Loudoun says it's in the dark on Silver Line despite $300M investment, Washington Business Journal, June 17, 2014

Michael Neibauer writes:

When it comes to the Silver Line project, even a $300 million investment isn’t enough to get answers.

Loudoun County will pay for more than 10 percent of the $2.778 billion extension of the Silver Line from Reston to Ashburn — or 4.8 percent of the $5.7 billion combined Phase 1 and Phase 2 price tag. But the county has very little role in, or even knowledge of, the project itself, according to a staff report. That includes major decisions such as schedule, cost and design changes. . .

The frustration bubbled to the surface in late April, when MWAA publicly announced that stormwater management and technical design changes would delay the opening of the 11.4-mile Silver Line Phase 2 by roughly 13 months.   (Reston 20/20 note:  And we have learned since that the stormwater issue accounts for only one month of the 13-month delay.)

The decisions were all made, Loudoun staff says, by MWAA and contractor Capital Rail Constructors (led by Clark Construction Group LLC and Kiewit Infrastructure South Co.) during a “six-month effort of schedule development and negotiations” in which neither Loudoun nor Fairfax had any role. Loudoun received a revised schedule in mid-May, indicating a late 2019 or early 2020 launch for passenger service, but it still has not been provided a new cost estimate or any word of the increased construction costs resulting from the design changes. . .

Both Loudoun and Fairfax, according to Loudoun staff, “were again excluded from schedule impact discussions” between MWAA and its contractor, the development of a revised schedule, and ongoing discussions regarded additional costs resulting from the massive stormwater management redesign. . . .

Click here for the rest of Mr. Neibauer's article.

Dulles Toll Road users shoulder an increasing share of Silver Line’s costs, Washington Post, July 12, 2014

By Lori Aratani and Mary Pat Flaherty July 12 at 7:26 PM

Dulles Toll Road users are shouldering nearly half of the costs of Metro’s soon-to-open Silver Line, a far bigger share than originally predicted.

Those drivers also face the biggest exposure for any additional cost overruns or delays on the rail line set to open July 26 — seven months late and $150 million over budget.

Commuters are vulnerable because tolls are the one share of the Silver Line project’s funding formula that is not capped at a fixed dollar amount or percentage of the final tab.

Since construction began five years ago, there have been five toll increases that spiked a common round trip from $2.50 to $7 or, viewed as a monthly tab for typical weekday commuters, from $50 to $140.

The impact of the line’s rising costs has been painfully apparent to drivers who use the road regularly. Yet the significance of rising tolls as a main funding source drew less public attention than heated intrastate political battles and engineering skirmishes over tunnels. . . .

Click here to read the rest of this article. 

While the increases in tolls on the Dulles Toll Road and their role in financing the Silver Line are not news to toll road commuters or Reston 2020 blog readers, their importance can not be ignored and we appreciate the Post picking up on this unfair and inequitable assignment of Metrorail costs to those who will or can not use the Silver Line for their purposes.

Although former Fairfax Board of Supervisors Chairman Kate Hanley is quoted as being "amazed" by the role highway tolls play in financing the rail line, the Fairfax Board under her successor, Gerry Connolly,, was specifically responsible for promoting and approving the 2007 "Funding Partners Agreement" that set this arrangement in place without so much as a public hearing. 

Without TIFIA funding--which is clearly a possibility as the Highway Trust Fund dries up in the next month without Congressional action--CDMSmith forecast that tolls would rise to $18 full toll each way by 2050 (about $7-$8 in today's dollars).  With TIFIA funding, tolls will still rise to about $12 each way, meaning an annual toll bill of about $4,800 for Dulles Toll Road users. 

And just for clarity, we would note that MWAA is paying only 4.1% of the rail construction costs (about $240 million)--less than half what it will cost to build the station at Dulles Airport and the rail line across Airport property ($587 million according to MWAA's April 2011 cost analysis).  And, oh yeah, MWAA will be leasing its land along the Silver Line to developers at a huge profit in the years ahead.  Fair, reasonable???

Of course, now Congressman Connolly is singing a different tune as he practically broke his arm patting himself on the back for his role in garnering a TIFIA funding commitment for the Silver Line.  While we appreciate his efforts along with those of Rep. Frank Wolf and Virginia Senators Warner and Kaine to gain this reduced-cost funding commitment, we know--and so do they--that this financial arrangement is unfair, inequitable, and quite possibly imprudent in the long term--even if TIFIA comes through. 

Before we sign off here, we will reiterate again that Reston 2020--and most Restonians--welcome the arrival of the Silver Line in Reston and its future extension into Loudoun County.  We believe it will be an important ingredient in the continuing economic health of our community.

We do, however, continue to object in the strongest possible terms to the abominable financial arrangements that force people who are not be able to use the Silver Line for any reasonable purpose to pay the largest share of its construction cost.  It is a disgrace and a mockery of sound public policy. 

Major Rail Issures Remain Unresolved, Rob Whitfield, Fairfax Times, May 30, 2014 (UPDATED)

Rob Whitfield, Dulles Corridor Users Group, wrote a detailed letter in last week's Fairfax Times noting that there are several important unresolved issues in the financing of the Silver Line.  A breakdown in any of these issues could result in a failure to obtain $1.9 billion in low-cost TIFIA financing, and thereby undercut the reductions in tolls that MWAA, elected officials, and others have been recently been pounding their chests about.  We present below his letter with the updates highlighted in red. 

