Bacon's Rebellion

  • Demographic Trends and Traffic Projections

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    James A. Bacon

    Allen E. Pisarski

    James A. Bacon

    Back in October, Northern Virginia commuting guru Alan E. Pisarski updated the Washington Metro board of directors on the latest trends in commuting behavior. He made a number of important points that should temper the agitation of those who believe that Virginia’s under-funded transportation system is doomed to be overwhelmed by increasing levels of traffic.

    (The following commentary is based upon data appearing in Pisarski’s PowerPoint presentation, which was shared with me. I did not hear the  presentation. The analysis is mine.)

    For starters, the national average travel time did not get worse over the past 10 years. Despite significant population growth, the average commute went from 25.5 minutes in 2000 to 25.3 minutes in 2010.That bears repeating: By this basic measure, commuting got no worse. Many people thought it would, but it didn’t.

    Furthermore, many of the demographic forces that propelled an increase in the number of Vehicle Miles Traveled in past decades are largely (though not completely) spent:

    • Population growth is slowing
    • Household formation is slowing
    • Labor force growth is slowing
    • Migration from state to state is slowing
    • Growth in driver’s licenses is saturated
    • Growth in car ownership is saturated

    I have examine all of these trends before except one — the slowing growth in the labor force. But this is fundamental. As Baby Boomers retires, succeeding generations are barely large enough to replace them. The workforce will continue to grow, but at an exceedingly slow rate. Why does that matter? Because workers account for peak traffic demand when they commute to work.

    If we combine these demographic trends with the rising cost of automobile ownership, there is no reason to expect Vehicle Miles Traveled to increase nationally at anywhere near the pace that it has in previous decades. Bottom line: Throw out all national traffic projections based upon the extrapolation of past trends.

    Admittedly, metro-level traffic projections are a different story. Population and economic growth in Northern Virginia, in particular, has outpaced the national averages, and it may well continue to do so. But that’s not the sure thing it seemed to be a few  years ago. NoVa’s economy grew in tandem with federal spending. At some point, federal spending will level off. It may even decline. Indeed, if you believe my Boomergeddon thesis, it will crash. While it’s possible that NoVa will reinvent itself, as, say Silicon Valley has, there is a degree of uncertainty and risk that did not exist before.

    Pisarski presented one other data set that should make Virginia’s policy makers perk up and take notice. Virginians are more likely than commuters in any other state in the country to leave their county of residence to go to work: 51.3% compared to a national average of 27.4%. That’s really extraordinary — and it’s an indictment of our collective failure to build communities with a balance of housing and jobs.

  • More Studies and Reports…

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    James A. Bacon

    Zombie come for money

    Funding Options for Low-Income Residents of Assisted Living Facilities
    Joint Legislative Audit and Review Commission
    The availability of assisted living for low-income Virginians is declining. Must… spend… more… money…

    How to Improve Virginia’s Solid Waste Program
    Department of Environmental Quality
    Division of Land Protection and Revitalization leadership has embarked on a culture change  that places primary importance on managing risk to human health and the environment, with less emphasis on doing things just “because that is the way we’ve always done them.”

  • Life Just Got More Difficult for the MWAA

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    James A. Bacon

    A bill filed Monday by Delegates Tim Hugo, R-Centreville, and Barbara Comstock, R-McLean, aims to prohibit state agencies from forcing bidders, contractors or sub-contractors to abide by a labor union agreement as a condition for participating in a public works project.

    HB 33 is clearly targeting the Metropolitan Washington Airports Authority (MWAA) decision to require bidders on Phase 2 of the Rail-to-Dulles project to sign a Project Labor Agreement (PLA). Word of the bill was disseminated by the Virginia chapter of the Associated Builders and Contractors, an open-shop trade association, along with a press release expressing support.

    The bill would make it difficult for a state agency to “issue grants” or “provide financial assistance” to any entity requiring a labor agreement. The McDonnell administration is asking the General Assembly to appropriate an additional $150 million state contribution — presumably to be routed through the Department of Rail and Public Transit — to finance construction of Phase 2 of the Metrorail extension. As the entity in charge of managing the project, MWAA would be the recipient of the grant.

