VIRGINIA MAY BE understandably intrigued by a business consortium's offer of a lump-sum $1 billion payment in return for a half-century's control of -- and revenue from -- the Dulles Toll Road. Obviously the state could use the money, not least to pay its share of the planned extension of Metrorail from West Falls Church to Dulles International Airport, a project whose projected cost just for the first phase has leaped. Indeed, the state's appetite for transportation funds is so huge, running into the tens of billions of dollars, and the politically palatable sources for those funds so meager, that some in Richmond may be tempted to grab the $1 billion and ask questions later. That would be regrettable.
Better to ask questions now -- tough ones. Let's start with the consortium: What happens to tolls, now set at 50 to 75 cents? They were just raised, and are scheduled to rise again in 2010. State officials say they would maintain control of the tolls in any deal. But it seems unlikely that the current tolls, which currently yield a reported surplus of about $28.5 million a year for the state, would satisfy investors willing to put up $1 billion. Would the consortium be entitled to a "reasonable" rate of return, as are utilities whose rates are also overseen by the state? If so, one should expect a major increase.
And what if tolls do double or triple? (It's not inconceivable: Tolls on the Dulles Greenway, a privately owned, 14-mile road that extends the Dulles Toll Road from the airport west to Leesburg, range from $1.35 to $2.90 for cars, depending on the time of day and point of exit.) That would hit commuters who work in the Reston-Herndon area near the airport -- home to some of Virginia's biggest companies -- and might also depress the rental market for office space in that area.
Then there are questions for the state. The Dulles Toll Road is robustly profitable, representing a steady and indefinite source of income. A price tag of $1 billion strikes us as cheap. As Ron Kirby, director of transportation planning for the Metropolitan Washington Council of Governments, put it: "The road is a cash cow. Does Virginia want to sell it or continue to milk it?" Moreover, there was some expectation that the road might become toll-free after 2016, when the bonds that financed it will have been paid off. Is that now off the table?
Also, if the road were leased to the consortium for 50 years, where exactly would the $1 billion be spent? Would there be any guarantee that it would be spent on the Metro extension to Dulles, or even any guarantee that 100 percent of it would stay in Northern Virginia, whose tax dollars already subsidize transportation spending downstate? The consortium says it would maintain and improve the toll road -- fixing intersections, for instance. That's nice, but not very significant. What if, a generation from now, it needs a major widening? What if it suffers a catastrophic event, such as a tornado or hurricane or terrorist attack? Will the consortium, rather than the state, foot the bill for that?
We have no problem with the idea of a transaction that would generate a pile of cash up front for the state, especially if it would secure funding for the planned Metro extension. But the details are key here, and what's important is that the deal makes as much sense for Virginians as it does for any consortium of deep-pocketed investors.