Tag Archives: Commonwealth Transportation Board

At Last: Objective Criteria for Scoring Transportation Projects


by James A. Bacon

After lengthy study, the Commonwealth Transportation Board yesterday approved new metrics for prioritizing transportation funding in Virginia. The new metrics are designed to create objective criteria for evaluating the selection of road and rail projects. It remains to be seen how the metrics will be applied in practice, but in theory they represent a big step forward.

As seen in the chart above, the metrics will be assigned different weights for different parts of the state. For instance, Category A, which assigns the greatest weight to congestion mitigation, consists primarily of the highly congested Northern Virginia and Hampton Roads transportation planning organization districts. Category D consists mainly of lightly traveled rural districts. (View the classifications here.)

The different weights reflect the different priorities of different parts of the state. The classifications and methodology can be amended as needed to reflect changes in priorities and advances in technology, data collection and reporting tools.

Here is a breakdown of the measures that go into the weighting framework:


These metrics will provide CTB board members unparallelled insight into the relative benefits of different transportation options. It should be much more difficult now for any administration to gain approval for “highway to nowhere” road and rail projects.

Bacon’s bottom line: I have long called for tools that make it possible to measure projects based on their “Return on Investment,” reflecting congestion mitigation, safety improvements and environmental benefits. This methodology goes beyond that by incorporating additional measures, such as economic development and accessibility, but falls short by providing no mechanism for calculating ROI. Given the complexity of the evaluations, it may be impractical to boil down all these metrics to a single ROI figure, so CTB board members will retain considerable discretion.

Some of the criteria look really fuzzy. How does one evaluate “land use consistency?” How does one measure “project support for economic development”?

Despite modest reservations, the new approach appears to represent a big step forward by limiting the potential for ideology, politicking and log rolling in transportation funding decision-making. I look forward to seeing how the new methodology works in practice. While one can rarely go wrong by taking a cynical view of human nature and the political process, I am hopeful that the transparent use of objective metrics will curb the worst instincts of the political class.

Coping with Risk in Highway Megaprojects

Aubrey Layne explains the concept of fiduciary risk.

Aubrey Layne explains the concept of fiduciary risk.

by James A. Bacon

As Transportation Secretary Aubrey Layne has had more time to dig into his job, he has developed an ever more nuanced appreciation of how things went wrong with the U.S. 460 Connector. There was more to the fiasco, which could cost the Commonwealth up to $300 million, than a simple failure to acquire necessary wetlands permits before opening the spending spigots and then discovering that the permits were not forthcoming. The McDonnell administration, he says, negotiated a public-private partnership deal without sufficient appreciation of risks entailed with the project.

“I can’t tell you if they didn’t know they weren’t transferring the risk [to the private-sector partner] and got out-foxed, or whether they didn’t give a damn,” Layne told Bacon’s Rebellion in an interview today. Either way, the Commonwealth was left holding the bag when plans for the 55-mile Interstate-quality highway linking Petersburg and Suffolk had to be redrawn to do less environmental damage. He still hopes to recover some of the $250 million paid to U.S. 460 Mobility Partners (over and above $50 million in sunk design and engineering costs) for pre-construction work, but that outcome is uncertain.

Layne is optimistic that public-private partnership (P3) reforms enacted with bipartisan cooperation this year will prevent recurrences of the U.S. 460 debacle and help the state negotiate better terms in future deals than it got with the Interstate 495 and Interstate 95 express lanes projects in Northern Virginia, which effectively capped bus transit on the highways for the next half century. The McAuliffe administration’s big test will be to do a better job structuring the financing and risk of $2 billion in proposed improvements to Interstate 66 in Northern Virginia.

Before 1995, the Virginia Department of Transportation (VDOT) had one way of building roads. It designed them, put construction out for competitive bids, arranged its own financing, operated them, maintained them and absorbed the risk of anything going wrong. The system got the job done but it had drawbacks. It overlooked potentially creative solutions to engineering and design problems, and it was prone to cost overruns. Then the General Assembly passed legislation enabling public-private partnerships, which provided the Commonwealth a whole new range of options for financing big projects and shifting selected risks to the private sector.

Facing a severe transportation budget crunch, the McDonnell administration made the strategic decision early on to use P3s to leverage scarce public dollars with private capital. From a high-level perspective, this made sense because the Commonwealth had limited capacity to issue road-building bonds without jeopardizing its AAA bond rating and then-Governor Bob McDonnell had not yet pushed through tax increases to bolster transportation funding. Moreover, the administration wanted to take advantage of historically low interest rates on long-term bonds.

But politics and ideology were pushing P3s as well, says Layne. There was a bias that something is always better if the private sector does it. Sometimes the private sector can do things better than VDOT, he says, and sometimes the private sector is better suited to take on certain risks than the state. But not always. The McAuliffe administration’s goal is to find the best fit — the best balance of cost and allocation of risk — on a case by case basis.

The devil is in the details. Layne, a Republican and a McDonnell supporter at the time, backed the governor’s mega-project funding priorities and voted to approve them while serving on the Commonwealth Transportation Board. Indeed, he chaired an independent bonding authority that issued bonds for the U.S. 460 project.  But now that he’s transportation secretary, he realizes the issues were far more complex than presented to him and the CTB board.

