The Politics of Interstate Interchange Funding

The area around Celebrate Virginia. (Click on map for more legible image.)

by James A. Bacon

Here’s another proposed transportation project to watch closely: The Fredericksburg Area Metropolitan Planning Organization (FAMPO) has proposed building a new interchange on Interstate 95, estimated to cost $250 million to $300 million — or more, depending upon whom you believe — that would benefit the wealthy developers of the Celebrate Virginia project.

William M. Beck, former mayor of Fredericksburg, has joined Ronald D. Utt, transportation scholar for the Heritage Foundation, to write a letter to Transportation Secretary Sean T. Connaughton urging him not to fund the interchange. “Under the circumstances,” they write, “a very costly project of modest, yet uncertain, benefits would seem to be an unlikely candidate for such scarce funds, and we hope you agree. Moreover, at a minimum of $300 million, the acceptance of the project would force the cancellation of many more worthy projects around the state and in the Fredericksburg area.”

The rationale for the interchange is to relieve congestion on U.S. Route 3 by diverting traffic from Route 3, which is overloaded near its I-95 interchange, to a proposed, 3.5-mile toll road running from Route 3 near Gordon Road to its own intersection with I-95. As it so happens, the proposed route would zip right through Celebrate Virginia, a 2,500-acre tract owned by the Silver family, a major developer in the Fredericksburg area and Quantico guesstimated by Virginia Business magazine to be worth $750 million. The Silvers have invested millions of dollars in roads and other improvements at Celebrate Virginia through a Community Development Authority with the aim of creating an business/entertainment district that includes former Gov. L. Douglas Wilder’s ill-fated slavery museum as well as the highly controversial Kalahari water park, plans for which have been put on ice during the recession. At build-out, the Celebrate Virginia complex is expected to include more than 11 million square feet of commercial, residential and entertainment space.

A big drawback of Celebrate Virginia is its lack of direct access to I-95. Motorists must use the Route 3 exit to the south and drive through the heavily traveled Central Park retail district, also developed by the Silvers. The new interchange would greatly enhance the value of the property, and it should come as no surprise that the developer has been lobbying heavily to get it built.  In 2010, the Silver Companies helped FAMPO underwrite a consulting study to evaluate options. That plan, submitted in May 2010, proposed building the interchange and connecting to the toll road. Meanwhile, the Silvers have engaged Washington lobbying firm Alcade & Fay to pursue a federal earmark for the interchange and toll road.

Although squeezing $300 million out of either the feds or the state is a tall order in the age of austerity, the developers can be assured at least of a respectful hearing. Patriarch Carl D. Silver, son Larry D. Silver, who now runs the companies from Boca Raton, Fla., and a host of enterprises they control have collectively donated  $465,000 to various PACs and political candidates in Virginia since 2004. Among the donations: $5,000 to Sean Connaughton when he was chairman of the Prince William County Board of Supervisors and $5,000 more when he ran for lieutenant governor; $90,000 to former Gov. Tim Kaine, his inaugural and his Moving Virginia Forward fund; and $62,500 to Gov. Mark Warner and his inauguration. Interestingly, in a quick scan of the different entities through which the Silvers funnel political donations, I could not identify any contributions to Gov. Bob McDonnell. (If someone spots something I missed, please let me know.)

Write Beck and Utt: “The embrace of outsized corporate welfare projects flogged as investments that benefit us all, are as old as the Republic and were common in the great debate over government funding of canals during the administrations of Jefferson and Madison. Not much has changed since.”

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7 responses to “The Politics of Interstate Interchange Funding”

  1. this project is a comedy of errors in terms of how it is being proposed and the understanding of it by the public.

    You need to start by asking yourself how in the world a 3.5 section of road would cost 300 million and up.

    then you need to ask yourself how in the world people would pay a toll sufficient to pay off 300 million in bonds….when the state has limited by legislation the toll not to exceed one dollar.

    the project is being attacked as corporate welfare for the Silver owners of Celebrate Virginia.

    but a major cost of this project is two new bridges over the Rappahannock River plus rebuilding the Route 17 Interchange to the North of the River then adding C/D lanes between Route 17 and the proposed new interchange at Celebrate – and THEN.. the 3.5 mile toll road.

