There has been considerable discussion on this blog on the viability of the $4 billion estimate for building the Rail to Dulles project. The issue became all the more urgent, to my mind, when private-sector proposals to build a new U.S. 460 between Suffolk and Petersburg came in hundreds of millions of dollars higher than anticipated. Given rampant inflation in the construction sector, could a similar fate be in store for Rail to Dulles, a lynchpin of Kaine administration plans to save Northern Virginia from traffic congestion hell?
We’ll find out more late this winter or early spring when the Bechtel/WGI consortium delivers its final, definitive estimate for Phase One before entering into contract negotiations to build the project. Don’t be surprised if the estimate, which stood at $1.8 billion in 2005 and now officially stands at $2.1 billion, bumps up another notch — a notch that conceivably could amount to another $200 million.
And that’s just Phase One. How much will Phase Two cost a decade or so out? Such an estimate, which must factor in the geopolitical impact of China’s economic transformation on steel prices and of jihadism on Middle Eastern oil supplies, is unknowable.
Peter Galuszka discusses the imponderables in his latest Road to Ruin piece, “A Riddle Wrapped in an Enigma.” He raises several points that, in my humble opinion, are insufficiently appreciated in the Rail to Dulles debate:
- What happens if inflation pushes up the price of Phase One much beyond $2.1 billion? Where does the money come from? Even now, the state funding formula is about $125 million short. If inflation adds another $250 million to the price tag, the state then needs to find $375 million. That’s real money. Where does it come from?
- What will the Federal Transit Authority reaction be to a higher price tag? The current funding formula for Phase One anticipates receiving $900 million from the feds. Without it, the project is dead. But the FTA cost-benefit analysis apparently considers the project so marginal that adding $200 million to tunnel underneath Tysons Corner rather than run the rail line above-ground could have scuttled the funding. What if inflation adds $200 million to the cost of the project?
- Who will absorb the risk if things go wrong? Bechtel-WGI can agree to build the project at almost any price you name — if someone else absorbs the risk of cost overruns. If the Kaine administration is desperate to close a deal for political reasons — and I’m not singling out the Kaine adminstration, what I’m saying applies to any administration — they can bury the risks in the fine print and pray that nothing comes back to bite them.
It strikes me that there’s a very good chance that the Rail to Dulles project could disintegrate. Let us hope that the Kaine administration is considering alternatives for improving mobility in the Rail-to-Dulles corridor. If the option is to build Rail-to-Dulles at any cost or… nothing at all… Virginians may wish they had another choice.
Here’s one possibility: Use time-of-day congestion pricing on the Dulles Toll Road to maximize throughput and use surplus funds to fund Bus Rapid Transit. It would help to have the numbers in hand in the event that Rail to Dulles falls apart.