Despite all the hoopla about the Metropolitan Washington Airports Authority (MWAA) turning over control of Dulles Rail Phase 1 to the Washington Metro Area Transit Authority (WMATA), several major unresolved issues remain:

 

1. We have yet to see the proposed business terms and conditions for the Dulles Rail Transportation Infrastructure Finance and Innovation Act (TIFIA) loan. A U.S. Department of Transportation official said last week that the public would not be allowed to see the agreement until after all terms have been negotiated and an agreement signed. This exemplifies the approach of former House Speaker Nancy Pelosi to government actions: “We have to pass the bill so that you can find out what is in it.”

 

The TIFIA Program is governed by the Federal Credit Reform Act of 1990 (FCRA), which requires the U.S. Department of Transportation to establish a capital reserve, or “subsidy amount,” to cover expected credit losses before it can provide TIFIA credit assistance. Congress places limits on the annual subsidy amount available.

 

Moving Ahead for Progress in the 21st Century Act (MAP-21) authorizes $750 million in FY 2013 and $1 billion in FY 2014 in TIFIA budget authority from the Highway Trust Fund (HTF) to pay the subsidy cost of TIFIA credit assistance. An MWAA financial advisor for the Dulles Rail project indicates that the capital reserve required is typically only 10% of the total TIFIA credit assistance amount. He expects closure before September 30, 2014 but if a delay in closure occurs, given the potential for the HTF to run out of funds later in 2014, the public should not assume that TIFIA credit assurance for Dulles Rail is a certainty, particularly at levels needed to complete the Dulles Rail project by 2018.

2. MWAA has yet to fund any of its 4.1 percent Dulles Rail capital cost share from Airport Revenues. Over five years have passed since Phase 1 construction started and months since Phase 2 work commenced. Chairpersons Bulova and York plus Virginia officials have yet to demand a specific MWAA payment plan. The 2007 Capital Cost Funding Agreement provided no proposed schedule for MWAA payments to be made. Where were our politicians?

Based on what was revealed at the MWAA Board meeting last month, it appears that some airlines are balking at the proposed use of Passenger Facility Charges at Reagan National to pay for MWAA’s share of Dulles Rail capital costs. Similar concerns exist at Dulles International Airport where passenger charges are the highest in the region and among highest in the entire USA.

 

3. The capital costs of Phase 2 within Dulles Airport will be at least $1 billion, including two stations. MWAA’s share of project cost obligations set by the 2007 “agreement” remain under $250 million while the future costs for Dulles Toll Road(DTR) users will skyrocket from 2006 projections made by MWAA - TIFIA notwithstanding. Why have our political leaders not demanded that MWAA and WMATA pay a fair share of overall capital costs? Is subsidizing those who live and work inside the Capital Beltway more important to our politicians than the thousands of dollars in additional tolls to be paid with after tax funds by those who must rely on the Dulles Toll Road for commuting?

 

4. MWAA next month plans to select the contractor for a $260 million Dulles Maintenance facility to be built for maintenance and storage of not only 128 Silver Line Series 7000 railcars being paid for by MWAA (mostly from DTR funds) but at least one half of the 300 (planned 420) additional Series 7000 railcars to be delivered to WMATA over the next five years.

Officials from MWAA, WMATA and USDOT have been asked repeatedly for over two years, when, if at all, are MWAA and WMATA going to negotiate for WMATA to pay for its share of facility capital costs. Nobody wishes to acknowledge responsibility for this matter.

5. MWAA has yet to fulfill certain terms of its January 2006 proposal to the Commonwealth to “Operate the Dulles Toll Road and Build Rail to Loudoun County.” An audit should be conducted to confirm compliance by MWAA with all provisions of the 2006 proposal.

 

6. MWAA plans to lease land for development adjacent to the two Metrorail stations on Dulles Airport property. This land is leased from the federal government. MWAA intends for 100 percent of revenue generated to be used solely to defray Dulles Airport expenses--with no revenues to be used to offset DTR tolls needed for MWAA Dulles Corridor Enterprise bonds. A MWAA Board member helped negotiate revisions to Federal Aviation Administration Congressional funding provisions. It appears possible that MWAA will be able to use its powers to benefit airport development on terms detrimental to development of nearby land whose owners pay property taxes. MWAA claims it pays fees in lieu of taxes but no independent accounting of the adequacy of such fees appears to have occurred.

 

These issues, and others, must be resolved BEFORE Virginia funds the proposed $300 million in further financial assistance, approved by the Virginia General Assembly in 2013, to offset proposed toll cost increases. Remember, in 2006. MWAA claimed that no further assistance would be needed from the Commonwealth for the Dulles Rail project. Various MWAA officials in office prior to 2010 lied repeatedly to Virginians about costs and funds needed from DTR users. Why should we expect that the lies won’t continue, particularly because the MWAA Board is controlled by D.C. and Maryland political appointees who don’t give a flying fig about the costs for Virginia taxpayers who live and work in the Dulles Corridor.

 

The failure of nearly ALL Virginia politicians, both Democrats and Republicans, to address these matters in a timely manner is the last straw in the series of outrageous failures in accountability by everybody involved in Dulles Rail during the last decade. Maybe it reflects the culture of corruption that pervades most political actions in Richmond and Washington, D.C. as well as those taken by many or most Northern Virginia elected officials.

