Thursday, October 31st, 2013
The nearly empty Intercounty Connector in Maryland. Coming soon to a bridge near you in Louisville or Portland? Source: Bethesda Magazine
I’ve recently reported on a couple of mega-bridge mega-boondoggles in progress in Louisville and Portland. But if you want to see a preview of how this might play out in real life when and if they are built, an example of this is in progress in the Maryland suburbs of Washington, DC with the Intercounty Connector.
Betheseda Magazine has the gory details in their September-October issue. And while this is a highway, not a bridge, there are an eerie number of similarities between this and the bridge projects in Louisville and Portland. The fate of the Intercounty Connector should be giving DOT officials in Oregon, Indiana, and Kentucky nightmares. Here’s what Bethesda Magazine had to say:
Driven on the Intercounty Connector lately? No? You’re not alone. Many haven’t. The 18.8-mile highway—the first stretch of which opened two and a half years ago after great hype and amid great controversy—is the road less traveled. Traffic counts are well below early projections, and revenue from tolls—needed to pay off the bonds that were sold to build the road—is far less than originally anticipated….The story of the ICC is a bit like the invasion of Iraq, a march to war in which the highway hawks—developers, development lawyers and contractors—held sway while critics were ridiculed as knee-jerk tree huggers and opponents of economic growth….The ICC is the Pac-Man of roads, critics charge, eating up all the transportation dollars in sight, now and for years to come.
Some troubling elements of this project that are similar to aspects of the Louisville and Portland examples:
- Been desired for decades? Check. “first conceived 50 years ago”
- Stunning cost increases? Check. “The initial estimated cost of $1 billion has ballooned to $2.4 billion—or as much as $4 billion if you include interest payments.”
- Tolls as an afterthought? Check. “Tolls were barely discussed. And hypothetical figures buried in a 2004 state consultant’s report marked ‘confidential’ are lower than tolls currently being charged.”
- Use of GARVEE bonds (a way to spend tomorrow’s federal transportation grants today) for financing (I’m looking at you, Kentucky)? Check. “The largest chunk, $750 million, comes from so-called GARVEE bonds.”
- Amazingly declining traffic projections? Check. “The Maryland Transportation Authority issued a press release asserting that ICC usage was ‘consistent with our projections,’ with 35,000 vehicles daily using the westernmost segment and 26,000 the eastern segment. Unmentioned was that the numbers were consistent with 2009 projections, which were significantly lower than earlier forecasts.”
- Two sets of books, er, traffic projections? Check. “The state developed two sets of projections, both higher than actual usage so far. The higher numbers were in official documents presented to the public, bolstering the case for the highway and implying greater environmental impact with higher volumes. More conservative numbers were used for the bond rating agencies.”
- Massive funds diverted from more worthy projects? Check. “To pay for other road improvements the state cannot afford—thanks largely, critics say, to the ICC—the Maryland General Assembly this year pumped $880 million more into the depleted Transportation Trust Fund by increasing the gasoline tax for the first time in 21 years.”
What happened? Traffic is far short of projections. Tolls are falling massively short of projections: “The total revenue in the fiscal year that ended June 30, 2012: $19.73 million—a third of the low-end projection of a decade ago.” Yikes! That’s a little bit more than an “Oops” to say the least. The state is being forced to bail out the bonds with regular transport funds: “$180 million is coming out of the state’s Transportation Trust Fund to pay bondholders.” Holy Financial Disaster, Batman!
Adding to these woes, people who drive the road without a transponder (likely many of them from out of state), aren’t paying up: “34.2 percent of drivers using the ICC without an E-ZPass transponder weren’t paying the bills they later received in the mail.” Presumably the rental car companies and such included in this will eventually fork over what they owe, but it looks like this thing is going to generate significant bad debt expense.
And let me put this one in a separate paragraph so you don’t miss it: building the Intercounty Connector caused the state to have to raise the gas tax. I repeat from the article: “increasing the gasoline tax.”
The Washington area is famous for extreme traffic congestion. It’s growing rapidly in population. It’s also the most affluent major metro area in the United States. Yet amazingly, people still aren’t willing to pay to use this thing. Admittedly, the tolls will be lower (though still not cheap), but I wonder how many people in much lower congestion and lower income Portland and Louisville will be similarly unwilling to pay?
Adding to the financial disaster is some fallout that I wasn’t necessarily thinking about, but is obvious in retrospect. Namely, recriminations and finger pointing about who is to blame for this fiasco. What’s that song by Shaggy again? It’s not just about the cost either. The highway has not spawned the type of development that was projected when it opened. Whose fault is that, you might ask? Well according to Doug Duncan, one of the politicians who pushed this debacle, it’s the local government. He claims that they have created an “anti-business climate.”
So head’s up to local leaders everywhere. If the DOT and its allies cram a mega-boondoggle road or bridge down your throats, it’s your fault if it doesn’t produce the economic benefits they projected. Better buckle up. Because apparently being a boondoggler means you never have to say you’re sorry.
I’m sure traffic levels will eventually improve and that there will be more development in the future. But this thing is clearly no where near what was promised by its backers. Sadly, Maryland motorists and taxpayers will be paying the price for years to come. Let that be a warning to would-be boondogglers everywhere. The hangover from overspending can be long and painful indeed.
Update: A commenter requested a map of the highway, so here it is via Wikipedia:
Also nice to see Business Insider pick up the story. The public needs to know how much risk their wallets are exposed to on these things.