Airports Authority takeover of Dulles Toll Road threatened by critical USDOT report

July 28, 2007

A project to build a rail line (Dulles Rail) in the median of the Dulles Toll Road is unlikely to get a high enough cost-effectiveness rating to be eligible for federal funds, throwing into doubt a proposed takeover of the Dulles Toll Road by the Metropolitan Washington Airports Authority (MWAA). A report from the USDOT's Inspector General's Office says the rail project's first 18.7km (11.6mi) phase was already near an unacceptable cost-effectiveness rating of "low" when its estimated cost was $2.07b. The cost has since ballooned to a range of $2.4b to $2.7b.

The USDSOT report says: "The project must achieve a final cost effectiveness rating of at least medium-low or it will not be eligible for (federal funding). Achieving this rating may prove difficult with the current cost increases."

The Dulles Rail project is located in Fairfax and Loudoun counties, an area of dispersed workplaces and low density automobile-orented development with plentiful parking. In operation the train is forecast to generate such low ridership and fare revenues that even its current operations will need large annual tax subsidies. The Airports Authority wants to take over the Dulles Toll Road in order to milk toll revenues to service planned bond issues for construction of the rail line.

The Airports Authority will take no responsibility for likely large annual operating deficits.

The Airports Authority agreement with Virginia DOT to take over the Dulles Toll Road is contingent on federal funding being gained for about half the capital costs of Dulles Rail. Tollroad patrons are expected to provide the other half by helping service rail construction bonds.

PPP process abused to avoid competitive bids

The USDOT report says an apparent cause of the cost growth of the rail line is the lack of competition. Bechtel and Washington Group Int (WGI) under the joint venture name Dulles Transit Partners were selected by VDOT under the state's public private partnership act, even though they invest no equity in the project and so carry none of the operating risks.

In effect they used the PPP law to negotiate a regular design-build contract with various government agencies putting only taxpayer and tollroad user monies in jeopardy.

The USDOT says the VDOT comprehensive agreement of 2004 only allowed advertising final contracts competitively if they fail to reach an agreement with Bechtel/WGI, and a contract has subsequently been concluded.

USDOT's report says bluntly: "Therefore there was no competition for this stage of the project." (p7)

Heavy reliance on tolls for financing - large toll increases might be needed

The report remarks on the project's "heavy reliance on Dulles Toll Road revenues" to cover the local share and to repay the proposed TIFIA loan. The project would be endangered if toll revenues are insufficient to cover Dulles Rail costs plus the costs of maintaining and improving the tollroad.

"Users of the Dulles Toll Road could be subjected to large toll increases in the future if higher (rail) project costs require more and more local funding. We are not aware of any legal or contractual limits on how high the tolls could be set, and the Dec 29 2006... agreement between MWAA and VDOT does not limit MWAA's authority to increase toll rates, although it does require some public hearings and consultations."

The inspector's office finds that local contributions are uncertain. The major local government, Fairfax County has been scaling back its estimates of business taxes available to support the rail line. The Federal Transit Administration FTA) needs to delay any decision on federal funding until it is clear what local funding is available, the report says.

The report also calls for the FTA to re-evaluate the user benefits of Dulles Rail based on new methodology, although the FTA has been reluctant to do this arguing that considerable expenditures on engineering design could be jeopardized. But the OIG report says much larger sums at at stake in any full funding, so a re-evaluation is needed.

Complex management structure & inexperienced management - echoes of the Big Dig

The report is critical of the highly complex management structure for the project with seven agencies having major roles: FTA, DOT-TIFIA, MWAA, VDRPT, WMATA, Fairfax Co, and Dulles Transit Partners. Ownership and operation will be WMATA, the tripartite (DC, MD, VA) transit agency, but design and construction will be MWAA and DTP.

The report notes that MWAA has no experience in managing a transit project. It sees a comparison with the Big Dig project where the Massachusetts Turnpike Authority lacked experience in managing a large construction project and was forced to rely on consultants. They in turn were integrated into a Turnpike management operation but in the process were left without oversight.

The inspector general notes that WMATA, the local metro agency, has not participated in the design-build negotiations "even though it will be forced to deal with the con sequences."

FTA needs to ensure that WMATA's interests are served by the Dulles rail project which would add 23 miles (37km) to an existing 106 mile (170km) system.

The report says a critical issue will be that MWAA will have the power to declare "substantial completion" of the negotiated Dulles Transit Partners contract, even though the project may not meet the needs of WMATA, which is expected to take over the new line and operate it.

COMMENT: Transit in the Dulles Corridor will be best served by a Metrorail spur bringing rail service from West Falls Church into the dense commercial center of Tysons Corner. Beyond Tysons transit should be entirely rubber tired and a variety of express buses, vans and taxis operating in toll lanes managed for free flow on the mainline of the Dulles Toll Road/Dulles Greenway with offline stops or transfer stations.

The transit needs of the corridor can easily be accommodated sharing the capacity of a single roadway lane with toll paying motorists. The point to point, door to door service of rubber tired vehicles will provide a higher level of customer service and attract more transit patronage than a rail train which has to stop at nearly 20 stations between Dulles and downtown DC. Roadway transit has a good chance of paying its way with user fees, rather than being a burden on taxpayers like this rail boondoggle.

FTA should say it won't support rail beyond Tysons Corner, and that it will fund design of an intermodal center there, plus flexible roadbased transit west of Tysons.

The ill-conceived proposal to hand over the Dulles Toll Road to the local Airports Authority should be terminated and the tollroad operated for the benefit of Northern Virginians, most of whom are motorists.



TOLLROADSnews 2007-07-28

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