Wiregrass Pike "Not-for-profit" tollroad proposal takes hit in FL Panhandle

It's hard slogging for promoters of a spur tollroad off I-10 in the Florida panhandle to the Wiregrass region of southeast Alabama. This week in Washington County Florida where it was planned to connect with I-10, county commissioners voted 3 to 2 against support for the project.

There's much sound and fury surrounding the proposed road and finger wagging about the secrecy of the promoters, and the "lack of information."

But the truth seems to be there isn't much information for anyone to be secret about - no traffic forecasts, no revenue estimates, no cost information, no financing plan, no detailed route, no feasibility study.

You have to start with the concept and the promoters do have a concept, but not much more.

It's rather ridiculous of critics to expect a tollroad or any road to emerge as a fullblown detailed and researched proposal. That takes a couple of years and costs millions of dollars. New highways never come to life like that.

This one doesn't even have a name. The arguments are about "the toll road."

(We'll call it the Wiregrass Pike because it is being pushed by people in the Wiregrass area of southeast Alabama, and it sounds catchy.)

The Wiregrass Pike is an idea or a concept - of a north-south expressway standard connection between the Wiregrass region Alabama and I-10 just to the south in the Florida panhandle. This priority segment has been touted for years as an I-10 Connector that would go between Dothan AL and I-10. From downtown Dothan to I-10 as the crow flies it's 53km (33 miles) - half in Alabama and half in Florida.

The concept is sometimes much enlarged. Roughly following the route of US231 it could be extended northwest from Dothan to Montgomery, the state capital - 153km (95 miles).

Southward it could go from I-10 to Panama City on the Gulf coast - 76km (47 miles).

Allow a bit more than 10% for route wander even in flat country and you've got the three portions, moving north to south of 170km, 60km and 85km or 105, 36 and 52 miles.

US231, the existing road, is a 4-lane divided surface arterial most of the route, although in one or two places there are grade separations. Basically it's a classic multipurpose highway some divided, some undivided providing frontage access to neighboring properties most of its distance, as well as catering to through traffic. Dothan has a ring road around it, but most places US231 is the main street though the middle of settlements.

Jurisdictional splits

The proposed road goes through a minimum of four Alabama and two Florida counties. It doesn't have to go through Washington County which has just rejected it. It could go through Jackson County to the east, where US231 is located.

Florida state DOT has little interest in the northern connection to I-10 since it almost entirely serves travel into Alabama.

Why should Florida tax money be used for a road mostly of benefit to Alabamans?

Florida DOT proposes modest upgrades to the existing surface arterial route. That's cheaper and doesn't upset merchants already established along the road. The downside is that such mixed arterials are 20% or 30% slower and about twice as dangerous as an expressway.

In Alabama the DOT has no money. The state Governor Bob Riley has expressed qualified support for the project.

Most prominent promoter of the project is Luther Strange a Birmingham lawyer who has run for office as a Republican. An entity called Focus 2000 is planned as the 6320 to develop and operate it. They want support from all the counties.

Houston County Alabama which contains the city of Dothan has passed a resolution supporting the tollroad on this basis. The resolution says that tolls will go toward debt service and operations and that when all the bonds are paid off the tollroad will revert to the control of the county.

Not-for-profits have failed two to zero so far

The two major not-for-profit tollroads built in the US have both failed. The Pochahontas Parkway in Richmond Virginia had to be taken over by a for-profit concessionaire Transurban after the not-for-profit Pocahontas Parkway Association was headed inexorably for default. Similarly in Greenville South Carolina the Greenville Southern Connector tollroad is seeking for-profit concessionaires in an attempt to stave off bankruptcy, though the process is temporarily halted.

The major problem seems to be that the developers of the project and state and local government all have an interest in over-investment, and neither has any responsibility for the longterm financial viability of the project. The project is controlled through the design and construction by groups wanting the maximum road built because their fees and profits are related to the capital cost.

They are gone after they turn the road over to the not-for-profit owners.

The not-for-profit owners have no equity in the project which has to be wholly funded with debt - an unhealthy lack of patient equity capital. Absent any shareholders with a longterm interest in the project it is liable to be overloaded with costs.

Also there's something rather shady looking when business people promote a tollroad as not-for-profit. First off it looks like a tax dodge. Second business is normally for-profit and that's its strength.

As Smith famously put it inthe Wealth of Nations: "Man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favor, and show them it is to their own advantage to do for him what he requires of them...It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love..."

People react with suspicion when a bunch of businesspeople say they are doing something bigger than a regular charity drive as not-for-profit. If there's no profit, why are they doing it, they wonder? Is the "profit" in padded "costs"? It sounds dodgey.

For-profits within concession contracts with local government are the more straightforward way of involving the private sector in tollroads.

TOLLROADSnews 2008-06-11