    “Unfortunately, unaccountable political appointees controlled by special interests have been steering taxpayer-funded construction contracts to their political supporters by mandating union-favoring PLAs on projects funded by the state,” said Patrick Dean, president of ABC-VA. “This special interest favoritism has no place in Virginia.”

    “If enacted, this measure would prohibit state-assisted construction projects, such as Phase 2 of the multi-billion dollar Dulles Metrorail Silver line project, from mandating unwanted anti-competitive and costly PLAs on contractors,” said Dean. “Why should Virginia’s financial stakeholders pay for the majority of this project when the PLA mandated on the prime contractor by MWAA ensures discrimination against 96 percent of Virginia’s construction workforce – those who have freely decided not to join a union? Local workers will lose jobs to out-of-state union members given hiring priority via the PLA.”

    Eleven other states have enacted similar measures, noted Ben Brubeck, ABC National’s Director of Labor and Federal Procurement. “HB 33 allows contractors to voluntarily enter into union agreements like PLAs. Unlike a government-mandated PLA, it gives contractors a real choice, which can only increase competition and help taxpayers get the best possible product at the best possible price.”

    — JAB

  • McDonnell Orders Closure of Mecklenburg Prison

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    James A. Bacon

    Click on graph for more legible image. Credit: Pew Center for the States.

    Gov. Bob McDonnell has directed the Department of Corrections to close the Mecklenburg Correctional Center in Boydton. The  decision was prompted by by Pennsylvania’s decision to remove nearly 1,000 prisoners housed under contract in Virginia, resulting in a loss of $20 million a year.

    Mecklenburg inmates will be transferred to the Green Rock Correctional Center in Chatham, reducing the cost per inmate by $10,000 and offsetting some of the lost revenue, according to a press release from the governor’s office. With 730 offenders held in Mecklenburg on average, the implied savings amounts to $7.3 million yearly.

    Opened in 1976, the Mecklenburg prison was designed for maximum security prisoners. It made national news in 1984 when six death-row inmates escaped, touching off one of the biggest manhunts in Virginia history. But it has since been reclassified as a medium-security facility. Not only is the design outdated, requiring more guards than state-of-the-art facilities, but it requires substantial ongoing maintenance work.

    Nationally, the plummeting crime rate and declining incarceration rate (see chart above) is one of the few trends favorable to state budgets. Fewer prisoners translates into direct savings to taxpayers. Indeed, Virginia’s inmate population plunged 26% to about 30,000 between 2000 and 2010. As the population of Virginia prisons continues to decline, there should be additional opportunities to cut costs — unless other states reduce the number of inmates they outsource to Virginia facilities. It would be interesting to know how many more out-of-state inmates there are and what level of exposure the commonwealth has to further cutbacks.

    — JAB

  • State Pension Liabilities Still Growing

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    James A. Bacon

    (Click on graph for more legible image.)

    Despite lower wages and salaries, the commonwealth of Virginia’s employee compensation package remains marginally competitive (defined as  90% or more of private-sector compensation), thanks to superior retirement benefits.

    But that fat retirement plan may not count for much if employees regard it as hopelessly under-funded and question whether they will receive the promised benefits. Between 2009 to 2011, the gap between the Virginia Retirement System liabilities and the assets on hand to pay for them increased by 69 percent from $11.8 billion to $19.9 billion, reports the Joint Legislative Audit and Review Commission, in its new report, “Review of Retirement Benefits for State and Local Government Employees.”

    And continued under-funding could increase those liabilities in a big hurry. The chart at the top of this post shows how state contributions have consistently lagged requests since 1992. JLARC inquired what would happen if the state continued to fund only 75% of requested contributions. The answer: The unfunded liability could increase by an additional $34.5 billion over the next ten years. That would mean annual contributions would have to be $314 million a year higher by 2022 than if the state kept up full payments.

    Click on graph for more legible image.

    “By not making the full contribution,” writes JLARC, “the State loses the benefit of the compounding interest that would have been earned on the contributed
    funds. Had the employer contributions for the State employees’ and teachers’ plans been funded according to VRS recommendations in the past 20 years, VRS estimates that the trust fund would have ten percent more in assets, or $5.7 billion, than is currently the case.”

    The state has an obligation to make good its promises to state employees, many of whom have worked decades on the understanding that their lower salaries would be offset by generous pension benefits. Further, there is no excuse for saddling future generations of taxpayers to honor that commitment.

