New Criticisms of the U.S. 460 Connector

U.S. 460 near Disputanta

by James A. Bacon

The state of Virginia is putting $400 million more of its own cash — $1.18 billion in all — into the U.S. 460 Connector under a recently announced deal financing than it would have under a public-private partnership contemplated two years ago, writes Peter Samuel, proprietor of Toll Road News in a recent analysis of the deal.

All for what? To upgrade a stretch of highway between Suffolk and Petersburg that averages traffic flows of between 20,000 and 30,000 vehicles per day at present and, when hoped-for port traffic materializes, will support only $216 million in debt, or 15% of the capital cost..

Samuel concedes that the U.S. 460 project will have some benefits. It will reduce the pressure on highly congested Interstate 64 and the Hampton Roads Bridge-Tunnel, expedite southwest-bound port traffic using Interstate 85, and provide an alternate hurricane evacuation route.

But he notes that “for political reasons,” tolls are being set well below revenue maximizing levels, only $.06 per mile for cars and $.21 per mile for trucks. Tolls, he suggests, could generate less than $10,000 daily when the highway opens in 2018. Politics, he adds, also are evident in a promise to freeze toll rates if revenues exceed the base-case forecast by 10% to 20% over a three year period — “the inverse of business logic.”

Bacon’s bottom line: In 2010, Cintra 460, one of three business consortia bidding on the project, submitted a conceptual proposal that called for $782 million in state subsidies, $400 million less than the McDonnell administration approved this fall. As Samuel rightly characterizes it, the decision to increase the subsidy and buy down toll rates was a political one.

The McDonnell administration has justified the $1.4 billion project mainly on economic development grounds based upon (1) an expectation that Virginia ports will gain significant market share when the Panama Canal widening project is complete, and (2) a belief that Virginia economic developers can parlay the increased freight traffic into major industrial development along the U.S. 460 corridor. Neither assumption has been subjected to rigorous analysis. Moreover, no one appears to have asked, what else could the state do with $1 billion to to stimulate economic development around Virginia? Does the U.S. 460 Connector truly offer the highest risk-adjusted Return on Investment?

Remarkably, there has been zero griping from other regions about the extraordinary beneficence displayed by the McDonnell administration toward Southeast Virginia. Even more extraordinary is the fact that there has been next-to-zero push back against the administration’s planned expenditure of up to $400 billion to buy down tolls way below their revenue-optimizing level.

Virginia is projected to run out of state funding for new road construction by 2017 or 2018, barring action by the General Assembly to identify new sources of revenue. Aside from federal funds, the $3 billion raised by the McDonnell administration by borrowing money is all there is to play with. The administration’s original plan was to leverage those resources through toll-driven public-private partnerships. Now it has chosen to commit one-third of its borrowed funds to a project that will generate only $.20 in private investment per dollar of public investment.

Meanwhile, there are plenty of other places where Virginians would like to see a greater state commitment to buy down tolls. Just ask Northern Virginia riders on the Dulles Toll Road and Norfolk commuters using the Downtown and MidTown Tunnels.

I am baffled how the administration has managed to push this project through with so little controversy. I attribute the silence to a confluence of factors. This economically depressed corridor desperately seeks industrial investment, which means there is no concerted opposition. The General Assembly gave the administration carte blanche to invest the transportation debt, and the Commonwealth Transportation Board is a rubber-stamp organization where no hard questions are asked. Finally, the Suffolk-Petersburg corridor falls outside the coverage areas of the Virginian-Pilot, Daily Press and Times-Dispatch, so the news media are not giving the project the scrutiny it deserves.

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0 responses to “New Criticisms of the U.S. 460 Connector

  1. I think Jim got a solid bead on what’s happening. This is such a huge change with so many moving parts that I think the public is clueless and I include in that most of the General Assembly – to include the NoVa and Hampton folks.

    Clearly, you gotta give the folks (Connaughton?) credit for thinking out of the box on transportation issues. There are some nagging concerns though.

    I guess at the end of the day – VDOT figured out how to go forward on some roads despite a gas tax that has not increased in decades.

    Pity the next gov – McDonnell and company have literally scrapped the bottom of the barrel and “more” will have to come in the form of higher taxes – OR toll roads that are able to operate without a state subsidy.

    Since the GOP has, for years, demagogued the gas tax issue – it’s unlikely that a follow-on GOP administration will advocate increased gas taxes though I’ll admit anything is possible but increasing the gas tax won’t generate substantial new dollars anymore anyhow. Cars are more and more efficient and even if they were not, one penny of gas state statewide generates about 50 million. That’s how much 5 miles of 4-lane or an interchange would cost.

    NoVa is likely “done” except for the western corridor / Potomac Crossing. Depending on who you talk to – the tunnels and bridges in Hampton are figured out … unless lawsuit gums it up.

    HOT lanes start on 495 in a month on less and if other HOT lanes experience is any guide – we’re going to see changes in NoVa.

    A couple years after that – HOT lanes will be extended down I-95 to exurban Stafford – and probably Spotsylvania.

    Once that happens… I think – it’s going to have such an effect on congestion in NoVa that the advocacy for more roads is going to quiet down.

