Trouble: Dulles Greenway

Michael Crane, chief executive of Toll Road Investors Partnership II, the principal of the Dulles Greenway wrote the Washington Post: “Your paper seems eager to report on the demise of the Dulles Greenway, and the people who built the project...As chairman of TRIP II and the principal investor in the Dulles Greenway, I can assure readers that we are here to stay, and that the Greenway will continue to be a national model for successful private development of critically needed infrastructure.” (2/10/96)

Crane certainly has a point about the “Post’s” attitude.These headlines sum it up: “Toll Drives Traffic Off Greenway” (10/5/95), “Toll Road Underused” (12/8/95), “Drivers Put the Brake on Toll Road’s Future” (12/26/95). Then on January 25 a “Post” report put the knife in again by suggesting that the Greenway investors, or at least legislators acting on their behalf, were seeking government funds to “save the Greenway.”

“Flop”

Particularly wounding was the “Post’s” characterization of the Greenway as an “embarrassing flop.” (12/26/95) This highly judgmental phrase appeared not in an editorial or an opinion piece but in a front page news report! But even though the “Post” has reported the Greenway’s troubles with unconcealed glee, there is still a solid unrefuted core of truth in the story that the private tollway is in deep difficulty. Take these facts:

• TRIP II’s “Financial Model for the Final Financing” filed with the Commonwealth of Virginia projects annual toll revenues in its first year of operation as $22.3 million. By my estimate of the toll rates, the car/truck (90/10) split and assuming the weekend traffic is the equivalent of a weekday, that $22.3m figure is based on 39,000 vehicles per weekday average.

• On the major press bus tour prior to the opening, ex-Gen Charles Williams, the TRIP representative and chief of construction said: “We expect 40,000 vehicles per day.” He added that that number was based on conservative figuring. The spokesman for the Greenway, Suzanne Conrad told me around the time of the opening they were expecting 24,000 to start with. At other times 34,000 by the end of the first year was quoted.

• Actual vehicles per day have been in the 10,000 to 12,000 range in the first six months of operations, so first year revenue is heading for something like $7m to $9m compared to the business plan’s $22m.

• A third of the opening day staff have been laid off and many other economies made. Operational costs were projected at just under $11m in the first year in the filed business plan, and may be several million lower. Still the operation is not generating any surplus to pay lenders.

• Toll road officials have said that the group cannot meet its first scheduled debt payments and so there were negotiations late December with lenders for rescheduling

• noone is commenting on the outcome of those discussions beyond saying: “Everyone is in this for the long haul,” so apparently the lenders won’t formally reschedule, and are keeping all options open

• One Greenway official has said that their spending and operational plans are now totally subject to control by the lenders led by Prudential insurance.

As we go to press we are told the Greenway is lowering its toll from $1.75 to $1.00 — a bold gamble that the lower price will generate proportionately more customers and boost revenues.

Everyone who has met or followed the careers of Michael Crane and his mother Maggie Bryant knows them to be thoroughly public-spirited and decent persons who have labored mightily for this innovative and socially beneficial project. These people have staked their family fortune on the venture. Looking ahead ten years They will need forbearance from the lenders and great managerial skill in hitting on ways to improve their bottom line to pull through.•