The McDonnell administration first proposed a public-private partnership for the U.S. 460 project with the hope that outsiders could devise a more creative way of building and financing the highway than VDOT could come up with. Three consortia took a look and came up with similar conclusions — there would be insufficient toll revenue to finance more than a fraction of the construction cost with bonds. The McDonnell administration then switched gears, deciding to pay for most of the project with state funds but retaining the P3 structure in order to outsource the design and construction of the project to a private-sector partner, which turned out to be U.S. 460 Mobility Partners. The state should have gone back to square one and started over, says Layne, re-defining the project and putting it up for bids instead of using the P3 structure. Instead of getting multiple bidders to compete, the state wound up negotiating with a single player, U.S. 460 Mobility Partners. Even worse, Governor McDonnell had signaled that U.S. 460 was his highest priority, and there was no back-up plan — the administration had to reach a deal with U.S. 460 Mobility Partners or the project would never get built during McDonnell’s term. U.S. 460 Mobility Partners had all the bargaining leverge.

Negotiations took place within the P3 structure, which meant that the deliberations were secret and the contract not released to the public. VDOT briefed the CTB, the state’s transportation oversight board, but failed to disclose the information that critical wetlands permits had not been obtained and might not be obtainable.

The final contract for the U.S. 460 deal was more than 700 pages long. Layne says he can’t imagine than anyone in state government read the whole thing. “I’m confident that no one person understood it all. No one person could tell you what the deal was, what risk was transferred, and what risk the state was taking. And that’s a recipe for disaster” when negotiating with sophisticated business people on the other side of the table.

The dynamic would have played out very differently, says Layne, if the McDonnell administration had set up U.S. 460 as a design-build project.  First, VDOT would have opened up the proposal to competitive bids, very likely getting a lower price even while the private contractor took on the risk of delivering the project on budget and on time. Second, VDOT guidelines would have ensured that all necessary permits were granted before the project commenced and the state started shelling out money.

Layne doesn’t blame U.S. 460 Mobility Partners for negotiating the best deal for itself that it could. It’s not a charity. The company’s managers had a fiduciary responsibility to get the best deal for its shareholders that they could. But elected officials have a fiduciary responsibility to the public. The challenge for the Commonwealth is to bring to bear an equally acute understanding of risks and rewards and to cut the best deal possible for the taxpayers. That’s where the state failed utterly with U.S. 460. If he’d had negotiated such a disastrous real estate sector when he worked in the real estate business, he says, he would have been fired.

Now it’s Layne’s turn. He has to structure a mega-project deal for I-66. Tomorrow, I’ll describe how he is approaching that task.

More Transparency, Please, Asks CTB

transparencyby James A. Bacon

Overlooked in the hoopla over the $1.4 billion Route 460 controversy, it appears that the Commonwealth Transportation Board has made an important bid to inject more transparency into decision-making affecting public-private partnerships (P3s). Desiring a “more robust discussion” of such projects, the board has asked the director of the Office of Transportation Public Private Partnerships (OT3P) to conduct a review of its processes with an eye to increasing transparency and public involvement.

That resolution, passed in the CTB’s May meeting, arose in the wake of revelations that the state had paid nearly $300 million to US Mobility Partners, the private-sector, design-build partner in the proposed 55-mile highway between Petersburg and Suffolk, even though the project had yet to receive all of its environmental permits and construction work had yet to begin. Secretary of Transportation Aubrey Layne suspended work on the project in March until a resolution could be reached with the U.S. Army Corps of Engineers over wetlands issues.

Layne also initiated a study of how such a screw-up could have occurred. That study was completed last month. The Times-Dispatch obtained the report and reported some findings last week. I now have a copy of the document in my hot little hands. There is a wealth of detail in the report that did not appear in the T-D coverage, and I will endeavor to elucidate the findings as I find time.

One objective of the report, which was conducted by the Virginia Department of Transportation’s director of Assurance and Compliance and by the Office of the State Inspector General, was to “identify the individual(s) responsible for excluding members of the Commonwealth Transportation Board from full and free access to information relating to the 460 project.”

That was a reference to the fact that when the CTB was briefed about the major business terms of the U.S. 460 project on October 17, 2012, no one bothered to inform the policy-making board about the ongoing controversy with the Army Corps of Engineers over the wetlands permitting. As the report confirms: “The presentation did not include any information regarding any environmental permitting issues or concerns.” Based on that briefing, the CTB authorized funding for the project.

The review found that the McDonnell administration provided all “statutorily required disclosures.” However, it also determined that CTB members “were not provided effective communication and/or notice of key events impacting the 460 project.”

I am still working my way through the document, but I have found no indication who made the decision to omit mention of the wetlands controversy to the CTB. Just because VDOT officials were not statutorily obligated to mention the controversy, it surely was relevant and germane to any discussion whether or not to fund the project at that point in time. Any reasonable person would surmise that someone in the McDonnell administration had made the political decision to avoid unwanted questions that might delay the project.

Regardless, it is encouraging to see the CTB assert itself in this manner. The board was exceptionally deferential to McDonnell’s transportation secretary, Sean Connaughton. The one CTB member who openly questioned the administration’s decisions, Jim Rich, was asked to resign from the board.

If the public is to trust state government to engage in public-private partnerships without rigging the results to the detriment of taxpayers, the process of negotiating contracts and approving funding needs to be far more transparent than it is now. I am confident that Doug Koelemay, director of the office of public-private partnerships, will take the request to heart. Not only is he a former CTB member himself, he reports directly to Layne — and Layne appears determined to set a more open, less intimidating tone.

LaRock Targets MWAA, Dulles Rail, Mass Transit


Dave LaRock

by James A. Bacon

Del. David A. LaRock, R-Hamilton, the man who beat legislative veteran Joe May in the Republican primary last year, comes to the General Assembly promising to represent conservative values and principles. Judging by the bills he has submitted so far, he will be true to his word. Aside from one bill providing tax credits for private schoolers and another fine-tuning the transfer of firearms, he has focused mainly on transportation issues affecting his Loudoun County constituents. In effect, he has positioned himself as a champion of Dulles Toll Road commuters and scourge of the Metropolitan Washington Airports Authority (MWAA), the Rail-to-Dulles Metro project and mass transit generally.

