Dulles Rail Phase II headed for death spiral
COST Commentary: So much for the idea of reasonable costs for a train transit system to Washington DC’s Dulles Airport. DC has more that 12 times the transit ridership of Austin and its Dulles Airport has more than three times the annual passengers of Austin’s airport. Also, the distance from Dulles to downtown DC is more than five times the distance from downtown Austin to its airport, Austin-Bergstrom International.
So, with the Dulles rail in deep financial trouble, why does Austin leadership believe a train transit system from downtown Austin to Austin-Bergstrom International would be a cost-effective or needed priority. It is only a convenient 5 mile transit, rental car or cab ride. Ridership would be very low and costs very high as Cap Metro found in their studies in the late 1990’s. I guess the Rail folks in the DC area ignored the warnings of unacceptable high costs. Now what?
The Dulles rail transit line is only one of many throughout the nation which are not financially sustainable. There are numerous articles on this site with their stories.
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Dulles Rail Phase II headed for death spiral
By: Barbara Hollingsworth | Local Opinion Editor | The Washington Examiner, 08/23/11
Phase II of the Dulles Rail project, which will extend Metrorail to Washington Dulles International Airport, is on the financial ropes, so members of the Metropolitan Washington Airports Authority Board are resorting to panicky “warnings” in a calculated effort to stick local, state and federal taxpayers with the bill for their blundering.
Phase II costs have ratcheted up to $3.5 billion — the original price of the entire Silver Line — and Dulles Toll Road users finally realize they will soon have to pay around $20 per day — or $100 per week — to subsidize this economically indefensible transit project.
The public backlash prompted MWAA to demand $500 million more from Virginia and $1.2 billion more from the federal government — on top of the low-interest federal Transportation Infrastructure Finance and Innovation Act loans sought by Fairfax and Loudoun counties to build parking garages and the Route 28 station that were not part of the original agreement.
MWAA’s latest scare tactics are inadvertently hilarious. “We are now in the position of being the defender of the toll payer,” MWAA Chairman Charles Snelling proclaimed last week. That’s like Fantastic Mr. Fox declaring himself “defender of the chickens.” MWAA deliberately chose to put toll road users on the hook for two-thirds of all Phase II financing.
“We have given up more than anyone on this,” harrumphed MWAA Board Member Robert Brown, who voted to build a $330 million underground station that was later abandoned because it was too expensive. However, MWAA’s project labor agreement, which will add as much as 20 percent to overall construction costs, is still in force.
“U.S. [Transportation] Secretary [Ray LaHood] talked about this being one of the most important projects in the United States. We’re saying to him, we agree, so show us the money,” demanded Dulles Corridor Committee Chairwoman Mame Reiley.
Using the “people skills” she honed during years of strong-arming Democratic donors for Mark Warner, Reiley threatened “there’s no deal” if Fairfax and Loudoun balked at allowing MWAA to shift the ballooning costs of Phase II onto the backs of their constituents.
County, state and federal officials should call Reiley’s bluff because there’s a very good chance MWAA’s toll-heavy financing will collapse of its own weight.
“I’ve provided a financial analysis to MWAA Board members and their financial adviser, and nobody has been able to refute it,” Great Falls resident Thomas Cranmer, who has an MBA from Columbia University, told The Washington Examiner. “A number of toll roads across the country have gone bankrupt.”
Indeed, Virginia’s privately owned Dulles Greenway and public/private Pocahontas Parkway in Richmond both failed to meet revenue projections. So did San Diego’s South Bay Expressway, which went bankrupt in April despite the same kind of low-interest federal financing MWAA is now seeking. A price elasticity study there found that when parallel routes are available, toll roads lose 75 percent of their traffic volume when tolls double.
The same dynamic was experienced by the bankrupt North Texas Toll Road Authority, which desperately raised tolls 32 percent as traffic declined, exacerbating the problem.
Even if Dulles Toll Road traffic decreases only 50 percent when tolls increase by a factor of 10, MWAA will default on its bonds. That’s exactly what happened to the $300 million Southern Connector in Greenville, S.C.
Meanwhile, the foreign operators of the Indiana Toll Road — who paid $3.8 billion to the state for the right to collect tolls for the next 75 years — expect their reserve fund to run dry early next year, but can’t raise tolls because each penny increase further reduces traffic volume — and revenue.
The real threat is that Phase II is headed for a similar death spiral. Time to pull the plug before it’s too late.
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Barbara F. Hollingsworth is The Examiner’s local opinion editor.