    Beck and Utt are doing a disservice in their portrayal in my view but they are easily assisted by the crazy way this project is being proposed.

    There is simply no way for a toll on a 3.5 section of road is going to pay for all that I-95 infrastructure (that will not be tolled).

    but because of the way that road finances in Va no longer “work” – the project was proposed as a toll road – but hoping for more state/federal assistance.

    But the most important thing to ask yourself is WHO funded the majority of the 15 million dollars for the NEPA study and why in the world would a STUDY by itself cost 15 million to start with?

    The answer to these questions lies with FHWA who provided the bulk of the money for the study because FHWA wants the whole issue of I-95 access in that area thoroughly analyzed to see what kind of infrastructure will be needed to preserve and protect the mainline I-95 for non-commuter, East Coast I-95 traffic.

    you won’t see this anywhere so far but my view is why else would FHWA be interested in a simple off-I-95 toll road in the first place and the obvious answer in my view is that FHWA believes that improvements are going to be needed to keep I-95 from being degraded for mainline use.

    the hard part will come AFTER the study determines what the best infrastructure solutions will be – and that would be where the money to upgrade will come from because it almost certainly will not come from the toll road and it’s problematic that the State or even the Feds would/could free up 300+ million for this single project.

    This section of I-95 was originally expected to have HOT lanes on it but they (the schedule) were pulled back when the HOT lane project on I-95 was hurt by a lack of available financing for the PPTA companies building the HOT lanes.

    We cannot build 4 new bridges over I-95 so I’m wondering if this study is going to look at possible tolls on I-95 in the area of Fredericksburg since FHWA has approved tolling I-95 if the money goes for I-95 improvements.

    so we may see some toll lanes on I-95 that would allow mainline travelers to partially escape the commuter congestion on the trip through Washington.

    I’d not be surprised to see that 15 million study be very comprehensive to include the I-95 infrastructure upgrades.

  2. One of the most under-appreciated of a NEPA study and especially so with highway proposals is the requirement that an analysis be conducted with regard to a “no-build” scenario.

    Mr. Beck and Utt seem pre-occupied with the idea that the developer will get “something” if “something” is built.

    true enough.

    but what will happen to I-95 in this area if NOTHING is done INCLUDING not further development of Celebrate! ?

    Can anyone truly believe that in the next 20-40 years that I-95 traffic will not increase….or decline? Or is it likely that I-95 traffic will increase?

    this would be the legitimate purpose of the study – to take the required “hard look” of what is the likely future of I-95 if nothing more is done.

    It’s totally true that if anything is done that it will likely help the Celebrate! developers but are we so determined to deny them any benefits that we’d also deny any improvements to I-95 at all?

    that’s hard to believe but if you read the letter.. that’s the impression one gets… that there is so much concern that the developer would benefit that any/all options for improving I-95 should be not considered.

    I’m no proponent of more roads and I’m no lover of the VDOT way of dealing with controversial roads but I do think to ignore the current realities and future potentials is just as bad or worse than what the initial opposition is opposed to.

    we don’t reach consensus solutions this way. We just choose up sides and have pitched battles that consume resources and waste time.

    Let’s have the study. Let’s make sure it’s a good, comprehensive study – to include more than one option for congestion relief not only on I-95 but also Route 3. Then after we have that study – we can argue about whether or not the developer will benefit “too much”.

  3. Larry, Point of clarification… The $250-$300 million is a package cost for building interchange and the toll road? I missed that point, and I probably need to clarify it in my post. The point is important because, if that’s true, it means that taxpayers won’t be paying the entire cost of the improvement — toll payers will be covering some of the price.

  4. yes. and the letter indicates it may cost more than that and if you’re talking about two new bridges over the Rapp, plus rebuilding the Rt 17 Interchange, CD lanes and a new interchange at Celebrate – 300 million is probably a low, low number.

    the question has always been: 1. what needs to be done and 2. how to pay for it.

    The toll road came along as a “think outside the box” proposal but there was never any real expectation that a 3.5 mile toll road would generate enough in tolls to pay for not only the toll road but all this other I-95 infrastructure.

    It’s a weird proposal not understood by many – and rightly so.

