Three conglomerates who want to build a new, improved U.S. 460 between Petersburg and Suffolk have submitted cost estimates ranging from $1 billion to $1.5 billion — two to three times what the Virginia Department of Transportation thought it would cost. And all three companies want public money to help defray the costs, Malcolm T. Kerley, chief engineer for VDOT, told the Commonwealth Transportation board yesterday.
Writes Bill Geroux with the Times-Dispatch: “Among the questions Kerley did not answer yesterday was how much of the financial risk the companies had volunteered to bear in case the highway ran far over budget or attracted too few paying customers.
Bottom line: The project cannot pay for itself. It is not economical. One must question whether it should be built.
This is hard news in many ways. It undercuts the hopes of those (like myself) who hoped that toll-financed projects could pay for many of the transportation projects on the drawing boards.
But the news also undercuts those who would pay for such projects through taxes. The beauty of soliciting private bids is that it forces people to take a hard look at the economics of a project. In the case of U.S. 460, either the design is too expensive, or the demand for the improvements is too meager, or insufficient economic value is being created in property aligning the route. If the project can’t pay for itself… if the private sector isn’t willing to assume the risk of failure… maybe the project shouldn’t be built!
Indeed, when the private-sector proposals come in at two or three times VDOT estimates, it calls into question the cost estimates of a lot of other mega-projects. Like the $4 billion price tag on building the Rail to Dulles project — championed by Bechtel, the guys who brought the Big Dig to Boston. Is anyone believing that forecast? How much risk is Bechtel willing to assume on that project?
(The good news: It sounds like the transportation board was asking good questions: Who would assume the risk if the project tanked? Very, very good.)
