Lefties Confront Stewart. Stewart Wins.

Corey Stewart struggles to be heard.

Corey Stewart struggles to be heard. Photo credit: Washington Post.

Corey Stewart is one of those politicians that you either love or love to hate. He’s a conservative populist who built a state-wide reputation on his pugnacious, in-your-face opposition to illegal immigration. And as the prominent Virginia politician to align himself mostly closely with Donald Trump, he is surely loathed by many.

Whatever you might think about Stewart, though, he’s entitled to speak his views like anyone else.

It’s one thing to denounce him as a bigot and a white supremacist — his enemies are entitled to free speech, too — but quite another to disrupt his campaign appearances. Lefties may think they’re accomplishing something by shutting him down, but it’s probably not what they think — they’re engendering sympathy for a not-very-sympathetic guy.

Stewart visited the Peoples Republic of Charlottesville a couple of days ago to defend the statue of Robert E. Lee, which City Council had previously voted to remove. On social media, he had urged people to “defend Virginia’s heritage,” and likened those who wanted to remove the statue to tyrants and Nazis, according to the Washington Post.

His appearance was met by protesters who drowned out his interviews and conversations with shouts of, “White supremacy has got to go!” Hoisting signs saying, “Ban Bigots,” and “No tolerance for white supremacy,” protesters yelled at him to go back to Prince William County. As he left, they shouted, “Whose town? Our town!”

If anyone has that kind of treatment coming, it’s Stewart: His rhetoric toward illegal immigrants has been harsh and uncompromising. And if Charlottesville lefties want to vent online or hold their own demonstrations, I’m fine with that. But I have to say, Stewart handled the disruption with class.

“Stewart took it in stride, frequently grinning and trying to chat up his detractors,” the Post writes.

Stewart welcomed the protests and the attention they would bring, believing  they would buttress his pitch as a conservative standing up to an intolerant left and “political correctness.”

I’m calling them out for who they are,” Stewart said. “It’s really a symptom of the left and their unwillingness to listen to alternative points of view.”

Score one for Stewart.

Lefties in Charlottesville and elsewhere make much of their desire for “inclusiveness.” But their version of “inclusiveness” and “tolerance” includes only those groups friendly to their point of view. A truly inclusive viewpoint would say, “Sure, we’ll keep the Robert E. Lee statue because many people still revere him as a hero. We’ll build statues for our own heroes and heroines. Our community can tolerate them all because we embrace the diversity of cultures, sub-cultures and viewpoints.”

But that’s not the Left’s approach. They want to expunge the heroes of their ideological enemies. They want to exclude other points of view from the public realm. Their viewpoint is relentlessly negative. Erecting a statue of a politically correct hero would be a positive action. But if anyone has proposed doing so, the effort hasn’t gained enough steam to be noticed. The Left’s advocacy of diversity applies to race and ethnicity only. It is a pinched and intolerant view that excludes anyone who thinks differently, including dissenting views of blacks, gays and other minorities.

I part ways with Stewart because I think there are ways to justify restrictions on illegal immigration without demonizing millions of people who came to this country not to create mayhem but to better their lives. It is possible to both sympathize with the aspirations of those who want to live here even while saying firmly, sorry, this is a nation of laws, and if you want to live here, you cannot enter and stay in this country illegally. We can deal with the issue in a humane way.

Corey Stewart is not the guy I want to be making the stand against political correctness in Virginia. But he’s the one doing it, and the Left is making him look good by comparison.

Alternate Facts Regarding Virginia Employment

Gallup's Good Jobs Rate for Virginia is 49.2%. Despite sequestration, Virginia employment numbers are robust.

Gallup’s Good Jobs Rate for Virginia is 49.2%. Despite sequestration, Virginia employment numbers are robust. 

Virginia’s economy  may be down in the dumps by Virginia standards, but it still looks buoyant compared to many other states, according to Gallup Organization data based on tracking interviews with nearly 355,000 U.S. adults.

The official state unemployment was 4.1% in December 2016, lower than for 33 other states. But the unemployment rate does not include the under-employed, discouraged workers not looking for jobs, people on disability, or those who have retired early. While four percent has long been regarded as “full employment,” we all know that hundreds of thousands of Virginians who would like to work can’t find full-time jobs.

