One of the more intriguing ideas to emerge from Donald Trump’s upcoming presidency is a still-vague plan to build or renovate $1 trillion worth of roads, bridges, airports, pipelines and other infrastructure projects.
The rub, of course, is how Trump would pay for this, especially when spending-averse Republicans will control the Senate and the House.
Could Virginia be a model?
The Old Dominion has long experience with public-private transportation projects. Since 1995, the state has proceeded with more than a half-dozen, including the high-occupancy toll lanes on Interstates 495 and 95, the Pocahontas Parkway near Richmond and two expanded traffic tunnels under the Elizabeth River between Norfolk and Portsmouth.
The latest is a project to build express toll lanes and make other improvements on a 22.5-mile stretch on Interstate 66 in Northern Virginia.
The idea is to spare taxpayers from the expenses of building and maintaining roads with bonds and state funds. Instead, users pay for the highways through tolls collected by the private companies that built and operate the roads. Theoretically, the concept relieves taxpayers of the risks if the projects fail, but that hasn’t always been the case.
It isn’t clear yet how Trump intends to pay for his infrastructure initiative. He has tossed around tax credits for private developers.
In Virginia, partnership deals have resulted in transportation projects that otherwise wouldn’t have been built. But not all have worked.
The unneeded Pocahontas toll road and bridge southeast of Richmond was such a financial flop that it nearly tanked the state’s pristine credit rating. In the Norfolk area, plans to widen the Downtown and Midtown tunnels were racked by delays and operating oversights, such as sticking users with thousands of dollars in erroneous penalties.
The biggest mess of all was a plan to build a new, 55-mile-long expressway near U.S. 460 from Petersburg to Suffolk. Although construction never began because of a wetlands permit issue, it ended up costing the state $256 million. Richmond recovered only part of the money from a consortium run by Ferrovial Agroman of Spain and American Infrastructure.
Virginia Secretary of Transportation Aubrey Layne, a Republican appointed by Gov. Terry McAuliffe (D), studied that partnership program and found numerous operational flaws.
A big problem was a basic one. When it conceived of projects, the state didn’t bother projecting how much it would cost if the state built them, denying itself a cost baseline. “The state has to demonstrate what it would cost for it to do the project. That process puts you in a better negotiating position,” Layne said.
Once projects were underway, the Virginia Department of Transportation would simply turn over administration to the private sector, believing it had more experience, Layne said. Without oversight, contractors often came up with changes never discussed in public hearings. They often did not administer toll collecting and penalties fairly. They also did not always build promised features — such as additional rapid-transit bus lanes — that could decrease toll revenue and profits.
Layne said the McAuliffe administration incorporated reforms into the program. A result, he said is a $2.5 billion savings in the newly concluded I-66 expansion deal.
Trump may learn from Virginia’s experience, but it still may not solve his problems of paying for his big building program.
The public-private partnership concept “is no silver bullet,” because it needs revenue streams such as tolls to work, explained Stewart Schwartz, executive director of the Coalition for Smarter Growth. The biggest need is fixing up existing facilities, and that can’t be done with new tolls, he noted. Layne said many states do not have the legal framework or experience to handle partnership deals.
Shoring up the nation’s infrastructure sounds like a great idea. But Trump may end up simply handing out tax credits to developers or granting subsidized loans. In that case, taxpayers would get stuck with the risk, as Virginia’s experience has shown.