His bills would:

  • Direct the General Assembly to petition Congress to impose tolls on the Dulles Access Highway, which provides direct access between the Capital Beltway and Washington Dulles International Airport, and apply the revenues to reducing the tolls on the Dulles Toll Road that runs parallel to it.
  • Forbid the state from contributing any more funds to the Rail-to-Dulles project until MWAA implements the toll on the access road and also agrees to apply 50% of any revenue from the sale of federal land for non-aviation purposes toward the offset of Dulles Toll Road tolls.
  • Limit allocation of transportation funds to mass transit by the Commonwealth Transportation Board to 25% of total allocations to the Northern Virginia construction district.
  • Eliminate the ability of the Northern Virginia Transportation Authority to spend discretionary revenues on mass transit projects not included in the regional transportation plan.

Many Loudoun commuters who rely upon the toll road are frosted that under the terms of the Phase 2 financing agreement for Dulles Rail roughly half the funds are coming out of their pockets. They will pay more in tolls than the people riding the Metro will pay in fares, while people driving to Dulles on the parallel access road will pay nothing at all. This is the issue that propelled LaRock to the General Assembly.

Bacon’s bottom line: Loudoun commuters are being sodomized, metaphorically speaking, by Phase 2 of Dulles Rail. They will pay billions of dollars over the next three-to-four decades not only to maintain and upgrade the toll road but to subsidize Metro rail service to the airport. If they are asked to pay, it is hard to concoct a rationale for not asking users of the parallel access road to pay, too. The bills aren’t likely to go anywhere — MWAA isn’t asking for more state funding for Dulles Rail, so it has no reason to go along — but LaRock does stand on the moral high ground.

His crusade to limit spending on Northern Virginia mass transit is harder to justify. Once upon a time, when the majority of transportation funding came from the gasoline tax, one could argue that motorists shouldn’t be asked to subsidize mass transit. But the McDonnell transportation tax deform of 2013 reduced the contribution of the gas tax and eliminated any pretense that transportation taxes are a “user fee.” A large majority of transportation revenues will come from the sales tax and other non-fuel taxes — in other words, from the general taxpayer. Allocating tax dollars to roads is just as capricious and political as allocating them to mass transit.

Placing arbitrary caps on the allocation of state dollars, as LaRock proposes, is not the solution. Given the political reality that returning to a user fee is not in the cards, what we should do instead is devise a rigorous methodology for calculating Return on Investment on all proposed transportation improvements, of whatever type, and fund the projects with the highest return. Public policy should be agnostic as to whether the money goes to roads, mass transit, traffic light synchronization, incident management, Transportation Demand Management or other strategies for coping with congestion. Let’s make sure we get the most bang for the buck.

Hugo Proposes to Restructure the CTB

bill submitted by Del. Tim Hugo, R-Centreville, would expand the Commonwealth Transportation Board from 18 members to 24 by adding three members of the Virginia Senate and three members of the House of Delegates.

I have not talked to Hugo about his reasoning, but I can conjecture. The bill represents an effort to make the CTB a more independent-minded body for establishing state transportation policy and setting spending priorities. As currently constituted, the board is comprised entirely of gubernatorial appointees: the Secretary of Transportation, the Virginia Highway Commissioner, the director of the Department of Rail and Public Transportation, and 15 citizens from around the state who serve at the pleasure of the governor.

In a companion bill, Hugo proposes to allow removal board members only for offenses of malfeasance, misfeasance, incompetence or gross neglect of duty. 

As I reported in a story a year ago, the CTB had held 10 monthly meetings and voted on 134 resolutions during the first 10 months of 2012. Of those, 131 passed unanimously. When there were dissenting voices, only a single board member voted in the minority. Controversial mega-projects involving the expenditure of hundreds of millions of dollars typically received little debate. James E. Rich, former Culpeper District representative, was one of the few board members to ever speak out against, or vote against, controversial McDonnell administration decisions. He was fired and replaced.

Hugo’s bills would diminish the power of the executive branch only slightly. Governors still would appoint a majority of board members, the Secretary of Transportation still would control the agenda, and board members still would rely upon state employees for most of their information. But Hugo’s bills would do two important things to improve the quality of CTB deliberations. First, legislators would bring a valuable independent perspective and body of knowledge to the board. Second, gubernatorial appointees would feel free to speak more openly if they knew they could not be dismissed for disagreeing with the governor.

My main reservation is that expanding the board would make it more cumbersome. But a larger board would be a small price to pay for a more independent board comprised of members willing to ask tough questions.


Our Way or the Highway

James E. Rich

by James A. Bacon

James E. Rich has resigned from his position at the Commonwealth Transportation Board under pressure from the McDonnell administration. The Culpeper transportation district representative had opposed funding of the controversial Charlottesville Bypass and then had tried repeatedly, without success, to get the decision overturned.

One of the board’s more outspoken members, Rich supported key administration initiatives such as the upgrade to U.S. 460 between Suffolk and Petersburg, the Midtown Tunnel-Downtown Tunnel project in Norfolk, and major financial commitments through the Virginia State Infrastructure Bank. However, he sought reassurances that the Virginia Department of Transportation was not taking on undue financial risk in its public-private partnership deals. And he visibly irritated Transportation Secretary Sean Connaughton with his Don Quixote-like tilting at the Charlottesville Bypass.

