RCA: Use $150M on Costs, Not Interest

Advocacy group says Virginia should not spend on finance costs for Metrorail Phase 2.

The Reston Citizens Association is urging Virginia Gov. Robert McDonnell to use the $150 million it has pledged to help pay for construction of Phase 2 of the Silver Line as a down payment on the capital construction costs rather than as payments against interest on MWAA revenue bonds needed to finance the rail line extension.

In a letter to McDonnell, RCA President Colin Mills says "in using the $150 million to help pay down the interest payments on MWAA’s forthcoming revenue bonds for the Silver Line’s Phase 2, the payments will contribute much less than $50 million—maybe as little as $30 million—to Phase 2’s overall $3 billion capital cost.”

Mills calls for the State of Virginia to use the $150 million dollars—payable in three annual $50 million increments—as capital payments for the construction while Phase 2 of the line is being built. By reducing the debt needed on Phase 2 by $150 million, it would lower the total bond payment cost to Dulles Toll Road users by more than $500 million—more than $300 million after 3 percent inflation—over the next four decades. That is a far more cost-effective application of state transportation funds, RCA says.  

The entire text of the letter is a PDF attached to this article.

Terry Maynard, Reston 2020 and RCA Board of Directors member says the group's concern is that the state and MWAA will raise toll rates - which is not a good long-term solution.

“Our concern is that the state and especially MWAA will prefer to use the $150 million to incrementally increase toll rates in the very short term without regard to the most cost-effective solution," said Maynard. "While the MWAA approach— which is being considered by its Board of Directors — has a great political optic in preventing tolls from doubling to $4.25 one-way next year, applying the $150 million as a down payment on Phase 2 could save toll road users hundreds of millions more over the longer term by applying them to pay construction costs.  

"Moreover, the MWAA stair-step toll increase approach still means that toll rates will triple to $6.75 in 2018 as planned. Why wouldn’t Virginia and MWAA want the scarce funds to have their maximum impact? To do otherwise wastes taxpayer money and hurts toll road users more.”

Reston2020 co-chair Tammi Petrine says reducing toll increases is of "utmost importance."

“The place to start is to do the right thing now with state funding," she said. "That means taking a longterm view in maximizing any reduction in the projected nearly nine-fold increase in tolls on the 80,000 Northern Virginians who use the Dulles Toll Road daily. Virginia and MWAA have to stop playing political games and use public funds in a responsible manner that will most ease the huge costs toll road users face."

