Oldtown Historic Toll Bridge MD-WV looking to get state OK to triple tolls 50c to $1.50 after 35 years

December 11, 2012
By Peter Samuel

2012/12/11: The new owner of the Oldtown MD toll bridge seems likely to get approval from regulators in Baltimore to triple toll rates after 35 years. Lori Roberts a local realtor and businesswoman formed the Historical Oldtown Bridge Preservation LLC company to buy the toll bridge in 2010 for $60,000 from a man fed up with what he called the "endless paperwork" of dealing with regulators. After nearly a year of "paperwork" she has apparently done better with them than the former owner.

The Oldtown toll bridge is a 74 year old crossing of the Potomac between Oldtown Maryland in Allegany County and Green Spring West Virginia in the mountainous panhandle of Maryland.

It is about 100 miles northwest of Washington DC, almost midway, as the crow flies, between Pittsburgh PA and the national capital.

This is an area of small rural communities - based on forestry, a freight railroad that follows the river up through the Appalachians, and scattered housing - many residents are retirees from the Washington DC area.  

Jobs tend to be more in West Virginia but services more on the Maryland side of the river.

The Oldtown Toll Bridge has been steady at around 200,000 transactions a year (average 500 per day) at toll rates set more 30 years ago and generating revenue of just under $100,000.

Big obstacle is the bridge's designation by the Maryland State Public Service Commission as a "common carrier" and the need to gain its approval of any changes in toll rates.

Roberts started in the spring this year with a plan to make the bridge financially viable by doubling tolls (from 50c now to $1.00) as we reported in April.

Plans bulked up

In the summer she bulked up her plans for improvements and on August 15 submitted a formal application to the regulators (Maryland Public Service Commission) to increase tolls four-fold from 50c to $2.00 for cars.

In addition she proposed eliminating an unlimited travel monthly pass of $14.

Her aim was to increase annual toll revenue from just under $100k to $400k to fund operating improvements and rehabilitation of the bridge and earn an income for herself.

Roberts said that without the revenue to support proper pay of employees and funding of the rehabilitation work future engineers' inspections would require closure of the bridge, perhaps quite soon.

She wrote in her submission: "Based on our financial projections, we concluded that all existing (toll) rates must be multiplied by 4 to... provide a sustainable income for the business. Because the bridge basically needs to be rebuilt we have to be aggressive in our (toll) increase yet remain a 'good deal.'

Car tolls should rise from 50c to $2, motorbikes 25c to $1, tractor-trailers and buses $2 to $8 and the $14 unlimited car pass ended.

She said: "$2.00 per crossing for cars still allows an economic advantage to the commuter by saving time and mileage."

Up to 60 miles could be saved and at 20mpg that was 3 gallons saved plus wear and tear and an hour in time. The savings for truckers are even larger.

Plus, she argued, the 1975-established toll of 50c was $2.23 in 2012$s.

Regulators prune back

In September a Maryland State auditor at the Public Service Commission in Baltimore recommended approval of a pruned back version of Roberts' plan - essentially a tripling of toll rates for cars rather than the 4-fold increase sought. But they denied her the right to increase truck and bus tolls.

"Staff" also recommended acceptance of her proposed ending of the unlimited usage monthly pass.

The prospect of much higher tolls stirred considerable reaction in the small communities of the upper Potomac River that use the little toll bridge on a regular basis.

Local criticism

They have been petitioning local politicians and other officials, and getting local press.

Some have argued that the states of Maryland and West Virginia should provide grant money for the bridge rehabilitation work so that lower tolls can be maintained.

But to no avail.

In November the Maryland regulatory commission held a public meeting in Oldtown. About a hundred people showed up. People were particularly angry about the elimination of monthly passes.

Susanne Roy of Green Spring on the West Virginia side tells us the proposed tripling of tolls will create hardship for split families and those who cross the river for shopping and medical service.

Free crossings are about 15 miles east and west as the crow flies - crossing at Cumberland upstream or Paw Paw downstream - but actual routes are slow and circuitous so 30 minutes to 40 minutes extra driving can be involved.

