Why I oppose I-77 toll lanes: Nuclear safety

Today TollFreeNC and WidenI77 features Robert Ageenko, Commissioner Candidate for Cornelius.

AGEENKORobertIn the 1970s, I-77 was built as an evacuation route for the two nuclear stations in our region just as much as it was intended for a faster ride to and from Charlotte. For this reason, I have grave concerns about our safety when it comes to I-77 as a nuclear evacuation route.

You see, I am from Russia and knew people who worked in Chernobyl and died after the nuclear disaster. I personally knew the workers who helped to build the massive cover over the Chernobyl nuclear station in order to contain the radiation in case of a leak. Sadly, tens of thousands of those workers died after working on that cover. Millions of lives were lost and impacted in about a thousand mile radius. In fact, my uncle today is fighting cancer as a result of being a Chernobyl construction worker.

Two years after the Chernobyl disaster, I was in Kiev, Ukraine, for a one-month training for my job. Kiev is 60 miles from Chernobyl. Several people, including me, could taste the radiation two years after the disaster. It had a specific metallic flavor in your mouth.

Now all the area within a 20 miles radius of Chernobyl is closed off to the public. It is a place where you can find animals with two heads, or three eyes, and apples the size of melons. It is a scary place still today. And it will be for a thousand years.

All of us residents of Cornelius, Davidson, Huntersville and Charlotte live VERY close to TWO nuclear stations, not just one! We are within 50 miles of the Catawba and the McGuire nuclear stations. Many folks do not realize this. If something happens, as it happened in Chernobyl and Fukushima and other nuclear plants — we are screwed. Really screwed! Here’s a direct quote from Wikipedia, “According to a 2010 survey of energy accidents, there have been at least 56 accidents at nuclear reactors in the United States (defined as incidents that either resulted in the loss of human life or more than US$50,000 of property damage).”

None of the pills the nuclear operators are providing to us will do much to help us — forget about the pills. Nothing will help, unless we RUN… Run, baby, run! It will be the one and only action that can help. Scary? Yes, it is scary. But when you are prepared and nothing negatively impacts your evacuation route, you have a better chance of survival.

North Carolina built a beautiful road (that few use) around Fayetteville for military reasons. Shouldn’t we build more lanes (NOT TOLL LANES) on I-77 to protect the millions of people who live in our region?

It is estimated to cost between $75 to $130 million for general purpose lanes to relieve the congestion between Huntersville and Mooresville. By adding one lane in each direction where it is needed, we will not need to redo 9 bridges and a flyover between I-77 and 277. That is a wasteful project that will be a road construction nightmare. It will eliminate an efficient evacuation route for several years. We need to do what is the fastest way to widen the road given our close proximity to two nuclear stations. That is by using existing public funds under Governor McCrory’s new transportation plan that would put I-77 at the top of the list for the funding of regular lanes, not toll lanes.

Robert Ageenko

The Toll Lane Financials…..work????

As the elected establishment began touting how the financing model works so well for this project, we believe that is fuzzy math at best.  If the state does not have $85 to $120 million to build a lane each way from Exit 23 to 30, but not only has $170mm to contribute to the $550mm HOT lane project – claims they are being made that the 4 access points will be 8 @ est $20m per adds $80mm to move the total to $630mm AND suddenly $200mm of apparently FREE money is falling out of the sky to pay for an assortment of local road projects.  IF IT SOUNDS TOO GOOD TO BE TRUE ?   Then re-read the reality of the situation based on referenced facts that we initially published on June 17, 2013

Some elected officials justify toll lanes as a means to generate revenues for roads.  They note gas tax receipts are expected to decline while road construction needs will increase.  These trend lines are headed in the wrong direction and to reverse that, these advocates point to toll lanes (and roads) as an important revenue-raising tool.

This implies that toll lanes must not only cover their operating costs, but also bring in enough revenue to pay for the lane itself. Ideally they would generate a surplus that can be used as a source of funding for other transportation needs.  For I-77, the current plan is a $550M project consisting of toll lanes for 27.5 miles from downtown Charlotte to the middle of Iredell County.  The project is proposed as a public-private partnership, where the NCDOT would lease the lanes to a private company under a 50 year contract.  The $550M includes $170M in public funds, and the rest would be financed through a combination of private debt and equity.

