Toll project spurs nagging questions

The first part of the system to open, on I-85 in Gwinnett County last fall, drew outrage from drivers in the regular lanes mired in new congestion. Then a state study showed the I-75/I-575 project would have marginal or no benefits for most drivers in that corridor, although delivering big relief for those who could afford the toll.

And now, perhaps most serious for the plan’s prospects, the private investment that is to underpin the network’s biggest pieces has collapsed. The private investors were dismissed in the middle of bidding and told the I-75/I-575 contract would restrict the state too much, limiting its ability to build roads in the corridor for 60 to 70 years.

Optional toll lanes rarely pay for themselves, and so must be financed upfront. Higher taxes on gas could raise that much and more, but legislators say that is a non-starter for Georgia taxpayers.

Some fear that without private funding it could be difficult for metro Atlanta to achieve significant traffic relief.

“Here’s the issue: We don’t have the revenue at the Department of Transportation to build the capacity we need for the future,” said Tommie Williams, state Senate president pro tempore and sponsor of the state’s original 2003 law inviting private road investment.

Nine years later, that law and its successors have not yet turned an ounce of dirt on any project.

Lawmakers have noted that Gov. Nathan Deal has not ruled out private investment in the future, and they accepted his reasoning that the I-75/I-575 contract was too restrictive for too long. But they could not say how the network would be financed.

As if to underscore the point last week, Deal and House leaders finally landed on a new way to finish paying for the I-75/I-575 project: back to square one, with the state’s usual transportation funding source, gas tax money. If approved, the $500 million total for I-75/I-575 would dwarf the state’s entire annual road-widening budget.

“Maybe they’ll say we can build this project by pulling every scrap of money they can find together, but then what are they going to do for the next one?” said Bob Poole, a founder of the libertarian Reason Foundation, which favors private financing.

Williams said it’s simple: If the state doesn’t make private investment in toll roads work, “Well, then we stay mired in congestion.”

The options

State Transportation Director Todd Long stressed that the state is getting some things done. A referendum this summer could build scores of projects easing thousands of commutes, if it passes at the ballot box and survives legal challenges. DOT is doing roadwork with its regular budget. And some of those toll projects are rolling: I-75/I-575 may work with public funds; the one on I-85 is open; and one on I-75 south of I-285 also will be publicly funded and is scheduled for construction within a year.

If you don’t have enough money, he said, “you go one bite at a time, OK?”

To be sure, experts stress that sometimes, the government is better off collecting the tolls itself as a public project. And private funding is not a cure-all, since investors aren’t interested in roads with middling traffic where they can’t make a profit.

But DOT has conceded that without private investment, some projects are simply not possible.

Those who depend on DOT to deliver projects to their neighborhoods say more must be done.

“We need to have a toll expansion,” said Yvonne Williams, president of the Perimeter Community Improvement Districts, a self-taxing business district where public-private partnerships are expected to contribute more than $1 billion to projects on I-285 and Ga. 400. “I don’t know that we’re ever as an urban center, especially as large as Atlanta is, going to have enough money for transportation. Every bit of money we can find we have to put at the table.”

Among commuters, however, tolling has few big fans. Georgians are not used to tolls. When the I-85 HOT lane opened, Ga. 400 was the state’s only toll road. Drivers now flock to Ga. 400, but many also despise it because of the imposition and continuation of the toll.

Use of the I-85 HOT lane has risen, and the lanes are now often at capacity, according to the State Road and Tollway Authority. Doug Belew, a Lawrenceville resident who takes I-85 daily to his office in Midtown, is one of the thousands who ordered a Peach Pass, but said he felt he had a gun to his head.

“They just destroyed the commute times” in the regular lanes, he said. He knows the toll lanes are intended for a larger system.

“I’m not a fan of this,” he said — but he might stomach it for projects such as I-75, where there will be a new lane, unlike I-85’s, which took over the HOV lane.

Long concedes that without private investment, delivery of big toll projects such as I-285 will be delayed.

“It’s going to take a long time,” he said. However, “Every state in the country is going through the same thing. We have a strategy, but yet there’s not enough money to fund the strategies.”

In fact, it’s not clear the state ever would have had enough money to build the whole optional toll system. The $16 billion system might require as much as $7 billion from the state to supplement the tolls and private investment. DOT hoped private investment would fill more of that.

DOT’s regular budget can’t do that much.

The state DOT gets about $2 billion a year in gas taxes but straight off the top comes more than $400 million for debt payments on loans it took out to build roads in the past.

After paying expenses and engineering, DOT had $722 million to spend on construction statewide last year, and about half of that went to just maintenance and repair. The entire statewide budget for major highway widening was $52 million, for two projects.

Sometimes, it can be a better deal for the state to finance its own toll projects. After all, working with private partners means paying someone a profit margin.

But private partners provide cash up front, as well as big teams of experienced workers to let massive projects hit the ground running, said James Taylor, a consultant on transportation finance at Mercator Advisors. And they, not the state, worry about the risk that toll revenue won’t be as much as expected.

