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The state isn’t obligated to follow the advice of an advisory group that Gov. Roy Cooper has tasked with recommending a future for the massive interstate toll lane project under construction north of Charlotte, but vocal members of the group appears to favor a strategy being called “complete and delete,” in which no tolls would ever be collected.
The advisory group has been discussing options for the $640 million Interstate 77 project and met last week to conduct further discussions about the costs of terminating the public-private partnership that has funded the initiative so far.
Although the group examined a range of options, much of their discussion has focused on just two choices, both proposed in a report authored by Mercator Advisors, a consulting firm that the state contracted to provide an independent analysis of the project, to transfer control of the project to the state.
The first of those two options — allowing the private developer to complete the project, which would then be purchased by the state after completion — would result in toll lanes being left in place. But those lanes and fees would be maintained by the North Carolina Department of Transportation, rather than leaving ownership with Cintra, the Spanish infrastructure company that is currently building the project.
The second option, and clearly the one that some group members prefer, is “complete and delete.” Comments from some group members indicated that in gauging public sentiments in the metro-Charlotte area, they found that “complete and delete” most closely matches what people want.
This option would result in Cintra completing the project, followed by the termination of the company’s 50-year toll-lane contract. The state would convert the toll lanes into general-purpose lanes.
The group adjourned for the day before more detailed discussions of “complete and delete” could begin, but that subject will likely be on the agenda for the committee’s April 16 meeting in Cornelius.
Looking at costs
Mercator representative Jim Taylor told the group that the estimated cost of the first option, in which the Cintra completed the project but the state then terminated its project and operated the tolls, ranged between $400 million and more than $600 million, but that those figures could change when negotiations between the state and Cintra begin in earnest, and could also change based upon the performance of the toll lanes once they’re finished.
Although the costs of “complete and delete” have not been fully released yet, it’s clear that contract termination costs, coming at the same point in the project, would likely be similar. However, “complete and delete” would not allow the state to recoup revenue by collecting tolls, while the state would not incur costs for maintaining the toll collection system on I-77.
“When I was first retained, we got a lot of public comments all throughout the process and people were all over the place in terms of their confidence in the numbers that have been thrown out about what the cost to terminate was,” Taylor said at the meeting.
“The agreement provides special protections for the lenders, which is separate from the equity, the guys from Spain, and their co-equity investors. In order to terminate, you have to see how much it would take to pay off the debt, and compare that to the fair market value of the entire facility.”
Many questions remain unanswered about the timing of the state-takeover option, its ultimate cost, and whether the state is willing to fund such a large-scale change to a project that has been ongoing for years.
The advisory group heard that to pay for the termination of the contract in order to allow the North Carolina Department of Transportation to maintain the toll lanes, the state would have to prioritize the project under the State Transportation Improvement Program guidelines, which rank infrastructure projects throughout North Carolina.
That program is governed by the Strategic Transportation Investments law, “which mandates ongoing evaluation and improvement to ensure the process continues to be responsive to North Carolina’s diverse needs,” according to state documents.
That law requires NCDOT to make prioritization decisions through a formula that ranks decisions based upon a project’s economic impact, quality of life factors and local needs. There’s no guarantee that changes to the Interstate 77 toll lanes project would make that list, because those changes would be in “competition against other projects” and would depend upon the availability of funding, according to the presentation given to the advisory board.
It’s not clear that the “complete and delete” option, which would not commit NCDOT to maintaining the tolls, would involve the same logistical issues.
Gov. Cooper commissioned the advisory group in the wake of public outcry about the I-77 project and its possible impact on the areas of northern Mecklenburg County and southern Iredell County where the toll lanes are being built. The group has no decision-making power, but will eventually provide a recommendation to NCDOT about how the state should proceed with the toll lanes project.