Compromise

In the last couple of weeks Roberts has negotiated a compromise with staff of the Commission. She and the Commission agree to continuation of a monthly pass but at $45 (vs $14 now) and for a minimum of 18 months. Tractor trailers and buses pay $6 vs $2 now.

In addition the Commission staff acknowledge extra revenue is needed to complete repairs to the bridge, and that "the repair schedule may be extended somewhat to accommodate the lower cash flow."

If as expected the Commission formally accepts the settlement agreement the new tolls will go into effect early in the new year.

Roberts is legally bound to report and document all her expenses to the Commission for as long as it takes to complete the repair and rehab work.

Repairs will track cash flow

Roberts says of 12 piers and abutments five need rebuilding. The 20 foot steel beams spanning between the piers are in excellent condition, she says, and can be reused. The wooden deck however needs complete replacement and is the biggest expense. In the past local wood planks have been used.

Roberts is looking at more durable equatorial species.

They have to expect floodwaters to overtop the bridge an average of eight times a year.

The pressure on the bridge of floods is "tremendous," she says.

Sandy produced the latest flood to overtop the bridge, but it was "nothing out of the ordinary," by way of upper Potomac floods.

After each flood they have piles of debris along the upriver side of the bridge - mostly trees but also "all kinds of other things that come down the river." She has to employ a guy with a backhoe to work the debris piles to get the stuff either under, or over, the bridge so it can continue on its way down the Potomac toward Washington DC.

Elasticity of demand?

How does she think traffic will respond to the big toll increases?

"I expect it will drop," she says, "but I think it will come back after a while. It is still good deal at the new tolls, but we'll see."

Her spending on repairs and improvements is going to depend on the cash flow, she says.

She doesn't propose going into debt for the bridge.

Case study in regulation

The case is an interesting example of the dynamics of state price regulation of toll rates of a private toll facility.

The regulatory process in Baltimore focusses on whether the applicant owner has a financial plan of "necessary expenditures" from which is derived a needed revenue stream. It then assumes that revenue stream can be obtained by multiplying toll rates by the ratio of needed to existing revenues.

There is little attention given to how traffic will respond to the higher toll rates - to the elasticity of demand.

And there is no discussion of possible economies with automated toll collection. This is not E-ZPassland, apparently.

Cost-plus regulation

The regulation is based on book-keepers' cost-accounting plus politics, the politics seen in 'Staff' recommending a splitting of the difference in many cases, allowing half of bridge owner's proposal. Plus modifying the position on the monthly pass.

Roberts financial plan as submitted was for revenue to rise from $98.4k at present toll rates to $400k/year, assuming stable traffic volume despite the 4 fold toll increase.

It provided for:

-  repairs and rehabilitation rising ten-fold from $17k to $175k/year (spreading about $850k over 5 years)

- an 11-fold increase in Salary (Office & Overhead) from $9k to $100k based on the state toll authority MdTA's supervisory salaries

-  and an increase in toll collectors pay from $45k to $75k (going from $7.50/hr to $12) based on MdTA's lowest pay scale

The state auditor representing Staff on the case Jennifer Brekke-Miles in her first report said that $253k, rather than $400k, was all the annual toll revenue Roberts had substantiated as necessary.

She recommended approval for toll rate tripling instead of quadrupling.

Major features of her report to the regulators:

- Toll collector pay of $10/hour is adequate (vs $7.50 now and $12 at MdTA, the state toller) on the basis that a publication Brief Economic Facts, Allegany Co MD says 'shipping/receiving clerks' in the county get $10/hour and their job is comparable to toll collectors. Toll collector pay of only $10/hr should be allowed, versus the $12 Roberts wanted to pay.