Deal is not ruling out public-private projects, said spokesman Brian Robinson. But with I-75/I-575, the governor opposed a clause in the contract that, for the benefit of the private companies, would have restricted road building in the corridor for more than half a century.

There are other types of finance arrangements; Florida is trying a range of plans on projects for roads such as I-95 and I-595.

However, if Georgia does want to invite private investors in again for a long-term deal, “I would say if you’re talking about a complete absence of [such contract reassurances] in any shape or form, it would be very difficult to do” a privately funded road concession, said Bent Flyvbjerg, a professor at Oxford University who studies the issue.

Or the state could put its whole budget on the hook to help repay the loans in case the toll revenue doesn’t come in. That’s what the state did when Ga. 400 was built two decades ago, and it’s the cheapest way, said Peter Kessenich, a retired transportation financing expert who advised the state’s toll officials then.

But there are limits to borrowing, too, Kessenich said. “At some point in time, the straw will break the camel’s back.”

Seeking a solution

One regional plan estimates that for a complete transportation solution, Atlanta needs more than $100 billion.

The regional transportation referendum, if it passes, is expected to raise about $7.2 billion across the region over 10 years. That is expected to make an impact on congestion, easing many commutes, but it does not come close to solving the problems.

While “it would give us a tremendous boost,” said Doug Hooker, director of the Atlanta Regional Commission, “we’re going to have to continue to look for opportunities.”

Increasing the gas tax or imposing a new sales tax for transportation could raise big money, but legislative leaders said taxpayers are burdened enough.

The state has a tortured history in private road financing: Since 2003, proposals have bloomed and died on Ga. 316, Ga. 400 and I-75/I-575. Such proposals can cost companies more than $1 million to prepare, but have been undone nonetheless by unexpected public outcry or disagreements between a governor and the DOT.

Some look at the state’s history of failed proposals and say it is set up to flop at big-ticket innovation, in spite of checks and balances that are meant to ensure wise planning and spending.

“If the purpose of checks and balances is to prevent anything happening, you got it,” said Neill Herring, a lobbyist for the Sierra Club.

Others such as Long point to the continuing I-75/I-575 project as evidence that top officials can work together to make big things happen even after they stumble.

Major initiatives such as new investments in the airport, MARTA and the regional transportation referendum are rare simply “because they’re so hard,” said Atlanta Mayor Kasim Reed, a key supporter of the referendum law. “You’re talking about five years’ worth of time, energy, political capital, talent and activity.”

Rep. Brett Harrell, R-Snellville, said he favored funding the optional toll lanes, but it was unclear what direction to go for systemic congestion relief or how the state will pay for it.

“You’ve got the $7 billion question,” said Harrell, a member of the House Transportation Committee. “I don’t know. I don’t have that answer today. ... The citizens, at some point their level of frustration will reach a point where they just can’t bear it anymore, and then they will with a voice tell us which direction the state ought to move.”

Story so far

• 2003: State law first allows private investment in public toll roads. The legislation is later rewritten, then replaced.

• January 2004: The Parkway Group offers a proposal for Ga. 316 from Herrington Road in Gwinnett County to the Loop 10 interchange approaching Athens. The public-private road-building proposal would have turned Ga. 316 into a limited-access highway and put tolls on all lanes.

• Dec. 27, 2004: In the Crossroads 400 Group's public-private proposal for Ga. 400 from I-85 to Ga. 20 near Cumming, in Fulton and Forsyth counties, contractors would add high-occupancy toll lanes and build new interchanges at I-285 and I-85. The proposal is revised in November 2005.

• 2005: The Georgia Department of Transportation signs its first partnership to develop toll lanes along I-75 and I-575. The original plan is to add eight lanes, but the estimates skyrocket from about $2 billion to $4 billion.

• Feb. 25, 2005: Following a public outcry at turning a free road into a toll road, the Parkway Group suspends the Ga. 316 proposal.

• October 2008: A state committee kills Crossroads 400's proposal to build optional toll lanes along Ga. 400.

• 2009: DOT abandons partnership on the I-75/I-575 project, scales it back.

• September 2011: The latest I-75/I-575 project — with 29 miles of reversible toll lanes on I-75 and I-575 — goes out to bid. Tolls and private investors would pay the majority of the cost, but the project also is expected to require a public subsidy of up to $300 million.

• Oct. 1, 2011: An HOV lane on 16 miles of I-85 in Gwinnett and DeKalb counties becomes a toll lane, leading to an outcry from drivers facing longer wait times in the regular lanes.

• Nov. 14, 2011: When The Atlanta Journal-Constitution asks the governor's office about a study that says the I-75/I-575 project would provide limited relief from congestion for most people, the governor's spokesman says the study raises "serious questions."

• Dec. 14, 2011: The state DOT pulls the plug on the public-private I-75/I-575 project but says it will look at other ways to build it.

• Feb. 3, 2012: A state budget plan that includes another $300 million in gas tax money for the I-75/I-575 project passes the House.