Attempt to block I-77 project fails

A bill that would terminate the P3 agreement for the North Carolina express lanes project has died in the Senate despite overwhelming support in the lower chamber.

House Bill 954, which passed with a vote of 81-27 earlier this month, will not be put to a vote in the Senate, effectively clearing the way for the I-77 Express Lanes project to proceed according to schedule.

It is not clear why the Senate Transportation Committee that was considering the bill has decided not to submit it to the full Senate for a vote. Infrastructure Investor contacted Senator Warren Daniel, one of the committee’s two chairmen, but his office could not provide further details. The other co-chairman Bill Rabon had not responded to a request for comment by press time.

However, in a letter dated 9 June, North Carolina Secretary of Transportation Nick Tennyson urged the two Senate Transportation chairs to consider concerns surrounding the bill.

Aside from the amount it would cost the state to cancel the agreement it has already signed with private consortium I-77 Mobility Partners – $302 million in cancellation fees and another $500 million to complete the project, compared to the $94 million it will cost the state under the current agreement – passage of HB954 would also affect other projects that would have to be suspended.

In addition to pointing that the title of the bill, “Terminate agreement for tolling of I-77”, is inaccurate since I-77 is not being tolled – instead 25.9 miles of dynamically priced, high-occupancy toll lanes will be added to existing toll-free road capacity – the bill, as it is written, would prohibit the use of P3 managed lane projects but allow the use of tolls.

The draft legislation was filed on 25 April, a few weeks after news broke that the concession company responsible for operating Texas’ State Highway 130 had filed for bankruptcy protection after more than four years of lower-than-expected traffic volumes. Ferrovial subsidiary Cintra, which is a major shareholder in the SH130 Concession Company, is also a majority shareholder in I-77 Mobility Partners.

However, the two consortia are separate entities with different financial structures. What’s more, even if the North Carolina project does not perform as anticipated, any situation involving developer bankruptcy would not burden the state nor taxpayers. Yet the basis for HB954 is to terminate the contract for developer default.

In closing, Tennyson wrote: “If HB954 becomes law, Department will not be able to proceed with confidence on any other projects identified in the STIP [State Transportation Improvement Programme], if a similar ‘notwithstanding’ bill could be used at any time to re-arrange or cancel contracts for project construction.”

Asked to comment on the bill’s fate in the Senate, I-77 Mobility Partners responded: “While we are not able to speak to the political process, we are making great progress on the construction of the I-77 Express Lanes, with work already underway from Huntersville to Mooresville. We look forward to completing this project by the end of 2018 and making this long-term, reliable travel option a reality for the region.”