Arizona toll prospects develop with bills in legislature

April 9, 2009
By Peter Samuel

Prospects for toll projects in Arizona have brightened with easy passage of enabling legislation in the state House last week. HB2396 sponsored by house transportation committee chairman Rep Andy Biggs passed 53/1 last week. Parallel bills are moving in the state Senate (SB1261, SB1463). Byron Schlomach of the Goldwater Institute in Phoenix who has been following the legislation says there is strong support this year for toll financing because of the dropoff in gasoline and sales tax revenues.

"In one word, the difference is the economy," he says.

Last year toll bills were introduced but lapsed. Many said tax revenues would be sufficient to build what was needed. Not now.

HB2396 gives the Arizona Department of Transportation (ADOT) broad powers to to solicit proposals from investor groups, to consider unsolicited proposals, and to make longterm contracts for tollroad development and operation. The department would get the right to carry some of the proposers costs, or to charge fees for evaluation of proposals.

It requires the department to hire financial, legal and other consultants to assist in getting the best deals for the public.

Terms of the toll concessions is left very much to the department's discretion.

Permissive legislation

Biggs told us today that previous efforts to pass enabling legislation had bogged down in differences over specifications for toll concessions.

"We decided we shouldn't impose another layer of rules and regulations. I've discussed it many times with the director (of ADOT, John Halikowski) and they are ready to write the rules and to move quickly on this once it is passed."

Typical of the permissive nature of the legislation is this on the term of concessions: "Agreements may be for a term not to exceed fifty years but may be extended for additional terms."

On non-compete clauses the bill initially barred the private toller from seeking compensation for loss of revenue from a competing free facility, but after an amendment it now bars only claims on loss of revenue from facilities planned at the time the concession was signed.

The form of the concession may specify a rate of return on capital, and it may contain formulae for adjusting toll rates.

Toll concessions can cover regular tolling of a whole road, congestion-priced toll lanes or HOT lanes.

Photo enforcement of toll payment is allowed on private toll facilities, but not photo enforcement of speed limits and other traffic offenses.

The bill allows federal, state and local tax revenues to be contributed for toll projects and allows the department to issue toll revenue bonds. (CORRECTION HERE 2009-04-09 12:00)

The department also has the right to approve concession proposals from other levels of government (counties, cities).

Refunds for gasoline taxes paid on tollroad

An innovation in the Arizona legislation is a requirement that the state set up procedures for refunding motorists all fees they pay for funding of untolled roads when on the tolled road:
"28-7705: E.  A PERSON WHO PAYS A TOLL TO OPERATE A MOTOR VEHICLE ON A ROADWAY PROJECT THAT IS CONSTRUCTED OR OPERATED PURSUANT TO THIS ARTICLE IS ENTITLED TO AND MAY APPLY FOR A REFUND OR CREDIT FROM THE STATE FOR MOTOR VEHICLE FUEL LICENSE TAXES, USE FUEL TAXES OR MOTOR CARRIER FEES PAID WHILE OPERATING THE MOTOR VEHICLE ON THE ROADWAY PROJECT. THE DIRECTOR SHALL ESTABLISH BY RULE THE PROCEDURES FOR GRANTING REFUNDS AND CREDITS."

Napolitano departure

Former Governor Janet Napolitano, now secretary for homeland security in the Obama administration declared herself anti-toll in 2007.

"I am not a fan of toll roads," she said. "There's a reason I don't live in New Jersey."

Biggs told us he wasn't sure what to make of Napolitano's anti-toll statement, saying there is widespread acceptance of the principle of users paying.

In any case Napolitano has departed for Washington DC to a Cabinet position in the Obama Administration.

Biggs thinks the new governor Jan Brewer sees the value of tapping private sector capital - given the huge shortfall in tax funds.

Schlomach tells us he thinks there's a "good chance" of a toll road law being enacted this summer after the budget has been dealt with.

