Tuesday, December 20, 2011

Get Smart and Get Out-The Door is Open

 Tom Cranmer has a degree in geology and civil engineering from Yale and an MBA in finance and economics. He has worked on soil and water projects for four decades around the world involved in analyzing, developing, managing and financing major projects. He was the manager of operation for oil, gas and electricity reconstruction in Iraq. Tom has studied the Dulles Rail Scheme as much as he can considering how little real information has been leaked out. Tom can spot a lemon and does not like it when the numbers do not add up. Tom cares about his home community in Fairfax. This is his summary, he gives Rail to Dulles and Loudoun this grade.


The US Department of Transportation drafted a "Memorandum of Agreement" (MOA) for funding the proposed Dulles Rail Phase 2 to serve western Fairfax and eastern Loudon Counties. The MOA shows a cost "now" of $3.8 billion. In addition, the VA Department of Transportation (VDOT) proposes to provide $150 million spread over five years to help reduce interest charges, but subject to General Assembly approval. Please oppose the Phase 2 project for the following reasons:

- Phase 2 is uneconomic. The Federal Transit Administration rejected funding Dulles Rail Phase 2 previously due to low forecast ridership. The rail project service area has less than half the population density stipulated by Federal and State government standards to meet minimum economically viable heavy rail ridership demand.
- Costs are too high. Dulles rail construction costs increased from an initial estimate of $1.9 billion in 2000 to about $7.0 billion. Phase 2 preliminary engineering and cost estimates are due by Spring 2012. Contract bids are to be requested and awarded in late 2012. Costs could increase. Signing the MOA is premature. Dulles Rail is Fairfax's and Loudoun's "Big Dig." The Dulles Toll Road is being used to pay most of the cost of Dulles Rail.
- Tolls would be outrageously high. Toll road tolls for maintenance and debt service are projected to be up to $10.70 per car one way in 2018. Combined with the cost of commuting on the Dulles Greenway the annual charges would be $8,250. By commuting on the HOT lanes on Route 495 (the Beltway) during rush hour, the total charges would be over $10,000 per year.
- Traffic on free roads will increase greatly. As Toll Road charges rise, most current toll road users will use other routes. A study by Cal Poly State University, California, shows when tolls double, then 75% of users are likely to take nearby toll free parallel roads. Traffic congestion would increase on Routes 7, 50, 29 and I-66, plus back roads. These highways would require additional state spending for improvements and maintenance.
- The Dulles Toll Road is likely to go bankrupt. As with the high tolls preceding the Greenway bankruptcy in 1996, most people would revolt and not use the toll road. The State might bear bankruptcy costs in addition to interest charges. VA bond ratings could be adversely affected.
- It is unreasonable to penalize toll road drivers with paying most of the capital costs of rail. As presently planned, rail users will make zero contribution to capital costs.
- Bus transit is a far better option than Heavy Rail for Phase 2. Buses have a much lower capital cost per person transported. Bus routing is flexible and expenditure can be varied to meet changes in demand. There can be multiple pickup points. Buses are available now and run on the reserved Dulles Airport access road over the proposed Phase 2 route.
- Adding rail transport is unlikely to increase mass transit use significantly. Transit's share of commuting in the Washington, DC area in 1976 was 16.7% before Metro opened and 16.8% in 2008 -- not a significant change with Metro.
- The Metropolitan Washington Airports Authority (MWAA) that runs Dulles Rail / Toll Road has failed to make $300+ million in promised improvements to the Dulles Toll Road. No Phase 2 approvals and funding should occur until these improvements are done.
- Virginia is facing a one billion dollar deficit in the biennial budget. Subsidizing northern Virginia commuters with $150 million for Phase 2 is a low priority project that can be eliminated compared to significant increases necessary in Medicaid and taking care of the disabled.
- With a $150 million VA subsidy, tax payers would pay about $6,522 per rail commuter over five years. Dulles Rail would have 23,000 regular commuters, only 1.2% of two million people living in Northern Virginia. This is based on Metro's Dulles Rail projected usage figures. Taxpayers should not subsidize commuters this way.
- Tax payers will have to subsidize the greater deficits in Metro's operations. Metro projects an annual $12 million operating deficit for just the Silver Line in 2014. Adding additional rail mileage would necessitate increased deficits. Metro fares do not even cover operating expenses. Metro's operating and capital deficits are paid by taxpayers.
- The Metro for Northern Virginia, DC and Maryland is facing a $6.5 billion dollar deficit for major repairs and replacements with no sources of financing identified. The total Capital Needs Inventory for FY 2011-20 is $13.3 billion, of which only $6.8 billion is funded. Repairs for existing facilities should be covered before new politically attractive projects should be taken on, like Phase 2 Dulles Rail.
- Revenues from the Federal Government are likely to be lower. Defense expenditures are now mandated to be cut, negatively affecting up to one third of Virginia's economy and budget. Virginia and Northern Virginia can't afford the luxury of Phase 2.
- The international and U.S. economies are weak and uncertain. With parts of Europe possibly sliding into another recession, the Euro in trouble, interest rates rising for some countries that have been spendthrifts, the US economy and revenues for Virginia are likely to be lower.
- Financing Phase 2 removes $3.8 billion from the productive economy of the U.S. Lenders have limited money, and the private sector has been complaining they can't get adequate financing.
- VDOT has inadequate money to finance repairs to existing roads, and very little to pay for road expansion. VDOT wants counties and cities to finance repairs on secondary roads. Congested roads in Virginia are not being budgeted for expansion. A subsidy for Phase 2 removes more money for maintenance and road expansions.
- MWAA will impose a Project Labor Agreement (PLA) with unions as a condition of a prime contractor receiving an award. MWAA's board of directors voted in April 2011 to impose a mandatory Project Labor Agreement with unions as a requirement for bids on Phase 2. The Project Labor Agreement for Phase 1 was voluntary and agreed after the contract award. The PLA with unions and the Federal Davis Bacon Act will drive costs up due to union wages being paid and union work rules being imposed. In addition, such a PLA conflicts with VA's status as a right-to-work state.

With the poor economic outlook, potentially lower revenues, higher priority needs and an uneconomic project, it seems important to recognize there should be a limit to risky and uneconomic use of taxpayers' money. Please oppose Phase 2 of Dulles Rail.

Thomas L. Cranmer
Dranesville Director,
Fairfax County Taxpayers' Alliance
Dulles Corridor Users Group

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