Taking its toll

The American Legion Bridge P3 project in Maryland is back on track, but the reasons it was nearly derailed will still be prevalent on other projects

“This is a great victory for Marylanders,” pronounced Governor Larry Hogan after the Capital Region Transportation Planning Board (TPB) came round to his way of thinking on the I-270/I-495 P3 project, which will also see the replacement of the American Legion Memorial Bridge.

The TPB had previously chosen not to include the project in its plan, meaning it was no longer eligible for federal funding, throwing the whole project into doubt. Hogan and colleagues at the Maryland Department of Transportation put considerable pressure on the board to change its mind, not least by insisting a slew of projects would have to be shelved so that the funds could be found to push through the I-270/I-495 scheme.

Under such pressure, it is perhaps unsurprising that such a major change of heart has taken place among TPB members. However, the underlying reasons that this deal - already at preferred bidder stage - faced such a last-minute wobble have not gone away, and may well haunt projects across the US in the near future.

In particular, there was unhappiness about the plan to toll the bridge as part of the P3 structure. Critics argue that drivers should not have to face such charges on top of their existing payments, such as through the gas tax, which is nominally meant to pay for road infrastructure. However, as cars are increasingly fuel efficient and raising the gas tax is also an inflammatory political issue, paying for major road upgrades out of government funds is becoming increasingly difficult.

So without those tolls, the Legion Bridge project simply would not stack up from a private finance point of view, as the public sector would have had to find the cash to make annual repayments.

Unfortunately, this issue could replay itself across the US over the coming years, particularly in relation to money linked to the federal Bipartisan Infrastructure Framework. As it stands, that plan would see up to $100bn of new surface transportation infrastructure paid for in part through P3s - but it remains to be seen whether politicians realize that this will often mean introducing tolls.

As I have said before, the danger of blithely stating that federal infrastructure investment can be paid for through P3s potentially misses the point that the private partners will expect to be repaid for the work they carry out. That means the government will need to have money available to remunerate the private partners, or accept that they can make their money back through revenue generation such as tolls.

Another meeting, held at virtually the same time as the TPB one, is perhaps a reminder of how this is not an issue simply affecting Maryland.

As the Brunswick County Board of Commissioners discussed the unsolicited proposal to replace (and, yes, toll) the Cape Fear bridge, many expressed the dichotomy of needing the new infrastructure, while being uncomfortable with using tolls to pay for it - but also acknowledging that they were rather short of alternative options.

In the end, that project looks to have been undone by a different local board - the Wilmington Urban Area Metropolitan Planning Organization, which voted against the plans. Concerns over tolling played at least some part in the decision, with members raising the issue during the debate, despite being aware that NCDOT doesn't believe it can find the money for the scheme for the next 10 years.

These conversations will be held over and over again as the final surface transportation package from the federal government eventually begins to flow down to states and counties.

While some might argue it is time to reconsider the whole premise of the gas tax, the current administration has ruled that out for the time being. So in reality there will be some difficult choices that have to be made when looking for the revenue streams to fund major P3 works.

It will therefore be important that those developing the projects are able and willing to explain why they are using such an approach - as well as spelling out what funding the scheme through the public purse will mean. Clearly, it was only when the alternative was set out to members of the Capital Region TPB did they accept that, while they may not like the project, it is perhaps better than the alternative.