- $836k of bridge rehabilitation proposed by Roberts should be accepted but expensed over 39 years, the depreciation term of the previous owner rather than over 5 years as proposed by Roberts, (although in the end they reverse themselves on most of this)

- $65k approved to repair bridge piers and abutments as quoted in an inspector's report rather than $150k quoted by Roberts bridge company

- disallowance of half the $3,500 cost quoted for a new staff parking lot because the Inspector didn't recommend it, only the bridge company

- disallowance of half the $25k proposed for a 'code-compliant bathroom' for toll collectors because Roberts had not provided "support to substantiate" the need

- disallowance of half the estimated $15k for bridge lighting, again because its need had not been substantiated by the bridge company

- disallowance of expensing $7,200 for toll gates, depreciation over 39 years allowed

Flip because $s insufficient

The commission auditor says although it is "customary" to depreciate major bridge repairs proposed of $729,300 over the depreciable life of 39 years this "would not work because the Bridge (company) would lack the resources to obtain the financing it needs to make the necessary repairs."

So "Staff" ended up recommending to the Commission the $729k be amortized over five years for an annual $146k expensing.

They accepted that Roberts' income for managing the toll bridge should rise from $9,000/year now to $40k.

HISTORY:

The bridge built by Melvin R Carpenter was the first permanent crossing. For some years previously locals had improvised fording of vehicles when water was low or used boats to ferry vehicles. Various pedestrian bridges were contrived, and then washed away.

The bridge as built was designed to be overtopped in floods, with a flat wooden deck and no railings to minimize water resistance in floods. The single lane 11 foot wide  deck is described as 7 feet above normal water level. About 200 feet long the bridge has twelve reinforced concrete piers built on the natural rock floor of the river, the piers having sharp ends to break up any ice jams. Eleven spans are spaced about equally. Main structural element are steel I-beams - matching the railroad bridging of the time.

Carpenter was a local businessman who had lobbied but failed to get state money to build the bridge, then decided to build it himself.

1937: US Congress passed a law granting right to build and operate the bridge Oldtown MD to Green Spring WV. prohibiting any other bridge within 5 miles either side. Carpenter reportedly did much of the construction himself.

1938 the bridge opened, few reports of the bridge or Carpenter in next three decades

1971 Charles Walters bought the bridge

1991 Walters died and the bridge passed on to his widow Frances Walters who apparently did little wityh it

1993 state inspectors say bridge unsafe, demand weight limits and repairs

1995 August 2 the state notices no repairs have been made, declares bridge still unsafe and barricades it off to vehicular traffic (pedestrians still allowed), toll collection ceases

1995 mid-August unknown locals remove barricades, state puts them back, after some months of this the state tacitly concedes defeat and the bridge remains open, untolled, and officially 'unsafe' for several years

1999  John F Teter a new owner has restored the bridge to the point where it passes engineer's inspection, toll collection resumes at 50c for cars

2009 Teter is losing money on the 50c toll but is frustrated by the Maryland Public Service Commission in Baltimore saying they demand "endless paperwork" before they'll permit a toll increase, so he puts the bridge up for sale.

2010 Lori Roberts buys the bridge from Teter for $60k and forms Oldtown Historical Bridge Preservation LLC

http://oldtownbridge.com

http://webapp.psc.state.md.us/Intranet/home.cfm

http://webapp.psc.state.md.us/Intranet/Casenum/CaseAction_new.cfm?RequestTimeout=500

see our earlier report 2012/04/17:

http://www.tollroadsnews.com/node/5879

COMMENT: There must be a better way to collect tolls than paying toll collectors to sit in the toll booth for 500 tolls/day, especially when money has to be spent on upgrading a bathroom and a break room and employee parking, payroll tax, health insurance etc etc.

A couple of toll systems providers told us they could provide Roberts with cost-effective systems -  from some selection of rehabbed coin machines, bill acceptors, card swipe, prox card readers. sticker tags, E-ZPass plus cameras and a lane controller. One said about $400k would provide a good system.

Trouble is the state regulators think cost-plus, and Roberts is locked in to the financial plan with manual toll collection and all the rest.

TOLLROADSnews 2012/12/11

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