VACostCutting

Wednesday, April 05, 2006

Dulles Toll Road: MWAA v. Private

Having just reviewed the MOU between the Commonwealth and the MWAA concerning the Dulles Toll Road, and the talking points distributed by Secretary Homer, nothing in them invalidates the concerns raised by the Speaker.

a) The talking points claim that the Airport Authority has agreed to consider the four previously submitted proposals. If so, they did not bother to include that in the MOU.

b) The talking points are almost certainly wrong in asserting that MWAA's management of the rail project is the least-cost way to bring it about. First, they have zero expertise in rail projects, only in airport projects. Second, they have tax-exempt bonding ability, but so does VDOT. Third, if what is meant is lowest cost to taxpayers, it's not clear that some form of least-subsidy concession might not require less taxpayer subsidy that the contemplated plan.

c) Regarding which option would lead to lower tolls, either the Speaker is wrong or the talking points are wrong. The Speaker has presented an argument for his position, which the talking points do not attempt to refute; they simply assert their position and provide no evidence to suggest otherwise.

d) SB666 assures that revenue from concession agreements will be spent in the region. The Governor has yet to act on that. In addition, it is true that only 34% of Indiana is going into the corridor (about $1.1 b); however, the operator has agreed to invest at least another $1b in capital upgrades over the life of the agreement – and upwards of $400 million immediately. Certainly the same would likely hold true in the case of DTR. Further, VDOT could designate any or all revenues into that region. Indiana made its own political decision about how to allocate and spend the resources it generated, as should the Commonwealth. To suggest that Indiana is not a model because only 34% of revenues were then directed into the region is ridiculous and short sided (considering it leaves out a huge piece of the equation).

e) Negotiations between private and MWAA would be no different with the exception that the MOU gives MWAA broad authority with respect to the tolls. The active private proposals are all based on certain assumptions about the toll rates i.e., they would not have the ability to fully capture costs. If the bidders had this ability, their offers would be much higher, thus likely to be better deals for the state.

f) The MWAA is not accountable. They’re a board of political appointees, including three slots for the president. Even if they were to sign a concession deal for the roads, as noted in “a,” where would the revenue flow? To the state or to MWAA? If the latter the state would be passing up a golden opportunity.

g) According to the MOU the MWAA can raise tolls to meet the cost of construction and operation of the Metro rail extension – this will be a huge number. They may have to hold meetings and be “transparent” but this does nothing to their broad ability to simply raise tolls to cover the costs. The full costs will be large and will serve such a small percentage of commuters. Further, toll road users will be subsidizing the construction and operation of rail—that they will not use. Where is the fairness in that?

h) One question this agreement raises is whether it fully complies with the rather detailed restrictions on how airports can spend their revenues, under the terms of the detailed grant agreements they must sign as a condition of receiving federal AIP grants. This is a question that I'd love an answer to.

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