Greenway Distance Tolling Unlikely Soon
TRIP II/Macquarie resist changes to fare collection, cite cost of infrastructure for 'gamble.'
Despite a recent push, any change to match toll rates to the distance traveled along the Dulles Greenway is unlikely to occur in the near the future. And existing maximum toll rates could rise as early as 2013.
The Greenway is a fairly common and rather easy political punching bag: The owners are headquartered outside the United States, the tolls are the highest in the region, profits are legally protected by the state and public recourse is to an unelected entity.
Congressman Frank R. Wolf (R-10) calls the tolls — $4.50 for a two-axle vehicle at the main toll plaza during rush hour, plus 75¢ for the Dulles Toll Road — “highway robbery.” Local officials often deride the rates, while state legislators appear unable to find a suitable solution.
Time and again, after owners of the private road take a public shellacking over proposed toll hikes. Yet, the tolls go up and life goes on — making the punching bag seem more like one of those blow-up boxing toys that keeps standing back up on its own.
No one complains that a private entity built the road—which slices through Ashburn and connects the Dulles Toll Road and Dulles Airport to Leesburg. The concerns arise solely from the cost to use it. The state authorized the privately maintained road in the early 1990s and it opened in 1995. The Virginia State Corporation Commission must approve any toll increases, but have indicated state law essentially prevents them from denying Greenway owners a profit.
From the perspective of the current Greenway owners — Australia-based Macquarie Group purchased the concession for the road in 2005 and 2006 — critics ignore the actual costs of paying for and operating the road. The owners rely solely on toll revenue to pay off bonds used to finance it, and a sluggish economy has taken its toll on that income, according to Tom Sines, the CEO for Toll Road Investors Partnership II — or TRIP II, the Macquarie subsidiary that operates the road.
“We have to have the revenue to make the bonds payments,” Sines said.
Del. Thomas A. “Tag” Greason (R-32) and Loudoun County Chairman Scott K. York (I-At Large) have publicly pushed for distance pricing on the Greenway. While tolls are lower at exits west of the main toll plaza, westbound traffic traveling through the main plaza must pay the same amount regardless of where they exit. Similarly, eastbound traffic that enters the road at Rt. 606 pays the same toll at the main plaza as traffic entering at Leesburg.
Instituting distance pricing or zone pricing would equate the amount of the toll to the length of the trip.
“But they refused to do so,” York said during Jan. 19 county board meeting.
Greason met with Sines to push the idea last fall, touting progress on the discussions, but Sines said little can be done currently. Toll revenue is already down, and making a change to “distance pricing” could cut into those profits even more and cause additional maintenance needs.
Whether distance pricing would help, or work at all, will likely not be known soon unless the state ponies up some of the costs.
“We didn’t do a full-blown study,” Sines said, adding that the new tolling equipment alone would cost $6.5 million. “There is a risk in that is would not increase revenue and the company would be out $6.5 million that I would have to explain to the bond holders. It’s just a gamble.”
The poor economy, increased teleworking and carpooling have all made impacts, Sines said.
“At this point, there’s nothing we can do until the economy gives us some assurance that revenue would increase,” he said. “There’s just not the traffic out there to capture.”
That’s why Greason and others think distance pricing would help—the hope that lower rates would result in an exponential growth in traffic and, therefore, higher toll revenue.
Some businesses acknowledge avoiding such expensive roads, and not just because of the economic downturn, perhaps hinting that traffic could potentially increase at lower rates.
A spokesman for UPS said, “We spoke with our local management team and found that, in some instances, we do avoid toll roads because of costs. We’re always looking for the most convenient and cost-efficient options to deliver packages.”
Tolls for trucks are as high as $15.75 — for six axles — at the main toll plaza during rush hour, plus $1.75 for the Dulles Toll Road.
Christine Windle, of the Dulles Area Association of Realtors, said high tolls impact commercial and residential real estate business because buyers try to avoid properties near such an expensive toll.
“People avoid the Greenway,” Windle said, citing the high tolls as the reason. “It’s hard to quantify it.”
Lower tolls and higher traffic doesn’t necessarily improve the equation, Sines said.