    — JAB

  • Where, Oh, Where Is the Logic to the State Educational Funding Formula?

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    James A. Bacon

    The state spent $4.75 billion in Fiscal 2011 in Standards of Quality Funding, or the equivalent of $3,933 per pupil, according to the latest report from the Joint Legislative Audit and Review Commission, “State Spending on the Standards of Quality (SOQ): FY 2011.” Sums allocated to localities varied widely. Impoverished Lee County in the heart of the Appalachian coalfields received the most funding, $6,573 per pupil. Alexandria, the wealthy city next door to Washington, D.C., received the least, $2,053.

    There’s no surprise about the biggest per-pupil recipients — they are all poor, low-population counties in Southside and Southwest Virginia. The list of jurisdictions receiving the least state support, however, is somewhat curious. Not surprisingly, given the redistributionist nature of the funding formula, affluent Northern Virginia localities predominate. But Northumberland, Lancaster and Rappahannock counties also make the list.

    Northumberland? The county’s largest industry is menhaden fish processing. It has a per capita income of $22,917. Compare that to the City of Fairfax, which has a per capita income of $31,247, and receives about the same level of state aid. I’m not saying this is bad or good. I’m just interested in the logic… assuming there is any. Despite JLARC’s effort to explain how the state dispenses its SOQ funds, the system for dispensing state funds to local governments remains as opaque and mystifying as ever.

    — JAB

  • Option One: Spend More Money. Option Two: Replicate Patrick County.

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    James A. Bacon

    The student pass rate for the reading portion of Standards of Learning has improved from 55% in 1998 to 83% in 2010. So says a new report from the Joint Legislative Audit and Review Commission, “Strategies to Promote Third Grade Reading Performance in Virginia.” But given the number of disadvantaged and disabled children in the population, it will be a struggle reaching the ultimate goal of 95%.

    Only one school division, Patrick County, exceeded that goal in 2010. However, progress can be met with mo’ money, JLARC contends. The two most costly initiatives proposed in this study — funding more reading coaches and literacy specialists for grades K-3 — would cost between $40 and $70 million.

    That’s one approach. Here’s another. Dispatch JLARC to Patrick County: population 18,500; unemployment rate, 9.7%; household income, 37% below the national average; dominant ethnic group, Bubba; and per pupil expenditures, 12% below the state average. Find out what Patrick County is doing, then replicate it. (Could it have something to do with an initiative launched by Patrick County native Gerald Baliles more than a decade ago? I’d love to know.)

    — JAB

  • Boosting the Productivity and Quality of Road Design

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    James A. Bacon

    truck mounted laser scanner

    Here’s how state highway departments do their project design work: An engineer sits at a work station equipped with Microstation 3-D modeling software and downloads topographical data provided by VDOT surveyors. To get new data, the engineer sends a request over to the surveying department. When a surveyor is available, he is dispatched to the site where he takes the measurements. Sometimes the surveyor, using his best judgment, gets everything the engineer wants. Sometimes not, and he has to be dispatched again. Then the engineer starts tinkering with the design. Often he (or she) realizes he needs more information, and he issues another request to the surveying department. It’s not unusual for the process to take weeks.

    3-D modeling software has dramatically increased engineer productivity, and GPS tools have dramatically increased surveyor productivity. But neither can do much to improve the clumsy interface between the two. Along comes TopoDOT, a Microstation plug-in created by Certainty 3-D, a start-up company in Orlando, Fla. All it takes is driving down the road and pausing periodically for the laser scanner in the truck bed to sweep the area. TopoDOT’s technology dumps the data into Microstation for instant access. Engineers now can gather all the topographical data they need in a single sweep. A job that once took days now takes hours.

    Engineers can work faster and without interruption, says Certainty 3-D CEO Ted Knaak. They can run more what-if scenarios. They can spend more time and effort into creating the most cost-effective design. “The information’s right at their fingertips.”

    I ran into Knaak in the exhibit hall of the Governor’s Transportation Conference last week. The hall was packed with vendors and consulting companies of all stripes, but Knaak’s was the only exhibit with any technological pizzazz.

