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Transurban leader calls Maryland’s Beltway, I-270 toll lanes ‘transformative’

The Australian firm is designing express toll lanes to create a regional network with similar lanes to those in Northern Virginia

Pierce Coffee is president of Transurban in North America. The Australian toll road operator manages express toll lanes in Northern Virginia and is designing toll lanes planned for Interstate 270 and part of the Capital Beltway in Maryland. (John Harrington)

Australian toll road operator Transurban is designing toll lanes for Maryland’s Interstate 270 and part of the Capital Beltway to create a regional network of express toll lanes with those in Northern Virginia.

If Maryland approves a 50-year contract with Transurban and Australian investment bank Macquarie, the private team would build the lanes, finance their construction and operate them in exchange for keeping most of the toll revenue. Construction could start in late 2022, with the lanes opening in 2027.

Transurban operates 53 miles of express toll lanes on the Beltway, Interstate 95 and Interstate 395 in Northern Virginia. It is also extending Virginia’s I-95 toll lanes 10 miles to Fredericksburg and its Beltway toll lanes 2½ miles toward the American Legion Bridge.

At the helm is Pierce Coffee, 39, the company’s president in North America. Coffee, who grew up and lives in McLean, recently spoke about Transurban’s work in the Washington region and why the company thinks it can alleviate the area’s crippling traffic congestion. This interview has been lightly edited for length and clarity.

Q: What has the Transurban and Macquarie team been doing on the Maryland toll lanes project since the state of Maryland awarded it a “predevelopment agreement” in August?

A: There’s a lot of work underway. We’ve got the competitive search for a design and construction partner. That’s a big piece of work. We’re really in listening mode as well. Our team is out meeting with communities, meeting with elected officials and working with Maryland to understand, especially, the communities that are most impacted as we’re designing this project. Then the construction plan is going to minimize construction impacts. We’re also working with utilities that will be affected. There’s a lot of pre-work, and then, ultimately, we have to deliver a [50-year partnership] proposal with all the final details.

Maryland selects Transurban, Macquarie to develop toll lanes

Q: What do you say to people worried about the effects of a wider Beltway and I-270 on adjacent neighborhoods, public parkland and streams?

A: At this point, we’re trying to understand what the impacts will actually be. We’re trying to refine design elements to minimize any impacts. It’s too early to say, but the team’s goal is to try to make sure there aren’t property displacements in the [first 12-mile segment] and to try to reduce any impacts purely from a widening standpoint. Our goal is always to try to move the most number of buses, carpoolers and cars through the smallest footprint, so that will be something that the team continues to work on.

Transit advocates say a new American Legion Bridge should leave room for rail

Q: Some transit advocates say that allowing buses to use express toll lanes at no cost might sound good but that it won’t provide the significant expansion of mass transit the region needs. What do you say to that?

A: There are no transit routes now across the American Legion Bridge. This project will really change that, enabling our transit system to connect Maryland residents to Tysons or Virginia jobs, and vice versa. … That can be game-changing. In Virginia, there was no incentive to ever take a bus, because you sat in the same traffic as everybody else. Bus trips and carpooling in the Virginia express lanes have increased over 105 percent, on average, across the network since opening. I think the Virginia system has been able to show some of the naysayers how an express lanes network can fit into the broader transportation solution. Also, we have pledged $300 million in transit services over the life of the Maryland project to ensure transit is a core part of this project.

Q: Is Virginia’s 10-mile extension of the I-95 lanes to Fredericksburg still on schedule to open in October 2022?

A: That project is about 50 percent complete. It’s tracking behind now. We’re working with the design-builder in an arbitration process around some geotechnical issues, so we’re in the process of understanding the impact to the schedule.

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Q: Why did Transurban enter the U.S. market via the Washington region, and why is this area so attractive to the toll lanes industry?

A: This predates my time at Transurban. But if you look at what Transurban has done in Australia and what we’ve been working on in Virginia, we look at opportunities in a region that has a lot of congestion, and there’s a crippling amount of congestion here. So that was one area: What does the congestion look like? What does the population growth look like? What are the economics of the region? It was also, what are the public-private partnership laws? Virginia has been a leader in the [public-private partnership] space for years, so that certainly was one of the reasons that Transurban looked to come to the Virginia market.

Maryland board approves $45 million more for state consultant on toll lanes project

Q: What do you say about concerns that Virginia and Maryland are “privatizing” their public highways via these public-private partnerships?