Gallup compiles what it calls a “Good Jobs” rate which expresses the total number of 18-and-older adults with full-time jobs (more than 30 hours) as a percentage of the adult population. The metric excludes part-time and self-employed time workers. Virginia scores 49.2%, which means that almost half of all adults are working in full-time jobs.

Gallup views the Good Jobs rate as an indicator of economic vitality. It’s important to note, however, that a state with a large population of the elderly and retirees will look worse by this measure. Thus West Virginia, a state with an aging population where only 36.6% of adults are fully employed, fares the worst in the country. Likewise, Florida and Arizona, states with otherwise robust economies, also rank in the bottom 10 states by this measure.

Still, a high Good Jobs rate indicates that a high percentage of the adult population is contributing to economic activity.

Nationally, there are two clusters of very high Good Jobs scores — one in the northern plains states and the other in the two states bordering Washington, D.C.: Virginia and Maryland. Whatever harm sequestration has inflicted upon Virginia’s economy, the employment rate remains high by national standards.

Gallup also compiles an “underemployment” metric, which adds both unemployed people looking for jobs and those working part time but desiring full-time work. This number is expressed as a percentage of the adults in the workforce (not the entire adult population, as with the Good Jobs indicator).

Gallup did not publish the Virginia number for this metric, but in the map reproduced below, the company classified Virginia among the “low” underemployment states, meaning that it scored between 11th and 20th — ahead of Maryland, heh, heh.

Bacon’s bottom line: By both these alternative measures, the Virginia employment picture looks better, relatively speaking, than the official unemployment rate. They may be “alternate facts,” but they’re real facts. The economy is not as vibrant as it should be… but as a working man, I’d rather be in Virginia. (Hat tip: Tim Wise.)

Virginia Is for Lovers, Not Lobbyists

by Christopher Mitchell

Pop quiz: Should the state create or remove barriers to broadband investment in rural Virginia? Trick question. The answer depends very much on who you are – an incumbent telephone company or someone living every day with poor connectivity.

If you happen to be a big telephone company like CenturyLink or Frontier, you have already taken action. You wrote a bill to effectively prevent competition, laundered it through the state telephone lobbying trade organization, and had it sponsored by Del. Byron, R-Forest, in the General Assembly. That was after securing tens of millions of dollars from the federal government to offer an Internet service so slow it isn’t even considered broadband anymore. Government is working pretty well for you.

If you are a business or resident in the year 2017 without high quality Internet access, you should be banging someone’s door down – maybe an elected official, telephone/electric co-op, or your neighbor to organize a solution. You need more investment, not more barriers. Government isn’t working quite as well for you.

Rural Virginia is not alone. Small towns and farming communities across America are recognizing that they have to take action. The big cable and telephone companies are not going to build the networks rural America needs to retain and attract businesses. The federal government was essential in bringing electricity and basic phone service to everyone. But when it came to broadband, the big telephone companies had a plan to obstruct and prevent and plenty of influence in D.C.

When the Federal Communications Commission set up the Connect America Fund, they began giving billions of dollars to the big telephone companies in return for practically nothing. By 2020, these companies have to deliver a connection doesn’t even qualify as broadband. CenturyLink advertises 1000/1000 Mbps in many urban areas but gets big subsidies to deliver 10/1 Mbps in rural areas. Rural America has been sold out.

If you are a big cable or telephone company, you have a lot of influence in the federal and state capitals. But at the local level, your elected officials are more accountable to you because their decisions have a more immediate impact on their constituents’ lives.

Remember that as the General Assembly considers a bill from the telephone company lobbyists to limit your local governments from building networks. Places like Danville, Martinsville, and the Roanoke Valley have thoroughly upset the big cable and telephone companies by investing in new fiber-optic networks and opening them to any Internet Service Provider that wanted to compete for subscribers.

Danville and Martinsville have been doing this for years, with incredible results. The job gains are remarkable, particularly in areas hard hit by the decline of tobacco and manufacturing. Consider Danville, where the network was started with a loan from the electric utility. The network has made money every year for the community while also enriching the tax base. Existing businesses have become more competitive, new businesses came to town, and the community attracted more foreign direct investment.

They also created something else – a good example for communities that need better access. But the big monopolies are striking back using their strongest asset – lobbying. Virginia is already one of the 20 states that limit local authority to build networks. Now the state could make it even harder or impossible for communities to make these investments.