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Bob Bruhns July 11, 2012 at 11:36 AM
It is utterly amazing to me that nobody cared that the construction costs of Dulles Rail Phase II were nearly two times what they should have been. And now, am I supposed to believe that all of these financial geniuses didn't know how that would affect the tolls? Excuse me, but they must have. So why didn't they speak out? It wasn't a secret. Yes, MWAA hid the line item costs the best they could - but even when the FTA leaked the bloated costs of the five parking garages and the Rt 28 (Innovation) station (one of four clones of the Reston Wiehle station), and even after the FTA bungled the Rt 28 station cost by $53 million - which SHOULD have attracted a lot of attention, because it spoke loudly of incompetence and carelessness - our so-called 'leaders', and our news media, and even the opposers of the big tolls, just whistled and looked pointedly the other way. I made plenty of noise about it, but you notice that it was pointedly ignored, even by individuals and groups who purported to be pushing for lower tolls, and who continue to make suggestions about the tolls now. I hold every individual and group that knew or should have known about this massive overcharge, but who did not vigorously oppose it, responsible for having allowed it to be foisted on this region. When they speak about the increasing tolls now, they should also apologize for not having spoken out - and loudly - about the bloated costs that contributed so much to that. What were they thinking?
T-Bird July 11, 2012 at 01:30 PM
Imagining new "facts" again Bob? Reality check: the error of the station cost was reported by multiple local news agencies at the time. Although, you seem to want to believe that there's some kind of conspiracy. Does it make you feel better to think that everyone is against you, and not that your wrong? Second relaity check Bob: 80% of the people wanted the rail. You and your ilk lost. Get over it.
bruce bennett July 11, 2012 at 04:32 PM
T-Bird: I am so glad you responded with “facts.” I have been looking for the definitive and complete media coverage of the cost of Rt 28 (Innovation) station Rail stop and five parking garages for which Fairfax and now Loudoun have agreed to pay. Can you provide URLs for the news media coverage of that event? Thank you Bruce Bennett
Bob Bruhns July 11, 2012 at 05:18 PM
Speaking of imagined facts, let's see the links, T-Bird. Show me links to all of the multiple articles that you say reported that the July 3, 2011 FTA White Paper had shown a $136 million cost figure for the Rt 28 station, that actually turned out to be the bloated $83 million rail station price plus the bloated $53 million parking garage price that was also tallied elsewhere in their report (and hence counted twice). You won't have any links to any such articles, because there were none - it was not reported. Anything you saw about that was written by me and appeared in a blog or in article comments. Other than that, all you will find is a few reports in late July 2011 of the $83 million price (still two times what it should have been), without note or explanation for the $53 million change, and one lone article that contained a quote that barely hinted at the change - because that was all that was published by the news media.
T-Bird July 11, 2012 at 07:13 PM
Oh Bob, I know it was covered, because I remember reading about it. I don't remember the links, and frankly, I don't feel very compelled to prove it to you. And unlike you and your friends, I don't have a blog that I can post links to to prove I'm right. And I am very certian I did not read about it on your (or any other) blog. By the way Bob, if you didn't notice, I'm not saying that the estimate error didn't happen. It did. And I would agree that it was a sign of incompentnece. Or, in the least, sloppy work. As for somebody still using the old number after the fact, I would also call that sloppy work. But what I would NOT call it is a conspiracy, as you would.
Bob Bruhns July 11, 2012 at 09:24 PM
You probably read one of my reports about it, T-Bird. I'm glad you agree that it shows incomptence by FTA because that is my point. Of course, it did just happen to make the FTA 'savings' larger. Those savings were for MWAA, of course, and not for Fairfax County - in fact, if Fairfax County hands that work back to the Partnership, the county saves 83.9% of those costs. Hmmm. I know that the County Executive told the Fairfax County to only promise to take on the parking garages and the Rt 28 station IF it got a TIFIA loan. No TIFIA loan was forthcoming, so it is quite likely that this work will revert to the Partnership. I know you think these things just all happen at random and by total coincidence - but forgive me if I am not surprised.
Bob Bruhns July 11, 2012 at 09:24 PM
Here is the Fairfax County document on the County Executive's recommendation at the time: http://www.fairfaxcounty.gov/government/board/bdagenda/2011/7-26action9.pdf "RECOMMENDATION: The County Executive recommends that the Board of Supervisors endorse the principal provisions of the Proposal strategy with the following conditions: 1. Regarding funding of the Route 28 station, Fairfax County will make every reasonable effort to assemble a funding option for the Route 28 Station and two parking garages in Fairfax County (Herndon-Monroe and Route 28) that is sufficient to shift the cost of the station and garages out of the Project. However, any Project costs shifting to Fairfax County must be contingent upon securing adequate financing through available options, including a sufficient Transportation Infrastructure Finance and Innovation Act (TIFIA) loan from USDOT, to mitigate the financial impact to Fairfax County. Accordingly, construction costs of the Route 28 Station and the Route 28 and Herndon- Monroe garages should remain in the overall Project budget pending Fairfax County’s success in securing financing alternatives such as an adequate TIFIA loan. If Fairfax County is unable to secure an adequate financing alternative then the costs to construct the Route 28 Station and the Route 28 and Herndon- Monroe garages should remain in the Project and shared by all funding parties."