Before we begin our analysis, a word about sources.  Population data comes from the U.S. Census Bureau.  The financial data was taken from the 2012 Managed Price Lane Guide published by the Federal Highway Administration.  This document is basically a how-to manual for getting toll lanes built.  It was written by Parsons-Brinkerhoff, an engineering consulting firmly deeply involved in the toll lane business.  Among its authors is David Ungemah, the featured speaker at a local toll lane information session.  He is nationally recognized as a “managed lanes expert.”  Thus, any bias in the information presented is in favor of toll lanes.

With that in mind, we’ve undertaken a study of existing toll road financials.

Revenues

The chart below plots annual toll revenues vs metropolitan served area (MSA) population for 11 toll lanes currently in operation. In addition, we plotted the required Revenuesrevenues ($20M) for the proposed I-77 toll lanes.  Toll lane experts have placed this number as high as $30M; we erred to the low side.

A couple of observations.  First, toll revenues are roughly correlated to the MSA.  On the low end are the I-15 lanes through Salt Lake City with a metropolitan area of approx one million and revenues of $500K.  On the high side- indeed an outlier- is SR 91 connecting North Orange County to Riverside.  Combined, over 7 million people live along this route, and toll revenues were $41M.  We’ll discuss SR 91 in more detail in a moment.

This correlation is not surprising as urban sprawl is necessary for the toll lane model to work.  As we have stated elsewhere, toll lanes rely on congestion in the general purpose lanes to entice people to pay the toll.  Robert Poole of the Reason Foundation affirms this in a recent article he wrote examining toll revenues in Miami.  (Poole invented the term “HOT lanes” and is widely viewed as the father of the concept.)  Poole states:

I could imagine that a managed lane project in Minneapolis or Salt Lake City, say, might not relieve enough congestion to cover its costs out of toll revenues. But congestion on I-95 in Miami was nearly as bad as on the Los Angeles freeways, and the prices charged during peak periods are considerably higher than on many other managed lanes around the country.

In order to cover its costs, Poole implies, toll lanes must be in a large metropolitan area.

The second observation is that the required revenues for I-77 are out of proportion with the region’s population.  I-77 toll revenues will need to surpass those in Seattle, San Diego, Houston, Atlanta, and Miami, among others.  In fact, the I-77 project would need to be the second-highest grossing toll lane in the country.  It would require revenues greater than the eight lowest-grossing toll lanes combined.  This should be especially concerning in light of the fact that the project’s northern terminus (Iredell) has the smallest population (160K) of any of the existing toll lanes.

Operating Income

Operating Income is defined as revenues minus operating costs and does not include debt repayment.  Whatever is left over from operating expenses is what is available to pay for the capital cost of the project.  Toll lanes incur several operating costs that are unique to toll lane operation.  Among these are advertising, toll billing, toll collection, credit card fees, toll enforcement, occupancy enforcement, administration of the tolling authority, insurance claims and premiums, and ROI to private equity and debt investors.  General purpose lanes incur none of these.

The chart below shows annual operating income vs population, with projects sorted in order of increasing population.  Of the 11 projects, 7 have negative operating income.  IncomeThree generate significant positive income and one generates a modest income.

With one exception, no toll lane serving a population of less than 5.5 million currently covers its operating cost.  The exception (Denver) is an HOV-HOT lane conversion with a modest capital cost of $9M.  It was built with public funds and is run publicly, thereby avoiding some of the expenses previously mentioned.  The other HOT lanes with positive income are in Houston, Miami and Riverside/NOC.  SR 91 (Riverside/NOC) generates a significant income of nearly $20M.  This stretch of road is ten miles long and serves the relatively affluent North Orange County and more working-class Riverside.  The total served population is over 7 million and traffic on this road is over 300K vehicles per day, about twice what the busiest freeway in North Carolina carries.

However, even this “success” story is not without a cautionary tale.  The project originally opened in 1995 as a private, for-profit investment at a cost of $135M.  When the state tried to make improvements to ancillary roads, the operator sued, citing a clause in the contract that would prevent the state from making improvements that would ease congestion and impact toll revenues.  In 2003 the Orange County Transportation Authority bought the project back for $207M, 50% more than its original cost.