 

Last Friday the Dulles Corridor Advisory Committee met. In the past DCAC members have acted as a rubber stamp to MWAA proposals.  Unfortunately, DCAC members continued to shirk their obligations to those who live and work in the Dulles Corridor as they have since 2006 by not insisting on answers to these issues.

 

Rob Whitfield, Dulles Corridor Users Group

When will the Silver Line start operations? How safe will it be? And how much more will it cost--and who?

On April 23, MWAA's Silver Line project team certified that Phase 1 of the project to Wiehle was "substantially complete" although it still had a "punch list" of 50 items--plus sub-items--of work to complete before it would turn over the line to WMATA for further testing, training, and ultimately operations.  The April 24th announcement meant that DTP, led by Bechtel, met its basic contractual commitment to the line's construction and would not face $25,000 a day penalties to begin the next day.  Moreover, the announcement did not mean what "substantial completion" should have meant--the immediate turnover of the project to WMATA for its 90-day testing and training period.  That 90-day clock doesn't start until the "punch list" is satisfied.  Tick, tock.

Yesterday, more than two weeks following MWAA's announcement, Metro's public relations staff held a teleconference to lay out MWAA's progress in addressing DTP's continuing construction failures.  (And why Metro is plugging for MWAA is a bafflement.)  Following the press conference, RestonNow (Karen Goff) reported:

A Metro official says the Metropolitan Washington Airports Authority (MWAA) is making progress on pre-operational fixes to the Silver Line, however he still cannot pinpoint an opening date for the first phase of the $5.6 billion rail extension.

“We are tracking to be able to provide service sometime this summer,” Rob Troup, Metro Deputy General Manager of Operations said Monday in a media conference call. “A lot depends on progress MWAA makes in resolving issues. I can’t tell you an operational readiness date, but I am encouraged by the progress.”

Troup said that MWAA is “at the more than the halfway point for the pre-ORD items.”

On the other hand, Washington Business Journal (Michael Neibauer) reported:

Metro still hopes to launch service on the Silver Line by late summer, but it doesn't yet have control of the rail line and a new issue that popped up this weekend has been deemed a “concern” by the transit agency.

Rob Troup, Metro's deputy general manager for operations, told reporters on Monday that the Metropolitan Washington Airports Authority and its Silver Line contractor, Dulles Transit Partners, have knocked out more than half of the punch list items that must be cleared before Metro can take ownership of the 11.7-mile, $3 billion rail line.

But a new issue involving what Troup described as a “bobbing track circuit” threatens to slow (not derail) the work. It’s not a safety issue, Troup emphasized, but rather an issue of reliability — as Silver Line trains approach the Orange Line boundary, “the track circuit will go to a false occupancy” and trains will “go into a braking profile.” The last thing Metro wants is for Silver Line trains to halt every time they approach the East Falls Church station on the Orange Line.

RestonNow follows up:

The April 23 agreement called for adding four blocking capacitors to address the (bobbing track circuit) issue. The fixes fared well in testing, but over the weekend one failed, said Troup. He said this is also a reliability issue and not a safety issue, and after operational readiness this will also have a system upgrade.

Our read:  MWAA and DTP have fixed the easy shortcomings in Silver Line construction, but still haven't fixed the more challenging failures, including the "bobbing track circuit" despite what they thought were repairs.  Moreover, as was previously announced, they will not have the RTU problem repaired for another year, meaning additional acquisition ($1.8 million) and operational expenses (who knows how much?) generated by requiring "eyes on the rail" to make sure trains are where they should be.

And, if all of this is to lead to Silver Line operations by "sometime this summer," MWAA and DTP need to have all their repair and replacement work done by the end of June (about 7 weeks from now).  Then, WMATA can have its full 90-day period to test the line and train its operators before the end of September--and the end of summer by its most extended definition.  Given the remarkably pathetic history of delays and failures in this project, WMATA should take as much time as required to make sure system reliability and safety are assured before launching into operations, complete with a photo op attended by every ear-to-ear grinning politician who ever said "Silver Line."

Should you feel safe riding the Silver Line?

An observation:  MWAA and Metro both state the longstanding (and continuing) RTU problem and the newly discussed (but apparently also longstanding) bobbing track circuit problem--both of which deal with detecting the presence or absence of a train at a particular point--are reliability issues, not safety issues.  We wonder how many reliability issues--especially ones tied to knowing where Metrorail trains are on the Silver Line--it takes to become a safety issue.  If Metro doesn't know where the trains are, how can MWAA or Metro assure anyone that the trains are safe to ride?

And we will once again point out that the fatal 2009 Metrorail Red Line accident--the worst accident in Metro history--was the direct result of the failure of an automated device to sense the presence of a train and the obstructed view of the train operator who could not react quickly enough to stop.  In light of this deadly history, the continuing official assertions of the multiple "reliability issues" without full explanation of why they aren't--individually or together--a "safety issue" is utter nonsense that, apparently, we are suppose to accept on face value.  We don't. 


. . .  And please show me the money!

Missing in total from Monday's Metro media seance was any--and we mean "any"--information or discussion about how much all these repairs would cost and who would end up paying for them.  The construction contingency fund, which started at nearly $462 million at the project's outset, has dwindled to $23 million through February 2014, according to the Project Manager's report to the MWAA Dulles Corridor Committee.   We have a hard time believing there is any money left in that fund in mid-May as DTP and MWAA try to salvage this rail construction project.