  2. What is the estimated cost to upgrade I-64 between Hampton and Richmond?

    Is the new road going to have “I-85” signage?

    • The cost of upgrading I-64 is on the order of $10 billion — absolutely out of the question.

      Upgrading U.S. 460 is probably the least expensive *highway* option. But Norfolk Southern and CSX have upgraded their freight rail capacity, the McDonnell administration is working on an AMTRAK passenger rail connection, and the Hampton Roads TPO is pushing a high-speed passenger rail option that would be 60-80% privately financed.

      The McDonnell administration may be correct in saying that the U.S. 460 Connector is the best option, but I don’t think they’ve made the case yet. I’m not sold.

      • re: 10 billioin

        One of the other ways that VDOT sometimes has been known to tilt the analysis process is to low ball the desired project and high ball the others.

        Just given the costs that we have seen to upgrade I-95 and I-495 , on the order of 2-3 billion to add 2 lanes, I’m a little suspicious of the 10 billion number.

        If it costs 10 billion to upgrade an existing road why would it be less to build an entirely new road?

        Sometimes, I simply do not trust VDOT’s evaluation processes.

        I-64 certainly needs to be upgraded. To say that we need a new 460 more than we need to upgrade I-64 -, as if it is a binary choice with US 460 the higher priority.

        think about this. does this make sense?

  3. re: upgrading I-64.

    1. – no options of adding new lanes and tolls “work”? it would seem to be common sense that adding to an existing road and tolling would be less expensive that building a new location road – rights of ways, bridges, grading, etc.

    2. – I THOUGHT that the idea of US 46o was to head SOUTH to I-85 rather than west to Richmond.


    if you look at the map – you can still use I-64 until Providence Forge then build a new connector south.

    It just seems dumb to NOT have a plan for I-64 when its already fairly crowded on weekends and at the same time squeezing the last bit of money into a new road that is somewhat speculative.

    no matter what happens to 460, there OUGHT to be a plan for I-64 – that is more than lines on a map.

  4. The speed of deciding this project is breathtaking, as you say. In fact, it’s almost as if a private government is making the moves.

    Where is the General Assembly on this? The newspaper coverage has been lame, except for the Pilot which noted that city officials in Tidewater didn’t see the urgency of the road.

    Years ago, everyone would have been all over this. Is China becoming our governance model?

  5. If you build a new road, a coal fired electric plant, a passenger rail line and a great big airport, what do you have?

  6. re: building a new road…other infrastructure.. paid for with taxpayer dollars.

    I get a little confused sometimes.

    Obama is getting hammered for trying to pick “winners” like Solyndra or GM but in Va, it’s okay for the govt to pick winners by building a road or pushing tourism or a King’s Dominion Law?

    Is this a slippery slope or are there clear demarcations for govt involvement?

    • I would guess that the gap in cost estimates can be attributed largely to the cost of acquiring right of way. The 460-Connector would be acquiring inexpensive, rural land. An I-64 widening would have to acquire expensive suburban and urban land, especially in the Hampton/Newport News area.

      • RoW is costly. But VDOT already has more rights-of-way than you might think.
        At a community meeting about the possible Express Lane extension toward Maryland, I heard some people complain that VDOT could not cut some trees and use a specific parcel because they assumed it was private property. However, the VDOT maps showed the parcel was already state property. It’s possible VDOT might already own some of the RoW necessary to widen I-64.

  7. yes. I suspect, at least in the rural areas of I-64 that they already have some if not all r/w.

    but there seems to be a major presumption (perhaps substantiated but I doubt it) that not only is a new road needed but it needs to connect I-85 to Hampton.

    I’m willing to bet that the passenger car counts don’t work at all and judging from the truck counts and the effect tolls have on trucks, one is left with two questions.

    1. – would there be enough truck use if there were “no” tolls.

    2. – do tolls tend to drive trucks to use I-64?

    My “bottom line” here is that I do not think you can look at US 460 in an isolated analysis. I64 is involved in the issue.

    I have not read the planning docs. Do they address I-64 at all or if they do how do they justify not including it in analyses?

    this is the problem with the govt being involved in economic development issues.

    there is real tax money involved and we have what boils down to, a closed process without any real public involvement.

    We have to worry about developer roads in NoVa and port-interests roads in Hampton and the public interest just slides off to the side.

  8. But you said the MPOs have a handle on it? Could it be all of them are just as crooked as down here? And trucks going to 85 use Rt. 58, not I64. What really makes 460 so special? hmm…

  9. MPOs have a handle on the area within their boundaries and I do distinguish between citizen involvement and elected officials involvement.

    In order for Hampton Roads to decide what to do as a region – they have to have some agreement among their elected officials – whom presumably would get unelected if those who elected them are unhappy with them.

    When the people and their elected in a region with an MPO cannot themselves agree on what to do – it leaves the door open for VDOT.

    460 is not a an issue for Hampton itself.. – any more or less than other MPOs that 460 is not located within their boundaries.

    Darrell – are you saying right now that truckers will use 460 over I-64 to get to I-85 even though it probably takes longer to do it?
    (or perhaps I’m wrong).

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