News: CJ Exclusives

McCrory Not Budging on I-77 Toll Project

Opponents calling $144.5 million incentive 'a bribe'

Despite widespread vocal opposition from area business leaders and residents, Gov. Pat McCrory and North Carolina Department of Transportation officials maintain it is too late for the state to scrap the controversial 26-mile Interstate 77 tolling project between Charlotte and Mooresville in favor of nontolled alternatives.

On May 20, state officials signed a 900-page, 50-year agreement with I-77 Mobility Partners, a subsidiary of a Spanish company, to build and operate the project, officially named the I-77 Hot Lanes Project. The project is expected to cost $648 million. Mobility Partners will set toll rates, collect the tolls, and — for the most part — keep all the proceeds.

Opponents of the project want the state to build additional lanes without charging tolls, and pay for them using existing funding mechanisms or with the highway bonds McCrory is promoting. Some opponents characterize a $144.5 million incentive payment from NCDOT to the Charlotte Regional Transportation Planning Organization as a bribe. Others predict nightmarish commutes, as the eight-mile stretch at the northernmost portion of the project will include only one lane traveling each direction, with little room to accommodate disabled motorists or emergency vehicles.

But McCrory is not budging on the issue, citing the high cost of terminating the contract and the faster timetable for completion promised by the public-private partnership.

McCrory spokesman Josh Ellis told Carolina Journal via email on June 19: “Governor McCrory continues to support the I-77 Express Lanes project, a project that that was unanimously approved by the Charlotte Regional Transportation Planning Organization. Canceling the projects would cost North Carolina taxpayers approximately $100 million, money that should be invested in other infrastructure projects. The current project can be delivered within a matter of years instead of up to 20 years to secure funding through the normal state channels.”

Opposition to the project has reached the General Assembly. State Sen. Jeff Tarte, R-Mecklenburg, told CJ he will introduce a bill to stop the project, since several local governmental bodies and the Lake Norman Chamber of Commerce have passed resolutions asking for alternatives to the current toll plan.

“Ninety eight percent of the people in this area are against this toll project. The hurdle is the perception of spending $50 [million] to $100 million in contract termination fees,” Tarte said.

“When this project started, NCDOT told us that it had to be managed toll lanes or nothing, but now there are other ways. I think NCDOT is emotionally attached to a bad decision and can’t change directions,” he said.

The project would be the second toll road project to be built in North Carolina and the first operated using a public-private partnership.

Even though the contract has been signed, opponents appear to be gaining momentum. On June 16, the Mecklenburg County Board of Commissioners passed a resolution asking McCrory and NCDOT to cancel the contract and explore alternatives to road improvements without using tolls.

And on June 22, the Lake Norman Chamber of Commerce passed a resolution urging the termination of the project. In a press release, the chamber said it polled its 1,000 business members, and 94 percent of those responding oppose tolling the corridor.

To date, nine local governments have passed resolutions asking NCDOT to rethink the project.

A group of Lake Norman Area business people reportedly have chartered two buses to travel to Raleigh June 30 to hold a press conference and meet with legislators, urging them to scrap the project.

The project

After the Charlotte Regional Transportation Planning Organization approved the toll concept in 2007, NCDOT proceeded with developing the details. The CRTPO comprises Mecklenburg, Union, and Iredell counties and the incorporated towns within them. The section of I-77 that is the object of the plan passes through the corporate limits of Charlotte, Huntersville, Cornelius, Davidson, and Mooresville, an area often referred to as the Lake Norman Region.

The lake, created 50 years ago by Duke Power, is the largest in North Carolina. The area has seen rapid growth and traffic on I-77, the main north-south corridor, is frequently slow or at a standstill during peak times.

Two years ago, the General Assembly passed the Strategic Transportation Investments Law containing a provision allowing incentives for regional planning organizations that approve toll projects. The money can be used to speed up other transportation projects. NCDOT offered CRTPO $144.5 million in incentives to approve the I-77 toll project.

NCDOT says the I-77 express lanes will help resolve current and future congestion problems. The agency decided to use a public-private partnership to accelerate the project rather than submit it to NCDOT’s often-complex system of selecting and prioritizing road projects.

The design calls for closing the current high-occupancy (carpool) lanes in each direction along the corridor and converting them to express toll lanes. A second express lane would be added so that when the project is complete, there will two express lanes in each direction for the southernmost 18 miles and a single express lane in each direction for the eight-mile northern section. Drivers can enter or exit the express lanes at either end of the project and at five other planned access points.

Mobility Partners will observe traffic flows and says it can adjust toll rates at five-minute intervals. It has a contractual requirement to maintain traffic flow in the express lanes at a speed no less than 45 miles per hour, and tolls will be manipulated to ensure that this traffic speed is maintained. For instance, if traffic in the toll lanes begins to bog down, the tolls will be increased to discourage users.

As Mobility Partners explains it, “The I-77 Express Lanes use congestion-management pricing to help manage traffic flow and provide faster, safer and more predictable travel for drivers who choose to use the lanes. Toll rates will fluctuate periodically based on the level of traffic in order to ensure that express lanes drivers travel at faster, more predictable rates of speed. As traffic levels and demand increase, the toll price increases to keep vehicles moving. Once traffic volumes drop, the price goes down. Vehicles with three or more occupants and public transit buses can use the express lanes at no charge.”

Drivers still may use the general-purpose lanes for free. Trucks will not be permitted on the express lanes. Vehicles using the express lanes will be monitored with a transponder or by having the license tag photographed. Vehicle owners will be mailed bills for tolls due. There will be no toll plazas.