So how much more will it cost?  We don't know, but we'd be hardpressed to not believe we are talking tens of millions of dollars more, possibly as much as $100 million.  And, since MWAA let pass the opportunity to penalize DTP $25,000 per day, that is at least $1.6 million the project will have to absorb by the end of June when we might hope the "punch list" is fully satisfied--more if it takes longer. 

And the grossly unfair part of all this is that, under the illogical and inequitable "funding partners agreement" among MWAA, Loudoun, and Fairfax governments, Dulles Toll Road users will end up paying 75% of the added costs unless some other arrangement has been reached.  But, of course, all parties to the "funding partners agreement" as well as WMATA have not said a word about who will pay the extra costs.

As much as we have believed--and fought--the dominant role played by DTR users in funding the construction of the Metrorail line, we find the idea that they may need to pay for the massive failures of the project builders (DTP) and their project managers (MWAA) to meet their contractual commitments grotesque.  

All we wonder at this point is whether MWAA will be able to keep its commitment to no new toll hikes through 2018 given the recent awarding of low-cost federal TIFIA financing once the final bill for building Phase 1 of the Silver Line comes in.

. . . and then there will be Phase 2.

Who pays how much for Bechtel's Silver Line construction failure?

Yesterday we were informed that MWAA's inspection of the construction of Phase 1 of the Silver Line, led by Bechtel Corporation, failed to meet expectations in seven of 12 categories.  Much ado--and no answers--was made about how much longer it will take to get the Silver Line operating.

An equally important--maybe more important--pair of questions has not even been asked, much less answered:

• How much will the needed repairs cost?

• Who will pay the cost of the repairs?

Given the scope and serious of some of the required repairs, it is possible to speculate that the needed repairs could add as much as $300 million (or 10 percent) to the cost of Phase 1.  That is exactly the amount the Virginia General Assembly approved in an added contribution to Silver Line construction last year.  In essence, Virginians' taxes may have spent to gain absolutely nothing.

The morally and ethically right way for the extra cost to be paid is for the inept builder to assume all the cost of the needed repairs after depletion of the already nearly bankrupt contract contingency fund.  If that cuts into Bechtel's profits or even leads to a loss on the project, it would be right and appropriate.

On the other hand, we're talking contracts which are completely unrelated to "doing the right thing."  If so, it probably means the Silver Line's "funding partners"--MWAA, Fairfax, & Loudoun counties PLUS the unrepresented Dulles Toll Road users who are being soaked with half the line's construction cost--will have to take on the burden.  That could mean all those political promises (if that's not an oxymoron) hyped last year that tolls would not have to go up again for a couple of years may be thrown out to fill the gap in financing Phase 1.

It also won't help Loudoun and especially Fairfax County finances either.  Fairfax County, in particular, is running close to its debt financing cap and the last thing it needs to do is divert the remaining balance from needed schools, transportation, and other projects to help finance Bechtel's failures.

So, what are the answers to these two critical questions?

Silver Line Update: Partners Await Fed Loan Decision, Ashburn Patch, May 2, 2013

Supervisors in Loudoun are counting on saving from a federal loan; express desire to engage MWAA on airport development.

• By Dusty Smith

The most notable elements of a presentation Wednesday about the second phase of Metro’s Silver Line were news that the project appears to be nearing final approval for a federal loan that will save Loudoun millions and concerns about potential development on Dulles International Airport property.  . .

Most recently, the federal government requested $100,000 from the project partners – MWAA, Loudoun and Fairfax County – to pay for a review of financial records. Newquist said she expected the partners to complete their presentation to TIFIA administrators by the end of May and receive a decision by the end of the year. When supervisors expressed dismay at the uncertainty of a final approval date, County Administrator Tim Hemstreet said he believed the project was on track for TIFIA approval now that it had entered the “application phase.” . . 

During the discussion, Supervisor Matt Letourneau (R-Dulles) said he wants to make sure the county pays close attention and engages MWAA about its plans on the Dulles International Airport property.

“Certainly presentations were made by Mr. Potter that he would wish to work with the county in a cohesive manner to develop the property,” Letourneau said, referring to MWAA president and CEO Jack Potter. “But there is still the concern that MWAA could move forward on their property and develop large-scale commercial, which would be competing with what’s happening on county property.” . . .

Click here for the rest of this article.

Although this discusses TIFIA financing issues in Loudoun County, they also apply to Fairfax County where the County has agreed to pay 16.1% of the Silver Line's construction costs.  The big winners if the Silver Line project receives TIFIA financing will be Dulles Toll Road users who are now accountable for over half the line's construction costs.  TIFIA financing would substantially reduce the debt service costs and, therefore, toll increases in the years ahead.  But tolls will still go up substantially even with TIFIA financing.

We would also note that at least one Loudoun County Supervisor has the same concern the RCA Board of Directors has expressed about unfair competition from MWAA in developing its property near one of the Loudoun County Metrorail stations. 

Letter: Airport Authority Gets Into Business, The Connection, March 26, 2013

The following are the opening paragraphs of a letter to the editor by David Webster, a Herndon attorney, on MWAA's effort to commercially develop its Dulles Airport property--some of it around a Loudoun Silver Line station--for non-aviation purposes.

