Private toll road, not a good deal, says Deal
Toll-road deal might not be good deal, says Deal
June 7, 2011, by Jay Goodman, Atlanta Journal Constitution
Under prodding from Gov. Nathan Deal, the state Department of Transportation has suspended a new toll project along I-75 north of the Perimeter into I-575 in Cherokee County.
If you’ve driven it at rush hour, you know there’s a real need for additional capacity in that corridor. That unmet need explains why three major international consortiums were ready to negotiate for the right to build and own the toll project, which they see as a potentially profitable business.
The state has a lot to gain as well. The hundreds of millions of dollars in private investment that the project might attract would stretch Georgia’s transportation budget, freeing up resources it could invest elsewhere. But there’s a catch, or more accurately a few of them.
First, the new toll lanes were intended to be “managed,” meaning that if the lanes got too crowded, the toll would automatically rise high enough to discourage additional drivers from using the lanes. Those drivers who couldn’t afford or justify the additional cost would be forced to use the existing, more crowded lanes.
DOT studies confirm that lower-income Georgians would be less likely to use the so-called Lexus lanes, even if it saved them time. Those studies also document that building the additional toll lanes would not ease congestion in the existing 1-75 lanes. Any drivers lured into the less-congested toll lanes would quickly be replaced by new drivers who are currently discouraged from using the interstate by traffic.
Finally, even with heavy traffic in that corridor, the toll lanes would not come close to paying for themselves. To make the project pencil out, the state would have to subsidize private investment by as much as $450 million.
Apparently, that’s what got the governor’s attention. He has asked the DOT board to halt the project pending approval of a federal loan to help lower the state’s costs.
That’s an important point: Transportation debates in Georgia often run aground on the claim that transit and rail systems ought to be self-supporting, as if they were businesses. But as the example of the toll project demonstrates, most highways don’t pay for themselves either. (Neither does the street outside your home, by the way.) The same is also true of freight transportation, which is why Deal and Atlanta Mayor Kasim Reed were in Washington, D.C. last week trying to shake loose federal money for the deepening of the Savannah harbor.
Yet for some reason, I don’t recall state legislators insisting that such projects be abandoned because highways and harbors ought to be able to paying for themselves, without taxpayer subsidy. Apparently that is a test applied only to mass transit.
It’s also important to be clear about the nature of the “public-private partnership” proposed for the I-75 toll project and similar projects. While such projects would be privately run and owned, they’re not normal businesses. For example, a key point of negotiation between the state and private investors would be the ability of toll road operators to bar new transportation options from competing with them in that corridor. Overall, the amount of profit that private companies make in such an arrangement is driven less by the efficiency with which they operate than by the skill with which they negotiate with public officials.
That makes openness important. Under the original process laid out by DOT officials, Georgians would not be allowed to know the details of any deal negotiated on their behalf until after the final contract had been signed. It’s as if your lawyer were to negotiate a house purchase on your behalf, then refuse to let you read the contract until after you signed it.
That’s unacceptable. If the proposal is revived, it should be with the understanding that the entire contract will be made public for least a month before state officials can make it final.
– Jay Bookman