Rich told Bacon’s Rebellion that he resigned “a couple of weeks ago.” Connaughton did not acknowledge Rich’s resignation during the CTB meeting early this afternoon. But his seat was vacant and, as is customary, board members with less seniority took seats closer to the dais. Rich’s biographical information has been scrubbed from the CTB website.

Rich, a McDonnell appointee, confirmed that he was asked to resign but refused to divulge details. However, he told Charlottesville Tomorrow that the removal took place in a phone call with Connaughton.

“There was great consternation when I voted against the Charlottesville Bypass,” Rich said. “There was an attempt to push me out at that time. I’m not going to sit on the board as a potted plant. You have a statutory duty to make the best decisions you can with the information you have. And that’s what I’ve tried to do. I’m not going to waiver from that just to say I have a title.”

The retired Shell Oil executive said the CTB is far more passive today than when he served on it two decades ago during the Allen administration. “When I was under Allen, it had a very substantive role. The outcome was not dictated by the chairman of the board,” he said, referring to Connaughton.

Given the administration’s low-key handling of Rich’s ouster, there has been little reaction. However, Trip Pollard, staff attorney for the Southern Environmental Law Center, did say this:

This is disappointing news and we hope it’s not the result of an effort to silence dissent.  Mr. Rich has been a valuable, independent voice on the CTB. He has consistently sought greater public input into transportation decisions and been willing to raise tough questions about the effectiveness of particular proposals and the failure of state officials to adequately consider less costly and less destructive alternatives to projects.  We urge the Governor to choose a replacement who will bring a similar level of dedication to spending our tax dollars more wisely and to pursuing a more balanced transportation approach.

His forced resignation should raise red flags, Rich said. Diminished tax revenues mean that fewer funds flow through formulas that distribute money dispassionately to each VDOT transportation district. By borrowing $3 billion, which it is leveraging through public-private partnerships, the administration is not bound by traditional checks and balances and has largely dictated how the money was spent. “One of the lessons for members of the General Assembly, with the secretary running the show unilaterally, [is that] they need to have some review of expenditures so they have some say in what’s going on.”

In an article two days ago (See “Kings of the Road?“), Bacon’s Rebellion noted the absence of controversy and dissenting votes in CTB meetings, and asked whether the board was a rubber stamp. Interviewed before his resignation, Rich had suggested that board members were too dependent for information upon VDOT and Department of Rail and Public Transit (DRPT) staff and recommended that the CTB hire a financial expert and technical expert that answered directly to the board.

“Any reasonable board needs to ask questions,” Rich told Bacon’s Rebellion. “You don’t want to end up like the General Motors board that rubber-stamped everything that management put forward. … The more oversight an agency has, the better.”

McDonnell Pitches Tax Plan

Governor Bob McDonnell addresses the Commonwealth Transportation Board.

by James A. Bacon

Addressing a friendly audience this afternoon at the Commonwealth Transportation Board, Governor Bob McDonnell plugged his transportation financing plan, arguing that it was “economically sound, politically viable” and will “fix the problem.”

“Our problem is a math problem,” the governor said. “Revenues are on a downward path and the cost of asphalt is on an upward path.” Within a few years, $500 million a year will be diverted from the state’s construction fund to pay for maintenance.

“I’ve used every asset I can find” that the General Assembly has made available to him, McDonnell said. He has audited VDOT four times. He has issued bonds. He has tapped the General Fund budget surplus. He has leveraged state dollars through tolled Public Private Transportation projects. Now the options are exhausted and the state needs new revenue.

McDonnell has proposed a five-point plan: (1) scrapping the motor fuels tax (except on diesel) and boosting the sales tax by 0.8%, a revenue source that will increase as the economy grows; (2) diverting 0.25% of existing sales tax revenue from the General Fund to transportation; (3) charging an extra $15 per year for vehicle registrations; and (4) charging alternative-fuel vehicles $100 per year, and (5) collecting taxes on online sales.

As people shift to more fuel-efficient automobiles and alternate-fuel vehicles, the governor said, the gasoline tax is not a viable long-term revenue source. “Relying on the state gas tax will only make the funding situation worse because the gas tax buying power has greatly depleted over the years.  Switching to the state sales tax is the reasonable and logical solution to fund projects.”

Underlining the governor’s remarks, John Lawson, chief financial officer of the Virginia Department of Transportation (VDOT) told the CTB that his five-year revenue forecast had become significantly more pessimistic over the past year. Compared to last year’s five year forecast (2013-2018), the amount of revenue available to VDOT over the next five years (2014-2019) is $766 million less. State revenue is expected to decline $218 million while federal revenue will plummet $548 million. Those numbers do not take into account added revenues from the governor’s tax plan, which, in enacted, would raise an estimated $1.8 billion over the same period.

Between direct funding reductions and a delay to bond issues, that means the state will have $700 million less to spend on new roads, bridges and highways than expected. Even previous to Lawson’s revelation, the McDonnell administration had been saying that the state would run out of state construction funding within four to five years.

Touting the sales tax component of his plan as a first for the country, McDonnell said. The sales tax “is predictable, it’s reliable and it grows.”

A wide array of business and labor groups have endorsed McDonnell’s plan, as have key Republican legislators. Democrats have been relatively quiet, although some have expressed concerns about the idea of siphoning money from the General Fund, which would come at the expense of schools, health care and other priorities. Conservatives have expressed suspicion of anything resembling a tax increase. Free-market advocates have argued that the shift away from the user-pays gas tax would subsidize driving.  And smart growth advocates have slammed the bill for that reason and others.

