Maryland's premier pike - the JFK Highway I-95 - is the key to state's revenue enhancement

March 8, 2013

2013-03-08: Legislators in Maryland have filed bills to privatize via longterm P3 concession the Intercounty Connector (ICC) and the I-95 toll express lanes. Both would benefit by the greater respect for customers of private enterprise in place of the arrogant we-know-better stance of the MdTA as exemplified by their nannyish low speed limits for example, that dub the majority of motorists irresponsible speedsters.

But the legislative initiative is unlikely to be successful. The ICC was funded in a complex set of arrangements so federal and state  governments and bondholders would have to sign off on any deals. Also it seems unlikely they would come anywhere near to recouping the money the governments have put into them at this point. The ICC is only getting started as an operating pike and the I-95 Express Lanes aren't even open yet.

Yet legislators do have an uncomplicated, surefire way to unlock value - in the state's only real turnpike.

50th anniversary in the fall

November 14th will be the 50th anniversary of the opening by President John F Kennedy of what was called at the ceremony the "Delaware-Maryland Turnpike." The ribbon cutting was at the state border since the two states had collaborated to build their big turnpikes to open simultaneously since they depended on one another for connectivity and traffic. So the theme of Kennedy's speech was of the new highway as an exemplar of interstate cooperation. In Maryland the highway was known in construction as the Northeast Expressway. Opening the DE-MD Turnpike was Kennedy's last official act because only a few days later he died in Dallas TX at the hand of an assassin's bullets.

Maryland soon renamed the Northeast Expressway the John F Kennedy Memorial Highway in his honor, and it has been known ever since locally as the "JFK" or just as I-95.

From White Marsh Boulevard MD43 on the outskirts of Baltimore 43 miles and eight interchanges northeast to the Delaware line was a full fledged turnpike with mainline tolls at Perryvile just beyond the Susquehanna River's Tydings Bridge before the MD222 interchange. South of the mainline plaza at five interchanges (MD152, MD24, MD543, MD22 and MD155 there were ramp toll points so that motorists northbound getting off before the mainline plaza would pay. And southbound the opposite ramps would toll motorists getting on the road without going by the same mainline plaza.

And there was a similar arrangement of ramp toll plazas at a couple of interchanges between the Perryville mainline toll plaza and the Delaware Turnpike.

Such mainline and ramp toll points were far from ideal. In the era of cash collection in order to minimize the delay of multiple mainline plazas for through traffic they led to serious anomalies in the toll per mile. And as tolls rose with inflation the coin machines became more inconvenient.

That plus politicians wanting to win favors with communities along the pike led to abandonment of the ramp tolls, making many trips free. Another step to detolling many trips was taken in 1991 when southbound tolls were abandoned at the mainline plaza at Perryville

But it was a fully toll financed road for the 43 miles north of MD43. Toll revenue bonds were always the source of its funding and they were paid with motorist tolls. They also funded the widening from 2x2 lanes initially to 2x3 lanes for 33 miles and to 2x4 lanes for just under 10 miles in the south.

Tax built road added on south end

The exception to that is segments 1 and 2 (I-895 IC to MD43 iC) 7 miles on the southern end which were never tolled and were funded with state and federal grants. They were later added to the Kennedy Highway (JFK) to get the MdTA toll authority to carry the maintenance and operations. Added to the original 43 miles they make the JFK now a rounded 50 miles long.

Average daily traffic varies between 82k and 165k in the different segments as seen in the table below. The toll point is now just one direction of the least trafficked segment - 40k/day. But this is a heavy trucking route with 15% of traffic trucks of one kind or another. So its a lucrative tollroad even with just half a mainline toll - $115m/year and almost up there with the Ft McHenry Tunnel ion the middle of Baltimore as Maryland's leading toller.

The present base rate toll is $6.00 for a car going to $8 July 1. A tractor trailer of the standard 5 axles pays $36 now going to $48 mid-year.  Spread over the 4.3 mile segment (#8) that is tolled cars are paying per mile $1.40 going to $1.86 shortly. The 18-wheelers are paying $8.37/mile which will rise soon to $11.16/mile.  Of course most drivers are traveling much further and get the benefit of free segments.

From midyear 2013 spread over the whole 100 miles of a roundtrip the toll would amount to 8c/mile for a car and 36c/mile for the big rig.

But that's all rather theoretical. The majority of present trips on the JFK incur no toll at all especially those traveling between the Harford County suburbs and Baltimore. Their road is financed by the longdistance travelers, and some of those are encouraged to divert to avoid the single toll point.

Spread the tolls

This cries out for spreading the tolls evenly along the JFK with open road all-electronic tolling. Full tolling would greatly increase toll revenue as well as being fairer and less distorting than the single high-toll, one-direction toll point.

We've got the traffic volumes by segment and applied some pretty standard current toll rates per mile - for cars 10c in rural areas, 20c in urban, and for 18-wheelers 40c/mile rural and 80c/mile urban.

