Penn Pike takes time answering Fed Highways on I-80 tolls - four months now

Timothy Carson vice chairman of the Pennsylvania Turnpike Commission says that they are producing a "very robust plan" including detailed commitments to plow toll revenues on I-80 back into the road in order to persuade the Feds to give the green light to tolling the presently free interstate. The reconstruction plan will involve complete rebuilding of the road over a 30 year period, Carson said, except for some short stretches that already meet modern standards and have recently been rebuilt by PennDOT.

Carson told us: "As a public finance lawyer I can tell you I am fully convinced we will be able to make the legal case that we meet the requirements of federal law (to toll I-80)."

The vice chairman of the Turnpike Commission was speaking with us in an extended telephone interview recently. He said that there may be political difficulties in gaining federal approval "but as a matter of law we will meet the requirements."

The detailed longterm rehabilitation and reconstruction plan for I-80 will be an integral part of the Turnpike Commission's response to the aggressive questioning by FHWA in response to the Commission's first phase application for a tolling permit.

Carson and CEO Joe Brimmeier have both indicated that the Turnpike Commission is in no hurry to craft its response. The questions were posed by the Feds in a letter dated December 12, so it is now four months.

It is so long people who should know better seem to have forgotten.

Harrisburg paper loses track of the ball

The major newspaper in the state capital the Harrisburg Patriot News on Sunday had an editorial beating up on the Feds for being so slow in making a decision, when the slowcoaches are not in the Washington DC area but just a mile or so away from them in the High Spire offices of the Pennsylvania Turnpike Commission.

"Why is it taking so long for federal government to tell state its decision on tolls for Interstate 80?" the Harrisburg newspaper editorialist wrote Sunday, April 13, 2008.

"It's hard to understand what is taking the federal government so long to give Pennsylvania an answer to the request to toll Interstate 80.

"Whether one agrees with the concept or not, time is becoming crucial, as rejection will put the state back at square one in addressing critical transportation needs...."

"They concluded: 'So, please, would somebody in Washington make a decision?' "

Washington's decision was communicated December 12 2007 in a seven page letter here:

http://www.tollroadsnews.com/sites/default/files/US-PAon80.pdf

The Feds said Pennsylvania had not provided the information required for a US decision and it posed a list of questions for the state. The questions have not been answered by Pennsylvania.

Editorial writers in Harrisburg: the ball is in Pennsylvania's court.

Risking the killer Furgeddit

The reason the Turnpike Commission is taking so long is that the response is difficult to craft. A sloppy answer would elicit more questions from the Feds and further delay, perhaps even a killer 'Furgeddit.'

14 points still to be addressed

According to the Dec 12 letter responses to fourteen points are required by the Feds before they will make a decision (our paraphrasing and numbering):

(1) details on improvements on I-80 planned to be funded with tolls, the costs and schedule

(2) reconcile Act 44 requirement to maintain the highway at the standard at the date tolling commences with the improvement requirements of ISRRPP (Interstate System Reconstruction and Rehabilitation Pilot Program)

(3) explain meaning of sections of I-80 lease to include only improvements required by Federal Highway Administration? ("It is not FHWA's role to establish the necessary level of improvements.")

(4) provide copy of PennDOT "State of I-80" report

(5) evidence of direct consultation with all affected metro planning organizations

(6) rationale for past transfer of past federal interstate maintenance grants to other programs and large balance of unobligated funds

(7) provide schedule and finance plans for reconstruction and rehabilitation of I-80

(8) projected toll revenues

(9) explain how tolls affect local, regional and interstate travelers

(10) clarify contradictory accounts of lease payments and explain how can still meet reconstruction needs

(11) how can PTC issue $610m bonds in 2009 for I-80 when lease caps annual bond issuance for entire turnpike at $600m

(12) reconcile statement in application that tolls will only be used for I-80 with the lease contract provisions

(13) is I-80 revenue to be used to pay debt unrelated to I-80?

(14) explain how amounts of PTC payments to PennDOT using I-80 revenues can be considered operating costs?

Our report on this is at

http://www.tollroadsnews.com/node/3300

[COMMENT: Point 14 of the Feds inquiry reminds us the Turnpike Commission seems to have constant trouble explaining to the outside world its concept of Operating Costs. Last week they told us their Comprehensive Annual Financial Report for FY2007 was out by a third in its reporting of operating expenses. Operating expenses of $369m contained $126.3m of "non-operating expenses," they said. see http://www.tollroadsnews.com/node/3489]

No 3rd laning now

We asked Carson in our conversation a couple of weeks back why the Turnpike Commission hasn't proposed third laning of the eastern end of I-80 (from I-81 east) where traffic is very heavy on just two lanes each direction. He said they have advice that capacity enhancement proposals like that wouldn't help in getting federal approval for tolling, so they are leaving that alone for now. But he said he agreed the Turnpike would have to consider the need for third lanes on I-80 east of I-81 before too long.

Greenfields yes, brownfields no - Carson

Carson issued a fierce statement against lease/concession proposals in late February after the 3-Profs report saying it "very effectively exposes the risk adverse privatization purveyors currently peddling to cash-strapped public entities highcost monetizations of well established, essential transportation assets."

Carson's statement continued: "This (3-Profs) study unequivocally validates the original actions and judgment of the Pennsylvania Legislature in enacting Act 44. My hope is that it will also help persuade the private sector to abandon its misguided pursuit of these 'brownfield' monetizations and, instead, turn its considerable talents and resources to criticallyneeded newcapacity ('greenfield') projects where it can bring real value to the transportation infrastructure table.”

Not sabotaging the Governor - Carson

Carson insisted in his conversation with us that he wasn't trying to sabotage Governor Rendell's efforts to get potential concessionaires to make their proposals to the state. He said he was making a general public policy argument that concessions are good for new roads (greenfields projects) but bad for existing tollroads (brownfields projects).

The Governor, he said, would get his lease bids regardless of anything he said.

BACKGROUND: Under the Interstate System Reconstruction and Rehabilitation tolling program the Feds say:

"The State must execute an agreement with the FHWA specifying that toll revenues received from operation of the facility will be used in accordance with the requirements set forth in Section 1216(b)(5) of TEA-21. This requires that all toll revenues be used only for (1) debt service, (2) reasonable return on investment of any private person financing the project, and (3) any costs necessary for the improvement of and the proper operation and maintenance of the toll facility, including reconstruction, resurfacing, restoration and rehabilitation of the toll facility. Additionally, the agreement must include a provision that the State will conduct regular (annual suggested) audits to ensure compliance..." http://www.fhwa.dot.gov/tea21/tollpilt.htm

also see http://ops.fhwa.dot.gov/tolling_pricing/programs/interstate_rr.htm

POSSIBLE ARGUMENT: The detailed and intense capital program for reconstructing I-80 that Carson promises will be intended to satisfy (3) in federal law.

We asked Carson if transfers to PennDOT specified by the state's Act 44 and the concession agreement between the Turnpike and PennDOT will be advanced as part of (2) "reasonable return on investment". Didn't get a reply.

There won't be any problem showing lots of debt service (1) above.

TOLLROADSnews 2008-04-15