    Knaak charges $7,000 for the software plus a flat fee for each use. The technology will enable DOTs to save a lot of money on surveying costs while speeding up design times. “Everything is 40 to 50 percent cheaper than what they did before,” he asserts. But even bigger savings can come from reorganizing work processes around the technology. In theory, better project design should translate into more cost-effective projects at a savings of millions of dollars. Virginia is one of five DOTs that have acquired a license, although at this point, only one person at VDOT is actively using it.

    There is no magic technology bullet to solve Virginia’s transportation woes. There certainly is no substitute for adopting more efficient human settlement patterns and for selecting projects that provide the greatest Return on Investment. But boosting VDOT employee productivity represents a small step forward, and engineering more cost-effective designs a pretty big one. Every little bit helps.

    — JAB

  • Cuccinelli: Not a Single Penny for Phase 2

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    James A. Bacon

    Speaking of the Rail-to-Dulles fiasco… Attorney General Ken Cuccinelli reiterated his opposition to the Metrorail expansion last week and predicted that the General Assembly would spurn a McDonnell administration request for an extra $150 million state contribution needed to refinance Phase 2 of the controversial project.

    “I would oppose putting a single penny of state dollars to bail out Phase 2,” he said, according to the Washington Times. “I hope that legislators will not agree to spend the $150 million.”

    A General Assembly refusal to kick in the $150 million would collapse a fragile deal brokered by U.S. Transportation Secretary Ray LaHood to cut costs and otherwise limit exposure to users of the Dulles Toll Road. The original financing deal called for contributions from Fairfax County, Loudoun County and the Metropolitan Washington Airports Authority, with the balance to be paid by revenues from Dulles Toll Road. But as estimated costs ballooned from $2.8 billion to $3.8 billion, creating the prospect of $20 tolls within a couple of decades, political resistance flared in Fairfax and Loudoun.

    Cuccinelli raised the prospect that the Loudoun Board of Supervisors, which has approved the LaHood deal, could reverse its position if the newly elected board  reconsiders the issue. He also said that the $150 million contribution would be a hard sell in a General Assembly looking for ways to close a $1 billion budget gap. “If I had to predict, I’d bet against.”

    Given Cuccinelli’s popularity among conservative Republicans, these comments won’t make it any easier for McDonnell to squeeze the money out of the General Assembly. It may be time to dust of those Bus Rapid Transit plans!

    — JAB

  • Stacking the Deck for Heavy Rail

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    James A. Bacon

    The Rail-to-Dulles project is a classic example of how the transit-selection process in the United States is rigged in favor of rail projects and seriously biased against buses, contends a new report, “Recapturing Global Leadership in Bus Rapid Transit,” published by  published by the Institute for Transportation & Development Policy. States the report:

    Numerous studies have shown that travel demand for large transportation infrastructure projects worldwide — especially rail projects — is frequently overestimated while costs are frequently underestimated, due to systematic optimism bias and strategic misrepresentation of project costs and benefits. Looking at 210 projects in fourteen nations, Bent Flyvbjerg found that nine out of ten rail projects overestimated passenger demand by an average of 106 percent. For seventy-two percent of rail projects, forecasts were overestimated by more than two-thirds. This bias is often a product of the political competition for public investment that pushes analysis to favor locally-preferred alternatives. …

    Under current law, the [Federal Transit Authority] has minimal requirements for what types of alternatives must be included within an alternatives analysis. … Moreover, the project sponsor can modify the alternatives in ways that will change their cost-effectiveness ratings. [An] example of this deck-stacking technique is the 2002 Dulles Corridor (West Falls Church to Dulles Airport) Environmental Impact Statement, which considered fewer stations for BRT alternatives than for the metro-rail alternatives, and envisioned BRT as a closed system, running only on the new alignment. The analysis thus failed to consider the most obvious potential strength of a BRT option in the Dulles corridor — the ability for buses to operate off-corridor at one or both ends of their trip, picking up and delivering passengers at locations off the BRT corridor, while gaining travel time advantages from use of dedicated bus lanes in the corridor. Indeed, it is this ability of open-system BRT to deliver many more one-seat rides that can accrue significant environmental benefits by making mass transit attractive to a larger share of the potential travel market.

    And why the bias for rail? Rail is backed by powerful constituencies like engineering firms, construction firms and labor unions coveting contracts to work on the often-massive projects (Dulles rail will cost more than $6 billion before it’s all done) and by land owners who stand to reap windfall gains in property values. By contrast, there is no local constituency for Bus Rapid Transit, the main beneficiaries of which are politically powerless out-of-state bus manufacturers.

