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Loudoun County to spend $95K appealing Dulles Greenway ruling

The privately-owned Dulles Greenway is a 14-mile thoroughfare running east-west between Leesburg and the Loudoun-Fairfax line.
Loudoun’s Board of Supervisors voted Wednesday to spend nearly $100,000 in county funds to fight the owners of the “Champagne Highway,” otherwise known as the Dulles Greenway.

Coming out of a closed-door executive session, supervisors voted 8-1 to spend $95,000 on outside counsel to appeal a September ruling from the State Corporation Commission that essentially defended the Greenway and its rate structure. In that judgement, an SCC examiner said the roadway’s tolls are reasonable when weighed against the benefit it provides users.

Following the most recent annual rate increase, Greenway drivers pay upwards of $6 during a peak, one-way trip on the 14-mile thoroughfare.

Loudoun County's appeal is “by-right,” meaning the Virginia Supreme Court is obligated to hear the case, according to Supervisor Matt Letourneau (R-Dulles).

“We have been told that it will be an uphill battle, but it’s still a battle worth having,” Letourneau said. “And it’s a battle that you want to be well-armed for.”

Supervisor Ken Reid (R-Leesburg) cast the lone dissenting vote. Reid said he doesn’t “think this is going to go anywhere.”

“I’m sorry that distance pricing didn’t work,” Reid said. “But to go this route and to spend this kind of money is a crap shoot … I don’t like the toll structure … but I’m not going to beat [the Greenway owners] up. I’m just not.”

The Greenway is privately owned by Toll Road Investors Partnership (TRIP) II.

It's unclear when the state Supreme Court will hear the appeal.

Comments


Instead of wasting 95k on lawyers how-about using the money to fund our museum? At least we get something of value for the money.


David, maybe the students are doing so well because parents have to hire private tutors to fill in the gaps the schools leave?


@Virginia SGP.  Someone brought that to my attention a couple of months ago.  Something is seriously wrong with that level of debt and the fact that the SCC has allowed tolls to go up to service it.  It appears, but I’m not certain, that the current owners slathered on enormous amounts of debt.  I believe they did this because the agreement allows them to cover their debt cost with tolls.  I believe the owners, therefore, borrowed against the Greenway to force a toll increase.  However, the SCC should have disallowed that.  But a full audit needs to occur.

Here is what I hope happens:

1. The VA Supreme Court rules that the tolls are too high because they violate the basic agreement.
2. TRIP II can no longer make its debt payments.
3. Virginia buys the Greenway at a reasonable price.
4. Tolls are lowered.
5. Traffic is diverted off RT 7 and 50 to the Greenway.
6. Loudoun gets an actual transportation solution to our congestion problems.

It won’t solve all traffic problems, but it will help.


David Dickinson, look at an article posted on David Ramadan’s site on April 14, 2014.  The structure of the debt is back-loaded so that it’s now grown to about $1B already.  So a road that cost $300M to build has tripled over the last twenty years.  That’s like a negative amortization home loan that was so popular.

Put another way, the current tolls CANNOT pay off the debt if they are held constant.  The tolls must rise in order to pay off the debt.  That’s built into the plan.


Laugh, you make me want to cry.

LCPS has everything it needs.  It is highly regarded and its students perform really well (which must be a modern-day miracle because they’ve been deprived of Full Day Daycare!).  If the school was as bad off as our infrastructure, then I’d be singing a different tune.  But an A++ school isn’t good enough for some people.  They want an A+++++ school…and someone else needs to pay for it.

For them to be equivalent, you’d have to have highways wide open at rush hour and 12 bridges across the Potomac with easy-access light rail taking you to any destination.

Its not an apples an oranges comparison.  More like concrete and sour grapes.


Not to continue a discussion for too long, but yes, I was talking about you, and no, there is no difference here.  Consistency is not the strong point of a great many, me,me,me, people, and so, what a surprise to see it here.


10 years ago, Macquarie bought 87% of the Greenway for $533M.  We have a baseline for negotiations.


My mistake, I stand corrected.  I think I was confused about the offer to purchase the Dulles Toll Road back in 2005 for $1B by the private firms.  That never happened.

But I would note that Virginia approved an extension of ownership of the Greenway from 2036 to 2056 in exchange for improvements (lanes, exit ramps).  The State Corporation Commission (members approved by the state houses) approved this deal, thus the politicians were significantly responsible for the increased tolls (due to the improvements) and the increased price to purchase the road (extension to 2056).  If we don’t like the current decision by the State Corporation Commission, replacing 2 of the 3 members would take no more than 4 years.  But it’s very likely the price increases are economically justified even if the original financing structure was not.

You’ve got two problems.  1. Macquarie doesn’t have to sell.  They can request any price they want.  And they are certainly not going to sell for less than the net present value of the tolls through 2056 and possibly even much higher since they know they have Virginia over the barrel.

2. VDOT should have picked up a large portion of the construction cost of this road regardless as they do with all other major construction projects.  That would mean Virgina pays for a big chunk of the purchase price today with the tolls only covering maintenance and a small portion of the original construction cost.  When we tell the rest of Virginia just issue the bonds and the tolls will pay for all of it, that’s not going to cut the tolls in half.  We are now stuck with paying the full cost of this road via tolls.

And if Virginia ever did buy the road and eliminate tolls, usage would skyrocket and the road would become congested.  You would almost need some tolls to prevent it from become gridlocked like Rt 7. 

I support using bonds to purchase the road.  But I think this appeal has a snowball’s chance in ....


