Any deal on tunnels must include toll relief
The P3s that created ERC and the deal to operate the Downtown and Midtown tunnels were unfairly imposed on Hampton Roads
Underwritten by public money and financed by millions of dollars in tolls collected from our residents, Elizabeth River Crossing Opco LLC has operated the Downtown and Midtown tunnels since 2014. The two multinational firms that own ERC are set to sell the remaining 50 years of their exclusive contract to operate the tunnels.
The contract includes the right to increase tolls at a rate of at least 3.5% annually until 2069, as well as the power to influence the scope and scale of any transportation project that may offer commuters alternative routes and choices that impact current tunnel traffic. According to a report published by Bloomberg in December, the contract could command as much as $2 billion.
The public private partnership that created ERC and the deal to operate the Downtown and Midtown tunnels were unfairly imposed on Hampton Roads. As we approach the sale of ERC, we deserve a commitment to split the profits of the sale with the commonwealth of Virginia.
From my time representing the 89th District in the House of Delegates to my current service as mayor of the city of Norfolk, I have fought this bad deal and demanded relief for residents. The creation of ERC set a new and disturbing precedent for transportation projects in Virginia. Historically, the proceeds from tolled roads and bridges financed the debt that enabled their construction. Those tolls were set by the commonwealth which is obligated to voters. Once debt on that transportation project was satisfied, the tolls were lifted. Also, local governments, in partnership with the commonwealth, were able to plan for regional transportation needs without being obstructed by the profit motives of private interests.
During the 2012 session of the General Assembly, I introduced legislation to break-up the financing arrangement that tolled the Downtown Tunnel to help pay for the expansion of the Midtown Tunnel. It failed even after receiving bipartisan support, and for six years area commuters have been forced to subsidize the expansion of a tunnel that many have never used. Some have been burdened with toll bills as high as $18,000.
In addition to the high immediate costs imposed on our residents, the contract with ERC imposes challenges to new opportunities in regional transportation planning. Numerous mandated payments or compensation events are included in the contract for actions that may decrease Midtown and Downtown tunnel traffic. The development of new roads, bridges or enhancements to our existing regional transportation network that have the potential to reduce congestion, protect the public, and sustain our regional economy trigger astronomical payments from the commonwealth to ERC. This has already had a profound impact on regional transportation planning.
Significant changes were made to the High Rise Bridge project, a critical segment of Interstate 64 that also crosses the Elizabeth River. Expansion of the High Rise Bridge had the potential to create a compensation event where the commonwealth would owe ERC an estimated $100 million. If the High Rise Bridge expansion reduced the number of drivers willing to pay a toll to cross one of the tunnels operated by ERC, the commonwealth, through your tax dollars, would have to compensate ERC for decreased traffic. To avoid this event, the Virginia Department of Transportation could not add free lanes. Instead of free travel through an alternative route, commuters are forced to sit in traffic or pay a toll. This is a huge cost to Hampton Roads and obstructs our ability to attract new businesses and visitors.
Although the commonwealth has compelled ERC to be more transparent, accountable and customer driven, under the current contract we will be forced to allow ERC’s successors continued influence over great transportation projects that can benefit commuters and our local economy. It is unfortunate that taxpayers will continue paying for this terrible decision for at least a half century, while ERC stands to gain windfall profits for the sale of a contract that has imposed economic pain and hardship on our region.
ERC should split profits from this sale with the commonwealth given the millions of Virginia taxpayer dollars used to support ERC’s profits, and the privileges ERC has been granted to determine the future of our regional transportation network.