  5. EMR points out in email correspondence that there is ample precedent in Virginia for the developer to contribute to the cost of building an interchange. He writes:

    “You will recall that Hazel Peterson not only paid for the I-66 interchange with the Fairfax County Parkway but paid for the design and supervised construction. As I recall they paid for the supersizing the structures to accommodate later widening of I-66. They also built the Parkway from I-66 to US Route 50 and built an interchange there too. Sure it provided access to Fair Lakes but it also was the key to completing the Parkway from I-95 to VA Route 7 – 30 some miles.”

    Silver Companies could respond that they *did* foot the bill for several miles for four-lane parkway in Celebrate Virginia, so they’ve already done their fair share and the economics of the project cannot justify paying for the interchange, too. Well, that’s the nub of the problem. The Fair Lakes project created enough value that Hazel-Peterson could afford to make major contributions to construction of the road system. Apparently, that potential does not exist for Celebrate Virginia. That should tell you something.

  6. Silver has done other developments in the area and in each case made major upgrades to the road infrastructure and paid for it by setting up special transportation districts where the commercial within those districts pay a supplemental tax – that is, in effect, added to the price of goods and services.

    developers don’t really pay for roads..they incorporate the cost into whatever is sold to buyers.

    if an interchange opens up here-to-fore undeveloped land into prime development venues then developers could help pay for infrastructure but expecting 300 million for infrastructure out of a project that will cost less than that is unrealistic.

    I don’t know the numbers that EMR is referring to but I find it hard to believe that a developer paid for 30 miles of limited-access roadway unless they made a whale of a lot of money on the deal.

    Silver companies naturally want to see their property developed but it does not depend on the new interchange to be developed. It would enhance it but not having the interchange won’t prevent the development. What is stopping the development is the inability to get financing which is pretty much a problem everywhere right now.

    Take Silver Companies out of the equation here and ask yourself if I-95 through Fredericksburg is “ok” now and will likely remain “ok” in the next 10,20,30 years or do you think that I-95 through the Fredericksburg Area – especially during commuter rush hours is a problem?

    If you think it will need upgrades including new bridges over the river – where do you think the money could come from?

    where it will not likely come from is a one dollar toll on a 3.5 mile road or from the profits of a developer trying to get a 250 million dollar water park built.

    More than likely if I-95 is upgrade (and let’s stipulate WITHOUT a silver companies interchange) – it will cost 300+ million and the money is likely to come from tolls on I-95 – not a 3.5 mile road that connects to I-95.

    I also go back to the 15 million dollars of which more than 12 of it came from FHWA WHY so much money has been allocated for a “study”. The last “study” that was done for a similar proposal a few years back was under 5 million.

    Again – I’m not a proponent of any particular proposal here. What I’m a proponent of is a good study that will determine what parts and pieces of infrastructure will be needed to preserve and protect I-95… and then once we know that we can figure out who will pay for it and I support any/all options including developer contributions AND tolls.

    This issue got “polluted” when Silver fronted the money for the initial study and yes it was oriented to his needs but my view is that FHWA would not kick in as much money as they have just to further efforts to help the developer.

  7. Full disclosure. I used to do legal work for the Silver Companies and provide services for Celebrate Virginia – not related to transportation.
    Questions I would ask. Is this project high on the list of VDOT or Fredericksburg priorities? If so, how high; and where does it rank? Putting aside Celebrate Virginia for the moment, how much would this interchange improve traffic flow in the Fredericksburg area? Would there be any negative impacts on I-95 or other roads from a new interchange?
    Assuming this project is not high on the list, what would be the value of the real estate around the interchange, including Celebrate Virginia, before and after the interchange was constructed? The developers and landowners should be willing to pay the difference between today’s value and tomorrow’s value to construct the interchange that will enable the increase if value. If not , why should taxpayers fund a single nickel?
    EMR is absolutely correct, the Hazel Peterson group funded all of those road improvements. Jack Herrity told me the full story at lunch one day. According to Herrity, he told them what they needed to pay; one of the principals took off his suit jacket, threw it one the floor and stopped it, saying this was highway robbery. To which Herrity supposedly said: “But you are still going to pay for this.” As EMR wrote, they did.

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