I-75/I-575 toll finance hits roadblock

By Ariel Hart

The Atlanta Journal-Constitution

The flagship project in the state’s revived program to fund transportation projects with private investment has hit a financial roadblock, highlighting broader questions about the funding for its key plan to address congestion in metro Atlanta.

The federal government has denied the Georgia Department of Transportation’s request to borrow $375 million for a project to build toll lanes alongside I-75 and I-575 in Cobb and Cherokee counties, state DOT officials say. That loan would have been paid back using toll revenue.

DOT spokeswoman Vicki Gavalas said Georgia was on the short list for this round of loans, and that there will be other rounds. A decision on another round is expected within days, she said.

"We still have other options that we are looking at, and we’re going to go through all of those options," Gavalas said. "Certainly a part of what we’re doing is the financial feasibility, but as long as we’ve got options we are pushing forward."

The stakes are high. Bob Poole, who is often credited with inventing the type of toll lanes proposed along I-75 and I-575, said of the rejection, "It means unless they get selected in a subsequent round, they’re going to have a struggle to figure out how to put the funding back together."

That's because this particular loan program, called TIFIA, for the Transportation Infrastructure Finance and Innovation Act, offers much more attractive terms than regular loans, he said, shaving millions of dollars off projects by giving lower interest rates and allowing projects to take as much as 40 years, as opposed to a more standard 30 years, to be paid off.

But the loan rejection is only one issue in the project's finances, and the project is only one in a larger, very expensive plan for metro Atlanta.

Even if Georgia wins the project loan, the project needs up to $350 million in public tax revenue in addition to the toll revenue. That is more than the state DOT's entire road-widening budget for the past fiscal year after spending on repaving, widening bridges and building new roads, soaring debt service and other costs.

The DOT has a plan to cobble that tax money together -- $126 million from the next five years' gas tax revenue and up to $224 million in borrowing off of future federal gas tax receipts. But the DOT's high debt service is already causing it trouble, and that $224 million in borrowing hasn't been approved.

The public borrowing likely would have to be approved by the governor, who heads the State Road and Tollway Authority. Gov. Sonny Perdue may be out of office by then, but his spokesman said his feeling on the issue was not decided. Perdue, who has clashed with the DOT board member who now heads the committee that handles toll projects, David Doss, "has expressed his concerns to the DOT Board and commissioner about any concession project being carried too heavily by public financing," the spokesman, Bert Brantley, wrote in an e-mail. "He is certainly supportive of [public-private] projects, and would have to see the entire financial plan and an assessment of the risks and benefits of the project before committing any public funds."

And this is just for one project.

The state is planning a network of "managed" lanes, likely optional toll lanes, for metro Atlanta. Beleaguered Georgia and Atlanta planners have struggled to find a way to fix metro Atlanta congestion, which ranks third-worst in the nation, according to the Texas Transportation Institute. Traffic jams cost the average area driver 57 hours of wasted time a year, at an overall cost of $3 billion, according to the institute's report, Urban Mobility.

Georgia planners have accepted that there isn't enough tax money to sufficiently widen Atlanta's roads out of congestion. Instead, they have turned to optional toll lanes, mostly built alongside existing highways, sometimes built on existing HOV lanes, as on I-85 in Gwinnett County. On this type of toll lane, called a high-occupancy toll ("HOT") lane, the toll price rises and falls minute by minute with congestion, aiming to keep traffic low enough to keep the lane free-flowing.

If built in its entirety, the state's optional toll lane network for metro Atlanta would need public money on the order of $7 billion, according to briefing documents on the plan. The state's transportation planning director, Todd Long, stressed that the state could choose to build only the most important parts of the network. Statewide on all projects, Georgia DOT spent about $1 billion last year.

The total cost to build the I-75/I-575 project in Cobb and Cherokee counties is $987 million, or $1.4 billion when the cost of loan interest is added in. The rest of the project cost would be paid by private investors, who would be paid back through toll revenue. The DOT hopes competition would drive the companies to put more money toward the project.  Representatives of the three consortiums eligible to bid next year did not comment.

Doss said the board decided on the network of managed lanes partly because the Bush administration was so supportive of the concept.

"Were we starting with a clean sheet today, would we be pushing managed lanes?" Doss asked. "I don’t know the answer to that question. ... If you want federal money, you’ve got to do projects that are in favor with the current administration. There has clearly been a shift."

He noted that another potential public-private project, to build a passenger station in downtown Atlanta, got a good reception in Washington.

A spokeswoman for the Federal Highway Administration, Nancy Singer, said Georgia could apply again for the TIFIA loan program in December. Gavalas said Georgia was in the running for additional funding to be announced within days.

In the long term, it is unclear what will happen with the TIFIA loan program altogether.

"Everybody’s uncertain and up in the air about the future" of the program, Poole said. "It’s a big question mark, a big question mark."

Gavalas said the DOT is still optimistic. "I haven’t heard from anybody here that we’re backing down," she said. "We do believe that this will be a successful program."