Rail-to-Dulles Exposed: Subsidize the Rich and Plunder the Middle Class

Jamie Radtke, who is running for Jim Webb’s U.S. Senate seat, has criticized the Metropolitan Washington Airports Authority for recent decisions it has made relating to the Rail-to-Dulles heavy rail project. Specifically, the board approved an underground station that would cost millions of dollars more than an above-ground alternative and agreed that anyone bidding on the $3.8 billion second phase of the construction project would have to agree to use union labor.

As Radtke rightfully pointed out in a Friday email blast, “This is an appalling example of arrogance from unelected officials with no accountability to the citizens.”

I agree. I think that Virginians will come to rue the day that former Gov. Tim Kaine turned over responsibility for Rail-to-Dulles to the unelected MWAA, only a minority of whose board members are appointed by the Virginia governor. The MWAA suffers a clear conflict of interest on the project: It cannot possibly be expected to dispassionately represent its own interests as well as the interests of Virginia citizens.

I will deal with the union issue in a later post. For now, I want to focus on the issue of the underground station. The issue, to my mind, isn’t whether an underground station is preferable to an above-ground station — of course it is — but the question of who pays for it.

In a recent op-ed in the Washington Post, former MWAA Chair Mame Reily did a good job of justifying the underground station.

It’s better for baggage-laden travelers, who will not have to trek 1,150 feet to an aboveground station to stand in steamy Washington summers or icy winter winds after long international flights. And it’s better as an international gateway to Washington because it preserves the architectural vision of the masterful Eero Saarinen that has made Dulles a design icon worldwide. Washington’s two airports, designed by world-class architects, are worthy of the capital of a great nation. For the airports authority to have decided to provide anything other than a first-rate rail connection at Dulles would have been shortsighted — and soon regretted.

If we’re going to spend in excess of $6.8 billion extending heavy rail from the existing Metro system to Dulles airport, it makes sense to do it right. At the same time, the MWAA deserves credit for seeking to shave costs from the original plan. The newly approved design will knock $330 off the previous version by revising the tunnel length and depth, using a different excavation method, and finding ways to cut costs relating to air conditioning and electricity. Moreover, the service life of an underground facility is expected to last twice that of an above-ground station.

So, it’s not as if the MWAA is spending money cavalierly. But Reily ducked the critical issue in her op-ed. If the underground station is so vitally important to Dulles, why isn’t the airport authority paying for it? What Reily didn’t mention in her op-ed, nor did the MWAA in its press release, was that the Dulles station will still cost $912 million, even after the cost savings. None of the other stations, not even in densely urbanized Tysons Corner, will be build underground. No one can afford it! The return on investment isn’t there.

Under current financing arrangements, Dulles is getting a sweet deal. The Dulles station accounts for 13.8% of the $6.6 billion total project cost (Phase 1 and Phase 2 combined). Yet the MWAA is contributing only 4.1% of the total funding, according to the formula negotiated by the participants. The costs are allocated as follows:

Federal grants – 14.8%
Commonwealth of Virginia – 3.0%
Airports authority – 4.1%
Loudoun County – 4.8%
Fairfax County – 16.1%
Dulles Toll Road – 57.2%

Thus, the MWAA is paying roughly one-third of its proportionate cost, while most of the financial burden will be dumped on the users of the Dulles Toll Road who, by definition, aren’t even using the Metro.

Such a meager share might be justifiable if Dulles airport had no capacity to raise a proportionate level of funds. But that’s hardly the case. Dulles is a massive business enterprise, generating revenues from terminal leases, airport concessions, landing fees and other sources. Its 2011 operating budget is $420 million. But its operating expenses are only $200 million. After $163 million in principal and interest payments on bonds, Dulles runs a “net remaining revenue” of $67 million, which is distributed between the airport and the airlines. (These numbers do not include Dulles Toll Road fees.)

As one of the nation’s fastest-growing airports, Dulles has massive expansion plans. Its 2011 budget describes $4.1 billion in capital construction projects authorized for 2010-2016. That encompasses everything from roads, terminals and airfield improvements to cargo buildings, parking facilities, utility systems and… a $211 billion contribution to Dulles Rail.

In other words, Dulles airport is not an impoverished entity desperately scraping up every nickle and dime it can find to pay its share of the heavy rail project. Its 4.1% share of Dulles Rail constitutes only 5% of its capital spending project through 2016! Yet for some reason, Northern Virginia commuters using the Dulles Toll Road are expected to fund 57.2% of the project even though they will not be using the Metro.

Yes, the Dulles corridor needs a heavy rail line. Yes, someone has to pay for it. But why are middle-class road warriors expected to subsidize the Congressmen and business executives who wish to ride the Metro from downtown D.C., Pentagon City or Tysons Corner to a nice, air conditioned station located only a short walk from their destination? Why can’t the Congressmen and business executives who benefit from the facility, or their proxy the MWAA, pay for the convenience?

As it stands now, the financial arrangements for Dulles Rail represent a massive transfer of wealth from middle-class commuters and small property owners to the elites that (a) own property adjacent to the Metro stations and (b) who frequently patronize Dulles airport to fly around the country. But that’s pretty much the story of America today, isn’t it? Plunder the middle class to benefit the moneyed and politically connected special interests, and then plunder taxpayers generally to assuage the elite’s guilt by transferring wealth to the poor. Jamie Radtke gets it. And Tim Kaine, if he runs for U.S. Senate, will have to answer for it.

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