To the Editor:

Since its creation in 1986, the Metropolitan Washington Airports Authority (“MWAA”) has been forbidden by federal law from building for-profit commercial developments on the 3,000 acres of property at Dulles Airport that it leases from the U.S. Government. It has been limited to using the Dulles property for airport purposes, e.g. runways and hangers. That all changed on Feb. 14, 2012. On that day, President Obama signed into law the FAA Modernization and Reform Act of 2012 (“2012 FAA Act”). Hidden in the middle of this 150 page omnibus act dealing with all manner of subjects was a one sentence revision to the 1986 federal act that created MWAA. Henceforth, MWAA would be allowed to commercially develop Dulles Airport.

Here is why we as Fairfax County taxpayers should be concerned about MWAA’s venture into private commercial development and what we can do about it.

MWAA is tax-exempt under both Virginia and federal law and thus can unfairly compete with private landowners. MWAA does not pay state or federal income taxes, county business license taxes, or county real estate taxes. Any businesses that locate on the Dulles Airport property won’t be part of a special Phase II tax district and won’t pay a dime toward defraying the cost of building the Metro Silver Line. As if that isn’t enough, MWAA is not subject to county zoning laws and has no incentive to offer “proffers” which are voluntary agreements by a landowner to go above and beyond what zoning laws require, e.g. planting additional trees in a development. What private landowner can hope to compete with this type of unfair advantage? . . .

Click here to read the rest of this letter.

For those who do not know, MWAA's total contribution to the cost of  building of the Silver Line is actually less than it will cost to build the line and the station at Dulles airport.  On the other hand, Dulles Toll Road users will be paying for more than half of the total line's $6 billion cost.  Yet MWAA is adamantly opposed to sharing any of the proceeds from its non-aviation commercial development in reducing the costs to DTR users or its other "partners"--Loudoun and Fairfax Counties.  

Letter: Reston 2020 Calls on LaHood, Local Partners to Use Any TIFIA Funding to Reduce Toll Road Users' Burden

Ltr to SecTrans & Funding Partners Re Use of TIFIA Funding

RCA Statement and Press Relase on Sham MWAA "Public Hearings", August 27, 2012

RCA Statement & Press Release Re Sham Public Hearings - Final

Rail in medians of Dulles Toll Road & Greenway wins 5/4 in Loudoun Co as leading opponent flips, TollRoadsNews, July 3, 2012

 2012-07-03: Leesburg's Republican Ken Reid was the most articulate and forceful critic of the Metro Silver Line extending Dulles Rail into Loudoun County where he is one of nine elected supervisors (councilors.) But in a flip today he voted in favor of the rail transit project and provided the key swing vote for a 5 to 4 tally in favor.

 That means all the local government financial commitments are in place for Phase 2 of the Silver Line project which depends for over half its funding or $1.4 billion on bonds secured to the revenues of the Dulles Toll Road. . . . .

The article goes on to provide a very complete description of the decision and its implications for growth in Loudoun, its costs and who's paying for it, etc.  In the final paragraphs, Peter Samuel, TollRoadsNews editor/publisher, provides his perspective on the decision:

Contrary to the view that the Silver train line will bring great development to Loudoun County is that it will be so slow and inconvenient with trip-end mode changes, and stopping every 'station'  - compared to the near door-to-door cars, vans or buses - that it will attract little patronage and little development. And in this view the tax and toll burdens of supporting the loans needed to pay for the $5.6b Line and the train's operating losses will make it a serious net detriment to the corridor.

New sensing and control technologies heavily favor flexible and customized rubber-tired modes (cars, vans, buses etc) over trains on 19th century steel rails with their old 'switches' and 'stations.' Road-based vehicles provide the more personalized door to door modes, offering a range of price/service options, versus the train's one service, no options. . .

. . . Financial crises could well see metro areas forced to heavily reduce or even abandon rail service because of its drain on their budgets, whereas road travel is financially self-sufficient.

Ken Reid is a colleague and a friend. He's a specialist journalist and publisher like us - but in the health regulation and medical devices area.  And he's a great guy. And deserves credit for taking transportation issues much more seriously than most elected officials. And he has had the courage to challenge popular elite opinion.

But in the end Ken Reid voted for a technological dinosaur and a financial disaster, and did a grave disservice to his constituents.  Sad, because he knows better.

He may well be right. 

For the full article, click here.

The Toll Road User Is Still the Frog in the Pot, Terry Maynard

As probably everyone in northern Virginia and well beyond knows by now, earlier this week the MWAA Board of Directors folded to political pressure to abandon its planned preference for bidders on Phase 2 of the Silver Line offering Project Labor Agreements (PLAs).  In fact, this vote may be the most over-reported near-non-event in the decades-long history of the rail to Dulles. 

What it truly came down to was a largely meaningless partisan Republican-oriented victory for “right to work” over a Democratic-oriented pro-union stance.  It may (or may not) save 5%-10% on the total cost of Phase 2—about $150-$300 million out of $3 billion—at the same time creating a roughly equally small risk that there may (or may not) be labor-related issues that offset any savings from not having a PLA in place.  In fact, it is quite reasonable to think that the construction companies bidding for Phase 2 will actually reach voluntary PLAs without any preference in the bidding process, just to reduce the risk of delays and cost escalations during construction.  In short, the result of the MWAA decision is swapping slightly greater cost risk at a lower price for near certainty at a higher price.  This is not always a good investment strategy, but it gives the Governor and others chest thumping honors for the week.

