A 26-mile stretch of Interstate 77 in the Charlotte area soon could become the first highway in the state to use flexible toll pricing.
Plans call for the state Department of Transportation to enter into a public-private partnership agreement with Cintra Infraestructuras, a company based in Madrid, Spain, that has experience building privately financed highways.
The contract between Cintra and DOT has been signed, with a “financial close” targeted by the end of the year, said Jen Thompson, a DOT spokeswoman. Construction is expected to start next spring or summer, she said.
“We want to have it substantially completed in 2018,” Thompson said.
The project spans the Brookshire Freeway interchange in Charlotte (Exit 11) to the N.C. 150 (Exit 36) interchange in Iredell County. The project’s price tag is $655 million, with the state’s taxpayers footing $88 million of the bill.
“Cintra is financing about $230 million of their own equity,” Thompson said. “They’re going to get the rest financed” through borrowing.
The project would take the existing High Occupancy Vehicle lane and combine it with a newly constructed lane each way, converting them to High Occupancy and Toll lanes both northbound and southbound. Buses, motorcycles, and cars with at least three occupants would be allowed to travel free in the lanes.
Cars with one or two occupants could use the HOT lanes so long as the drivers pay a toll. Toll rates would vary, with higher rates during peak travel hours. The flexible tolls would be designed to keep traffic in the HOT lanes flowing freely.
Bob Poole, director of transportation studies at the Reason Foundation, said HOT lanes are operational or in planning and construction phases in several states. Existing projects are operating in Washington, D.C., the San Francisco Bay area, and the Dallas-Fort Worth area of Texas. Another is under construction in Colorado between Boulder and Denver, he said.
While supporters of the project say the state is getting a great deal out of the HOT lanes, opponents say the project is much larger and more expensive than it needs to be.
“The taxpayer is contributing all the remaining right of way for the private company’s exclusive use for the next 50 years,” said Kurt Naas, a spokesman for the HOT opposition group Widen I-77. “We see it as a very expensive undertaking, far more than it needs to be.”
The business model relies on the private company keeping the general-purpose (non-tolled) lanes congested, he said. “It relies on people being willing to pay to avoid congestion,” Naas said.
Naas said that the project would add lanes closer into downtown Charlotte that aren’t needed. He suggested that the state should add a general-purpose lane on the outer part of the city, where traffic is more congested and forgo the extra lane closer to downtown.
“That would cost about $100 million,” Naas said. “It would end up costing the taxpayer less to build a general-purpose lane than it would the toll lane.”
Naas notes that the contract between Cintra and DOT would allow the state to pay $12 million more a year if Cintra doesn’t collect enough toll revenues to meet its bond payment obligations. That money would be capped at $75 million.
The backup money from the state is “intended to be for the ramp-up years,” said Rodger Rochelle, technical services administrator at the N.C. Department of Commerce. Rochelle said it would not be in Cintra’s interest to tap into state funds because doing so would mean the company’s equity investors would not be getting a return on their investment. Rochelle said state funds would not kick in unless toll revenues fell 40 percent to 50 percent below projections.
“To [build] 26 miles for $88 million, that’s a good deal,” Thompson said.
Thompson said DOT didn’t want to limit the scope of the project in the way Naas proposed. “We’re thinking way into the future,” Thompson said, adding that the smaller scope proposal would produce gridlock within five years.
Thompson said tolls would be collected through transponder technology, or by photo detection of license plates. “There will not be a toll booth anywhere,” she said.
She said transponders that work for many other toll roads across the nation, including the Triangle Expressway, would work on the I-77 project.
Thompson also said the project offers choices to motorists. They’ll be able to continue using general-purpose lanes for free, or HOT lanes for free if three or more passengers are in the car. They’ll also have the option of paying tolls if they don’t have at least two additional passengers. Motorists using the HOT lanes also would reduce congestion in general-purpose lanes, she said.
“It’s up to you to decide how much your time is worth to you,” Thompson said.
Barry Smith (@Barry_Smith) is an associate editor of Carolina Journal.