The $3 toll. It’s the great fear of privatization, which came to a head Monday morning in City Council chambers. And that’s precisely why the city should accept a deal from the Richmond Metropolitan Authority to pay the city back $62 million, Mayor Dwight Jones says.
“I’m not against privatization,” Jones told council. “But I am not in favor … of privatization of toll roads, and that is evidenced by the fact that in 2002, [Route] 895 tolls were $1.25; today they are $3. And I’m sure they will continue to escalate.”
Route 895, known as the Pocahontas Parkway, is operated by Australian company Transurban, a deal borne out of necessity. In 2006, because of low traffic counts, the state leased the 8.8-mile parkway to avoid a financial default.
Jones and others, including the city’s financial adviser Davenport & Co., fear tolls will rise dramatically in much the same way if the Downtown Expressway and Powhite Parkway are privatized.
But the toll taboo may be more myth than reality. Because the expressway system has been around nearly 40 years, traffic forecasting is relatively easy. Pocahontas Parkway, which opened in 2002, was a relative upstart, the victim of overzealous traffic projections. It had no choice but to jack up the tolls.
Not so with the Downtown Expressway and Powhite Parkway, which opened in the early 1970s. Abertis, a transportation company based in Barcelona, Spain, already is preparing a proposal to privatize the expressway system -- with minimal toll hikes.
While still preliminary, Jordi Graells, president of Abertis USA, says the company will offer at least $250 million for a 30- to 40-year lease (or concession) agreement. That’s about $180 million to pay off existing debt, including the $62 million, and an additional $70 million in cash.
How much would tolls increase? “The rates are now correct,” Graells says, “so the user would not have to pay significantly more than now.”
The concession agreement would allow annual toll increases adjusted only for inflation, Graells says. The current inflation rate is a little more than 3 percent. Assuming an immediate increase, tolls would jump from 70 cents to about 72 cents.
Tolls have increased at a higher rate under the authority, which last raised tolls in 2008 from 50 to 70 cents. On an annualized basis, that means tolls were raised 4 percent per year since the last toll hike in 1998, from 35 cents to 50 cents. The authority also plans a raise in 2018, from 70 cents to 80 cents, which comes to 2 percent a year.
Abertis says it will achieve greater efficiencies by making toll collections cashless through improved open-road toll technology during the next three to five years.
Regardless of how the expressway authority votes Tuesday -- its board of directors is expected to make a decision on a deal to repay the city its $62 million -- Graells says his company still plans to submit a proposal, perhaps as early as next week.