“Increased traffic means increased maintenance, especially truck traffic,” Sines said.
Plus, those currently using the road because of its relative lack of congestion could be lost if traffic grows significantly, he said.
Sines said the Greenway owners would need financial assistance from the state to make the switch to distance pricing, but there does not appear to be a legislative move to do so.
“We don’t have enough data to take that gamble,” he said, adding that he remains open to if the state offers assistance.
Del. Jim LeMunyon (R-67) offered a bill in the General Assembly this year that would require all localities to approve toll increases along the Greenway and the Dulles Toll Road, but concerns were raised that such a system could result in projects defaulting on the bonds that fund them. In addition, since tolls from the Dulles Toll Road pay for the Metro rail project, blocking a toll increase aimed at debt relief could jeopardize that project’s funding, according the Loudoun’s legislative staff.
Supervisors said they believed state legislators were attempting to pass the responsibility for toll hikes down to local elected leaders.
The county’s legislative advisors warned that the law could violate existing legal agreements and that it may be difficult to apply against the private Greenway owner or the quasi-governmental Metropolitan Washington Airports Authority, which controls the Dulles Toll Road.
Supervisor Eugene Delgaudio (R-Sterling), who has been a vocal opponent of the Metro extension project, said supervisors should embrace the opportunity to be able to block toll hikes.
“Why we wouldn’t be supporting this is beyond my comprehension,” said Supervisor Eugene Delguadio (R-Sterling), adding that it would give supervisors an opportunity to block toll hikes.
But Supervisor Jim Burton (I-Blue Ridge) said the bill could do more harm that good.
“This bill is designed simply to cause trouble and to put on local governments the backlash from any fare increases that may be used to fund rail,” he said.
Supervisor Stevens Miller (D-Dulles) was more blunt: “This is one of the worst thought-out pieces of legislation ever.”
Supervisor Lori Waters took Delgaudio’s side, saying it would give the public a better way to block toll increases they believe are unfair.
“The public doesn’t have a proper avenue to express their opinion over the toll increases,” she said, referring to the fact that residents do not have the option to vote SCC commissioners out of office.
York said state legislators should instead focus on distance pricing, even if it means helping to pay for a study or infrastructure.
“If he really want to do some good, work on incremental tolling on the Greenway,” he said.
Supervisors voted 7-1-1 to oppose LeMunyon’s bill, with Delgaudio opposing and Waters abstaining.
Sines said many people don’t fully understand the expenses the owner must pay to keep up the road, including taxes that are not applied to other major roads open for public use.
“We are the only toll road in the state of Virginia that pays real estate taxes,” Sines said.
Sines responded to potential changes in state law that could impact the agreement with Greenway owners after Rep. Wolf suggested legislators had that simple option.
“I would think the bondholders would be very upset at that,” Sines said. “It would throw us into default. I’m not sure Congressman Wolf understands how we’re funded.”
Sines also responded to common criticism that an Australian firm owns the Greenway, saying the bonds were sold in the United State by entities that “are all American institutions.”
“The owners should take offense” at such criticism, he said. “They invested money in this infrastructure.”
And in the end, Macquarie won’t own the road. After the 50-year concession ends in 2056, the road reverts back to state ownership at no cost, according to the existing agreement. That means profit is the company’s only incentive to operate the road, which few would deny is maintained better than most in the region.
According to Macquarie's Web site, the formula for determining permissible profits is as follows: "From 2013 through to 2020 tolls can escalate annually at the highest of (i) CPI + 1% (ii) Real GDP, or (iii) 2.8% per annum."
The most recent financial report posted on Macquarie's Web site, from December 2009, shows that the Dulles Greenway's assets were valued at about $554 million, while liabilities totaled more than $991 million.
Sines and Greason both said they would continue to work together, and Sines indicated that circumstances could change when the economy improves.
“I am still confident that we will continue to make progress with Tom Sines and his team on distance pricing,” Greason said. “I believe that distance, or zone, pricing will help local businesses and the community at large.”
Sines confirmed the line of communication remains open: “We continue to talk and we continue to explore areas of mutual concern.”
But for now, don’t expect any changes to the toll rates.