Tolling all the eleven segments of the 50 mile JFK you get an annual toll revenue of $400m versus $115m of the existing northbound-only Perryville tolling. That $115m will go to about $150m/year after mid-year. In any event the fair-toll-em-all arrangement will more than double the tolls in prospect with the existing single toll point.

Maryland probably doesn't need any clearance from the Feds to reinstate tolls int he northern nine segments MD43 north. Tolling the two southern segments is more problematic because of the history of them being built originally with grant money.

Tolling nine segments 3 through 11 apparently brings about $300m, about double the prospective revenue under MdTA arrangements.

HOT lanes

HOT or toll express lanes are under construction from the 895/95 merge at confluence of the approaches to the Baltimore Harbor tunnels north through the 695 interchange (Baltimore Beltway) to MD43.

In  Florida the Turnpike is doing flat rate tolls alongside variable rate managed lanes such as the MD/I-95 Express Lanes, the idea being that motorists have varying values of time saved, so there's a good argument for offering them the option of (1) a take-your-chances-on-congestion fixed lower rate toll and (2) a premium lane with no trucks and guaranteed fly-along free flow conditions.

43 mile or 50 mile concession

So there are two ways a JFK concession could be offered maybe in parts and stages:

(1) North of MD43, the 43 miles to the Delaware border, for a quick and relatively simple standalone concession

(2) The additional 7 miles south of MD43 with the highest traffic volume highway down to I-895 including the express lanes, perhaps with the option to extend them north of MD43 to serve commuters in segments 3 and 4 to MD24

The first, we're told is entirely within the discretion of Maryland since there was no federal money ever put into it. The second would likely require extended negotiation with the Feds since they've put a lot of money into its construction, some of which is very recent at the big new interchange of I-95 and I-695 the Baltimore Beltway.


The first at least would be a much more attractive P3 concession offer than the ICC and the 95 Express Lanes because:

- there's a well established, high volume traffic stream on a prime transportation corridor

- a healthy mix of commuter and longdistance traffic

- it's a major trucking route 12k/day (about twice the Ambassador Bridge)

- no pressing need for new investments because the highway is in good condition and capacity pretty well meets traffic needs

- if traffic does grow, and it hasn't for ten years now, right-of-way is readily available for extra lanes

- major deficient structure of the JFK is the cantilever truss Tydings Bridge over the Susquehanna River which should be replaced with twin spans to provide shoulders, deck for an extra lane and a lower maintenance structure with more redundancy like the Penn Pike's new bridge upstream at Harrisburg PA

- AET cost would be about $50m to $60m

Potential $s

A guess is a P3 concession/lease on the JFK would raise $3 to $4.5 billion based on 10 to 15 times annual revenue with obligations to do AET and rebuild the Tydings Bridge immediately and for the future to adjust capacity to traffic and rebuild/maintain to keep in good condition.

By contrast the ICC probably wouldn't raise much more than $1 billion and the I-95 Express Lanes half that.

Opposition to the P3 concession on the JFK will come from (1) socialists (also known some places as  'liberals') who plain don't like the idea of a business running a road for $s (2) crony capitalists, politicians and lobbyists who will feel disadvantaged by a longterm deal with clear rules and their lessened political space for working special favors (3) pro-market, good government and motorist groups who focus on what the $3 billion or $4 billion might be mis-spent on - Purple line trolley for the toffs of Montgomery County, Capital Cities Corridor trolley for Montgomery County developers, Red Line for ribbon-cutter pols and non-existent commuters in Baltimore City (Guess which opposition group we sympathize with?)

Opposition to the full toll all-electronic tolling aspects of the scheme will come from (4) the communities and counties of Harford County south of the Perryville Toll Plaza whose past lobbying and pandering has gotten them mostly free rides on a politically-abused tollroad.

(3) and (4) might be countered by dedicating the net processes of a full tolling JFK concession to the people of Harford County (250k) and to rest of the the citizens of Maryland (5.6m). If $3 billion was split half to Harfordites, half to other-Marylanders, each Harfordite would on financial close with the concessionaire get a check in the mail for $6,000 and other Marylanders would receive checks for $265 (rounded.)

A one third/two thirds split would give each Harfordite $4,000 and each other-Marylander $350.

Of course dedicating the concession proceeds to the citizenry would leave nothing for interests favoring the concession - and the very Montgomery Co and Baltimore city trolley projects in which these groups see such merit.

Ot else they broker some compromise that doesn't satisfy anyone completely but spreads the $billions between trolleys, Harfordites and citizens.

Or MdTA can look at it

Most likely of all, being Maryland you can't get agreement on any concession because of (1) and (2) above.

In that case full JFK tolling and AET implemented by MdTA would at least strengthen the finances of the state toll authority and improve traffic management. And MdTA could assuage the hostile Harfordites by promising deep toll discounts for frequent users.

NOTE: Approximately in the middle of the JFK at MD543 the interchange was built after detolling of ramp tolls elsewheer so it was never tolled.

TOLLROADSnews 2013-03-08

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