The Washington PostDemocracy Dies in Darkness

With $200M spent on stalled Beltway relief project, Md.'s next step unclear

After the contractor to build the public-private consortium backed out, environmentalists cheered, some business groups sighed, and many, many people had unanswered questions

Traffic backups are not unusual where the Capital Beltway meets the I-270 spur in either direction any time of day. (Katherine Frey/The Washington Post)
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When a private consortium backed out of Maryland’s controversial, $6 billion plan to relieve Beltway congestion late Thursday, the costly and complicated problem grew even more so.

The public-private partnership to rebuild the American Legion Bridge and add high occupancy toll-lanes to parts of the Capital Beltway and I-270 was billed by former governor Larry Hogan (R) as solution that ultimately would come at no cost to taxpayers.

But Maryland officials working for his successor said the preliminary work and environmental approval for the plan has cost at least $200 millionmoney the state currently has no set course to recoup.

“He [Hogan] always claimed it would be repaid someday by the vendor. As Creedence Clearwater Revival once said: someday never comes,” said Maryland House Majority Leader Marc Korman (D-Montgomery), a longtime critic of the public-private partnership.

Now the fate of the entire project, which could have been one of the country’s largest public-private partnerships, is up in the air, raising questions about whether Maryland’s sluggish upgrades could complicate the region’s economic growth.

“It makes somebody ask: how committed are we as a region to fixing our transportation issues?” said Terry Clower, who runs the Center for Regional Analysis at George Mason University. “If we’re not addressing those issues, we’re going to get further behind on becoming an attractive place to buy house, raise a family, invest in your career, the whole bit.”

The state’s Department of Transportation has no immediate plan on whether to continue down that path with a new contractor — and spend another $500,000 to buy the work done by the consortium — or reinvent another way to resolve some of the region’s most intractable traffic.

“At this time, it is too soon to speculate on timeline to move forward with any contract,” Op Lanes Maryland spokesperson Terry Owens said in a statement that reconfirmed the state’s commitment to addressing the bottleneck but did not detail how.

The sudden upheaval of a critical infrastructure project generated uncertainty among project critics and proponents alike, as the Moore administration has yet to commit to a vision for what it hopes to build, how to pay for it or whom will construct it.

AM Partners was the consortium picked in 2021 to design, build and operate the toll-lanes, led by Australian toll company Transurban. The company announced late Thursday that it would walk away from the deal, citing uncertainty about lawsuits and the political climate around the project. Two environmental lawsuits over the plan are still pending.

At the same time, the company that lost out to Transurban in August 2021 is still fighting the state to try to win the right to replace them.

Friday morning, the losing bidder for the original public-private partnership, Capital Express Mobility Partners, was in the state’s second-highest court, continuing a years-long fight for a right to do the project instead. A final decision was not issued by the Court of Special Appeals, according to people familiar with the matter.

But it’s not clear whether Moore’s administration wants to use a public-private partnership, called a P3, for the project at all.

P3 agreements have taken hold as a way for governments to build costly infrastructure and other projects without having to raise taxes or debt limits. Typically, a team of companies and private investors builds the project, operates it and finances the construction, in exchange for future toll revenue or regular payments from the government to pay off the debt and make a profit.

P3 experts say public opposition surrounding environmental studies is one of the biggest risks for project delays and, in turn, escalating costs. Such deals are also hard when administrations change, and for the most part procurements start and finish during a single administration.

In the Maryland case, experts say, without Hogan, who was the project’s champion, and with Moore unenthusiastic about the project, Transurban had to make a judgment call that the deal was unlikely to reach completion.

“An important part of an effective P3 program is having market confidence in the ability of the state to bring these projects to fruition. And today, Maryland’s efforts to do that continue to be frustrated,” said Jonathan Gifford, a professor at George Mason University and director of the Center For Transportation Public-Private Partnership Policy “It’s a missed opportunity for Maryland to address a long-standing, critical transportation issue.”

By comparison, said Gifford, Virginia has been able to “bring many multibillion-dollar mega projects to successful fruition.”

Gifford noted the state has the costly and difficult federal environmental approvals already in hand. That “record of decision” allows toll lanes to be built, but major changes to the project to accommodate additional transit and multimodal options might trigger a new round of environmental reviews.

“They do have the record of decision. So, if they want to proceed with that, they have that option,” Gifford said. “But if that’s really what they wanted to do, why would they let their partner walk away?”

Longtime critics of the project say good riddance.

“I had major reservations about giving billions of dollars to a private corporation whose goal is to maximize profit,” said Del. Jared Solomon (D-Montgomery), who tried but failed to pass legislation stripping Maryland’s P3 law of its teeth.

Josh Tulkin, director of the Maryland Sierra Club, was involved in the lawsuits trying to stop the P3. He said losing Transurban allows for the Moore administration to reconsider how to solve the traffic woes, even if the state has already sunk cash into this plan.

“More than anything else, this clears space for them to take a fresh look,” Tulkin said. “If it’s not the right strategy, it’s not the right strategy — even if we spent money on it.”

Some business leaders said they were encouraged by the Moore administration’s statement that it is committed to relieving traffic congestion on the American Legion Bridge, and that federal studies would still be intact to move forward on a project.

But they said the news that Transurban walked away from the project is a major setback.

The Greater Washington Board of Trade said it would be an “understatement” to say the group is disappointed that Maryland’s plan for the American Legion Bridge and the Beltway is delayed once again.

While traffic volumes have rebounded to pre-pandemic levels, the group said, congestions is expected to continue to build in the region, even with transit investments, because of project growth of 1.3 million people by 2045.

“This project should have started years ago, and each delay increases project costs, slows regional economic growth, and imperils our quality of life,” Jack McDougle, the board’s president and chief executive said in an email to members. “This project is a critical component of an integrated regional system, including transit.”

In an interview, McDougle added that administration needs to move quickly because the region can’t tolerate another years-long delay.

“You get to a point where you have to move forward, and we’ve reached that point here,” McDougle said. “There’s no perfect solution, but we have to get to the best that we can and move forward. We can’t wait for congestion to get worse.”

Owens, the state spokesman, said that between 2018 and June of 2022, the state spent $206 million on planning and preliminary design, engineering and public engagement with Virginia, the Federal Highway Administration and communities. The cost also included legal and financial analysis and traffic studies. None of that money went to Transurban.

In conversations with Moore administration officials this week, Montgomery County Executive Marc Elrich (D), a vocal critic of Hogan’s plan, he said he discussed short term and long-term solutions to congestion in the county and at the American Legion Bridge. He is optimistic that the administration is in a good place to come up with a plan.

He said the state doesn’t have to start over, and could review proposals from other bidders that didn’t win the “predevelopment agreement” and assess whether any of those make more sense. He said he also expects the state will continue to pursue federal funding for replacing the bridge and that moving forward the state would prioritize tackling the gridlock in the span.

An average of 240,000 vehicles cross the bridge daily. Most of the bridge — like the river beneath it — belongs to Maryland. In addition to creating a chokepoint that backs up traffic at both ends, the bridge has no shoulders, and crashes on the span can create significant backups.

“The sooner the bridge gets done, and to the extent that it starts to alleviate traffic, you’ll get a better idea of what you need to do behind the bridge,” he said.