The state of Maryland is looking to fund and make improvements to over 70 miles of interstate on I-495 and I-270 using a public-private partnership program. Unfortunately, some opponents of the first phase of the project, featuring Maryland’s I-270/I-495 managed lanes project, are making bogus claims about the public-private partnership’s structure and filing questionable lawsuits designed to derail the project.
Maryland’s Purple Line P3 rail agreement, a 16-mile light rail line that is supposed to connect the Maryland suburbs to the Washington D.C. metro area, is facing legitimate challenges and problems. As the Washington Post recently reported:
Under a recent legal settlement, MDOT [the Maryland Department of Transportation] agreed to pay an additional $250 million to resolve the cost disputes with the contractor but retain the longer-term public-private partnership with Purple Line Transit Partners.
The line’s opening date will be determined as part of the new construction contract, project officials have said. The line initially was scheduled to open in March 2022, but the previous contractor said construction was at least 2½ years behind schedule.
However, the poorly structured Purple Line agreement is very different from the I-270/I-495 managed lanes project. The I-270/I-495 public-private partnership (P3) project seeks to reduce the traffic flow surrounding the nation’s capital through private investment and tolling.
First, the two projects are different types of deals. The I-270/I-495 project is a toll concession project where the toll company, or concessionaire, receives its compensation through its ability to collect tolls. The Purple Line project, on the other hand, is an availability payment deal where Maryland taxpayers provide the payment to the company building the light rail line.
While both deal structures typically provide an advantage over public procurement, toll concessions reduce taxpayers’ risks and provide a needed revenue source, which limits negotiations between the public entity and the private party. Additionally, the private partners that entered the Purple Line rail deal were heavily exposed to debt and the numerous environmental lawsuits filed against the project negatively affected their financial viability.
The I-270/I-495 project is in better shape. The three highway teams currently bidding on the project are better leveraged and currently work on other major construction projects, so if the Maryland project is delayed for a year for any reason, they would be able to mediate risk. As Transport Topics reported:
The Maryland Department of Transportation has received three proposals from teams composed of private sector firms interested in becoming the developer for major interstate improvement work. Specifically, the firms are vying for responsibility to oversee predevelopment work on the American Legion Bridge and Interstate 270. The American Legion Bridge carries Interstate 495, known as the Capital Beltway, over the Potomac River between Montgomery County and Fairfax County, Va. I-270 is an auxiliary interstate linking I-495 in Montgomery County and I-70 in Frederick, Md. MDOT’s plans include constructing a new American Legion Bridge and developing options for reducing traffic congestion along I-270.
The projects are part of MDOT’s I-495 and I-270 Public-Private Partnership Program.
“We received three strong proposals from private investors that want to partner with us to provide new travel options and business opportunities for all Marylanders — bicyclists, pedestrians, buses, carpoolers and truckers,” said Maryland Department of Transportation Secretary Gregory Slater.
Once the winning bidder for the I-270/I-495 project is identified, Maryland plans to enter a pre-development agreement with the private consortium. The company will meet with adjacent communities, property owners, and the general public in hopes of reducing the impacts of the toll lanes.
And given this highway project has been considered controversial by some from the start, government officials and lawyers have already spent months working with state and local agencies to ensure that the project meets its purposes and users’ needs. The state is unlikely to proceed with a project if it believes legitimate lawsuits that could prevent it are likely.
Further, on the private sector’s side, the bidders and their investors knew they’d need to protect themselves from potential environmental lawsuits and risks to the project by pricing those risks into the bids and final contract.
They also know the tolling project could facing the same types of questionable environmental lawsuits that the Purple Line project experienced. The Purple Line has been plagued by real mistakes and problems, but it also had three different plaintiffs suing to stop the Purple Line project by alleging everything from the environmental analysis was incorrect to the contract was awarded illegally to dredging in streams and wetlands violated environmental laws. Those lawsuits were all dismissed.
These types of lawsuits can be an even bigger problem for roadways. During the environmental review process for the I-270 and I-495 tolling project, it became clear the state and potential bidders should expect lawsuits. The Washington Post reported:
The Sierra Club’s Maryland chapter said it plans to sue if the state doesn’t address its concerns with the environmental analysis. In 207 pages of comments, the Sierra Club and about 50 other environmental and civic groups said the state hasn’t adequately assessed the highway widening’s effects on parkland, air and water quality, and historical sites, among other problems.
“If the agencies decide to move forward, and the flaws are not addressed, we anticipate challenging that decision,” said Josh Tulkin, director of the Maryland Sierra Club.
In addition to the environmental concerns, other opponents of the highway project have claimed the project isn’t needed at all—ignoring the region’s traffic congestion and need for highway capacity. Others have criticized tolls by creating unrealistic claims of drivers being charged $50 per trip in I-495.
That claim comes from stories about the variably-priced tolls on I-66. On that road, tolls on a couple of days have neared $50 for a handful of commuters (less than 50) who chose to drive in the toll lanes on a very busy, nine-mile stretch of the I-66 toll lanes during peak commute hours on some of the busiest days of the year. The tolls on I-495 would operate differently from those on I-66 in that drivers on I-495 would be able to choose either the general-purpose lanes or the managed lanes. There will be more capacity in the managed lanes because two-person carpools do not ride for free and this additional capacity allows the tolling rates to be more dynamic.
Maryland’s transportation officials and the private companies eventually chosen should take seriously the questions being raised about the public-private partnership. It’s important for them to be transparent with the public and make sure drivers, property owners, special interest groups, and stakeholders fully understand where the managed lanes will be, how they’ll be operated, and how much they’ll cost.
The COVID-19 pandemic has reduced traffic, so parts of the Beltway aren’t experiencing gridlock as bad as it has been in the past. But once the coronavirus vaccines have been widely distributed and given, travel and economic activity around the region are expected to eventually return to normal levels.
Expecting traffic jams to return to the Beltway is almost as sure a bet as betting on gridlock regularly returning to Congress. The state of Maryland, taxpayers, and drivers should view the I-270/I-495 project as a much-needed project that can be effectively financed and operated as a public-private partnership.