    Question of the day: Is it still too late to consider Bus Rapid Transit for Phase 2 of the Metrorail-to-Dulles project? Or has that train left the station?

    (Hat tip: Larry Gross.  For another take on this story, see Toll Road News.)

    — JAB

  • Hold Hands, Sing Kumbaya and Avoid Taxes

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    James A. Bacon

    The least studied, hence least understood, component of 21st-century America’s political economy may well be the rise of the not-for-profit sector of the economy. While real GDP grew by 38% from 1995 to 2010, real total revenues reported by charitable nonprofits registered with the IRS grew by 65%. Nationally, medical services and education, two vast sectors dominated by not-for-profits, accounted for 15.1% of all employment in 2010.

    A new study, “Property Tax Exemption for Nonprofits and Revenue Implications for Cities,” explores the impact of the growth of the not-for-profit sector upon municipal finances. Not-for-profit exemption from property taxes can blow a big hole in municipal budgets, especially in metropolitan areas such as Pittsburgh, Philadelphia and Boston where medical services and education exceed 20% of employment (and probably a  higher percentage of economic activity). Arguing that the rise of not-for-profits displaces a greater tax burden on homeowners and for-profit businesses, the authors present a variety of arrangements, from municipal-service user fees to Payments In Lieu Of Taxes (PILOTs), to avoid the hollowing out of the tax base.

    In Virginia, the challenge is particularly acute in jurisdictions such as Blacksburg that are dominated by a large educational institution, or in the case of Charlottesville, by a large educational institution coupled with a large not-for-profit health care system.

    The rise of the not-for-profit economy is significant in other ways not touched upon in the paper. E M Risse refers to not-for-profits as “institutions” in his Estate Matrix, as opposed to “agencies” (government) and “enterprises” (corporations). Institutions include, among others, foundations, labor unions, professional and trade associations, universities, hospitals, museums, political parties, political action committees, conservation advocates, chambers of commerce and other consumption advocates, churches and think tanks.

    A growing “institutional” economy means that an ever-larger chunk of the supposedly private sector is exempt both from the wealth-extracting exertions of the federal government and from the Darwinian, for-profit imperative to innovate, boost productivity or die. Not-for-profit status is a great tool to channel the economy’s energy into socially beneficial uses. But the not-for-profit-ication of U.S. society does not augur well for economic dynamism, growth of the tax base and fiscal sustainability.

    — JAB

  • How to Run a Transit Company without Breaking a Sweat

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    James A. Bacon

    MacArthur Station: Where Bacon's Rebellion nearly met an untimely end.

    by James A. Bacon

    NORFOLK–When the Norfolk light rail project was piling up cost overruns and threatening to run off the rails because no one had the money to pay for it, the powers that be in Hampton Roads prevailed upon Philip Shucet to bring the project back under control. Taking over as CEO of Hampton Roads Transit, he quickly fulfilled that mission, and then went on to improve the productivity and efficiency of the region’s bus system as well.

    Shucet had proven his mastery of large, unwielding organizations as Virginia Department of Transportation commissioner under Gov. Mark Warner, and then joined the private sector, where he conducted a clinic on productivity and efficiency in bridge building with the Jordan Bridge project. Rebuilding the aged and decrepit bridge had been deemed so expensive, around $200 million, that the City of Chesapeake shut it down. Working under the flag of Figg Bridge Developers, Shucet said he could complete construction of the bridge for less than $100 million. He left that project in order to take the helm of HRTransit but, according to press reports, the bridge is scheduled to open in 2012. If anyone wonders why Transportation Secretary Sean Connaughton believes that outsourcing the design and construction of mega-projects to the private sector is a good idea, the Jordan Bridge is a case study.

    In a Thursday panel discussion during the Governor’s Transportation Conference, Shucet explained how he applied his magic touch to Hampton Roads transit, and he made it sound simple. The key was to stay focused, he said, and stop making changes. “We held the line and said, ‘no.’” He re-worked contracts, he let a few people go. And he managed expectations by telling the truth. When there was bad news to reveal, it didn’t sugar coat it. The results have been gratifying. He stopped the runaway costs dead in their tracks. Originally estimated to cost $232 million, the project had shot way over the $300 million mark when Shucet came on board. The final capital cost, he said, came in at $317.6 million.

