Contrast the news of canceled construction projects and maintenance cut-backs at the Virginia Department of Transportation with the ongoing investment that Transurban is making in the 8.8-mile Pocahontas Parkway toll road southeast of Richmond.
Last week Bacon’s Rebellion published a communique from VDOT Commissioner David Ekern outlining how he planned to prioritize spending — and where he plans to cut back — on the state road system. With stagnant revenues and rising expenses, VDOT has no choice but pare spending and make unpleasant choices.
The Australian toll road operator, by contrast, has a dedicated stream of toll revenue, and it has the latitude to raise tolls. Indeed, it boosted its toll at the main tollbooth last year from $2.25 to $2.50 in January, with plans to raise it another quarter in January 2009.
Operating a 99-year lease, Transurban is incentivized to manage the property for long-term profit, not short-term return. Accordingly, it investing in a 1.6-mile connector road linking the highway to Richmond International Airport — a route that will save south-bound passengers several minutes of driving time — and in making operational improvements to the highway. These include:
- Installing sensors on the Vietnam Veterans Memorial Bridge (crossing the James River) to continually monitor snow and ice conditions. The sensors will tie into VDOT’s transportation operations center.
- Installing cameras, panic buttons and other security measures at the toll booth and administrative offices.
- Planting native grasses, flowers, shrubs and willow trees in the right of way to promote erosion control and improve storm-water retention.
Here’s what really intrigues me. Transurban actually advertises to promote awareness of the time-saving (and gas-saving, pollution-reducing) alternative that its toll road provides. Wall-sized poster in to corridors, greets arriving airport passengers trekking to the baggage claim and ground transportation areas. “Get home sooner,” the ad exhorts. “Pocahontas 895.”
Renting wall space in the airport is not exactly a huge marketing expenditure, but it represents a departure from VDOT’s no-advertising approach. Markets do require information to operate efficiently, and advertising helps fill the information void.
For the most part, I regard Transurban’s initiatives as positives, especially its roadway plantings. I do worry about one thing. It is in Transurban’s interest to promote real estate development along its route, in a mostly undeveloped portion of Henrico County. What may be in Transurban’s best interest is not necessarily in the best interest of the inhabitants of the Richmond New Urban Region. More development means more drivers paying tolls, which benefits Transurban. However, the scatteration of development drives up the cost of providing utilities, public services… and secondary roads. Such development puts cars on roads ill equipped to handle them, eventually leading to congestion, safety issues and demands for improvements that cost money the public does not have.
Those costs are not Transurban’s problem. I have no evidence that Transurban is actively promoting dysfunctional development along its route, but I would be mightily distressed if such evidence surfaced.
The Transurban experience on I-895 will be an interesting experience to watch — a leading indicator of what we can expect as Virginia privatizes more of its highways.