No one’s pulling the wool over this guy’s eyes!
by James A. Bacon
The governor’s office issued a press release yesterday touting the fact that Transurban, operator of the 495 Express Lanes and 95 Express Lanes, has relocated its U.S. headquarters from New York City to Fairfax County.
The two express lane projects have been highly beneficial to Virginia, said McDonnell, supporting 16,000 jobs, generating $3.5 million in economic impact statewide and bolstering productivity by reducing “billions of dollars lost every year due to traffic congestion.”
Then the press release quoted Jennifer Aument, group general manager-North America: “As we celebrated the opening of the 495 Express Lanes in Fairfax County last fall, Governor [Bob] McDonnell urged us during the ceremony to move our U.S. headquarters to Virginia. We’re pleased to officially call Virginia our home base as we continue to partner with Virginia on innovative transportation solutions that keep Virginians moving.”
What a heart-warming economic development success story! Kudos to Governor McDonnell!
But Toll Road News mentions a few details that the press release omitted (hat tip to Larry Gross): It turns out that Transurban shut down its New York office earlier this month and laid off all six of its senior staff because the top brass in Australia was “most unhappy” with the American business environment and the performance of the operations here, and “ordered a windup of expansion efforts.”
As the Times-Dispatch reported, no one actually moved from New York to Fairfax. Snagging the Transurban U.S. headquarters is something of a hollow victory, to say the least.
Transurban wrote off $181 million on its Pocahontas Parkway investment, and the company conceded earlier this year that traffic and revenue expectations were running behind the first-year projections for the 495 express lanes. From all indications, Transurban has done a fine job of delivering projects on budget and on time, and it has handled the marketing roll-out of its toll roads in a professional manner. The problem isn’t Transurban’s operational competence, it’s that traffic volumes are not materializing as expected when the company embarked upon the toll-road projects in the mid-2000s.
Transurban’s CEO has read the writing on the wall: The economics don’t support continued expansion of toll-financed express lanes in North America. Now the question is whether Virginia’s governor will experience a comparable revelation before he starts spending some $800 million a year in new tax revenue on a grab-bag of projects justified by the desperate need to combat congestion.
I’m not holding my breath. Transurban conducts an arcane exercise called preparing a “profit and loss statement” and it insists that its highway projects meet “Return on Investment” hurdles for new projects. The commonwealth of Virginia does not calculate profits and losses for its transportation projects, and it has no ROI hurdle. State officials have no way of knowing whether they are creating or destroying economic value. Transurban makes mistakes — but at least the big boss back in Melbourne knows when the company screwed up. Virginia is flying blind.
