Commentary

Greenway Toll Opponents Threaten Mobility

Legislative witch hunt would scare off private investors in Virginia road projects

Misguided opponents of the recent Dulles Greenway toll increase want the Virginia General Assembly to intervene. But a Greenway witch hunt would scare off private investors interested in financing badly needed road projects that the state cannot afford.

Private-sector investment in expanding and modernizing the commonwealth’s road system has never been more critical. But a legislative crusade against the privately built and financed Greenway would signal a risky political climate in which private capital is not welcome. With innovative policy-makers in states such as Florida, Georgia and Texas opening their arms to private investment, there are plenty of other options for investors.

Given current efforts to advance private-sector financing for expanding the Capitol Beltway and Interstate 95/I-395 in Northern Virginia, as well as the Third Crossing Bridge-Tunnel and the rebuilding of Route 460 in Hampton Roads, there’s a lot at stake for drivers across the commonwealth.

What’s often lost in Greenway discussions are the basics. A popular misconception is that the Greenway can charge whatever tolls it chooses. This is false. The State Corporation Commission is responsible for approving or denying proposed Greenway toll rates, and it only does so after a detailed investigation of the operator’s finances.

Another popular myth is that the Greenway owner is guaranteed a rate of return. In reality, SCC regulation allows, but does not guarantee, a return on investment. In fact, the Greenway has yet to turn a profit in 12 years of operation.

When the road opened in 1995, projected growth in eastern Loudoun had not yet materialized, and traffic volumes did not match projections. The Greenway defaulted, but a financial restructuring gave the project a new financial base (at considerable cost to the initial private investors). Then Loudoun boomed and since 2000, the operator has spent more than $50 million to add new lanes to accommodate increased demand.

Further, it has spent more than $40 million to upgrade nearby roads and bridges to improve Greenway access and traffic flow. In other words, the private operator has paid to improve non-tolled, public roads that Loudoun citizens benefit from, whether or not they actually use the Greenway.

The Greenway is also the only privately financed U.S. toll road that pays local property taxes, to the tune of more than $2 million annually. It also pays almost $750,000 per year to the State Police to service the road. All tallied, millions of Greenway dollars flow into public coffers every year.

To meet its rapidly rising debt-service obligations, the Greenway has two options: increase the number of daily users or increase tolls on a semi-regular basis. Since rush-hour Greenway traffic levels are limited by choked public feeder roads at either end, toll increases become the only feasible option to raise necessary revenues.

Tolls could be lower if state and local officials were to exempt the Greenway from property taxes and get serious about addressing congestion on its feeder roads, so that’s where legislators should focus.

In the final equation, the Greenway would not even exist had private investors not taken on the tremendous financial risks to build it. Imagine traffic on Routes 7 and 28 today if the Greenway didn’t exist and its nearly 60,000 daily customers were competing for scarce road space.

This is why private investors are so important – they’re getting needed projects built that government cannot. While opponents want to make political hay out of Greenway tolls, the rest of us should understand that privately financed roads benefit everyone by providing new infrastructure to improve mobility and reduce congestion, something the public sector is proving itself increasingly unable to accomplish.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.

The project aims to promote solvent, sustainable retirement systems that provide retirement security for government workers while reducing taxpayer and pension system exposure to financial risk and reducing long-term costs for employers/taxpayers and employees. The project team provides education, reform policy options, and actuarial analysis for policymakers and stakeholders to help them design reform proposals that are practical and viable.

In 2016 and 2017, Reason's Pension Integrity Project helped design, negotiate and draft pension reforms for the state of Arizona's Public Safety Personnel Retirement System and Corrections Officer Retirement Plan, which both passed with overwhelming bipartisan support in the state legislature and were signed into law by Gov. Doug Ducey.

Gilroy is also the Director of Government Reform at Reason Foundation, researching privatization, public-private partnerships, infrastructure and urban policy issues.

Gilroy has a diversified background in policy research and implementation, with particular emphases on competition, government efficiency, transparency, accountability, and government performance. Gilroy has worked closely with legislators and elected officials in Texas, Arizona, Louisiana, New Jersey, Utah, Virginia, California and several other states and local governments in efforts to design and implement market-based policy approaches, improve government performance, enhance accountability in government programs, and reduce government spending.

In 2010 and 2011, Gilroy served as a gubernatorial appointee to the Arizona Commission on Privatization and Efficiency, and in 2010 he served as an advisor to the New Jersey Privatization Task Force, created by Gov. Chris Christie.

Gilroy is the editor of the widely-read Annual Privatization Report, which examines trends and chronicles the experiences of local, state, and federal governments in bringing competition to public services. Gilroy also edits Reason's Innovators in Action interview series, which profiles public sector innovators in their own words, including former U.S. Transportation Secretary Mary Peters, former Florida Gov. Jeb Bush, former Indiana Gov. Mitch Daniels, former New York City Mayor Rudy Guiliani and more.

Gilroy's articles have been featured in such leading publications as The Wall Street Journal, Los Angeles Times, New York Post, The Weekly Standard, Washington Times, Houston Chronicle, Atlanta Journal-Constitution, Arizona Republic, San Francisco Examiner, San Diego Union-Tribune, Philadelphia Inquirer, Sacramento Bee and The Salt Lake Tribune. He has also appeared on CNN, Fox News Channel, Fox Business, CNBC, National Public Radio and other media outlets.

Prior to joining Reason, Gilroy was a senior planner at a Louisiana-based urban planning consulting firm. He also worked as a research assistant at the Virginia Center for Coal and Energy Research at Virginia Tech. Gilroy earned a B.A. and M.A. in Urban and Regional Planning from Virginia Tech.