Tuesday, October 04, 2005

Selling the Chesapeake Bay-Bridge Tunnel

Hampton Del. Tom Gear thinks the state should lease the Chesapeake Bay-Bridge Tunnel and take money from the deal - he says about $2 billion - and use it for other projects, such as expanding capacity at the congested Hampton Roads Bridge-Tunnel, says the Daily Press.

Gear plans to introduce legislation in the coming session to create a task force to figure out how to do a leasing deal, says the article. Del. Marty Williams, R-Newport News, sees another way to get money out of the bay bridge-tunnel too, by abolishing the commission that manages it and creating a regional bridge authority. He'd essentially let the state control the bridge-tunnel, and use the $10 million in annual toll revenues plus $100 million already in the bank, to underwrite costs for building a third crossing.

11 Comments:

At 9:39 AM, Blogger Ray Hyde said...

In Massachustts they have the Steamship Authority which controls travel between the Cape and Islands. The Steamship authority bonds make an excellent investment, but the result to users is that they have the highest shipping rates per ton-mile in the world.

Somebody is going to have to manage the bridge of course, and if it is making a profit, those profits should either be invested toward the day the bridge needs to be replaced or used for other transportation projects.

Who it is run by is not so important as that it is run well, and where the money goes. It is hard to see how sending the money off to private enterprise, especially if it is a foreign private enterprise does us any good.

Maybe government is so inept that enough savings can be made to sell the argument that private enterprise will benefit the public.

If anyone believes that, I've got a bridge to sell you.

 
At 11:25 AM, Blogger Gordon said...

Why doesn't VDOT have more control over the Chesapeake Bay Bridge Tunnel?

 
At 2:14 PM, Blogger Toomanytaxes said...

Ray Hyde is correct; the state should not be selling profitable enterprises such as the CBBT or the Dulles Toll Road. The revenues obtained in excess of costs should be used to maintain the facilities in question.

On the other hand, we should encourage private enterprise to construct new, competitive transportation facilities. We used to have those entities in the United States. They were called railroads. Perhaps, the concept will be reborn.

 
At 4:03 PM, Anonymous SDH4VBT said...

VDOT doesn't control the bridge because an independent -- and self-funded -- authority built it and runs it and was stashing the cash for future expansion. It has been so successful it will be rewarded by being abolished! Proving once again, no good deed....

But what the General Assembly creates it can take away. The Williams idea makes far more sense than what Gear has proposed. I think Williams would bring most of the local bridges and tunnels under the new authority and perhaps toll some that are not now tolled.

 
At 4:07 PM, Anonymous SDH4VBT said...

Best line in the story:

And pawning a family jewel won't solve the state's multi-billion dollar transportation problems, Holland said. (Jeff Holland of the Authority staff.)

 
At 10:14 PM, Blogger Ray Hyde said...

SDH4VBT: Good stuff.

How was the authority self funded?

I think the Williams idea is better and more saleable: everyone who thinks they don't use the bridges will favor this idea.

TMT: Weren't the railroads given enormous concessions so that they could compete with what, the canals? And didn't they keep those concessions and take them private?

 
At 7:49 AM, Blogger Jim Bacon said...

Gear and Williams are both stuck in the mindset that the "solution" to Virginia's transportation problems is to raise more money to underwrite the building of more roads. A legitimate case can be made that inflation has eroded the purchasing power of Virginia's fixed gasoline tax and that some kind of inflation-indexing mechanism should be put into place to restore that purchasing power. But the discussion over privatizing/leasing the bridge-tunnel occurs at the expense of lower cost alternatives that need to be part of the mix: land use reform, better urban design, telecommuting, demand management, traffic light synchronization, congestion pricing, etc. etc.

It's one thing to say that these alternatives are not sufficient to solve Virginia's transportation challenges. But could someone please explain to me why these options aren't even on the table?

 
At 8:59 AM, Blogger Ray Hyde said...

I have never heard that anyone has said they are not on the table. All you have to do is look around to see examples in service.

But if we agree that they are not sufficient, then all that remains is to determine how much we wish to spend on these methods and how much we need to spend on new roads and bridges. And, of course, how to allocate growth so that they are not overwhelmed; or alternativeley, what existing growth we need to tear down to increase the capacity/demand ratio. (See Rte 66 arguments.)

 
At 10:35 AM, Anonymous Informed Patriot said...

Ray mentioned that "who it is run by is not so important as that it is run well, and where the money goes." I do not think those two can be separated in this case. Government- in this case a semi-governmental entity, in other possibilities VDOT- does not have a whole lot of incentive to run the operations and maintenance of these assets well, and especially not efficient and effectively. Is there an incentive for the authority to keep costs of maintenance and operations low? Is there incentive for them to implement the latest and most efficient technology (electronic tolling, ITS, etc)? Of course not. What does it matter to them if they bring in revenue over their costs if it just going to go towards other projects? It is a lot easier to just raise rates or ask for a handout from Richmond. A private company has all the incentives to maximize efficiency in maintenance and operations to keep costs low as well as encourage motorists to use their facility. And the argument that "especially if it is a foreign private enterprise" is particularly invalid. What are they going to do? Roll up the bridge and take it home? Government authorities just do not have the incentives or the expertise to run these assets the way the private sector can. I'd rather have the road being run by a CEO in Paris leading businesses conferences then by a bureaucrat in Virginia traveling to Paris to hear that presentation.

 
At 7:30 AM, Anonymous Anonymous said...

Informed patriot: When you own a monopoly on the crossing to the eastern shore (and protection such a monopoly would surely be a requirement of the deal) what is your incentive to be efficient? Isn't the ability to maximize profit by raising the tolls going to dominate? If there was real competition you might have a point, but nobody is building a second bridge-tunnel.

 
At 8:19 AM, Anonymous Informed Patriot said...

This is where you need to have smart financial advisors with some political sensativity representing the state in writing these contracts. You can set a contract on whatever terms you desire since it is the state's asset. As with similar deals of this nature, the state can dictate the amount the tolls are rise over the length of the concession. While limiting that amount would cause the windfall to the state to decrease, it would control the toll rate.

 

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