by James A. Bacon
Many Virginians know the agony of driving to vacation in the Outer Banks at the peak of the summer season. Heading south between Chesapeake and Kitty Hawk, you follow four-lane roads jammed with as many as 50,000 cars on Saturdays. Then, if you’re staying in Duck, Whalehead or Corolla, you have to head back north through more congestion. It sure would be nice to have a bridge across the Currituck Sound directly to Corolla.
As it happens, the state of North Carolina was planning to build a seven-mile span from Coinjock to Corolla. The Mid-Currituck Bridge, expected to cost $411 million in its most recent incarnation, could save an hour’s driving time. The project worked its way through the traditional North Carolina project-approval system and, at one point, construction was expected to begin in 2012 and to be open to traffic in 2013.
I’m sure there are a lot of vested interests in the Outer Banks that would love to see new transportation capacity that would make it easier for even more visitors to come rent cottages, rent kayaks and go surfing. But North Carolina has instituted a system that we’re still working on here in Virginia: a methodology for ranking proposed highway projects according to cost, saved travel time, congestion relief, safety and economic benefits. According to the Virginian-Pilot, the Tarheels have scored some 1,284 projects and plans to release results for another 500 in May.
The result for the proposed Currituck Bridge: a score of 23.4 points out of a possible 100, giving it a rank of 178th in importance to North Carolina. It doesn’t look like the bridge will get state funding any time soon.
I have a problem with over-development of the ecologically fragile spit of land that originates in Virginia and extends almost unbroken all the way to Hatteras. The Outer Banks are a national treasure. Federal flood insurance subsidies are already encouraging excessive building on sand that could literally wash away with the next hurricane. The state of North Carolina doesn’t need to be subsidizing over-building as well.
That concern aside, I have a suggestion for the county officials of Currituck County who have been lobbying for the bridge. Don’t ask the citizens of North Carolina to pay for your bridge. Figure out how to pay for it yourself.
Issuing 30-year, tax-free bonds to cover the cost of $411 million bridge would require roughly $30 million a year in revenue. Could the bridge generate enough value for the tourism industry in the Northern Outer Banks to pay $30 million in financing costs and have local businesses come out ahead? If so, enact the needed legislation and get the deal done. If not, then the bridge, which is needed to accommodate peak traffic that occurs 13 or 14 Saturdays out of the year, would destroy economic value, not create it, and should never be built.
There are at least three potential financing mechanisms: tolls, value capture and excise taxes.
Tolls: A harried dad with antsy kids in the back seat would gladly fork over $10 or more to shave an hour off his drive to Corolla or points south. A toll could generate millions of dollars in revenue each summer to pay off the bonds issued to build the bridge. Indeed, before the project was put on hold, the Mid-Currituck Bridge project would have charged tolls. However, the North Carolina legislature envisioned the need to spend $28 million a year in gap funding, according to the News & Observer.
Value capture. Major beneficiaries of a bridge would be the owners of hotels and rental property. A bridge that cut driving time and made Currituck destinations the closest to Northern markets would allow owners to raise rents and generate more revenue. Set up a special district to impose a property tax surcharge to capture some of that added value and use it to pay off the bonds.
Resort meals tax. Other beneficiaries include owners of restaurants, shops and other beach amenities. Create a special resort tax district that collects an extra penny per dollar on retail sales. Apply that to pay off the bonds. Continue reading