There may be some good news in the MWAA Board decision, however.  It should clear the last partisan stumbling block in seeing the Republican-controlled Loudoun County Board of Supervisors approve its participation in the Silver Line project.  Still, as the Loudoun Board has come to recognize, there are a number of other real issues that need to be addressed before making an informed decision.  Whatever their decision ultimately is, they deserve credit—unlike their Fairfax counterparts—for looking at the numerous issues involved in making such a massive investment.  The good news is that Loudoun's participation would enable the smooth transition from the completion of Phase 1 completion to Phase 2 construction rather than further delays in figuring out how to finance the project.

There may also be good news if, as promised, Governor McDonnell allows state funds to be used in financing Metrorail construction.  Unfortunately, the total amount is small at present--$150 million--and will be dribbled out in $50 million annual increments to help cover the financing costs of the line.  Even in the unlikely “best case” event that the state contributed $50 million per year through mid-century, its contribution to the total financing costs over that timeframe would be about 11%--far short of the 25% it committed to in the 2004 FEIS. 

What is foolish about this arrangement, moreover, is that the state's money is going to pay the interest on bonds at MWAA's junk bond interest rate levels (somewhere north of 7%).  If the state instead put its money into the capital end of the investment, the debt could be paid at the state's much lower AAA-rating interest rate (south of 4%).  The state’s planned course of action is sort of like preferring a mortgage at sub-prime rates with no down payment when you could be borrowing at prime rates with a mere 5% down payment.  It’s a very cost inefficient use of Virginia taxpayer funds.  Nonetheless, the state’s investment would allow toll rates to edge up to $4.50 full toll over the three-year period rather than merely double to that level next year as now forecast.  It would not significantly lessen the long term impact on tolls.

On the other hand, the cost projections for Phase 2 are still in at the “100% preliminary engineering” stage and, if the tale of the projections for Phase 1 are any lesson, they are likely to climb substantially.  In Phase 1, two separate “100% preliminary engineering” cost assessments were conducted, and the final contract agreement exceeded those assessments by 11% and 35%.  And, yes, there has been a nearly 10% cost overrun in building Phase 1 alone—which, while not bad for a project of this scope—more than offsets all the financial gains from cutting PLAs and using incremental toll increases.  All of which shows how meaningless the recent partisan posturing on PLAs and bureaucratic posturing incremental toll increases have been.  

The real issue remains that the Dulles Toll Road user will be stuck paying for some three-quarters of the cost of Phase 2 and over half the total $6 billion cost of the Silver Line. 

The myth of boiling frogs is that they do not feel the pain if they are put in a pot of cold water that is slowly brought to a boil, while throwing a frog in boiling water causes great pain.  Both lead to death, however.  Toll road users face the same fate financially.  The likely incremental changes in toll rates are rather like warming the water up with the frog in the pot rather than throwing the frog in the boiling pot of toll doubling and tripling in the next six years—and climbing thereafter. 

So, despite all the recent political, bureaucratic, and media hullabaloo, toll road users will face toll increases of at least $2 every five years to $18.75 by mid-century per MWAA’s official forecast.  Total toll road revenue collections are forecast to exceed $17 billion through mid-century, all paid for by a declining number of sufficiently wealthy, willing toll road users.    In the end, neither technique is in the long term interests of the frog--nor the toll road user.  And the absence (or presence) of PLAs will likely be totally meaningless to future tolls.  For the toll road user, nothing much has changed—his or her wallet will be boiled dry for much higher tolls.

MWAA: Loudoun’s Opt-Out Option Doesn’t Stop Toll Hikes, Leesburg Today, May 17, 2012

• by Erika Jacobson Moore

 The (Loudoun County) Board of Supervisors last night had its first opportunity to sit down with representatives of the Metropolitan Washington Airports Authority since beginning its detailed review of plans to extend Metro to Dulles Airport and into Loudoun.

MWAA CEO Jack Potter and others expressed their desire to see the Silver Line go beyond Dulles to its planned end at Rt. 772 in Ashburn, to see Loudoun continue as a funding partner on the project. They also emphasized their commitment to working with the county on any potential development around the Rt. 606 station.

Supervisors said they were still not comfortable with the funding plan MWAA has for the project. They said other funding sources should be explored and worried about how high rates could go on the Dulles Toll Road in the decades to come.

Unless another funding source is discovered, or the federal or state government pitches in hundreds of millions dollars more for Phase 2, tolls on the Dulles Toll Road could go as high as $12 one way by 2030, according to information presented last night. In today’s dollars the 2030 tolls would be $6.75. . . .

Click here for the rest of this article. 

Video: "Reston: Is It the End of the Silver Line," Reston Impact, Host John Lovaas with Terry Maynard

In this one-hour interview, Reston Impact host John Lovaas and RCA Board member Terry Maynard discuss the status, prospects, and issues in the the completion of the Metrorail Silver Line.

Dulles Rail and "The Highway of the One Percent," RCA Reston 2020 Committee, May 9, 2012

                                                                                          Reston 2020 Committee

Reston Citizens Association

Contact:  Terry Maynard

Reston.2020@yahoo.com

703-476-5376

May 9, 2012

RCA’s Reston 2020 Committee calls fair Silver Line construction

cost sharing, not PLAs, the critical issue in the line’s success

In a new white paper called “Rail to Dulles and “'The Highway of the One Percent,'” the Reston Citizens Association’s (RCA’s) Reston 2020 Committee calls the more than an 800% increase in highway tolls in the years ahead the most critical problem in the Silver Line’s success.  It says the political and media attention given the PLA dispute is misplaced and the issue is basically irrelevant.