A: Both Maryland and Virginia are the ultimate owners of the infrastructure. What Transurban can do with our partners is bring that private capital to bear so the states can use limited dollars on other infrastructure projects. There’s also oversight over Transurban in the operations phase. There are requirements for operations and maintenance. We are incentivized to make it a good experience, to make it a product that customers choose to use, whether they’re riding on a bus, taking a carpool ride or driving alone in their car. We have a lot of aligned interests with the state to provide a good experience, to maintain these facilities at the top level because we ultimately hand the projects back at the end of the concession.

Q: The Washington region is still teleworking more than many other parts of the country and has a lot of desk jobs that could continue after the pandemic. Have you adjusted your toll revenue forecasts, or do you have any concerns about that?

A: There’s so much speculation about what is an unprecedented and evolving situation. We obviously take it very seriously. We watch it very closely, and we’re looking at trends. We do think there will be an increase in the work-from-home option from before the pandemic, but generally speaking, if you look at the growth in this region, we think there is going to be a strong need for ongoing mobility solutions.

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Q: What has Transurban learned in Northern Virginia about Washington-area motorists’ appetite for using express toll lanes that you can apply to the Maryland project?

A: I think we’ve learned that people view it as a choice. We have a small population of customers who use the lanes several times a week, but the vast majority use it more when they’re going somewhere out of the ordinary or when they need to be somewhere on time. We also thought people would be focused on the exact number of minutes saved. Instead, what we hear from our customers through our research and anecdotally is it’s about reliability. So when you would go from Tysons to Springfield before, you’d have to build in buffer time. We’ve found customers really value the ability to eliminate that buffer time. Being able to provide a reliable trip across the American Legion Bridge — that’s going to be pretty transformative for a lot of people.

Q: How do you respond to critics who say the recently approved Maryland toll rate ranges — up to $18 in bad traffic and up to $45 in unusually bad traffic to drive the first 12-mile segment — would be too expensive for most motorists?

A: In Virginia, before covid, 80 percent of our customers spent less than $20 on tolls per month. That’s less than one tank of gas. You have to have [toll] ranges, but that’s not the everyday price. When you see a toll like $45, is that on a Friday afternoon in the summer? Is that when you’re headed out of town on Thanksgiving? When you have those higher tolls, what you also get is a real amount of time savings. … If you look at the experience we’ve had in Virginia, that’s a good place to look at how often the toll prices are that high. When it gets to $45, it’s getting there to discourage people from continuing to enter the system so you can find that reliable trip.

Maryland board approves final toll rate ranges for Beltway, I-270 express toll lanes

Q: How do you respond to critics who call them “Lexus lanes”?

A: In our customer research, the vehicles are much more likely to be Toyotas than Lexuses. I think, historically, that’s a term that’s been used, but that’s not how it’s played out. It really runs the gamut. Most of our customers are actually young families making less than $100,000. The most frequent customers are often dual-working parents with young children, so they’re trying to figure out how to manage their busy lives, and the express toll lanes become a tool to do that.

Q: Are you concerned that Maryland’s updated environmental study predicted potentially significant choke points and delays where the toll lanes would end and merge with the regular lanes?

A: Those are the kinds of things that we’re working to provide innovative solutions for.

Maryland toll lanes wouldn’t lessen worst evening traffic without other improvements, study says

Q: How can you innovate your way out of highway choke points?

A: My former boss used to say that the worst thing about the express lanes is when they end. So that is a problem, and that’s something we’ll have to work on with Maryland. We’ve done similar things with Virginia over the years. When the 495 Express Lanes first opened, there was a choke point right before Georgetown Pike where the express lanes were coming into the regular lanes, and that was causing backups. So Virginia and Transurban sat down and said, “We’ve got to solve this problem.” Virginia enabled the ability to use the shoulder for peak periods to allow that merge to not be so abrupt. … After the I-95 express lanes opened, relatively quickly it became apparent that two lanes going back into the regular lanes was causing a choke point. So [the Virginia Department of Transportation] and Transurban worked on a one-lane extension to the [I-95] express lanes that would allow that merge to be smoother.

Q: What else should people know about the Maryland project at this point?

A: We believe, based on what we see from a traffic standpoint and the growth in this region, that this project is going to be transformative in the way we’re able to unlock congestion in this region. It’s going to take a few years to get that construction done, and we’ll do everything we can to minimize the impacts of that construction. But in the end, we’ll have a new American Legion Bridge, and we’ll have a reliable [express lane] network, which is going to provide a new choice that travelers don’t have today.