Articles

Fizzled Launch

Whoops. The General Assembly created a transportation authority for Hampton Roads and empowered it to raise a lot of money. But the authority has no organization, no staff. Road projects could be delayed for months.

by Peter Galuszka

“Well, Doc Holley, do you want to do it? Do you want to be on the finance committee?” asked Norfolk Mayor Paul Fraim, who is chairman of the newly-created Hampton Roads Transportation Authority.

“Sure I’d like to be on the finance committee,” replied Dr. James W. Holley III, Portsmouth mayor and an HRTA member. “But I’d like to have some finances to manage,” he added with a smirk.

Holley’s quip won amused titters at the second formal meeting of the HRTA, created by this year’s General Assembly as part of a flimsy compromise to raise significant new funding for roads for the first time since 1986. Holley’s crack came just after HRTA board members discovered they won’t have the money anytime soon to hire an executive director or a staff to help process the funds to pay for $9 billion in road and bridge projects throughout the region.

HRTA’s predicament underscores just how many hurdles the authority has to jump over to do its formidable job. Authority members, appointed from the city councils of 12 participating Tidewater cities and communities, have been tossed into the fray by the General Assembly, which had failed for years to come up with a solution for funding Virginia’s growing transportation problems.

The HRTA was created, along with a similar entity in Northern Virginia, as part of a highly far-reaching and controversial bill – the Comprehensive Transportation Funding and Reform Act of 2007. Fearing disgruntled voters in upcoming November elections, the General Assembly scrambled this spring to find ways to fund projects that mitigated traffic congestion in the state’s most hard-pressed regions. Simultaneously, Republican lawmakers desperately wanted to avoid being tarred with the accusation of having raised statewide taxes.

The result was omnibus legislation that reforms the way state and local governments build and maintain roads and raises up to $1 billion a year by issuing bonds, tapping the General Fund and raising a welter of taxes, levies and fees, including the now-infamous civil “fees” on abusive drivers. Perhaps the most far-reaching change was to allow the two most traffic-congested regions, Northern Virginia and Hampton Roads, to raise regional taxes to fund regional projects.

During the intense bargaining and politicking it took to get the unwieldy bill approved, legislators seemed to leave a few things out. Not clarified were such key issues as how the regional authorities should be organized and who should pay to start them up. As a result, it could take months -- a half year or more -- before the Hampton Roads Transportation Authority can begin its work in earnest.

The General Assembly mandated that the HRTA must undertake its key job – assessing tolls and an estimated $168 million in annual taxes and fees – by January 1 and get the six key projects on track. These include building a third crossing across Hampton Roads, erecting a new limited access highway along U.S. 460 and building a toll road called the Southeastern Parkway in Chesapeake and Virginia Beach.

At its second official meeting, on Aug. 10, however, Hampton Roads officials learned they don't have the money to hire an executive director or staff. The director’s job is now being handled on an interim basis by Arthur Collins, whose day job is executive director of the Hampton Roads Planning District Commission. The planning commission also is supplying temporary staff work for HRTA.

“I sure hope they get around to hiring their own director,” says Collins, who will probably moonlight for the HRTA well into next year.

Even if the HRTA had staff, it's not even clear exactly what the authority's responsibilities are. What, for instance, is the HRTA’s relationship to the Southeastern Parkway? "That’s a great question,” says Loretta Markham, location studies project manager at the Virginia Department of Transportation in Richmond. She has helped oversee the environmental impact process for the Southeastern Parkway, which has been in planning stages since 1986.

By the Aug. 10 meeting, the HRTA had been so whipsawed by recent events that no one was in the mood for thinking through such questions. The previous two nights, the authority had sat through difficult public hearings in Virginia Beach and in  Hampton. At the latter, some 200 protestors harangued board members about setting up public authorities to assess taxes without adequate public representation. They wailed about having to pay more for housing and cars to build roads miles away that they probably won’t use. Some urged the HRTA to simply disappear.

The public outcry caused the HRTA to lose members. Poquoson Mayor Gordon Helsel, the authority’s 12th appointed member, abruptly resigned, protesting, “I don’t think this is good for my city and [it's not] what I was elected to do. Not levy a bunch of taxes on jurisdictions I don’t represent.”

By contrast, other HRTA members, including Louis R. Jones of Virginia Beach, believe that they have a responsibility to do the General Assembly’s bidding. “We were brought on to push through these six projects and that’s what we’re going to do,” says Jones.

As a sop to the protestors, the authority moved to approve a new set of assessments and fees but delayed having them take effect from January until April 2008. That is designed to give the General Assembly, which meets in January through March, a chance to “rationalize” them.

In so doing, the Authority further pushed back the time it can actually start drawing revenue to build a staff and start implementing the mandated road and bridge projects. Authority members noted that advertising the job of executive director and interviewing applicants can take a minimum of four to six months, meaning that the position is not likely to be filled until well into 2008.

Once the staff comes on board, the Authority has to appraise and negotiate several very expensive, very complex projects. The $168 million a year in revenues will not be sufficient in themselves to pay for roughly $8.8 billion in new construction projects; they will have to be supplemented by tolls. Additionally, lacking the means to build and maintain the roads itself, the Authority will have to rely upon public-private partnerships -- similar to those that manage the Dulles Toll Road and Dulles Greenway in Northern Virginia -- to raise the up-front capital, build the roads and bridges, and maintain the assets.

But working out terms and conditions for such partnerships will not be easily done. If the HRTA doesn't bargain hard enough, the private sector partners could make excessive profits at the expense of taxpayers and toll payers. If it pushes too hard, deals might crater and projects don't get built. What's more, the HRTA has to watch its liabilities: It would be a fiasco if a project went sour, the private-sector partner bailed out, and the authority got stuck with the bills.

The launch of the $324 million Pocahontas Parkway as as a public-private partnership serves as a cautionary tale. Ridership on the Richmond circumferential highway didn't materialize as expected and toll revenues fell short, threatening the security of the bonds. Gov. Timothy M. Kaine avoided a major embarrassment by unloading the Parkway onto a consortium consisting of Transurban, of Melbourne, Australia, and its bank, DEPFA Bank of Dublin, Ireland, in a 99-year lease deal.

Without a dedicated staff, the HRTA will be unable to negotiate deals of comparable complexity for its six major highway projects. If the creation of a functioning organization takes until 2008, it will be even longer before the Authority can close deals on its first projects. As Northern Virginia has learned from the delays in gaining federal regulatory approval for the first phase of the Rail-to-Dulles project, time is money. Each year that passes materially increases the costs of the projects. Assuming a construction-industry inflation rate of six percent, the delay could cost as much as $50 million a year.

Despite the current confusion, some local officials, such as Robert Matthias, assistant to the city manager of Virginia Beach, doesn’t believe that the HRTA will be seriously hamstrung doing its duty as outlined by the General Assembly. Others aren’t so sure. Skip Stiles, an environmentalist with the Hampton Roads-based Wetlands Watch who is critical of several of the six HRTA projects, says the current HRTA is “like trying to use a computer without an operating system. It’s hard too boot up in the morning.”

-- August 14, 2007