Tolls are coming to an interstate near you. This time, Interstate 75 in Georgia. Georgia Governor Nathan Deal just announced re-worked plans to add toll lanes to I-75 from I-285 to I-575 and single reversible lanes running north from the I-75/575 split along I-75 to Hickory Grove Road and along I-575 to Sixes Road. It’s an easy sell for special interests. States are broke, no one has the appetite for raising the gas tax to keep pace with infrastructure needs, so politicians turn to tolls as the way out, and depending on how the deal is structured, it's a way for states to make some quick cash.
Amazingly, elected officials and so-called 'conservative' think tanks claim tolls aren’t a tax. But even the slightest examination of how these toll roads are being financed blows that claim out right of the water. For example, on the 30 mile I-75 toll project in Georgia, Deal is forcing all American taxpayers to subsidize this project, not just Georgians, since it will use a $270 million federal taxpayer-backed TIFIA loan, along with $500 million in gas taxes to pay $770 million of the $950 million pricetag to build the project. Yet, Deal still plans to charge travelers a DOUBLE TAX -- tolls -- to drive on a road built mostly with gas taxes. Therefore, the tolls the Deal administration will be charging aren’t ‘user fees,’ they’re taxes.
The private toll operator would only bring a measly $95 -$190 million to the table in this deal. Though it stops short of being a full blown P3 where the private operator gains the right to set and collect tolls (Georgia is using a P3 called a design-build-finance model), there are still significant costs to the taxpayer when doing a toll road with any version of a P3.
Other P3 projects, like the two in the Dallas Ft-Worth area, are a full blown concession model where the private operator offers a state some up-front cash and in return gets the right to extract tolls for our lifetimes from every American who drives on them. How is this a good deal for the taxpayer or for property rights?
That’s the dirty little secret with P3s. We all understand the need for eminent domain for a road that’s truly a public necessity, but when that public use morphs into a private one, it’s eminent domain abuse of the worst kind. P3s represent government picking the winners and losers -- if the government can forcibly take your land and hand it over to private developer, then we don’t have property rights left in this country.
Aside from property rights concerns, P3s are chock full of special interest giveaways. First of all, it grants a private corporation a government-sanctioned monopoly over PUBLIC infrastructure, as well as control over the tax rate. Just imagine how sky high your property taxes would be if a private corporation got a hold of the tax rate? Well, that’s precisely what happens when a private corporation, whom the public cannot hold accountable, gets a hold of the toll tax rate. Toll rates on such P3 toll roads can be 75-80 cents PER MILE, the equivalent of adding $15 to every gallon of gas you buy.
These contracts also contain non-compete agreements that penalize or even prohibit the expansion of free routes surrounding the toll lanes, guaranteeing congestion on ‘competing’ free alternatives. P3s are not competitively bid. They use ‘best value’ bidding and/or something called design-build, which nearly always translates into higher costs to the taxpayer than using traditional design-bid-build procurements.
P3s have profit guarantees at taxpayer expense, often eliminate due process when it comes to alleged toll violations and collections issues, and use taxpayer money to subsidize the privatized toll project -- socializing the losses and privatizing profits. What does this resemble to you? Can you say TARP, the massive trillion dollar taxpayer bailout of the toxic debt of fiscally reckless banks in 2008?
If the private sector isn’t willing to bring all the money to the table and put its own capital at risk if the traffic doesn’t show up to take the toll road, why should the taxpayers? They shouldn’t. It makes no financial sense!
Heading the wrong direction
Deal initially canceled Georgia’s P3 program just months after the taxpayer blow back he experienced after the I-85 HOT lane disaster. The Georgia Department of Transportation (GDOT) turned a successful carpool lane (HOV lane) into a High Occupancy Toll (HOT) lane where single occupancy vehicles can access the lane if they pay a toll, $5.40 one way. GDOT also increased the number of people needed in order to use the HOV lane from two to three. The toll rates vary based on the level of congestion on the toll lanes. So commuters pay a premium to get to work in peak hours. The same variable toll rates will apply to the HOT lanes on I-75. Needless to say, the opening week of the HOT lane experiment was a commuter disaster -- with so few able to afford the toll and next to no carpoolers now able to access the lane that the HOV/HOT lane was nearly empty and the free lanes were hopelessly gridlocked. So much for government-managed congestion!
After just the first week in operation, Deal lowered the toll rate from 34 cents a mile down to 11 cents and later asked the feds for permission to return the carpool requirement back to two occupants from the current three, but the feds denied his request and Atlanta commuters remain stuck in traffic. Shortly thereafter, Deal announced the state was not going to move forward with another HOT lane toll project, this time a P3 on I-75, citing concerns with compromising state sovereignty over public infrastructure.
Though in the case of I-75 the state would set the toll rates and collect the tolls, it’s still beholden to those private interests which costs the taxpayers more through the higher cost of borrowing from a private entity (and usually involves paying back the private entity first, and taxpayers' federal TIFIA loan last). The design-build-finance P3 also includes compromising the expansion of free routes based on the non-competes agreements it signs with the private developer, therefore it still compromises state decisions over public infrastructure and places the profits of private interests over the needs of the traveling public.
Trade corridors at risk?
Another concern with tolls on I-75 is its strategic importance as a trade corridor linking to ports in Ft. Lauderdale and Tampa, Florida up to the international border crossing in Canada, currently serviced by the nearby Ambassador Bridge. It’s no coincidence that the Ambassador Bridge is a private bridge that’s gained a monopoly at the crossing. The Michigan government is considering building a competing bridge of its own, called the Detroit River International Crossing, but since it plans to use a P3 to do it, it’d be exchanging one private monopoly for another.
