Momentum seems to favor privately run toll lanes on I-77. But why?

Categories: General News Tags: TRANSPORTATION

Last week, the N.C. Department of Transportation discussed the possibility of partnering with a private firm to build and manage new express toll lanes on Interstate 77 from uptown to the South Carolina line.

But at least one member of the Charlotte Regional Transportation Planning Organization said he felt NCDOT was steering voting members toward that outcome, rather than having the state maintain control of the project.

“The presentation we got from NCDOT indicated a preference of theirs for the P3 solution,” said Charlotte City Council member Ed Driggs, who is the city’s representative on CRTPO, the body that will help decide when and how the highway is expanded.

“P3” stands for “Public-Private-Partnership.”

That’s how the state built the express toll lanes on I-77 in north Mecklenburg, by partnering with Spanish infrastructure company Cintra.

Driggs said it will likely be up to him and other members of CRTPO to press the DOT on other ways to build the toll lanes — such as having the state finance the project itself, as the state did with the Monroe Expressway.

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Here is the background on what’s planned for I-77:

Why does I-77 have to be widened with toll lanes instead of just adding more free lanes?

The answer is: It doesn’t. But it’s unlikely that decision-makers are going to change course.

In 2014, CRTPO voted to widen I-77 south of uptown with so-called express toll lanes instead of general-purpose free lanes. The tolls would vary depending on how much traffic there is. The goal would be to keep traffic moving at around 45 m.p.h.

The vote aligns with the city of Charlotte’s vision of having more transit and less driving. The city wants fewer car trips, and if it costs $1 a mile to use express lanes, that might encourage more people to use the bus or Lynx Blue Line.

Planners also believe that building free lanes will only encourage more drivers to use the highway and therefore won’t solve traffic congestion. (That concept is known in planning circles as “induced demand.”)

The DOT also believes that the toll lanes will provide a reliable travel time for commuters — even as congestion grows.

What options did the DOT discuss for building the lanes?

In last week’s CRTPO meeting, the DOT and N.C. Turnpike Authority said if the state builds the toll lanes on its own, money wouldn’t be available until 2029. It said it would take 10 to 15 years to finish the 9-mile project, meaning the opening date would be in the 2040s.

The DOT said that if it partnered with a private firm, the project could open in the early 2030s. One reason is the private company could raise money quickly, while the state funding would be subject to limitations of the “corridor cap,” which is $650 million over five years for certain stretches of highways.

Cintra sent an unsolicited proposal earlier this year to the DOT to build and operate toll lanes on I-77 in south Mecklenburg.

Why not have the state finance the project on its own?

Driggs said he doesn’t remember the DOT talking about an option where it assumes the debt, rather than a private company.

The $800 million, 20-mile Monroe Expressway was financed that way, with toll revenue paying off debt.

NCDOT has estimated the cost of toll lanes on I-77 south of uptown at $2.1 billion. Cintra has estimated the cost at $2.5 billion.

Why couldn’t the state finance the I-77 toll lanes, using toll revenue and additional corridor cap money, over the next 15 years?

In response to a Transit Time question, the DOT said that’s what it’s considering — assuming debt on its own and using toll revenue to pay it off.

If that’s the case, why would it take the state 10 to 15 years longer to build the lanes compared with a private firm?

Driggs said he didn’t know.

And the state didn’t give an explanation as to why it would take them so much longer to build the project once it has secured financing.

Transit Time sent a follow-up e-mail to the DOT and hadn’t heard a response back before publication.

Would partnering with a private company result in higher tolls?

In its presentation, the DOT said the P3 model could result in the toll lanes being built a decade earlier.

But it did not mention the possible downside: Motorists could pay higher tolls.

Cintra sets the I-77 toll rates to accomplish several things. One is to keep traffic moving. Another is to pay off the debt it has incurred.

A final goal: make a profit.

Comparing the I-77 toll lanes with the state’s two toll roads is not apples to apples. One is a privately managed express toll lane project, while the others are tolled highways managed by the state.

But a quick look does show a difference in how much Cintra charges compared with the state’s rates.

If you drive north on the entire length of the I-77 toll lanes at 11:30 a.m., you will likely pay about $9.30 — or about 41 cents a mile. There is rarely much traffic at that time of day.

The price rises to about $17 during rush hour, or 75 cents a mile.

(The full price of an entire one-way trip could theoretically be as high as $39.50 under the toll rates posted by Cintra subsidiary I-77 Mobility Partners. The firm said it’s unlikely anyone would ever pay that much.)

The state-run Monroe Expressway has a fixed toll of $2.72 for the entire length of the 20-mile highway. That works out to about 14 cents a mile.

The DOT said, “It is too early in the process to know what a potential toll structure might be under any scenario.”

How are the I-77 toll lanes doing financially?

The I-77 toll lanes opened at a dreadful time, in 2019, right before the pandemic.

Even though Charlotte has one of the highest percentages of people working from home in the nation, the toll lanes appear to be doing OK financially.

For the first half of 2022, the toll lanes generated $25.6 million in revenue — up from about $13 million during the same period a year earlier.

Before the toll lanes opened, C&M Associates projected the toll lanes would generate just under $43 million in its third full year of operation.

If the state does a P3, would Cintra get the contract?

Not necessarily.

The DOT would solicit bids from other firms.

And the possibility of working with Cintra may cause the P3 concept to lose support.

Davidson Mayor Rusty Knox, a voting member of CRTPO, said he is OK with toll lanes — “ if the state were in control, received revenues and controlled the ability to expand the footprint, etc.”

He added: “There is such a bitter taste for Cintra still today and that will not change. If this path continues, I’ll be voting no.”

This story was originally published as part of the Transit Time newsletter, jointly produced by WFAE, the Charlotte Ledger and the UNC Charlotte Urban Institute.

Steve Harrison, WFAE