Before approving another $1.8 billion in spending over the next five  years, said Stewart Schwartz, executive director of the Coalition for Smarter Growth, in response to the governor’s remarks, the General Assembly should take a close look at how McDonnell is spending the $3 billion it authorized for to borrow. The U.S. 460 Connector between Suffolk and Petersburg, costing more than $1 billion in public dollars, has a very low cost-benefit ratio compared to projects going begging in other parts of the state, he said. What assurance is there, he asked, that new tax revenues won’t be similarly wasted?

Kings of the Road?

Who really establishes transportation policy for Virginia, the Commonwealth Transportation Board or the McDonnell administration?

by James A. Bacon

Between January and November 2012, the Commonwealth Transportation Board (CTB), the government body in Virginia charged with setting transportation policy and allocating transportation revenues, held 10 monthly meetings. During that time, the board voted on 134 resolutions. Of those, 131 passed unanimously. When there were dissenting voices, only a single board member voted in the minority.

Most of those votes dealt with routine, uncontroversial matters such as bid approvals, tweaks to the Six-Year Improvement Program or designation of roads as Virginia Byways. But several votes involved the allocation of hundreds of millions, even billions, of dollars. Consider some of the matters that met with minimal controversy during CTB deliberations:

Not a single CTB member opposed the $2.1 billion proposal to make inter-connected improvements to the Midtown Tunnel, Downtown Tunnel and Martin Luther King Parkway in Norfolk and Portsmouth — even though the project entailed a $362 million commitment from the state, a 58-year concession to a public-private partnership and billions of dollars in new tolls that caused a political uproar when citizens learned of them.

Not a single board member voted against allocating $1.4 billion, including roughly $1 billion in public funds, to the U.S. 460 connector between Suffolk and Petersburg — even though increased traffic on the highway is not expected to materialize for years and the economic return on investment is predicated upon the proposition that massive industrial development will occur in the U.S. 460 corridor.

Only one CTB member opposed funding the U.S. 29 Bypass around Charlottesville, despite the existence of an alternative plan approved by the community and open hostility of much of the Charlottesville-Albemarle County population.

When the McDonnell administration found $150 million to help pay down rates on the Dulles Toll Road, the source of revenue for the highly controversial Phase 2 of the Rail-to-Dulles project, it packaged the allocation with the broader Department of Rail and Public Transportation budget, which the CTB approved unanimously without debate. The larger question of state policy toward the heavy rail project never came up.

The McDonnell administration, like its predecessors, prevails with a consistency that would be unimaginable in the General Assembly or a local city council meeting. “CTB meetings are a love fest,” observes Chuck Gates, communications director for the Richmond Transportation Planning Organization. “The CTB rarely contradicts the transportation secretary.”

Given the unanimity on nearly every decision, it’s not illogical for citizens to ask: Is the CTB a rubber stamp board? If the board doesn’t debate billion-dollar spending decisions, what does it do? As the General Assembly debates the merits of restructuring and raising transportation revenues, the answer matters more than ever.

After attending CTB meetings for a year and a half and interviewing nine veteran appointees for this article, asking those very questions, I have concluded that “rubber stamp” is an unfair characterization. But it is safe to say that the CTB does not represent an effective independent voice in overseeing the billions of dollars spent by the Virginia Department of Transportation and the Department of Rail and Public Transit. If you’re looking for a board that will ask tough, uncomfortable questions, this is not it.

The CTB role, as described in its handbook, is “to promulgate public policies and regulations, along with other duties.” Among those duties is signing off on the allocation of state transportation funds. Given that the board is comprised of three senior administration officials and 13 representatives who serve at the pleasure of the governor — all but two on the current board were appointed by Governor Bob McDonnell — is it reasonable for citizens to expect representatives to exercise independent judgment, even if it means questioning the administration’s priorities? Read more.

An Expanded CTB Board: Long Overdue. But Nothing Will Change.

Dude, there is no rural-urban split on the CTB. All the money is going here!

James A. Bacon

Del. Thomas Rust, R-Fairfax, has introduced a bill, HB 2409,  that would expand the representation of urban areas in the Commonwealth Transportation Board, the board charged with setting transportation policy and allocating transportation revenues. The Richmond, Hampton Roads and Northern Virginia transportation districts each would expand the number of seats from one each to two, increasing the total board to 20 seats. According to the Times-Dispatch,  the change was suggested by Governor Bob McDonnell.

No question, the composition of the CTB is outdated, with members representing Virginia Department of Transportation construction districts set up before World War II, supplemented by three urban at-large and two rural at-large members. The current apportionment gives rural areas disproportionate representation, and Rust’s proposal has already won endorsement of the Richmond Regional Planning District Commission, which has chafed at Richmond’s long-term under-representation on the board. (Two of the urban at-large members hail from Hampton Roads, one from Northern Virginia, none from Richmond.)

While the measure may have merit in the abstract, it will not change how the CTB operates. Although rural representatives may predominate on the board, rural members have not sought to exercise that power to their advantage. There are major criticisms that can be leveled at the CTB — as I will illuminate in a forthcoming article — but a rural-urban split is not one of them. Whatever else might be said about CTB members, they do seek the good of the commonwealth and they espouse the goal of building a comprehensive, statewide transportation system.

Having covered the CTB for 18 months, I been highly attuned to signs of a urban-rural split. But I have not found one. The atmosphere of the board is very collegial, with urban members professing sensitivity to the needs of rural members, and vice versa. More to the point, rural representatives have gone along with Governor Bob McDonnell’s mega-project spending priorities, which have been heavily skewed towards Hampton Roads. While the administration did allocate $244 million for the Charlottesville Bypass outside the urban crescent as well as a much smaller sum to advance the Coalfields Expressway, the big bucks have gone to fund the $2 billion Midtown Tunnel-Downtown Tunnel project in Norfolk and the $1.4 billion U.S. 460 Connector providing an interstate-quality alternative to Interstate 64 for Hampton Roads. The administration also steered $150 million to Phase 2 of the Rail-to-Dulles project and has advanced the study of a north-south corridor in Northern Virginia..

