Build Today, Pay Tomorrow

I-285_at_SR_400_Interchange_Reconstruction_Artistic_RenderingWhen Governor Deal and GDOT announced their plan to fast track the reconstruction of the I-285/GA 400 interchange, the project was heralded as “the state’s top transportation priority and one of the worst bottlenecks in the nation.”  Plans to improve this interchange (actually two separate projects) were already on the books and slated for construction in the 2020s. But the project is now set to start construction in 2016 and open to the public in 2019.

Advancing this project required not only a change in priorities but also a change in funding. The new proposal will use a Design-Build-Finance (DBF) public private partnership to advance funding for the project now, rather than wait until those dollars became available later. According to GDOT’s fact sheet:

As currently envisioned, Georgia DOT would make payments to the private firm on a fixed payment schedule, to be finalized as part of contract negotiations. During the project’s active construction time period, the contractor would receive pai1ial payment for work completed; the remainder of the payments would be deferred until after the construction is completed, when GDOT would continue to make payments to the contractor on a fixed, negotiated schedule until all expenses have been paid.

The appeal of this arrangement is that the project will be delivered sooner; the downside is that the private partner’s profit increases the cost of the project.  A recent ARC presentation quantifies exactly how this new arrangement will change the amount and structure of the project’s cost.

TIP_Amendment 285 400

(This cost increase likely reflects other factors in addition to financing costs, such as updated engineering and right of way estimates.)  

GDOT has considered various repayment curves for how and when the project would be paid off.  The two curves below (one for the collector-distributor portion of the project and one for the interchange redesign portion) show that the DBF arrangement would not only increase the project’s total cost but also distribute repayment over a longer period of time.

285 400 Spend Curve CD

285 400 Spend Curve Interchange

If GDOT adopts this repayment schedule, the 400/285 project would be completed in 2019 but not paid off until 2027.  And those last payments in 2027, totalling $62 million, are over 20% of the state’s current $270 million capital budget.

Given the project’s perceived importance and likely popularity with the electorate, GDOT and the Governor may believe that the additional cost is money well spent. But deferring payment puts long term constraints on our transportation options. Georgia already has more of its transportation budget tied up in debt service than neighboring states. And this proposal suggests that we remain intent on building projects today but paying for them tomorrow.

Educating Clayton

MARTA has released a presentation and a FAQ to help educate residents of Clayton County about MARTA and the upcoming referendum. Of particular interest is the updated map and timeline of proposed bus service.

Clayton County - Service Map

The maps is very similar, but visually simpler, than the previous version and also includes the timeline for easy reference.

MARTA’s full presentation is here and its FAQ is here.


Cost Per Mile

Critics often discuss the cost per mile to construct, operate, and maintain transit projects.  Below, from GDOT Commissioner Golden’s presentation to the Joint Study Committee on Critical Transportation Infrastructure, are some similar figures for roads.

Keith_Golden_Presentation_Cost Per Mile

Who Pays for Georgia’s Roads

One of the most frequently discussed points in last Tuesday’s Joint Study Committee on
Critical Transportation Infrastructure Funding was how Georgia pays for transportation. As GDOT Commissioner Golden explained, Georgia relies on the feds for the majority of its transportation funds.

Keith_Golden_Presentation_080514 Fed Fund

As GDOT’s FY2015 Strategic Plan illustrates, this heavy reliance on federal funding is a consistent, long term trend.

GDOT Fed State Revenue

Looking forward, the Strategic Plan reasons that “federal funds are expected to be stable for the next two years but the long-term outlook continues to be uncertain as the current level of transportation spending cannot be sustained by the Federal highway trust fund as currently configured.” In other words, given Congress’ inability to find a long term solution for transportation funding, continued heavily reliance on the feds for the majority of our transportation funding is a dangerous game.

GDOT’s Joint Study Committee presentation also observed that Georgia relies on debt funding to a greater degree than our neighboring states.

Keith_Golden_Presentation_080514 Debt

Like relying on federal funding, using debt to pay for transportation projects is risky and doubly so when the debt is backed by  . . . .  federal transportation funds (as in the case of GARVEE bonds).  Yet Georgia continues to issue GARVEE bonds for the Northwest Corridor toll lanes and other projects.

Our current approach to transportation funding is inadequate, both in the amount and the sources of money. Georgia needs to find an alternative approach that is not only sufficient to meet the State’s needs, but also has the flexibility to pay for the non-road projects that so many Georgians want.