    The Tide light rail, which runs 7.4 miles from Norfolk General Hospital through downtown Norfolk and out to Newtown Road, also is generating nearly twice as many passengers as originally projected: 4,900 weekday riders daily on average versus an estimate of 2,900. Operations are still far from profitable, but they are considerably less unprofitable than budgeted.

    (As an aside, during the conference, I have been riding the Tide between my parents’ downtown condo and the Norfolk Marriott Waterside. The stations are attractive, the buses are clean and trains run on time. The experience is much more pleasant than driving — and less expensive than parking. I did nearly kill myself — literally — when sprinting to catch a train before it left MacArthur Center Station. I ran in front of the street-level train to get to the boarding platform just as the driver was about to leave the station. The guy was so rattled he stepped out of his cabin to warn me to never, never dart in front of a stationary train — the darn things jump out like jack rabbits.)

    Meanwhile, Shucet has been shaking up the region’s bus operations. Many buses and trains run nearly empty, he explained. He figured that almost anything that got butts in seats would represent an improvement, so he marketed aggressively to the region’s universities and major employers, offering a variety of incentives to encourage people to use mass transit. In a parallel initiative, Hampton Roads Transit restructured its routes, eliminating routes with minimal ridership and increasing frequency of bus runs on its strongest routes. Total ridership has increased and this year HRT was able to rebate some money to the local governments that support the organization.

    Shucet will remain as CEO of HRT through January then step down to resume his more lucrative career in the private sector, where he will look for more opportunities like the Jordan Bridge to make money by saving taxpayers money.

  • How to Increase Transportation Revenue without Raising Taxes

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    James A. Bacon

    by James A. Bacon

    NORFOLK–Declaring that transportation is a “core responsibility” of state government, Gov. Bob McDonnell outlined today a legislative package that would increase funding for roads, highways and transit from the General Fund. Traditionally, Virginia has paid for transportation projects primarily through dedicated revenue streams such as the motor fuels tax, a half percentage point of the sales tax, a tax on automobile registrations and other narrow-bore levies.

    McDonnell’s plan would divert an additional one-quarter percentage point from the state sales tax, a bigger share of end-of-year budget surpluses, a full percentage point of the General Fund budget when revenue growth exceeds 5% in a year, and a Tax Increment Financing-like mechanism for capturing a share of state tax revenues made possible by state-funded infrastructure.

    “Transportation and economic development and prosperity are inextricably linked,” said McDonnell, presenting his initiative to the Governor’s Transportation Conference in Norfolk. “Whether it’s the infrastructure needed to move people and goods, or certain transportation-related industries poised for major growth and job creation, we must continue to make progress in improving our transportation networks if Virginia is to remain economically competitive.” (Read the press release.)

    The governor’s address was interrupted briefly by an outburst from a group identifying itself as Occupy Norfolk. The protesters employed the Occupy movement’s trademarked human microphone technique to greet him with, “Welcome Governor McDonnell.” That elicited a fleeting smile, but the protesters then proceeded to shout over the governor as he tried to address the audience.

    The biggest chunk of new revenue would come from phasing in a one-quarter percentage point increase in the share of the state sales tax dedicated to transportation over eight years. If enacted, the plan will boost the share from one half percent (.50%) currently to .055%, or one-twentieth of a percent, sufficient to bolster transportation revenues by $110 million next budget. The governor provided no estimate of how much the other measures would generate, although he noted that over the past two years the state has transferred $100 million in surplus funds to transportation.

    Last year, the General Assembly backed McDonnell’s proposal to accelerate borrowing — $4 billion during his administration — to take advantage of low interest rates and low construction costs. Interest will be repaid from sources traditionally dedicated to transportation. A potential sticking point with the new plan is that, by taking money from the General Fund, it may be perceived as funding transportation at the expense of priorities such as K-12 education, higher education, Medicaid and corrections, that rely upon the General Fund.