Reston 2020 says the huge toll increases will cost regular Fairfax County toll road users almost half of any real income gains over the next four decades as tolls approach $20 one-way and take $17 billion out of the local economy.   Official forecasts indicate that, as a result, 30,000 or more vehicles per day will divert to congested local roads next year when tolls double.  By mid-century, high tolls will lead some 80,000-120,000 potential drivers to desert the toll road, turning it into a “Highway of the One Percent.” 

The exorbitant tolls proposed are also likely to force companies and families to re-think any plans to move to the Dulles Corridor, the white paper says.  In an era of extreme corporate cost-consciousness, companies will far be less likely to move to or pay premiums for space in an area where their customers and employees must pay a huge transportation premium just to get there.  Many families will avoid the more than $8,000 yearly cost that commuters and other regular toll road users would need to pay.

Consistent with its longstanding advocacy for the Silver Line, Reston 2020 calls for those who will benefit financially from its operation to be its principal investors.   It proposes that in addition to toll road users, station area landowners and the local funding jurisdictions—MWAA, Fairfax, and Loudoun counties—share equally in the cost of the line not yet funded by Washington or Richmond.  That means about $1.5 billion and a 26.5% share for each in this cost sharing arrangement to cover the unfunded portion of the line’s estimated $5.7 billion cost. 

 “The Silver Line is an investment in the future of Reston and the Dulles Corridor,” said RCA President Colin Mills.  “In order for it to succeed, everyone needs to step up to the plate and do their part.  We can't put the bulk of the burden on the toll road users' back.  That's not fair, and it's not good planning."

Tammi Petrine and John Hanley, Co-Chairs of Reston 2020, both urged US Transportation Secretary Ray LaHood to include Reston Citizens Association and other corridor citizens groups in his stakeholder discussions to help ensure a fair financing arrangement that would allow the Dulles Corridor to thrive.  “Reston needs Metrorail,” Petrine added, “but not at toll costs that would choke its growth and streets, and the Secretary’s intervention is our best chance to make that happen.”

“With the huge economic benefits others have forecast for the Silver Line, some $25 billion over 30 years in Loudoun County alone according Dr. Stephen Fuller of GMU’s Center for Regional Analysis,” the report’s drafter Terry Maynard commented, “it’s hard to believe that businesses along the corridor wouldn’t be willing to invest $1.5 billion to help ensure the line’s success.”

Rail to Dulles and "The Highway of the One Percent", RCA Reston 2020, May 9, 2012

Reston 2020 Letter to US Secretary of Transportation LaHood re Rail to Dulles, May 4, 2012

Ltr to Secy LaHood Re DTR & Silver Line

Some Forecast Impacts of Toll Increases:  The Dulles Toll Road

Dulles rail meeting between Ray LaHood and Va., local officials fails to yield deal, Washington Post, May 2, 2012

By Dana Hedgpeth

U.S. Transportation Secretary Ray LaHood said Wednesday that a meeting on Metro’s planned Silver Line to Dulles Airport yielded progress but not a final deal to move forward with the second and final phase of the $3 billion expansion.

LaHood, who mediated an earlier dispute over the fate of the project, called for the closed-door meeting of key officials in an effort to resolve a stalemate over a swirl of issues.

Virginia Transportation Secretary Sean T. Connaughton, chairmen of Loudoun and Fairfax counties’ boards of supervisors, and officials from Metro and the Metropolitan Washington Airports Authority joined LaHood for the meeting at his office in the District. . . .

Click here for the rest of the article.  

The focus of the meeting appears to have been on MWAA's intransigence on the PLA issue, offering preferential treatment to contractors who include a PLA as part of their bid package.  Loudoun's continued participation in the agreement also appears to have been a topic.

What was apparently not a topic is the 75% burden for Phase 2 construction costs that will be absorbed by Dulles Toll Road users in the current "funding partners" agreement, the most inequitable and unfair aspect of the current spending plan.  That puts $17 billion in rail financing and toll road O&M costs over four decades (& probably longer) on the 100K-200K users of the toll road, and especially those who use the toll road to commute.  That multi-billion dollar estimate apparently does not include needed capital investments (such as electronic tolling). 

With tolls set to double next year and triple within six years according to MWAA's estimates (others put the numbers higher), the agreement among MWAA, Loudoun, & Fairfax is not only unfair and inequitable, it is likely to stifle the very economic growth that Metrorail is suppose to stimulate. 

Some Doubt Phase 2 Will Ever Be Built, Reston Patch, April 30, 2012

Washington Post outlines how money, politics and labor agreement may doom second part of Rail to Dulles.

• By Karen Goff 

With a meeting between stakeholders in Rail to Dulles and U.S. Transportation Secretary Ray LaHood coming up on Wednesday,  The Washington Post takes a look at just how far off the tracks Phase 2 of the project has become.

Here are some key comments from Dana Hedgpeth's Washington Post article:

 After more than 10 years of planning to add 23 miles of Metro rail line in Northern Virginia, the second part of the Silver Line project could be dead before a spade of dirt is turned.

The Metropolitan Washington Airports Authority, Virginia, and Loudoun and Fairfax counties are at a stalemate over pro-union labor deals, concerns about costs and an inspector general’s investigation of the authority.

“This project will die if the stakeholders cannot get together and resolve their differences,” said Leo J. Schefer, head of the Washington Airports Task Force, a group of business leaders that supports the Silver Line.

