Beltway Express Lanes Aren't Attracting Drivers Or Money
The 495 Express Lanes in Northern Virginia are bleeding money.
Since opening on Nov. 17, 2012 the EZ Pass-only toll lanes running 14 miles along the Beltway between the I-95/I-395 interchange and Dulles Toll Road have struggled to attract motorists. And although the number of drivers using the lanes and toll revenues show steady growth, both figures continue to fall below the projections of the private sector firm that mostly paid for and built the highway: Transurban, the Australia-based construction conglomerate.
$51 million in losses
In a conference call with investors earlier this month, Transurban CEO Scott Charlton defended the firm’s $1.4 billion investment in the $1.9 billion road, according to a report in theNewspaper.com, an online journal about driving. The 495 Express Lanes lost $51 million in 2013. Charlton is quoted telling investors, “We think there is long term value here, recognizing that this is a 75-year concession period."
Transurban makes up the private piece of the public-private partnership that saw Virginia contribute only $400 million to the highway’s total cost. Transurban will receive the bulk of the toll revenue for the next seven decades as a return on its larger investment. So far the investment is not working out. . . .Click here for the full transcript or listen to Di Caro's full report.
Almost certainly, another faulty traffic & revenue (T&R) forecast is behind this $51 million shortfall. As we detailed in our report on Wilbur Smith Associates (now CDMSmith), one of America's leading T&R forecasters, these forecasts routinely over-estimate traffic and revenue by more than 100% in the first five years, and often much longer.
Aside from higher tolls (further driving down use) on these express lanes, it is possible the project will go bankrupt (as many others have) and the state will be forced to assume responsibility for paying off the debt. This has already happened in Virginia on the Pocahontas Parkway--another TransUrban boondoggle sold to state leaders now being paid for largely by Virginia's taxpayers.