Consider the shareholders of CenturyLink and Frontier. They demand a good return on their investment. In return for some federal subsidies, they will invest the bare minimum in Virginia’s small towns. They count on the lack of choice in the market (i.e. monopoly power) to protect them from the frustration of local businesses and residents.

Local governments also have to listen to their shareholders – the businesses and residents that demand better Internet access to do business, get a quality education, and even enjoy modern entertainment. Local leaders actually live in these communities, unlike the executives or shareholders from the big companies.

If all of Virginia is to thrive, local governments must be free to invest in the modern infrastructure that their local businesses and residents need. Where existing providers meet that need, the local businesses and residents aren’t going to demand a municipal solution. But that decision should be made locally, not by powerful lobbyists swaying the legislature.

Christopher Mitchell is the Director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance in Minneapolis. He is on Twitter @communitynets.

Replacing Foreman Field: Another Student Rip-Off?

ODU wants to replace Foreman Field. Who pays -- the students or the football fans? Take a guess.

ODU wants to replace Foreman Field. Who pays — the students or the football fans? Take a guess.

Old Dominion University wants to tear down its old football stadium, Foreman Field, and build a $55 million facility in its place. The university says it can pay for the project without raising student fees, traditionally a major source of funding for athletic programs.

If all goes according to plan, reports the Virginian-Pilot, the east and west sides would be demolished immediately after the 2018 season and rebuilt in time for the ODU Monarchs to play Norfolk State in August 2018. ODU requires General Assembly approval for the project, which appears to be forthcoming. “They have come to Richmond and made a good case,” said state Sen. Frank Wagner, R-Virginia Beach. “It’s fiscally prudent. Everything appears to be a go.”

The new 22,000-seat stadium will hold only 2,000 more spectators than Foreman Field, but it would offer better seats and bathrooms. The stadium could be expanded to 30,000 seats if ticket demand calls for it. A second phase would include a $39.5 million tower containing luxury suites, a stadium club, new press facilities and a new scoreboard, but funding sources have not yet been identified.

“I’ve maintained from day one that this is a proposal we can afford. It does not require any new student fees to pay for it,” said ODU President John Broderick. “In this time of well-deserved scrutiny on the cost of higher education, that was an important part of the decision I made on the scope and cost of the project.”

Bacon’s bottom line: The project may be fiscally prudent in that it does not require an increase in fees, which now stand at $3,076 per year. Almost $1,700 of that sum is classified as athletic fees. But two questions arise: First, are students getting good value for their fees; second, is ODU missing an opportunity to lower fees?

Let’s examine the economics of ODU football stadiums. As a benefit of paying fees, students get free tickets. What’s the value of those tickets? That’s hard to say exactly. Prices vary by seating, with the best seats costing more. But we can use the $199 price tag for new season tickets as a starting point. We’re not far off by assuming that a student’s annual fees entitles him or her to football tickets worth about $200 — assuming he or she attends every game.

But ODU has nearly 25,000 students. Currently, ODU allocates tickets to roughly 6,500 students, according to the Virginian-Pilot. Let’s assume that ODU bumps up the number of student tickets to 7,500 with the new stadium (allocating half to students, half to season ticket holders). That means fewer than one in three ODU students will have an opportunity to attend any given home game. Effectively, that means the value of “free tickets” to ODU students collectively has a market value of about $70.

When ODU calculates its student fees, how much does it charge students for “free” tickets? Is some portion of the fees allocated to supporting the football team and another portion allocated to paying for the stadium? Alternatively, are students charged a portion for the supporting the football program and the stadium as a package? Or does ODU even break out the numbers that way?

I called ODU’s press office yesterday afternoon and asked for numbers on how the administration plans to pay for the new stadium without increasing student fees. I have not yet heard back, but will report what I find out.

All we know at this point is what Broderick tells us: that no new student fees will be required to pay for the stadium. One of two possibilities seems likely: Either the university has cut expenses (renegotiating a contract, for instance) or it is cutting a program or programs previously funded through student fees. In either case, the opportunity existed for the university to reduce the fees instead of build a $55 million stadium. The university chose to build the stadium.

How much money are we talking about? Let’s say that the stadium will be constructed with bonds. Assuming a 30-year amortization and tax-free interest charges of 4% annually on those bonds, that works out to about $2.8 million a year. That averages about $120 per student.