    McDonnell deals with potential objections by limiting the circumstances in which the transfers to transportation would be made. The proposal to steer 75% of budget surpluses to transportation would apply only if the state runs a budget surplus. Taking a one-percent slice from the General Fund would apply only in years when revenues increase by more than 5%. It’s not clear how the Tax Increment Financing proposal would work, but the logic is that it would return to transportation a share of the revenues made possible by a transportation investment in the first place.

    Another foreseeable objection is that the plan will focus on the fact that McDonnell’s emphasis is on raising more money for transportation rather than reprioritizing how the money is spent. A recent Sierra Club report accused the governor of borrowing billions of dollars to build “major, unneeded and destructive roadways” instead of funding transit, bike paths, carpooling and transit- and pedestrian-friendly land use.

    In justifying the need for more revenue, the governor made two key points. First, the motor fuels tax, the primary source of transportation funds, will decline in the future. An increasing number of cars will shift to alternate fuels, and even those that don’t will get better gas mileage. “Add those two things together and you have a math problem,” the governor said. 

    Secondly, transportation is vital to economic development. McDonnell cited a study by Chmura Economics & Analytics that found the 2011 transportation package will grow the Virginia economy by over $13 billion and sustain an additional 104,000 jobs. Among specific economic-related initiatives, the governor mentioned additional funding for the Mid-Atlantic Regional Spaceport, with the goal of making it the number one commercial space flight facility in the nation.

    The governor also touted the  the I-85 Connector Economic Development and Promotion Zone, an initiative that is tied to the construction of a new, limited-access U.S. 460 between Petersburg (the northern terminus of I-85) and Suffolk. A southern route linking Hampton Roads to the national interstate highway network would provide an Interstate-quality alternative to the overloaded U.S. 64 and open up vast new acreage for industrial and warehousing development.

  • VDOT Makes the Case for I-95 HOT Lanes

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    James A. Bacon

    by James A. Bacon

    NORFOLK–The McDonnell administration characterized a public-private partnership agreement for HOT lanes on Interstate 95 as a win-win arrangement that will expand capacity and create new choices for Virginia drivers without dunning taxpayers or motorists who don’t want to pay tolls.

    The agreement in principle with Fluor Transurban also protects taxpayers from financial harm if ridership projections fail to meet expectations but shares revenue with the state if revenues exceed a pre-set level.  “People have a choice. Nobody’s forcing them to go onto the HOT lanes,” Transportation Secretary Sean T. Connaughton said during Wednesday morning meeting of the Commonwealth Transportation Board. “As tolls rise, it will encourage people to use transit or carpools. This is all about using market forces.”

    Hours later, at the Governor’s Transportation Conference, the McDonnell administration highlighted other design-build and public-private partnership projects (P3s), including a major truck-climbing lane on rugged terrain on Interstate 81, the addition of HOT lanes to the Washington Beltway, the Coalfields Expressway and the Interstate 295 interchange in Chesterfield County. In the absence of significant new revenue sources, the administration is turning to P3s to leverage the $4 billion the state will borrow during Gov. McDonnell’s four-year term.

    The unapologetic trumpeting of P3s and megaprojects followed the release yesterday of a report by the Virginia Chapter of the Sierra Club, “21st Century Green Transportation: A Vision for Virginia,” that criticized McDonnell’s “frantic road building program” for spending billions of dollars in borrowed money to build “major, unneeded and destructive roadways.” The Sierra Club said the state should prioritize spending on maintenance, establish performance standards to guide the selection of projects, require stronger links between transportation and land use and devote more spending to alternate forms of transportation such as mass transit, van pools, bicycles and pedestrian-friendly infrastructure.

    The governor’s office announced the I-95 HOT lane agreement Tuesday morning. The $940 million deal will add, improve or extend 29 miles of HOV lanes from Fairfax County through Stafford County. The HOV (high occupancy vehicle) lands will be converted to HOT (high occupancy toll) lanes, in which people can pay a toll to bypass congested traffic in the general lanes.  Carpoolers, buses and motorcycles will be allowed to continue using the HOT lanes with no extra charge.

    Virginia Department of Transportation officials expect that trips will run around 11 miles for a $4 charge on average, although the toll will change continually, depending upon demand, and could be considerably higher or lower. There will be no toll gates. Drivers will enter the HOT lanes like they enter HOV lanes, but they will pass under a gantry that will record their activity based on EZPass transponders in their cars. Toll rates will be set to maintain free-flow conditions of 55 miles per hour minimum speed.