If the project ever does start, it won’t start on time.

. . .  The biggest problem, according to Schefer and others: chest-thumping and good, old-fashioned politics.

“Underlying all of this is party political extremes that are being put ahead of public purpose,” Schefer said.

Politics have been a huge part of the issue in recent years, but underlying the political posturing of both parties is the fact that the Silver Line project has tripled in cost since the Final Environmental Impact Statement (FEIS) was published in 2004.  As the costs were skyrocketing, the Federal Transit Administration (FTA) pulled the plug on federal funding--planned at half the total cost of the line--in 2008 when it determined the project was not cost-effective.  At that point, then Governor Kaine and other elected officials intervened to get a $900 million downpayment on the line, and so it began. 

The key difference is that Dulles Toll Road users must now pay what the federal government won't in addition to the 25%--a more than generous share in our estimation--it was booked to pay in the FEIS.  That means toll road users are stuck paying 75% of the cost of Phase 2 of the line, especially if neither the federal, state, nor local governments nor MWAA (whom the rail is intended to serve) will agree to contribute to the construction and financing costs. 

Reston 2020 neither wants toll road users to be stuck with three-quarters of the bill nor a Metrorail line that ends at Wiehle station in Reston.  It has offered a number of alternative financing ideas for Phase 2 and encourages its prompt construction as soon as those alternatives are in place.  We all need rail to Dulles and we need those who will benefit most to carry the load.

LTE: Reader Questions Logic of Rail to Loudoun, Ashburn Patch, April 26, 2012

Infrastructure costs, unknown commitments and uncertain expectations are the the focus of his concerns.

As expected, proponents of the Dulles Rail project are relying on the most optimistic projections to support the need to add rail to our transit options, while opponents point to the enormous cost and the selective burden faced by Dulles Toll Road commuters to cover the financing. Beyond the political theater, it would be fair to say that there is enough uncertainty to apply the highest level of scrutiny to the proceedings.

Having examined some of the documents on the Loudoun County website, most notably the Dulles Rail traffic and revenue projections, and the updated Fiscal Impact Analysis, I must echo the findings by Terry Maynard of Reston Citizens Association Board of Directors/RCA Reston 2020 Committee, who in a recent letter to the Loudoun County Board of Supervisors and Gov. Bob McDonnell, states that “The key point is that Metrorail to Loudoun will bring major infrastructure investment and financing costs with it that will outweigh—probably by far—the economic benefits that may accrue to the county over the next several decades.” . . .

Please click here for the rest of this letter by Robert M. Jones, North Fork, Blue Ridge District, Loudoun County.  He discusses a number of other issues that affect the costs and impact of extending rail to Loudoun County. 

Metrorail Phase 2 Denied Opportunity to Compete for 2012 TIFIA Funding

In a press release late this afternoon, the Department of Transportation announced the five projects it has invited to compete for the very limited TIFIA funding available in FY 2012.  Phase 2 of the Silver Line is not among these "finalists." 

Here is the news release:

U.S. Department of Transportation Invites Five Projects to Apply for FY 2012 TIFIA Credit Assistance

In response to the Fiscal Year 2012 Notice of Funding Availability (FY 2012 NOFA), DOT received 26 Letters of Interest (LOIs) seeking more than $13 billion in credit assistance to finance approximately $36 billion in infrastructure investment across the country. While TIFIA’s limited resources mean that not all of the LOIs can be selected, five projects are being invited to apply for credit assistance. These projects include: the I-95 HOT Lanes project in Northern Virginia; the North Tarrant Express Segments 3a and 3b project in Tarrant County, Texas; the Port of Long Beach Gerald Desmond Bridge project in Long Beach, California; the SR 91 Corridor Improvements project in Riverside County, California; and the US 36 Phase 2 project, between Denver and Boulder, Colorado. The projects invited to apply are well aligned with the TIFIA statutory selection criteria. The invitation to apply does not guarantee that the project will receive assistance. The Department will evaluate each project to determine its creditworthiness and negotiate acceptable terms for providing credit support. Links to the press releases for the five projects invited to apply for TIFIA credit assistance are provided below.
Read the I-95 HOT Lanes Project Press Release
Read the North Tarrant Express Segments 3a and 3b Project Press Release
Read the Port of Long Beach Gerald Desmond Bridge Project Press Release
Read the SR 91 Corridor Improvements Project Press Release
Read the US 36 Phase 2 Project Press Release

RA Wants Silver Line to Extend Into Loudoun, Reston Patch, April 7, 2012

Reston Association president says rail must go all the way to Dulles International Airport and beyond.

By Karen Goff

Reston Association president Kathleen Driscoll McKee said on Friday the organization supports the completion of Metro's Silver Line to Dulles International Airport and into Loudoun County.

The Fairfax County Board of Supervisors will vote April 10 whether to support Phase 2, which will run from Reston Wiehle's Avenue (the end of Phase 1) to Loudoun County.

The Wiehle Station is scheduled to open in late 2013.

However, with several issues such as cost control and a mandatory Project-Labor Agreement, support from Loudoun County is uncertain. Loudoun County has until July to make a decision.

Reston Association has advocated for the completion of Phase 2 over the last two years. In separate letters to the Metropolitan Washington Airports Authority (MWAA), the RA Board said that this most important public works project would bring success to the entire region only if it were completed all the way into Loudoun County. . . .

For the rest of this article, including the full text of Ms. McKee's letter, click here.