If these numbers are in the ballpark, ODU students will be paying $120 per year to help finance a stadium and receive a $70 value in the form of  football tickets in return. In other words, ODU students and their parents are subsidizing construction of the stadium to the tune of $50 per year for the benefit of season ticket holders.

Who are those season ticket holders? Many of them are alumni. Some may be Norfolk-area residents who identify with ODU and love a good football game. Whatever the case, football is a great way to extract money from fans.

As the Pilot reported in January, The Old Dominion Athletic Foundation has 3,000 paying members.

Essentially, all 3,000 paying members of the Old Dominion Athletic Foundation – the school’s private athletic fundraising organization – are ranked on a number of factors. They include how much money they’ve donated, how long they’ve had season tickets and how long they’ve been members of ODAF.

Based on this ranking, 1 through 3,000, fans are allowed to choose their new seats. The reallocation of seats, or “re-seating process” as ODU calls it, happens every [four years] four at Foreman Field. …

If fans increase how much they donate, it’s an opportunity to get better seats. And if they don’t, there’s angst because they’ll likely end up sitting a little farther from the action.

ODU last reallocated seats at Foreman Field in 2013, as the school began the transition into the Football Bowl Subdivision. The process proved to be a financial boon, with ODU raking in $1.5 million more in donations in the first quarter of 2013 than it did in 2012. Much of that increase was derived from fans trying to get better seats.

“I suspect that we’ll see an increase in donations this year as well,” athletic director Wood Selig said.

In other words, ODU will over-charge students in the neighborhood of $50 each, for an annual total of $1,250,000, to subsidize a football program that netted the university $1.5 million in alumni/fan donations in just one quarter. That’s what it’s all about, folks. If ODU plays its cards right, a new stadium will raise even bigger donations for administrators to play with. When will students figure out what’s going on?.

 

McAuliffe Reverses, Now Opposes Electric Rate Freeze

Governor Terry McAuliffe

Governor Terry McAuliffe said yesterday that he supports legislation that would cancel the freeze in base electric rates on Dominion Virginia Power and Appalachian Power if President Trump kills the Clean Power Plan. The endorsement came a little late for state Sen. J. Chapman Petersen, D-Fairfax City, whose bill to roll back the freeze was killed in a Senate committee in January in a 12 to 2 vote.

Taxpayers “are entitled to the lowest, most efficient rate that we can deliver to them,” McAuliffe said on the John Fredericks Show, which broadcasts in Hampton Roads, Richmond, Lynchburg, Danville and Franklin. “If Chap Petersen can get me a bill on my desk, I’d sign it. Let me be clear.”

“There’s a better chance of me starting for the Redskins as quarterback,” said Petersen, as quoted by the Richmond Times-Dispatch. “Governor, you’re going to need to send down the legislation.”

In 2015 The General Assembly passed a bill freezing base electric rates, which McAuliffe signed, after the Obama administration had rolled out the Clean Power Plan requiring Virginia’s electric utilities to significantly reduce CO2 emissions. The State Corporation Commission staff had estimated that the legislation could push electric rates 20% higher. With a stated goal of providing rate stability in uncertain times, the legislation locked base rates in place for six years.

Environmentalists were critical of the bill from the beginning, arguing that the Clean Power would increase rates only marginally. Then industrial customers contended that Dominion had been overcharging customers before the law went into effect, and the law locked in rates at excessively high levels. Moreover, they charged, the electric companies weren’t even taking on a major risk: If the Clean Power Plan had forced them to retire coal plants and build new generating facilities, they would have been able to pass on the cost through a Rate Adjustment Clause, which wasn’t affected.

Dominion has argued that the law also provided for annual, instead of biennial, review of power companies’ Integrated Resource Plans, making the planning process more transparent. As part of the legislative compromise, the company also upped its financial commitment to its Energy Share energy-efficiency plan for low-income homeowners.

Furthermore, Bill Murray, Dominion’s managing director of public policy, said last week, the company has taken $296 million in write-offs for the past two years for expenses relating to the closure of its coal ash ponds. The freeze prevents the company from recovering those costs. “Those are costs we are absorbing.”

Bacon’s bottom line: McAuliffe’s support for reversing the freeze is a day late and a dollar short. As a practical matter, Petersen’s bill cannot be resurrected. Reversing the freeze without understanding the emerging regulatory context may not make sense anyway. The Trump administration has made clear its intention to kill the Clean Power Plan. We Virginians need a clearer idea of what kind of energy policy we want going forward. Simply rolling back the freeze doesn’t inform that debate.

