in rush hour is not usually fun.

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