Transportation News

Read the Report.

A new report outlines the trends behind recent road privatizations, the dangers of such deals, and the safeguards necessary to protect the public.  Examining a variety of types of private toll road deals, the report is written by Phineas Baxandall, Ph.D, formerly of the Taubman Center for State and Local Government at Harvard’s Kennedy School of Government. 

The report, “Road Privatization:  Explaining the Trend, Assessing the Facts, and Protecting the Public,” comes just as the Virginia Department of Transportation announces that it has signed a contract with two companies to construct and control new toll lanes on the Beltway. The deal was negotiated in secret without any mechanisms for public input, evaluation of alternative approaches, or open competition. Under the deal, four new high-occupancy toll lanes will be added in the center of the Capital Beltway between Springfield Virginia and the Dulles Toll Road. The two private companies who construct these lanes will keep the toll revenue for seventy five years. Rush-hour tolls are initially expected to be around $6 and to increase over time.

"Seventy-five years is a remarkably long time.  The profit to the companies and investors could be enormous and benefits to the taxpayers much more limited.  Since VDOT is allowing critical financial information in these deals to remain secret, we have no idea if the taxpayers and toll payers are getting a good deal," said Stewart Schwartz, Executive Director of the Coalition for Smarter Growth.  "Were VDOT to instead maintain public control of the lanes, the funds raised from the tolls would be available in future decades to pay for other transportation improvements, but here the funds will go into the pockets of private investors."

“The lack of transparency or accountability in the process makes it impossible to evaluate how bad this will be for the public,” said Phineas Baxandall, Ph.D. a Senior Policy Analyst for U.S. PIRG and author of the report. “The full extent of the downsides are not likely to be apparent for decades to come.” Baxandall noted that a similar deal in Texas was recently cancelled when a state senator belatedly forced hearings which made it clear that the public would receive far more revenue if the state’s toll authority built and operated the road instead.

Road privatization deals have come under serious criticism in the last year, following high-profile deals in Chicago and Indiana. After a long period of study and multi-billion dollar offerings, New Jersey Governor John Corzine announced in June that, ““New Jersey’s roadways will not be sold, and they will not be leased to either a for-profit or foreign operator.” Governor Corzine was previously the CEO for Goldman Sachs, which advised the financial structuring of the Chicago and Indiana deals.

“Virginia’s transportation needs are changing rapidly,” said Kristin Elia, the US PIRG Field Manager for Virginia. “It’s alarming to think that our hands will be tied to these private contracts.”