@Laugh.  I’ll assume you are talking to me.

Two different animals.  Our NOVA infrastructure is insufficient and the State should be providing free roads constructed with tax monies.  The State should have built the Greenway in the first place.

Our County has amply provided for our schools.  We aren’t tops in the state/nation because we have starved the schools.

That being said, I drive about 10 miles a week.  Tolls have no direct effect on me.


Always fun to see those who constantly call for slashing County spending on the schools, happily chime in praising this expenditure of public money, because it suits their purposes.  Consistency, anyone?


SGP, you have no idea what you are talking about.  The road was built by a private company, a private road that was sold by a private company to another private company.


According to their agreement with the State, the Greenway can’t charge tolls to the extent that people avoid the Greenway because of the tolls.  People avoid the Greenway because of the tolls (for short and long mileage) and, therefore, they are in violation of the agreement.

I’m very happy to see the VA Supreme Court taking up the issue and expect a different outcome than the rubber stamp the SCC has been doling out for years.


The Greenway is a “PRIVATE” road. If you don’t want to pay the toll, don’t use it. Otherwise, float a bond and buyout the Greenway from it’s owners and remove all the tolls and make it free for all.


A couple of points.  I was here when the politicians sold the Greenway to the private firm.  Tolls were scheduled to rise even if the road stayed in public hands.  But the deal was consummated prior to the big toll hike.  And instantly, the politicians began yelling about how the private firm was gouging the people.  But the politicians knew beforehand those tolls were going up just weeks after the sale!  They just didn’t want to take the blame.  The sale price was determined based on the profit from the higher toll rates.  I’d be careful before listening to a single long-term politician on this issue.

Second, folks really need to take some economic classes to have an intelligent debate.  “Monopoly prices” are set to maximize profit.  As other posters mentioned, that cannot be so high as to prevent folks from using the road.  But it’s also generally higher than a maximization of total benefits (private profits and user benefits) would specify.  As Ron Meyer points out, the tolls could be lowered simply by using gov’t bonds that have a lower debt service cost.  But the state might also choose to set a lower toll rate which would generate more traffic.  It’s true the marginal cost of extra traffic is not extremely high (generally monopolists set different prices because the extra costs of production are real), but those costs are not zero since the road must be maintained.

In the end, this was a political decision.  The rest of Virginia resents NoVa and doesn’t want to give us our fair share of taxes to build roads or other public goods.  They would rather take our money and ignore our votes even though we bankroll so much throughout the state.  Ideally this would be a non-tolled road.  And it likely would be if all Loudoun residents used it.  But if voters don’t want to pay for roads that only a portion actually use, toll roads will be a fact of life.


“the tolls can not be so high that they prevent people from using the road”

So you really believe that this for-profit private company is charging prohibitively high tolls, to the detriment of their profit?


Prediction:

As more and more electric and hybrid cars appear on the roads, the gasoline tax revenue will go down, prompting a distance-based replacement tax that will be assessed when you get your annual state inspection which will include reading your vehicle’s odometer.

Once a distance based highway usage tax replaces the gasoline tax, it will be the height of hypocrisy if the State of Virginia says on the one hand that taxes should be based on miles driven yet not compel TRIP II to institute distance-based tolls on the Greenway.


The removal of every traffic light on route 7 in Loudoun will have zero bearing on the greenway.  The people who use the greenway take it to get to the tysons area or all the way to DC.  Route 7 backs up from tysons all the way to reston during rush hour.  As for the lack of use on the greenway, traffic backs up half a mile every morning due to all the cars getting on the greenway off loudoun county prkwy.  So plenty of people seem to be using it.  wealthiest county it must be all the folks from WV and clark county complaining.


Public roads should be public. If a user fee (toll) is needed, then the govt should manage and not give the management fee plus ~10% profit to a company. Public/Private partnership appears to be republican snake oil to avoid raising the taxes necessary to construct infrastructure; then they act surprised and do this little dance when it costs money and the public complains. The company shareholders expect returns. At least Sup. Reid is being more honest about it. Perhaps Sup. Elect Meyer can build an elevated, free roadway above the existing toll road; during this past campaign, he seems to know where to find free money.


Maybe the BOS has some pal lawyers they want to fund.  Makes no sense otherwise.


Matthew, once the improvements to route 7 are realized, traffic flow will be immeasurably enhanced with more drivers switching from the toll road to route 7.  If the greenway operators want to maintain revenue, they’ll have no option but to reduce tolls to get ridership back. That’s what the marketplace is all about. Good in theory anyway. Right? :-)


The County has had to spend millions of dollars improving and building roads because of the Greenway. We’ve been held hostage by this ridiculous SCC ruling and it’s lies over the years. The flat rate fee is too much! I’m glad the board is listening to the people. We’re purposely avoiding a road due to the cost!


Here is why I think the Board should do this and should win.  The Greenway agreement has a stipulation that says the tolls can not be so high that they prevent people from using the road.  Why the SCC has ignored this clause in the agreement year after year, I don’t know.  But they are obviously incorrect.  It is obvious that the high tolls on the Greenway prevent people from using it and I’m glad the VA Supreme Court will hear it.  The chance of success improves dramatically with them, as opposed to the SCC who apparently can’t (or won’t) comprehend a contract.


This just continues getting more absurd. First we’re building a road right next to the Greenway w taxpayer dollars. Then we’re buying the Greenway. Now we’re setting money on fire trying to strong arm a private company into charging less than the market supports for their services. This is not leadership.


Wasted effort.

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