Solar power is the potential game changer. The cost of generating solar energy continues to decline, and so does the cost of battery storage, which will help offset the intermittent nature of solar generation. No one disagrees with those propositions, but many questions remain open. How rapidly are solar prices declining? When will solar become economically competitive with natural gas in Virginia? That depends in large measure what happens to natural gas prices. Will they rise from currently low levels, and, if so, by how much?

Another big question is how much solar can Dominion, Appalachian Power and Virgina’s electric co-ops absorb without undermining the reliability of the electric grid. A related set of questions revolves around how much retail competition regulators should allow, how to guarantee the integrity of the grid if electric utilities lose market to independent solar operators, and how rate payers will be impacted if utilities experience a decrease in consumption.

One more pressing matter: What’s the role of nuclear in a post-Clean Power Plan world? While it still may make economic sense to renew the licenses for Dominion’s existing nuclear power plants, building a third unit at North Anna guesstimated to be $18 billion probably does not. Dominion wanted to maintain that option as an insurance policy, at a cost of hundreds of millions of dollars in engineering and permitting expenses, to protect against the most onerous of the Clean Power Plan regulatory scenarios. In a Trump presidency, that scenario looks highly unlikely. Should Dominion scrap North Anna 3?

If Virginians want to unfreeze the freeze, we need to recognize that no regulatory action takes place in a vacuum. Rather than dealing with each of these issues piece-meal we should settle them in a comprehensive way.

Who Would Have Guessed It? Virginians Want Lower College Tuitions.

Graphic source: VCU. (Click for larger, more legible image.)

One more result from VCU’s Commonwealth Education Poll… The pollsters asked an interesting question. If a public university has funds donated by alumni or philanthropists — we’re talking private money here, not public — should the institution use it to reduce tuition & fees, expand facilities or hire more faculty? Hands-down winner: make college more affordable.

Four out of five parents of a Virginia college student said they wanted reduced tuition & fees. Although VCU asked a different question than Partners 4 Affordable Excellence did in its recent poll, the results are consistent.

Higher ed affordability may not be the biggest issue in the minds of the electorate — Virginians are more concerned about jobs and K-12 — but it is potent nonetheless. Consider that parents of college students and prospective college students tend to be better educated and earn higher incomes, which means they tend to vote in greater numbers than the average Virginian. That’s a powerful voting bloc. Gubernatorial candidates would do well to target this demographic.

My main fear is that politicians will advocate simplistic solutions that will wreak havoc on Virginia’s higher ed system, which, for all its flaws, does a pretty good job. I see higher-ed reform as akin to brain surgery — highly invasive but requiring a delicate hand.

Virginia Schools… Not So Safe

I will confess that I found some of the results from VCU’s Commonwealth Education Poll to be dismaying. Substantial majorities of Virginians believe that public schools have inadequate funding and would be willing to pay higher taxes to help low-performing schools. These misguided souls need to read Bacon’s Rebellion!

On a more positive note, there is strong support for changing the Virginia constitution to give charter schools more independence from local school boards regarding decisions about hiring and firing teachers — 40%. Alas, 45% of those polled opposed a charter-friendly amendment to the constitution.

But the poll I want to focus on, displayed above, shows a remarkable statistic: 16% of Virginians believe that public schools in their communities are “not very safe” or “not safe at all.” Unsafe schools are not an issue for most Virginians. but more than one in four lower-income Virginians and one in four minorities feel differently. Astonishingly, nearly one in three respondents in Hampton Roads felt their schools are unsafe. That is one heck  of an indictment. Unsafe schools demoralize teachers and make it harder for well-behaved students to learn. They are a root problem — not the only problem, but a significant one — behind poor academic performance.

I would love to see a poll that drilled down deeper on this issue. Why do people think their schools are unsafe? To what degree do they believe disruptive behavior in school interferes with teaching and learning? Whose interests should be paramount as schools revamp disciplinary policies — those of the bad actors or the students trying to learn?

Many Virginians Prefer Training over Incentives

Graphic credit: VCU

The Douglas Wilder School of Government and Public Affairs has published a public opinion poll delving into Virginians’ attitudes toward a wide range of issues relating to K-12, higher ed, and workforce training. The poll appears to be methodologically sound. I will use the poll results as stepping stones to address several topics.