The Detroit River International Crossing bridge would directly connect I-75 with border traffic into Windsor, Canada. There have been several legislative battles over the new bridge as well as P3s in the Michigan Legislature -- important battles since the control of America’s trade corridors is at risk of falling into the hands of private interests whom the public cannot control nor hold accountable. Toll rates in the hands of private corporations threatens affordable travel for both autos and trucks, which ultimately threatens affordable goods. Since P3s grant monopolies, the cost of goods will shoot sky high, with no way to rectify it for 50-100 years. Even publicly-controlled HOT lanes are runaway taxation since the toll rates go up in real time based on the level of traffic, not actual project costs. Under all these toll scenarios, affordable travel and the free flow of people and goods is at risk.
When contemplating the big picture, it’s easy to connect the dots and see how Americans’ sovereignty and control over our critical public infrastructure and trade corridors will be shredded if this concerted push for privatization and P3s is successful. Thankfully, Deal has maintained state sovereignty over I-75, but there are a lot of other states whose leaders may not draw such a line in the sand over I-75 or America's freeways. It’s incumbent upon every American to hold their politicians’ feet to the fire to ensure affordable travel and that our public infrastructure stays in the peoples’ hands.
Link to article here.
I-75/I-575 toll project close to bidding, again
The Atlanta Journal-Constitution6:39 p.m. Friday, May 11, 2012
Once again, the state is preparing to put the I-75/I-575 toll project out to bid, in June.
The project would build optional toll lanes along I-75 and I-575 in Cobb and Cherokee counties, from the Perimeter to Hickory Grove Road and to Sixes Road. The cost approaches $1 billion, to be funded largely by gas taxes paid by all Georgia drivers -- whether or not they drive the toll lanes -- and by tolls.
As reported by The Atlanta Journal-Constitution in March, the revised project will no longer be a public-private partnership as envisioned by the state Legislature. Companies will not finance the road to lease it from the state and be paid back by toll revenue over the years. Instead, much like any state road project, the state will hire private companies to create it and pay them back for their work afterward.
Then the state must pay to maintain and operate the road. That means once the road is operating, the state will control the road. If the toll fee is too high, the state can lower it. But if toll revenue isn’t enough, that’s the state’s problem, too.
There is a difference with this project, though, which is the most expensive transportation project in state history. First, the designers and builders will work as a team, hoping to save time and money. Second, the team also will help arrange or provide initial financing. Such "design-build-finance" models are generally used to fill a short-term gap in financing projects, and give states more flexibility, Sia Kusha, vice president of the engineering firm HNTB, said in an interview this spring. According to a statement, the state expects the bidders to loan the state 10 to 20 percent of the project cost.
With design-build-finance, the contractors don't generally provide upfront the big bucks required to finance the project over the long term. In Georgia's case, the state is ready to do that with $500 million in gas taxes. The rest of the $950 million or so could come from loans paid back by toll money.
On the flip side, Kusha said, no matter where the state borrows its project money, the state has to pay for that service. With design-build-finance, when the state pays for the work the contractors have completed, "the state, in terms of their payback, will have to pay back the money the contractor brings to the table and then some," he said.
Similar arrangements have helped finance projects in Florida.
This is at least the third time the state has put the I-75/I-575 project out to bid. In 2005, it signed a contract for initial work, but eventually broke off that arrangement. It revised the project and put it out to bid as a public-private project last year, but canceled that bidding.
The state now expects to start design work next year and open it to traffic by 2018.
Link to article here.
I-75 Toll Project Revs Up Again
The new lanes will open in early 2018 under a revamped public-private partnership, the state says.
May 15, 2012
Northeast Cobb Patch
GDOT announced the schedule and new approach for the project Friday.
Gov. Nathan Deal pulled the plug on the $950 million, 29.7-mile project late last year because he did not agree with giving the contractor control of the road and the tolls in return for paying upfront costs.
The revised project will still involve two reversible toll lanes running from along I-75 from I-285 to I-575 and single reversible lanes running north from the I-75/575 split along I-75 to Hickory Grove Road and along I-575 to Sixes Road.
The tolls still will vary, rising as the interstate becomes more congested, like the HOT lanes on I-85 in Gwinnett County but without the high-occupancy requirement for the cars using the lanes. Drivers will have to decide whether the price of the toll at any time is worth the relief from the congestion.
The project will remain a public-private partnership in which the contractor will be expected to bear some of the upfront costs.
But the state will retain ownership and control of the lanes and will repay the contractor out of the tolls.
“This is a vital commuting and logistics corridor,” Deal said. “Adding new lanes—and the new capacity they will provide—is critical to a continued high quality of life in metropolitan Atlanta and to sustaining further economic growth for the region and for all of Georgia.”
GDOT will look for a company or group of companies prepared to design and build the project at the same time while financing $95 million to $190 million of the cost.
The state will issue a request for qualifications from interested companies in June with the goal of creating a short list of potential bidders in August, putting out a request for proposals in December and naming choosing a contractor in 2013.
Construction would start in 2014, and the road would open in early 2018.
The project is not part of TSPLOST, the special regional, 10-year transportation sales tax on the ballot July 31.
Instead, the state will spend $300 million in leftover fuel taxes from past years, $200 million from the GDOT construction budget and $270 million from a low-interest loan guaranteed by the federal government under the Transportation Infrastructure Finance and Innovation Act.