With the exception of the Charlottesville Bypass — in which, ironically enough, the local representative voted against the project — all votes on substantive issues have been unanimous. There has been no rural-urban split. The under- or over-representation of different regions has had zero impact on the conduct of the board.

Listen to Mark Peake, the Lynchburg district representative, whose transportation district has received only 2% of construction funding in recent years — about half that of the second lowest district, Richmond. Here’s what he told me:

As a Lynchburg district representative, I have an obligation to put [the region’s] needs before the board. But in general the board has an obligation to oversee the entire transportation plan for the commonwealth. We understand people lobbying for their various areas. But we have to watch the balkanization of transportation, where we divide up into areas and fight each other.

Another factor moderating the parochial instincts of board members: Representatives see themselves as appointees of the governor and they are respectful of his agenda.

“There are going to be priorities that we as a board understand are priorities of the administration. I was put here by the governor to take a big picture and not be parochial,” says Gary Garczinksi, the Northern Virginia district representative.

Governor McDonnell has made the case that the two economic engines of the commonwealth are the port and Dulles airport. … I see the necessity and advantages of getting freight from the port to 95 with 460, and hope that when the time comes, if the north-south corridor is to be recommended, that my fellow board members would see the same thing for Dulles [airport] and the need to further its capacity. … You have to be patient.

Bottom line: CTB representation does need to evolve as Virginia urbanizes. That’s just sound governance. Just don’t delude yourself that the new balance of urban-rural power will bring about any meaningful alteration in how transportation dollars are allocated. The governor is in charge and the board will follow his priorities. End of story.

CTB Errata…

Sean Connaughton

Odds and ends from this morning’s meeting of the Commonwealth Transportation Board (CTB):

Sequestration is a non-event… for transportation. Transportation Secretary Sean Connaughton told CTB members that federal transportation payments to Virginia should be insulated from sequestration should Congress fail to reach a budget compromise by January 1. Federal transportation dollars are allocated by formula, and they aren’t subject to sequestration cuts, he said, although he added that anything is possible if Congress starts casting around for new sources of money. The sequestration-impact analysis inside the McDonnell administration is focused mainly on the impact on the General Fund.

Inter-regional subsidies… Bacon’s Rebellion has reported analysis by the Richmond Metropolitan Transportation Organization showing that Northern Virginia gets a disproportionate share of transportation funding. One might think that Connaughton, a former chairman of the Prince William County Board of Supervisors, would see things differently. But apparently he doesn’t. As he said in passing during the meeting, “The rest of the state subsidizes Northern Virginia.”

Bragging about borrowing… Connaughton tossed out another stray comment during the meeting: “Virginia is the largest recipient of TIFIA loans in the country.” The low-interest federal Transportation Infrastructure Finance and Innovation Act loans cut interest costs on Virginia transportation projects by tens of millions of dollars, and the competition for them is fierce. Virginia’s success in snagging the loans, said the transportation secretary, is testimony to the soundness of the project financing proposes the state has submitted to the federal government.

Transportation revenue up… for now. Commonwealth Transportation Fund revenues are up 6.3% so far this year, way ahead of the 2.2% forecast. But Virginia Department of Transportation (VDOT) officials don’t believe the revenue surge has staying power. Most of the increase comes from a strong performance by the volatile sales tax on automobile sales. The steadier motor fuels tax is up only 2%, slightly less than the 2.2% forecast. Said Virginia Highway Commissioner Greg Whirley:  “We expect spending to actually decline over the next six years.”

There was more, which I’ll try to get to it in future articles.


Uh, Oh, CTB Representatives Acting Feisty

Miller (left) and Louderback: Getting feisty.

by James A. Bacon

It was a routine matter that came before the Commonwealth Transportation Board (CTB) this morning: The Department of Rail and Public Transportation (DRPT) was asking the CTB to approve allocations from the state’s industrial rail access fund. The sums of money were small and the projects were uncontroversial — $450,000 to extend 8,400 feet of railroad track in Prince William County and $40,000 for a rail siding in Petersburg.

The CTB had signed off on dozens of other projects like these with nary a word or even a whisper. But it was different this morning in Tysons Corner as urban at-large representative W. Sheppard Miller III from Hampton Roads grilled Kevin Page, DRPT’s chief operating officer, about the justification for the two projects. Several other CTB members followed with questions of their own. In the end, they went along with the request, but the unusual display of feistiness could spur changes in the way the commonwealth analyzes transportation projects.

One project would pay for construction of staging tracks connecting Eco-Energy Distribution LLC’s to the Nustar Dumfries ethanol fuel-blending facility, Page explained. Prince William County would contribute $150,000 toward the project cost. The other would facilitate the expansion of the BleachTech LLC bleach-manufacturing plant in Petersburg.

Miller had two big questions:

(1) Would the private sector have made the investments anyway without the state contribution?

(2) If not, what Return on Investment does the state generate through jobs created, congestion mitigated and/or taxes paid?

Page had no direct answers. The state uses a standard methodology for grading requests for industrial rail funds, he said, and these two scored in the 50s. By comparison, a home-run project like the APM Terminal in Portsmouth scored in the 90s. The main tangible benefit he cited was that the improvements would facilitate the shift of cargo from trucks on roads to rail cars on tracks. Fewer trucks equals less traffic and improved safety. Also, he said, the agreements contain clawback provisions if the companies don’t divert the promised volume of cargo from the trucks.