Candidate projects

A most interesting toll project is an I-10 Bypass, an alternate which would cross I-10 between Phoenix and Tuscon serving the same longdistance traffic but skirting the state's two major metro areas Phoenix and Tuscon.

I-10 wends its way tortuously through the middle of those metro areas where it functions mostly as an intraurban distributor.

Schlomach says I-10 in Arizona is "one of the worst designed highways in the country," citing poorly thought out interchanges, overclose entries and exits, an unfortunate piece of tunnel with inadequate lanes, and a heavy mix of local traffic and through traffic with no alternative.

He adds: "Where else is an interstate designed with five right angle turns in ten miles?"

Schlomach says: "We urgently need extra and alternative east-west capacity. Some of the traffic needs to be able to bypass this whole mess."

The I-10 Phoenix Tucson Bypass project is close to 400km (250 miles) long and the state has put its total cost in the range $6 to $8 billion. It divides into a western segment and an eastern segment at a point southeast of Phoenix on I-10 near the I-8/I-10 split. (I-8 heads to San Diego, I-10 to Los Angeles.)

The western portion bypassing Phoenix to the southwest already has a preferred route and rationale.

More direct for through traffic than I-10 it would 145km vs about 162km (90 miles vs 100 miles) and a big time saver for through traffic. It is modeled to generate 44k vehicles/day in 2030 and 97k/day in 2050.

ADOT's studies of an eastern segment bypassing Tucson are more problematic.

True through traffic from Texas for example is best served by a northern route. Three possible northern routes through the San Pedro and Aravaipa Valleys have been identified, ranging in length between 218km to 232km (135 to 144 miles). They are slightly more direct than I-10, dipping south to go through Tucson. It is 240km (150 miles).

But these routes generate little traffic, the modeling suggests - only 14.5k/day in 2030 and about 20k in 2050.

Schlomach notes that this could be an expressway with just one continuous lane in each direction. Perhaps it could have alternating sections where a third lane was used for passing - a design used on some expressways in Scandinavia and Japan.

Another route skirting Tucson to its west and south following the Avra Valley would attract more substantial traffic the modeling suggests - 33k in 2030 and 73k in 2050. It would pick up a lot more local traffic, but less through traffic than the northern routes.

There are really three projects here:

(1) the bypass of Phoenix,

(2) a northern bypass of Tucson for Texas-Phoenix & Texas to California traffic, and

(3) a second route for the Tucson area to Phoenix or points west.

Representative Andy Biggs thinks entrepreneurial ingenuity is especially important in developing a viable plan for the project because there is little prospect for any substantial tax support for it.

I-10 Phoenix-Tucson Bypass study presentation:

http://www.azdot.gov/Board/PDF/Transportation_Board_Study_Session_Presentation_110507.pdf

Western Phoenix tollroads

Biggs and Schlomach also mention western portions of the Phoenix metro area as having several potential toll projects, the biggest of which are:

(1) the long planned South Mountain Loop 2002 project which is partially under construction with sales tax money but still very contentious. Schlomach says a toll revenue stream could help support a more acceptable route for the remainder of the highway. Modeling has shown it needs to be an eventual 10 lanes.

36km (22 miles) long it has been costed by ADOT at $1700m in its initial format.

(2) an I-10 Reliever road parallel to I-10 and to its south, sometimes called Route 801. Modeling by WSA suggested this highway would need to be 8 to 16 lanes to meet forecast demand.

(3) an outer loop 303 eventually 10 lanes.

Elsewhere there are possibilities for tolls to rebuild state routes 51 and HOT lanes on the long northern Loop 101 and eastern Loop 202, and other routes.

Another possible project is the upgrade of US93/US60 between Phoenix and Las Vegas Nevada. That's a 500km (300 mile) project.

Here is the 'engrossed' version of HB2396 or the text that passed the Arizona house:

http://www.tollroadsnews.com/sites/default/files/hb2396h.pdf

APOLOGIES TO TUCSONITES: for mispelling your grand city 'Tuscon' in about 27 places in first version of this.

TOLLROADSnews 2009-04-08

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