Maryland's $9 Billion Project Would Be the Nation's Largest P3 for Highways

Gov. Larry Hogan (R-Md.) announced last week plans for the largest highway contract awarded to a public-private partnership: adding four express toll lanes to the Capital Beltway and I-270. A third highway widening will be completed internally.

4 minute read

September 29, 2017, 6:00 AM PDT

By Irvin Dawid


Planetizen noted that Governor Larry Hogan's $9 billion highway widening proposal was critiqued by Angie Schmitt of Streetsblog USA here on Saturday. Other aspects, including financing, of the three highway widenings are observed in this post.

The complex road package would have a public-private partnership design, build, finance, operate and maintain four new express toll lanes (two in each direction) on the Capital Beltway (I-495) and on Interstate-270. They would be built adjacent to the existing eight, unmanaged, unpriced lanes.

Widening of the third highway, the Baltimore-Washington Parkway, designated as MD-25, would be undertaken by the Maryland Transportation Authority, the state's tollway authority that already operates eight toll facilities. The first step, though, would be a potentially controversial transfer of ownership of the parkway from the National Park Service, a bureau of the U.S. Department of the Interior, to the state.

Gov. Larry Hogan (R-Md.) "said he started the process during a recent meeting with Interior Secretary Ryan Zinke," reports David Shepardson for Reuters. "A spokesman for Zinke said Thursday no decisions over the future of the parkway were made during the meeting."

"With the total project estimated value at $9 billion, the Public-Private Partnership (P3) portion to add four new lanes on both I-495 and I-270 is the largest proposed P3 highway project in North America," according to the governor's press release on Sept. 21. There was no cost breakdown for the three segments of the projects though.

Today’s announcement officially begins the process to solicit the P3 industry for input and solutions to provide major congestion relief to these key transportation routes.

Cost to Maryland taxpayers: $0

However, Maryland won't be investing its taxpayers' money, according to Washington Post reporters Robert McCartneyFaiz Siddiqui and Ovetta Wiggins. Instead, users of the new pavement will ultimately be footing the bill.

Because of private-sector involvement, Hogan said, the plan would not cost taxpayers any money. Instead, he said, because of private companies’ up-front investments in the Beltway and I-270 ventures, the state could potentially reap billions of dollars of additional funds.

The plan foresees that the revenue spun off from the Beltway and I-270 would help cover the cost of upgrading and widening the B-W Parkway. Hogan was firm in saying that the roads would effectively pay for themselves.

Pushback from greens

"The proposal immediately drew criticism from some Democrats and from environmentalists and smart-growth advocatest, who said bigger roads would ultimately lead to suburban sprawl and an increased number of drivers, in turn worsening congestion.report McCartney, Siddiqui and Wiggins for The Post. Their preference was for public transit investment. 

“We do not see any point in new highways or expanding existing highways,” said David Sears, chairman of Montgomery County’s Sierra Club group. “It makes a nice difference for a short period of time, but that’s probably measured in months — not years. And people adjust their behavior and then the roads are just as clogged as they used to be.”

However, what Sears' is referencing is 'induced demand' based on 'free lanes.' It's not clear if the concept turns to priced lanes.

"Based on Virginia’s experience, Sen. Richard S. Madaleno Jr. (D-Montgomery), who is seeking the Democratic nomination to challenge Hogan next year, said rush-hour tolls for commuters would be as high as $20 to $40," 

HOT lanes not included

If the new express toll lanes operate like the existing I-95 Express Toll Lanes, owned by the Maryland Transportation Authority, toll rates would be determined by time-of-day and whether E-ZPass (transponder) or video (license plate) tolling was applied. See brochure [pdf].

Note that there are no exceptions for carpools or zero-emission vehicles. Everyone pays. These are not High Occupancy Toll (HOT) lanes where carpools travel at no cost, as do three-person or more carpools on the neighboring 95 and 495 express lanes in Virginia.

Planetizen observed that the new $500 million 395 Express Lanes project in neighboring Virginia, which broke ground last month, also essentially involves no public funding by Virginia taxpayers. Additionally, it will make a minimum $15 million contribution to public transit annually.

Fits an emerging pattern for new lane construction

All three Maryland highway widenings that comprise the $9 billion Maryland project fit the emerging pattern posted last month "that when freeways are widened, express lanes, financed in part by user fees, are being added rather than mixed-flow lanes."

A major exception to the pattern can be found in California, though, where voters have opted to support local transportation sales tax measures that widen highways with general purpose lanes, such as Orange County Transportation Authority's I-405 Improvement Project that received a $629 million TIFIA loan last month to finance the express lane addition of the $1.9 billion project.

WaPo Poll on Express Toll Lane additions

At the bottom of The Washington Post article is a "non-scientific," one-question poll for readers to answer:

"Do you support the governor's plan to widen three major highways using toll lanes?"

On Monday evening, 47% said 'yes'; 53% answered 'no.'

Hat tip to David Orr.

Monday, September 25, 2017 in Planetizen

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