I-77 is not included here because the financials are not yet public.  At 27.5 miles the I-77 toll project would be the second longest in the country, so operating costs can be expected to be on a par or greater than those currently in existence.

Capital Cost

The chart below shows the total project capital costs.  I-15 in San Diego is the highest, Capitalat $1.3B.  The project was financed through general bonds issued by the state of California.  This differs from the proposed financing in North Carolina, where bonds will be issued using anticipated toll revenues as surety (“toll revenue bonds”).  Implicit in the San Diego project is the consideration that toll revenues will never be sufficient to retire capital cost.  Conversely, as we reported here, North Carolina plans to issue hundreds of millions in toll revenue bonds.  In fact, by the end of FY 2015, North Carolina will have issued over $2B of these types of bonds.  These will be used for toll road construction (not toll lanes), but proponents of this method should take heed that even in Southern California, tolls are not viewed as a source of additional revenue.

The variation in capital costs are largely due to whether the project is a conversion of an existing lane or an entirely new project.  Houston, Riverside/NOC and Miami are new construction while the remainder are conversions of existing HOV lanes.

Of course, new construction is significantly more expensive than conversions.  I-77 is primarily new construction (10 lane-miles out of 90+ will be HOV conversion), and this is reflected in the project’s capital cost of $550M. The I-77 project would be among the most expensive currently proposed, and more expensive than any toll lane financed through toll revenue bonds except the Capital Beltway in DC.  (The recently opened Capital Beltway cost over $2B.  Operating financials are not yet available.)

As far as the implications for the rest of North Carolina, I-77 has the only HOV lanes in the state.  Therefore, building toll lanes will require either new construction- and the associated expense- or conversion of existing general purpose lanes.

Superlatives

Compared to projects in the rest of the U.S, I-77 toll lanes would be:

  • the second-highest grossing to make the project financially viable
  • the second most expensive project financed through toll revenue bonds
  • the second longest project in terms of miles
  • the first to have four toll lanes beside four general purpose lanes
  • located in the second smallest metropolitan area

In addition, I-77 toll lanes would be North Carolina’s first:

  • privately operated toll lane
  • toll lane or road to be operated on a for-profit basis
  • road under a 50 year contract

Historically, no toll lane:

  • serving a population the size of Mecklenburg-Iredell has ever had a positive operating income
  • has ever repaid a debt obligation as large as the proposed I-77 project, regardless of metropolitan population

Conclusions

The proposed I-77 project therefore requires revenues and income that have been historically unattainable.  This raises an obvious question:  shouldn’t the bond underwriters- the people who do this for a living- walk away from this?  When we were in Raleigh we asked this question.  The answer was if they do not think the project is viable, they will simply not fund the project.

Not so fast.  As we have pointed out previously, under the terms of the existing contract the taxpayer will be responsible for all but the equity portion of the total project cost.  (Equity is typically about 20% of the total project.) If the project fails, advocates tout that taxpayers could buy the project for “pennies on the dollar.”  To most people, eighty cents on the dollar is a lot of pennies.

Even if that were the case, the toll lane project requires several improvements that are otherwise unnecessary.  Foremost among these are the replacement and/or construction of 9 bridges.  According to the NCDOT none of the existing bridges require replacement.  So taxpayer money that could be spent elsewhere would instead pay for replacing structurally sound bridges.

The above analysis shows that North Carolina lacks both the population centers and existing infrastructure of readily-convertible lanes to make toll lanes financially viable. If we pursue this route the scenario for North Carolina is one of high capital costs, low revenues, and negative operating income. Indeed, rather than generating additional income for roads, toll lanes pose a substantial risk of making our funding problem worse.

Toll lanes may work elsewhere, but they should be removed from consideration in North Carolina.

A Mother’s Take on the Tolls

By Vallee Bubak
Volunteer for TollFreeNC/WidenI77

Bubak FamilySince December I and other moms have been working day and night to stop the I-77 tolls. These are not the pocket-change tolls of yesteryear. These are tolls operated by a private and most likely foreign corporation for 50 plus years that will cost drivers anywhere from $5 to $28 dollars or more to travel one way between Charlotte to Mooresville.

