Georgia’s key venture into privately financed toll roads, a project to build optional toll lanes alongside I-75 and I-575 in Cobb and Cherokee counties, is not going out to bid in June as planned and may be hanging in the balance.
The project is widely seen as a critical test of Georgia’s public-private toll program, the state Department of Transportation’s only initiative for financing major congestion relief in metro Atlanta.
In a statement, the DOT said that in consultation with Gov. Nathan Deal, it had decided it would wait to see whether Georgia wins a federally subsidized loan for the project, and then “assess the projects and plan accordingly.” (The I-75 project is tied to an I-285 project that could be developed later.) A spokeswoman for Deal said he had nothing to add.
If built, the project would put one or two optional toll lanes along I-75 from the Perimeter to Hickory Grove Road, and one along I-575 from I-75 to Sixes Road. The toll price would rise and fall with congestion in the main lanes, in order to keep the toll lane free-flowing. The DOT plans the project as one of a network of such lanes spanning the metro area.
"I can just say we’re committed to the [public-private toll] program and we’re also committed to a network," of which the project was a viable part, said Brandon Beach, who chairs the DOT board's committee that oversees such projects. "I believe this is a good project, but we need to look at the finance and see if it makes sense for Georgia." DOT board Chairman Rudy Bowen concurred, saying, "There’s no indication at this point that it will not move forward" and DOT just needed to make sure the taxpayers get a good deal.
The issue is the public subsidy that would be required to build the project. Although the lanes would be tolled, and built by private investors who would be repaid by the tolls, those funds would not be enough to fund the entire cost of the road. Building out the entire metro Atlanta optional toll network could cost $16 billion and require a taxpayer subsidy of $7 billion, according to DOT documents.
Even so, that is less than it would cost to sufficiently expand all of metro Atlanta's highways into the future with regular lanes, which tend to just fill up again.
The idea behind optional toll lanes is that by managing the toll price, the lane can always offer drivers who can afford the toll an option to avoid congestion.
For the $1 billion I-75/I-575 project, the DOT board has approved a taxpayer subsidy for the project of up to $450 million. Winning the $375 million federal loan, called a “TIFIA” loan, could shave $100 million off the taxpayers' share, DOT officials have said.
An expert on toll financing said it at least made sense to wait to bid out the project, until the state could tell the developers whether to incorporate the loan savings into their bids.
However, Georgia has so faltered in this project and others that it runs a risk to the overall program if it abandons the project. It can cost several million dollars for a private consortium to put together a bid on a project, and those private companies can get wary of doing business where previous proposals have been scrapped and proposers' money gone to waste.
“People have been disappointed several times in the last five years at Georgia really failing to get the program off the ground despite several projects under way,” said Bob Poole, a founder of the Reason Foundation, a libertarian think tank. “People will be skeptical. But if the rationale is that we’re waiting for TIFIA, I think in the short term that will certainly be understood by the private sector.”
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