But Miller persisted. “Say we take 100 trucks off the road. … Say we save $5,000. But we spend $40,000.” What’s the ROI to the state? How much does the state gain in taxes and reduced welfare payments from putting a factory worker back to work? In the future, he said, he would like DRPT to provide evidence that state support is required to make the private investment happen and to calculate the ROI generated by the state contribution.

Aubrey L. Layne, Jr., Hampton Roads representative, joined in. What is the purpose of the industrial rail access fund, he asked. Is it to promote industrial development — or is it to get trucks off the road?

Allen L. Louderback, a rural at-large representative piled on, questioning state subsidies for the ethanol industry, which is already heavily subsidized. “Given the questions about ethanol … is this really something we want to make a priority?” he asked.

Roger Cole, Richmond district representative, cut to the heart of the matter, when he asked Page: “Do we actually look at the candidate’s ability to finance [the project] by itself?”

The answer: No.

In response to Miller’s suggestion to include more pertinent data in future presentations, the DRPT executive said, “Thank you, Mr. Miller, we’ll take that into consideration.”

When asked after the meeting if Page was politely blowing him off, Miller said, he didn’t think so. In any case, he’ll talk to DRPT Director Thelma Drake about getting the information. When asked if he would like to see similar analysis for larger projects, he said yes. “The analysis gets harder for big projects, but you apply the same logic regardless.”

Thinking the Big Thoughts about Transportation Planning

Dironna Belton

by James A. Bacon

Under the auspices of updating the VTrans 2035 transportation plan, the McDonnell administration is executing a far-reaching overhaul of Virginia’s strategic planning process. The new approach would use performance metrics for such criteria as safety, congestion, the economy and the environment to create a data-driven system for prioritizing transportation projects.

The Office of Intermodal Planning and Investment (OIPI) under Transportation Secretary Sean Connaughton is developing a complex methodology for linking transportation goals such as “increasing mobility and accessibility” to investment priorities, and then rating the investment priorities. By measuring investment performance, OIPI will develop the capability over time to predict the impact of competing investments on a range of desired goals.

Virginia has all the components, it just hasn’t stitched them together in an approach that will inform decision making, says Dironna Belton, policy and program manager. The McDonnell administration recruited her from Tennessee, where she had worked as a transportation planner, to oversee the initiative. Among the reasons she took the job, she says, is that the initiative could make Virginia a national leader in the use of performance measures to guide transportation investment.

The VTrans 2035 Update represents, as its name implies, an update of the earlier VTrans 2035 plan. The research component is less exhaustive than the earlier exercise, and the planning horizon remains the same. However, the McDonnell administration is using it as a vehicle to advance reforms of the long-term transportation planning process as well as to recommend broad policy directions and funding sources.

The update will have little immediate impact but it will create a “framework” that will align the long-term planning of state transportation agencies and regional transportation planning organizations.

The framework lists seven broad goals such as  “economic vitality” or “coordination of land use and transportation,” each of which could be advanced by a variety of investment priorities. Specific projects would be rated on the basis of need — how much they “move the needle” of performance metrics — as well as affordability, ease of implementation and impact of not making the investment.

Highly rated investment priorities will be reflected in agency and MPO plans and programs.

The VTrans report also will recommend options for dealing with declining state funding for new construction projects. In contrast to previous McDonnell administration proposals to tap General Fund revenues, proceeds from the sale of state ABC stores or royalties from oil and gas drilling, the draft VTrans recommendations advocates a user-pays logic for raising revenue.

Among the recommended revenue sources are levies that are “based on travel, not strictly fuel usage and vehicle purchases” as well as “user fees such as tolls and locally based tax revenues” such as impact fees, proffers and special tax districts.

Concrete Exec Advocates “Two Pavement” Road System

The Virginia Department of Transportation (VDOT) spends only 7.6% of its paving dollars on concrete, as opposed to asphalt, and the Mid-Atlantic Chapter of the American Concrete Paving Association wants a bigger piece of the action.

Pitching the Commonwealth Transportation Board (CTB) Wednesday, Executive Director Robert R. Long Jr., outlined four “opportunities” for the state to stretch its transportation dollars.

  • Consider the concrete alternative. Concrete is price competitive today on the basis of up-front costs, and even more advantageous when viewed on a life-cycle basis. Rt. 316 in Accomack County, built with concrete in 1940, will be undergoing only its third major repair in 2013.
  • Use alternate design bids. Don’t specify asphalt only. Create a design alternative that uses concrete. A healthy two-pavement system creates more competition. Alternate bidding is used in 21 states to bring down costs.
  • Balance the state’s “pavement portfolio.” When building a new road or highway, use a mix of asphalt and concrete so that different sections are due for maintenance in staggered intervals, say, one-third in five years, one-third in ten, and one-third in 15. That evens out the long-term maintenance costs.
  • Utilize new pavement technologies. Take advantage of new techniques for patching old concrete pavement that can bring down costs.

Concluded Long: “Don’t be satisfied with the status quo.”


McDonnell Team Pushes New Transit-Funding Scheme

Thelma Drake

by James A. Bacon

Virginia should overhaul its funding formulas to reward local transit companies for superior productivity and performance, argued Thelma Drake, director of the Department of Rail and Public Transportation (DRPT) during a presentation yesterday of the McDonnell administration’s funding reform plan to the Commonwealth Transportation Board.

“The current system dates back to 1986,” Drake said. “If you were inventing it from scratch, you wouldn’t do it this way.  … He who spends the most money gets the most money. There’s no rewarding performance.”

