Yesterday, I published a column, “Rail Rip-off,” that decried the funding mechanism for the $4 billion Rail to Dulles extension of the Washington METRO. It was unconscionable, I argued, that commuters on the Dulles Toll Road will be required to pay 25 percent, or $1 billion, of the capital costs of the project, while most of the economic value created would accrue to the owners of property near the METRO stations.
If only I’d known the whole truth, an anonymous phone caller informed me late yesterday. In fact, Dulles Toll Road commuters may well end up closer to half of the METRO project costs, or nearly $1.8 billion, and their fares will ratchet higher for years to do it.
That, of course, is not the official party line. The Dulles Corridor Metrorail Project forwarded the graphic pictured above (cropped and shrunk to fit this blog). The state, which extracts its share from Dulles Toll Road commuters, will contribute 25 percent of the project costs, the localities (including the Metropolitan Washington Airports Authority) will contribute 25 percent, and Uncle Sam will generously provide the rest.
By way of background: In February 2005, the Commonwealth Transportation Board enacted a $0.25 toll increase at the main entrance and exit ramps to the Dulles Toll Road. As the CBT explained in a February 2005 press release (my highlights added):
The quarter toll increase will complete Virginia’s share to fund Phase 1, which will extend Metrorail for 11 miles from near East Falls Church station through Tysons Corner to Wiehle Avenue in Reston. The toll increase will also help to fund part of Phase 2, which will further extend the line for 12 more miles from Wiehle Avenue through Dulles International Airport to Route 772 in Loudoun County.
Since that CBT announcement, the Kaine administration has proposed turning over responsibility for the Rail-to-Dulles project to the MWAA (the airports authority). The MWAA outlined its plans for the disposition of the Dulles Toll Road revenues in a December 2005 document entitled, “Proposal to Operate the Dulles Toll Road and Build Rail to Loudoun County.”
On pages 14 and 15 of the proposal, MWAA “assumes” the following contributions to Phase 1 and Phase 2 of the METRO construction from toll revenues:
- Phase 1: $361 million
- Phase 2: $1,409 million
That totals $1,770 million, or $770 million more than acknowledged by the state.
Why is the Phase 2 contribution so huge? Because, my source explains, MWAA assumes that, while the federal government will contribute $900 million to Phase 1, it will not contribute one thin dime to Phase 2. MWAA, in his estimation, plans to accelerate development of METRO by substituting known and predictable Toll Road revenue for not-yet-committed federal revenue.
What does that mean for toll payers? MWAA says that it will “keep average real toll rates flat on an inflation-adjusted basis.” MWAA’s preliminary analysis assumes that tolls will be increased every three years starting 2010 at a 3 percent compounded annual rate for 50 years. Translation: Dulles Toll Road commuters can expect toll increases of about 10 percent every three years (assuming inflation stays at the current rate).
That sounds very reasonable if the sole purpose of the toll is to provide for operating expenses and capital improvements to the Toll Road and related corridor improvements. But roughly half of the tolls will be going to pay off METRO bonds — and bond payments are fixed. They don’t increase with the rate of inflation! In other words, increasing tolls at the rate of inflation over the next 50 years is, in fact, a very aggressive increase. Contrast that to the rate history of the Dulles Toll Road before 2005: From the day it opened in 1984 — 21 years — it did not increase tolls once.
Bottom line: Dulles Toll Road commuters are the beasts of burden upon whose backs Rail to Dulles will be built. When all is said and done, they will wind up paying about 44 percent of the cost of the METRO extension even though, by definition, they will not be using it. By contrast, as explained in yesterday’s column, the contribution of Fairfax County commercial property owners will be capped at $400 million for Phase 1, even though they will be the most direct beneficiaries.
Tax revolt, anyone?