Workforce training: When asked how to prioritize the spending of state economic development dollars, according to the poll results shown above, Virginians were evenly split between expanding workforce training and education programs over providing financial incentives to recruit new business or retain existing business.

I construe these results as evidence of potentially strong public support for my proposal, elaborated upon here, to scrap the Commonwealth’s Opportunity Development Fund, which is used to dish out financial incentives to corporations expanding in Virginia, and beefing up the state’s targeted workforce training program. The idea: Instead of attracting corporations with cash, we entice them with a skilled workforce.

As I noted in that column, addressing the jobs-skills mismatch is arguably the greatest economic challenge facing Virginia today. If a corporation can’t find the workers it needs, it won’t consider a community no matter how big the incentives. Furthermore, it makes more sense to invest in Virginia workers than subsidizing out-of-state companies that may or may not be willing to make a long-term commitment to the state.

More P3s Coming. Taxpayers, Hang onto Your Wallets

The twice-bankrupted Pocahontas Parkway: Virginia's poster child for failed P3s.

The twice-bankrupted Pocahontas Parkway: Virginia’s poster child for failed P3s.

by Randy Salzman

The history of American transportation “public private partnerships” indicates that virtually all P3 shell companies go bankrupt before paying back federal loans and the “private activity bonds” which they sold to finance part of the debt.

When these firms go bankrupt, who loses? Taxpayers. We get stuck (1) with paying back the money Uncle Sam lent the privates; (2) paying off bonds guaranteed by the state; and (3) picking up the maintenance costs. As a practical matter, the supposedly entrepreneurial, risk-taking private sector doesn’t take nearly as much risk as taxpayers do.

Aubrey Layne, Virginia’s secretary of transportation, recognized that his predecessor gave away Virginia’s transportation future with $6 billion (yes, with “b”) in 2012 through P3s. He has undoubtedly done a much better job negotiating Virginia’s latest P3, the I-66 project, but he’s a state official and has been interested in protecting Virginia taxpayers; not federal taxpayers. Most of us pay both state and federal taxes.

The I-66 partners are putting up over $500 million. Obviously, they expect to realize a profit or they wouldn’t have submitted the bid. That’s simple business and should underline, even if nothing else, what a horrifying reality previous P3s were for state and federal taxpayers. That 460 Mobility Partners put up zero dollars for the disastrous Suffolk-to-Petersburg connector under the McDonnell administration and walked away with $350 million is almost criminal.

The issue is especially timely now that President Trump is promoting public-private partnerships as a tool for increasing infrastructure spending and stimulating the economy. He has proposed $137 billion in federal tax credits for  investors who commit to financing infrastructure, which would transfer even more risk from the private sector to the federal government.

The justification for P3s is that the private sector can build and operate projects more efficiently and economically than government can. But the public record is splotchy, and the news media needs to dig into it. In the U.S., more than a dozen billion-dollar transportation P3 projects have gone bankrupt. Even the Indiana Toll Road, the poster child for the privatization of transporation infrastructure, went belly up in 2015.

Cintra, which won the I-66 contract, went belly-up this spring with Texas SH-130, a toll road from San Antonio to Austin. Heavily promoted by former Texas governor and present U.S. Secretary of Energy Rick Perry, the project was absurd from the gitgo. The highway is located is only 20 miles east of an existing interstate, I-35. Even though Texas increased speed limits to the highest in the nation, few drivers were willing to pay tolls to use the road. SH-130 is so underutilized that airplanes have on at least two occasions landed on it! The project generated less than half the traffic and income that Cintra cronies projected when bonds were sold and federal loans obtained. Even though Texas bought down the tolls (wasting additional taxpayer dollars), Cintra’s shell company still went bankrupt and taxpayers were will be stuck paying off the bonds.

We taxpayers are told, pre construction, that tolls will pay off P3 bonds and back the notes. Even honest media such as The Washington Post parrot that line without  examination. Yet no one can find a single instance in which a  U.S. P3 toll road has generated the projected traffic or income. There is no bell curve of successes and failures that as one would expect if the forecasting of future traffic and future income was done correctly.