    As tolls rise, the HOT lanes will encourage to carpool, ride buses or even join the ranks of “slugs” who hitch rides with drivers eager to avail themselves of the free HOV lanes, Connaughton said. To create transportation options, the deal contemplates the investment of $200 million in the expansion of transit bus services and park-and-ride lots.

    Chief Deputy Commissioner Charlie Kilpatrick gave a detailed explanation of how the commonwealth’s interests are protected in the agreement with Fluor Transurban. Although the state is granting a 73-year concession upon completion of construction, it will maintain legal ownership and all assets will revert to the state at the end. The state has the right to audit the concessionaire’s books, and it can suspend tolling in emergencies. The agreement outlines the concessionaire’s obligations to maintain operating standards and roadway conditions. And Fluor Transurban assumes the full risk of cost overruns or schedule delays.

    By investing $97 million, the state will attract roughly$840 million in private investment, some of it equity and some of it financed by bonds. CTB members asked what protection the state has if revenues fall short of projections and the venture loses money. Revenues would go first to pay operating expenses, he said, and only then be used to meet payments to bond holders. If the entity went bankrupt, private investors would lose their equity.

    The agreement also builds in options and protections for Fluor Transurban, such as allowing the enterprise to propose enhancements not contemplated in the original deal. The state has no effective veto over tolls, which are set by market rates. And the private partner has the right to be compensated if the state undertakes a project that is proven to impact the revenue flow from the road, such as making significant improvements to U.S. Route 1, which runs parallel to the Interstate.

    The Federal Highway Administration is scheduled to review and approve the project in the spring of 2012. The financing will close that summer. Construction is scheduled to be complete in 2015.

  • Fast and Furious

    Posted on

    by

    James A. Bacon

    The Fast and the Furious, starring Vin Diesel as Sean Connaughton, Paul Walker as Tony Kinn and Jordana Brewster as Thelma Drake.

    by James A. Bacon

    The public-private partnership deals are coming fast and furious. The McDonnell administration announced a new one today, a $940 million agreement in principle with Fluor-Transurban to build, operate and maintain a 29-mile HOT/HOV lane project on Interstate 95 from the Springfield Bypass to Stafford County.

    “With HOT lanes on both the Beltway and I-95, we will create a region-wide network of managed lanes that will enable travelers to get to and from some of Virginia’s most employment centers and military sites,” said Transportation Secretary Sean T. Connaughton in a prepared statement.

    Highlights of the project include:

    • Expansion of HOT/HOV capacity from two lanes to three for 14 miles in the northern leg, improvements to six miles in the middle leg, and extending the HOV/HOT lanes for nine miles into Stafford County, “alleviating the worst bottleneck in the region.”
    • Establishing a seamless connection with the Interstate 495 HOT lanes now under construction.
    • Free access for High Occupancy Vehicles.
    • Investment of $200 million into the expansion of regional bus services, including construction of more than 3,000 new park-and-ride spaces. A Department of Rail and Public Transportation study recommended a total of 9,575 park-and-ride spaces, 46 more buses, off-site parking, shuttle services at the Franconia-Springfield Metrorail station and other intermodal features.

    The project will generate revenue by charging single-occupancy vehicles for using the HOT lane; traffic volume will be regulated to ensure minimum travel speeds. The price will vary according by time of day, fluctuating with demand.

    The commonwealth will contribute $97 million to the project. Fluor-Transurban will pay for the rest. The consortium will have a 73-year franchise.

    The statement provided no details on what toll rates are expected. Connaughton undoubtedly will provide details in a media briefing this afternoon, but I will be on the road to Norfolk, where I will attend the Virginia Transportation Conference tomorrow. Although I-95 HOT lanes are not on the schedule of events, I would be surprised if the topic doesn’t come up for discussion.

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Book cover of 'Dust Mites: A Second American Revolution' by James A. Bacon, featuring astronauts planting a flag with a blue and white emblem on a lunar landscape, with Earth visible in the background.
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The year: 2075. The American colonies on the Moon are getting restless under Washington’s tyrannical rule….

This second edition of “Dust Mites” has a snazzy new cover, includes helpful lunar maps, and is 5,000 words tighter than the original. The sequel, “Trogs,” is scheduled for publication this summer.

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