Mobility Partners has not determined maximum toll prices, but opponents are estimating a round-trip using the toll lanes could be as high as $20. The agreement is structured for Mobility Partners to keep the toll proceeds, but there is a complex provision calling for a portion of excess profits to be returned to NCDOT.

According to a May press release from Mobility Partners, the total cost of the project is $648 million, and will consist of a $95 million contribution from NCDOT, a $189 million federal government loan, $100 million in private bonds, and $248 million from Mobility Partners. CJ pointed out to Mobility Partners that those components add up to $632 million, not the announced $648 million. “There is interest income and capitalized interest that makes up the majority of the difference,” Mobility Partners spokeswoman Jean Leier told CJ.

The agreement contains a provision for Mobility Partners to make a claim against NCDOT if the department were to build additional lanes that result in a loss of toll revenues to Mobility Partners. Opponents of the project have referred to this provision as a “non-compete clause.”

Opponents

Area residents Kurt Naas, Mac McAlpine, and Chuck Suter are among the most vocal opponents of the project. Naas and others set up Widen I-77, a nonprofit dedicated to pushing for alternatives to the toll project. The organization has filed a lawsuit to stop the project, and its website has information about the suit.

McAlpine brought together approximately 150 Lake Norman Area business owners in May for an event named “Emergency Call to Action.” At the event, McAlpine argued that the I-77 toll project would harm the region. He noted that Mobility Partners could collect as much as $13 billion in tolls over the life of the contract. McAlpine characterized the $144.5 million payment from NCDOT to the CRTPO as “a bribe.”

Suter runs Constitutional War, a website and grass-roots organization “focused on saving lives, protecting our freedoms, pushing for lower taxes, demanding smaller government, and defending the Constitution of the United States of America.” Suter has spoken against the project in public forums, including to the Mecklenburg County Commission and the Davidson City Council. He also has posted several videos of local government bodies discussing the project.

Mecklenburg County Commissioner Jim Puckett, a Republican, is another frequent critic of the toll project. On June 12, The Charlotte Observer published an open letter from Puckett to McCrory urging him to reconsider the project.

“Pat, you once famously suggested folks not put their stupid hat on,” Puckett stated in his letter to the governor. “I respectfully ask you sir to take your stupid hat off. You have successfully provided new tools for road expansion. Use those tools. Do what you went to Raleigh to do, bring logic to challenges and return responsibility to leadership.”

Former GOP state Rep. Robert Brawley of Mooresville told CJ that when he attended a NCDOT presentation about the project in early 2013 he had no strong opinions about it, but after meeting with opponents in the following months he determined they had the better arguments.

“Public-private partnerships came about and were developed in Third World countries as a way for the rulers to funnel public funds to their friends,” he told CJ. “If you do it on traffic count, I-77 should have been [expanded] a long time ago. Traffic count is as nonpolitical as you can get,” he said. He also said it was fair to characterize the $144.5 million payment to CRTPO as “a bribe.”

A Facebook Group, “Exit 28 Ridiculousness,” named after the often-congested I-77 Exit 28 in Cornelius, has 3,900 members. It is a place for people following the project to make comments, and most commenters are critical of the project, NCDOT, and McCrory.

Proponents

While a number of local elected officials have expressed support for the project, the most outspoken backers are the state officials who now must deliver it.

NCDOT Board Chairman Ned Curran responded to Puckett’s letter in a June 15 opinion piece also published in the Observer. Curran stated that it was not DOT’s project to cancel since it was requested and approved by the CRTPO. “The state is simply delivering on that request,” he said.

He also stated that cancelling the project would cost approximately $100 million in penalties and the region would lose the $145 million in incentive money. He noted as well that local planners never submitted an alternative general-lane project for DOT to score under the Strategic Transportation Investments law.

He said the project would not be eligible for McCrory’s bond proposal because it had not been scored under the STI law.

“I trust the CRTPO and the transportation experts who have studied this project for years. The I-77 Express Lanes Project is what is best for our region,” Curran concluded.

Rep. John Fraley, a Mooresville Republican who defeated Brawley in the 2014 Republican primary election, told CJ that NCDOT should go ahead with the project. “The I-77 congestion must be addressed,” he said. “There is a signed and legally binding contract in place for the project. Unless there is a legal reason or a very firm, nonspeculative alternative, the project should move forward.”

“All sides of this discussion have important points to make and be considered,” Fraley said. “There are also comments being made without proper context or full details, which I believe are harmful. I believe NCDOT and I-77 Mobility Partners are fairly and seriously considering many of the points being made and serious about doing what is best for North Carolina and the I-77 Corridor.”

I-77 Mobility Partners

I-77 Mobility Partners LLC was formed in April 2014. The chief executive officer is Javier Tamargo. Mobility Partners is led by Cintra, a Spanish company heavily involved in the private sector development of transportation infrastructure, in partnership with Aberdeen, a London-based infrastructure investment fund.

Cintra is a subsidiary of Ferrovial, a publicly held company. Both are headquartered in Madrid, Spain.

Project opponents point out that a Cintra toll project in Indiana has had significant problems. In 2014, Cintra filed bankruptcy for a public toll road it took over in 2006 from the state of Indiana.

JLF research

In March 2013 the John Locke Foundation released a report titled “Transportation Priorities for North Carolina,” written by the Hartgen Group and the Reason Foundation. The report discussed public-private partnerships and price-managed toll lanes as possible solutions to some of North Carolina’s transportation problems. The report offered no opinion of the I-77 Hot Lanes Project.

Don Carrington is executive editor of Carolina Journal.