Under the proposed “hybrid” approach, which must be approved by the General Assembly, DRPT would allocate roughly $150 million per year in state operating assistance based upon a balance of ridership numbers, operating expenses, and performance-related metrics such as costs and the number of customers per revenue mile. The formula would be “a 21st century model for funding transit.”

But the hybrid model received heavy push back from the Virginia Transit Association (VTA) and individual transit companies. Performance metrics are a great management tool but not a basis for allocating funds, said Linda McNiminy, executive director of the VTA. The DRPT proposal would pit transit companies against one another, make funding more volatile and ignore unique circumstances in each enterprise.

The DRPT proposal does recognize that there are big differences between transit systems serving the Washington metropolitan area and the town of Chincoteague, said Drake. The idea is to put the state’s nearly 40 transit systems into one of five peer groups based on population, population density, ridership, operating costs and other criteria. Each peer group would receive its proportional share of the state allocation based on operational expenses, and each smaller pie would be divvied up between the enterprises in the peer groups.

The state should “reward and incentivize our transit systems to be more efficient,” Drake said. The proposed approach would hold them more accountable.

Transportation Secretary Sean Connaughton described the presentation as “positive, upbeat.”

McNiminy countered that peer-group comparisons could be unfair. Consider Blacksburg transit, which serves a large captive ridership of university students and has access to a workforce of part-time student drivers. How fair is it to compare that situation with, say, the Roanoke bus service, which is spread over a much larger area and does not have access to a large pool of part-time labor?

Fran Hooper, representing the Charlottesville-area JAUNT public transportation service, said the service is unlike any other. Riders, many of them wheelchair-bound, must call a day ahead of time. According DRPT’s metrics, which are suitable for conventional bus companies, JAUNT would be judged inefficient and its $5.7 million budget would be cut. The DRPT would “create winners and losers,” Hooper said, but not necessarily on the basis of productivity.

The state pays a modest fraction of operating costs and an even smaller fraction of capital costs, yet through this proposal it would “take control over local transit systems,” said Stewart Schwartz, executive director for the Coalition for Smarter Growth. “It would be like a minority shareholder taking over a company.” The real issue, he added, is the need to find more transit funding.

One benefit of the proposal, said Drake, is that it would allow DRPT to go to the General Assembly and more effectively make the argument for more funding by addressing widespread concerns about inefficiency in the transit industry. “We’re not trying to punish anyone,” she said. “We want to encourage people to make good decisions.”

CTB Advances $1.4 Billion U.S. 460 Project

With a new financing plan, the interstate-grade U.S. 460 Connector is a go, as the McDonnell administration touts the highway’s economic development potential.

by James A. Bacon

The Commonwealth Transportation Board approved Wednesday the issuance of up to $425 million in tax-free bonds to finance construction of the U.S. 460 Connector between Petersburg and Suffolk in one of the priciest economic development initiatives in Virginia history.

The state will contribute roughly 80% of the cost of the $1.4 billion project with funds funneled through the Virginia Department of Transportation (VDOT) and the Virginia Port Authority. Bonds, to be supported by toll revenues, will pay for the balance of the 55-mile, Interstate-grade highway, which is designed to bolster the competitive position of Virginia’s ports and attract large industrial and logistical investments to the U.S. 460 corridor.

Most of Virginia’s transportation mega-projects address a congestion crisis, but U.S. 460 represents an opportunity, Aubrey L. Layne, the Hampton Roads district representative, told fellow CTB members. Layne, who has worked behind the scenes for years to bring the project to fruition, described the project as “forward looking.” An upgraded U.S. 460 will relieve an overloaded Interstate 64 north of the James River and it will serve as an alternate hurricane evacuation route, but its main purpose is to stimulate economic development. U.S. 460, he said, has great “potential.”

“If the governor were here today, he’d say one word: jobs,” injected Gary Garczynski, Northern Virginia district representative, later in the meeting. He hopes the U.S. 460 project will provide a model for a north-south outer beltway for Northern Virginia, he added.

“The new Route 460 highway is critical to economic development in this growing region of Virginia,” confirmed Governor Bob McDonnell in a prepared statement released shortly after the vote. “The new highway will stimulate business development in the region and accommodate freater freight traffic from the Port of Virginia, benefiting the entire Commonwealth. Chmura Economics estimates that the new highway will have an annual economic impact by 2020 estimated at $7.3 billion.”

Sheppard Miller (left) and Aubrey Layne, representatives from Hampton Roads, chat after the CTB vote on U.S. 460.

Although several CTB members pressed McDonnell administration officials for assurances that the state was amply protected in the event of a hypothetical bond default, the board voted unanimously to approve the bond issue.

The main note of skepticism came from Stewart Schwartz, executive director of the Coalition for Smarter Growth. Speaking during the public comment session, he described the administration’s approach as a “rush to judgment” on the project, which has received little public scrutiny and review. The case for the highway, he said, was based upon a number of economic assumptions, such as an anticipated jump in container traffic that Hampton Roads will see when a major Panama Canal widening project is complete and an ensuing surge in the number of trucks and tolls on U.S. 460.

Schwartz also questioned whether the state’s commitment of between $753 million to $930 million was the optimal use of finite resources. The state has tapped out its borrowing capacity and state funds for new construction is fast eroding. There won’t be any more money for mega-projects available for years, he said. In a knowledge-intensive economy in which knowledge workers are increasingly stuck in traffic, he asked, is betting on factories and distribution centers a wise use of money? “Are there better investments you could be making with scarce money? … If this were your business, would you make the investment?” Read more.