In addition to moms like me worried about our children’s future and the impact on local businesses, real estate values, and more traffic on our neighborhood roads because of unaffordable and ill-planned tolls,  men and women from various political backgrounds have come together to form and support the outreach efforts of TollFreeNC and WidenI-77. We have one mission: to inform the public about the proposed tolls for I-77 and North Carolina. Our volunteers are everyday people from Charlotte, Cornelius, Davidson, Huntersville and Mooresville. They have given of their personal time as well as their personal financial resources to get the word out and inform their neighbors, co-workers and fellow citizens about the tolls.

As a mother, I am extremely disappointed in the elected leaders who could have spoken up against this exploitative plan — but didn’t. Instead, they relied on a so-called consultant who is in the tolling business, Parsons Brinckerhoff (www.PBworld.com), to recommend how best to widen I-77. What did we expect Parsons Brinckerhoff to come back with but a recommendation for tolls? Parsons Brinckerhoff has orchestrated the tolls like a high-paid wedding planner. For moms like me (as well as the fathers in our groups), the poor research and decision making of a number of elected officials have stolen from us precious time away from our families and kept us from volunteering in other ways for our community.

The good news is that we have numerous hard-working citizens who have stuck their necks out to do the right thing and speak up against an unfair, unwise and deceptive tolling scheme. It is not easy to go up against politicians, and especially those who have the support and resources of powerful political forces in the Lake Norman area.

A little over a week ago, the TollFreeNC group put up signs that both supported anti-toll candidates, and also signs that said Fire Bradford: He Supports Toll$ and Fire McAulay: She Supports Toll$. The volunteers of WidenI77 and TollFreeNC who produced the signs are everyday citizens and not political consultants. Their intention was not to offend, but to inform citizens about the toll issue and to identify the Town Commissioners running for re-election who had voted for the tolls. Also, TollFreeNC felt that McAulay’s actions toward the public at the May MUMPO meeting should be known. The video of that incident can be viewed at http://www.youtube.com/watch?v=ot9f4bJilCk or via the website www.tollfreenc.org.

It has been reported that Commissioner Bradford of Cornelius was concerned about how he would explain the signs to his kids. I ask, how will we all answer to our kids and grandkids when they ask us who allowed 50 years of thousand-dollar tolls on I-77? For all of the mothers and fathers and concerned citizens who have spent countless hours away from our families and jobs to stop the tolls, isn’t that loss of time, money and energy more harmful than a truthful sign about an elected official who is expected to be held accountable to his electorate?

In response to the signs that said Fire Bradford: He Supports Toll$, Bradford came forward with 61 endorsements from other pro-toll politicians and his allies, and referred to us volunteers as “fringe group activists”. However, his 61 endorsements is a very small number compared with the approximately 3,500 petition signatures against the tolls and the more than 25,000 hits to the WidenI77.org website.

Upon hearing that some people were upset about the signs, we removed the signs in order to have time to check with other volunteers, citizens and business owners for their perspective. We also wanted to make sure that the conversation around the signs did not overshadow the topic of the tolls.

While some people felt that the signs were a bit harsh, the overwhelming majority of citizens and business owners felt that the positives of the signs outweighed the negatives. So the signs have gone back up. Are the signs harsh? For some, yes. Are they truthful? Yes. Do I wish that our months and months of polite and kind requests were effective in getting elected officials to represent the will of their constituents? Yes. Have Bradford and McAulay listened to their constituents’ kind requests? No.

It is crucial that we have proper representation and elect Town Commissioners who will stop a plan that benefits a foreign tolling corporation at the expense of the public for the next 50 years. One of the unintended consequences of the signs is that they showed us which of the candidates would have the courage to continue to fight the tolls even when under pressure from the area political power players. As has been the case before, opponents of tolls often come under fire from a few Raleigh legislators and their allies to “NOT” voice opposition to the toll plans. The tolls have become a litmus test for elected officials by revealing to the public who will have the courage to speak up for their constituents.

While as a mother I am frustrated and hurt by the selfish and self-serving actions of some elected officials that I had previously trusted, I am encouraged to see numerous other mothers and fathers working together to stop a catastrophic plan that will impact our children for decades. I encourage each person to take the time to visit the website www.tollfreenc.org and our Facebook pages: TollFreeNC and WidenI77 to learn more about the tolls and the candidates, and to vote this November 5.

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