Inevitably, a few years later, after all the politicians and reporters have changed, the same excuse is given as the reason for the eventual bankruptcy:  “For XXX reason, the drivers didn’t show up as expected and, reluctantly, the poor private had to give up the ghost.” Never do P3 advocates suggest that bankruptcy was the business model.

Here in Virginia, our first P3, Pocahontas Parkway outside of Richmond, has gone bankrupt twice (yes, twice) in a little over a decade. The owner: an Australian infrastructure company, Transurban. Since then, Transurban participated in the Capital Beltway Express public-private partnership. After CBE took in only one-fifth the projected tolls, the company had to restructure its debt on the project. Despite those negative experiences, Transurban is building the Interstate 95 HOT lanes and competed unsuccessfully for the I-66 project.

If Transurban keeps losing its shirt on P3s, why does it keep coming back for more? I cannot prove it, but I strongly suspect that the company hires the smartest lawyers and smartest financiers to structure the P3s so as to offload risk and ensure the company comes out whole regardless of what tolls are generated. The P3 contracts runs hundreds of pages, and I question whether anyone in the McDonnell administration truly understood them, or even read them as they farmed out negotiations to private law firms that proudly on their websites the great returns they got for private investors.. Continue reading

How Virginia’s Slowing Population Growth Plays Out Locally

Virginia's population growth is slowing, but four distinct patterns emerge within the state.

Virginia’s population growth is slowing overall, but four distinct patterns emerge within the state.

Speaking of slower population growth… Even though Virginia’s population growth is slowing overall, the dynamics play out differently at a local and regional level.

Luke Juday, director of planning for the City of Waynesboro, has developed a useful schema for examining Virginia’s cities and counties. He has created a matrix based on two variables: whether a locality is experiencing net in-migration or out-migration, and whether it is experiencing natural increase or natural decrease. Writing in the January 2017 issue of the Virginia News Letter, he describes four categories:

Booming. Booming localities are experiencing both in-migration and natural population increase. One sub-set of this group consists of central metropolitan areas such as Arlington County, and the cities of Alexandria, Charlottesville and Richmond, which are experiencing a renaissance fueled by waves of incoming young adults. Another sub-set is comprised of suburban or exurban counties experiencing significant in-migration. Three examples are Montgomery, Albemarle and Rockingham counties.

The great challenge for booming counties, writes Juday, is accommodating that growth. Providing room for an expanding population can keep housing prices from skyrocketing, thus avoiding future issues. On the other hand, these localities need to be sure that what they build withstands the test of time.

Shedding. Shedding communities continue to gain population through natural increase but are experiencing out-migration. Examples include Fairfax County, Norfolk, Virginia Beach, Hampton and Newport News. In some instances, the key driver is a high cost of housing and limited housing options that push young families out of the jurisdiction. In others, however, Juday suggests, inner cities may be affordable but they’re not desirable. The challenge is to find new ways to add housing and/or make the locality a more attractive place to live.

Attracting. These communities are losing population through natural decrease, yet still manage to attract in-migration. This pattern is particularly common in the New River, Central Piedmont, Blue Ridge and Chesapeake Bay areas that can exploit their natural beauty to attract older adults in compensation of lower birth rates.

Declining. Declining localities are experiencing both out-migration and natural decrease. Residents are aging, and no one is replacing them. These counties are concentrated in Southwest and Southside Virginia, with a smattering along the Blue Ridge. These jurisdictions face the greatest challenge. How do they promote economic development, and how do they maintain the level of government services?

Declining localities, suggests Juday, need to cope with eroding populations the same way that Youngstown, Ohio, did in the 1990s: planning for population decrease by structuring public service and infrastructure projects to be sustainable with a smaller population. Regional cooperation is one way to accomplish that aim.

For both attracting and declining communities, Juday also suggests linking to a nearby metropolitan area to entice highly educated and well-paid commuters to patronize local services and agricultural businesses. Such a strategy would likely be more successful than trying to attract new industry. Floyd County reversed population by attracting workers who enjoyed the county’s quality of life and commuted to the Blacksburg metropolitan area. Counties outside of Washington, D.C., have seen similar trends.

Similarly, these localities can find ways to serve metropolitan economies from afar, most obviously by attracting retirees and vacationers. The Chesapeake Bay counties, Blue Ridge counties, and counties around Smith Mountain Lake have reinvigorated local economies by appealing to outsiders who build and purchase homes.