of the recent Dulles Greenway toll increase (see
Sheep's Clothing") apparently haven’t
clouded the judgment of at least one key
transportation steward. Del. Joe May, R-Loudoun,
understands the critical importance of
private-sector investment in expanding and
modernizing Virginia’s road system.
need to get [the Greenway] right," said May
when opening discussion of the latest
Transportation Accountability Commission meeting.
As chair of both the
Commission and the
House Transportation Committee, he understands
that a legislative witch hunt against the Greenway
would chill private-sector interest in financing
other badly needed road projects statewide.
investment in the Commonwealth’s transportation
system has never been more critical, and political
risk is like kryptonite for private investors. As
traditional transportation funding sources dry up,
elected officials cannot afford to scare off the
private firms able and willing to invest across
the state. Given state efforts to advance
private-sector financing of the Capital Beltway
expansion and I-95/I-395 in Northern Virginia, and
Tunnel and rebuild of U.S.
Hampton Roads, there’s a lot at stake for
drivers across the Commonwealth.
first step to “getting the Greenway right” is
to understand it. The world of transportation
finance and public-private road partnerships is
inherently complex, and the Greenway is unique in
Greenway is the only toll road in the country that
is regulated by a state utility commission, a
structure established under the 1988 Virginia
Highway Corporation Act facilitating the road’s
development. Subsequent private toll roads
have been developed on a purely contractual basis
under a later law. A popular misconception is that
the Greenway’s private operator has the
discretion to charge whatever it chooses, but
that’s not so. The State Corporation Committee (SCC)
has the ultimate authority to approve or deny
proposed Greenway toll increases. It can approve
an increase only if the operator proves that
several criteria have been met.
of those criteria is that toll rates provide the
operator no more than a “reasonable” rate of
return. There are no guaranteed returns on
investment, however. In fact, after 12 years of
operation the Greenway has yet to turn a profit.
why. When the road opened in 1995, the explosive
growth projected in eastern Loudoun had not yet
materialized, and traffic volumes (and hence,
revenues) did not match projections. The Greenway
defaulted, but a financial restructuring gave the
project a new financial base (at considerable cost
to the initial private investors). Then Loudoun
boomed, and the traffic arrived. In fact, since
2000, the operator has spent over $50 million to
add new lanes to handle the increased demand.
the Greenway has spent more than $40 million over
the same period to upgrade nearby state and local
roads and bridges to improve Greenway access and
traffic flow. Stated differently, the private
operator has paid to improve non-tolled, public
roads that Loudoun citizens benefit from whether
or not they actually use the Greenway.
Greenway is also the only privately financed U.S.
toll road that pays local property taxes, to the
tune of over $2 million annually. Additionally, it
pays almost $750,000 per year to the State Police
to service the road. Once you add all of these
together, it becomes apparent that a lot of
Greenway dollars flow into public coffers every
the Greenway’s only revenues are the tolls, its
operators only have two options to meet its
rapidly rising debt service obligations, cost of
operations and maintenance expenses in coming
years: Increase the number of daily road users or
increase tolls on a semi-regular basis. Given that
rush-hour traffic levels on the Greenway are
constrained by choked public feeder roads at
either end, toll increases become the only option
to raise necessary revenues.
some motorists have complained that the recent
increases (to be phased in over several years) are
too high, they fail to realize that tolls could be
lower if state and local officials were to exempt
the Greenway from property taxes and get serious
about addressing congestion on its feeder roads
(which would benefit Greenway users and non-users
the end of the day, Virginians should understand
that the Greenway would not even exist had private
investors not taken on tremendous risks to raise
the needed capital to acquire the land and build
it. Imagine what traffic would look like today if
the Greenway didn’t exist and its nearly 60,000
daily customers were instead jockeying for space
on Routes 7 and 28!
the end of the state/operator agreement in 2056,
the operator will hand over the Greenway to the
Commonwealth at no cost. So, the state (and the
public) will ultimately receive a road that it
didn’t actually have to build itself.
some politicians want to make hay out of Greenway
tolls, thoughtful officials like Del. May
understand that privately financed roads benefit
everyone by providing new infrastructure to
improve mobility and reduce congestion, something
the public sector is proving itself increasingly
unable to accomplish.
December 10, 2007