Bob Bruhns July 11, 2012 at 09:44 PM
Here is the April 10, 2012 post-agreement statement from Fairfax County on the Rt 28 station, Herndon and Rt 28 parking garage construction plan: Board of Supervisors Confirms Participation in Phase Two of Dulles Rail Project Fairfax County Government April 10, 2012 http://www.fairfaxcounty.gov/news/2012/updates/board-confirm-participation-dulles-rail-phase2.htm "Fairfax will make its best efforts to find money outside of the project to pay for the Route 28 Station and the parking garage at this station and Herndon Monroe. But the county will only pay for 16.1 percent of the cost of these facilities if outside funds can't be found." "As part of the financial deal, Fairfax County agreed to make its best efforts to pay for building the Route 28 Station, along with the parking garage at this station and at Herndon Monroe, outside of the project. The county is looking at several options that include using a public-private partnership, developer contributions, parking revenue, and/or federal or state grants. If the county is not successful in funding the two garages and station outside of the project, Fairfax will only pay for 16.1 percent of the cost for these facilities."
the-stix July 12, 2012 at 08:48 AM
You are right T-Bird, it’s time to move on from all the repetitive anti-Dulles rail rhetoric. The decision of the funding partners has been made and there are now bigger fish to fry. Those are finishing Phase 1, what to do about moderating the onerous projected toll road hikes for Phase 2 , what can be done to get MWAA compliant to the citizens of NoVa, who will be selected to bid Phase 2, who will be selected to build Phase 2 and what is their best offer, how and when will the stations and garages be completed by the counties, etc. And of course the ever present problem of reliable Metro management and operational funding involving all jurisdictions (of which VA is only one), urgently needs a solution. Yes, it is time to move on from yesterday’s arguments.
Bob Bruhns July 12, 2012 at 10:08 AM
You're right, stix. Now it's time to prepare for the riots that will happen in January 2013, when the Toll Road tolls go through the sky. How do you plan to deal with the crush of Toll-Road refugees that will flood the roads where YOU live? Also, how do you plan to deal with the taxes that will come with the Billion dollar bonds that Fairfax County, and probably also Loudoun County, will ultimately have to float, to deal with that nightmare permanently - on top of the costs for expanding the Rosslyn Tunnel, and paying WMATA's $13 billion of deferred maintenance and capital needs inventory? Oh, and let's not forget the hundreds of millions that we were TOLD about, for construction? No doubt the answer will be more building to the sky, probably with insufficient proffers - meaning even more surprise taxes and jammed roads for the people. Can anyone tell me why there are always rich developers, but never any economy of scale, when localities do this?
T-Bird July 12, 2012 at 05:08 PM
That's an improvement Bob. Posting to actual websites instead of your own blog is more credable. But again Bob, nothing you post shows a conspiracy. What it shows is 1) poor quality control and 2) a bureacracy at work. Fairfax County has much of #2 and MWAA have much of both. The two together can lead to much groaning and forehead smacking, but it doesn't amount to conspiracy. What it also shows is that Fairfax County may have been sold some proverbial swampland in Florida with the TIFTA loan. Then again, maybe not. It's my understanding that they were told a TIFTA loan was forthcoming. It may be the case that they could not secure the TIFTA loan until a Transportation funding bill was approved by Congress. This only happened a week or two ago. Prior to that, the FHWA has been working under continuation motions which was going to result in the discontinuation of most FHWA grants. It may also be possible that certian grants were not funded in the most recent bill. Either way, the Transportation bill is very political, and was being held up on party lines. Nobody in the FHWA or in local government would want to wade into that fight by inferring that they were holding up a TIFTA loan for the Dulles Rail, so there is no "news" about it. Now that Transportation is fully funded, I would give them till the end of the year to see if a TIFTA loan is forthcoming. Perhaps something on October at the beginning of FY2013. If it doesn't, things will get intresting.
T-Bird July 12, 2012 at 05:18 PM
But then Bob you assume that it will not be forthcoming, and then you assume that Fairfax will be stuck holding the bill. That is alarmist at best, and willfully disengenuous at worst. When it comes down to it, it was much more than some shadowy cabal of developers who wanted this project. Most local leaders and 80% of the general population wanted this. It's been planned for the better part of 40 years, and DC is one of the few cities that doesn't have public transportation to it's major airport. Now was Metro the right choice? No, probably not. From a passenger centric point of view, a VRE style service would have been much better, and it could have included light frieght service to and from Dulles. This, of course, would have been done much easier if the state still controlled the toll road. MWAA would have less control, which would suit me just fine.
Bob Bruhns July 12, 2012 at 06:33 PM
Well gee, T-Bird, if you liked that link, how about this one: Reality check for Dulles Rail Washington Post, June 1, 2011 http://www.washingtonpost.com/opinions/reality-check-for-dulles-rail/2011/06/01/AGHXKkGH_story.html According to this article, Ray LaHood, head of the US DOT, said that the federal government is not a cash cow, and that it would not rescue the Phase II project. Oh, and CC - it also talked about the underground BOONDOGGLE at Dulles Airport. Imagine that - the oh-so-pro-rail Washington Post using a term like Boondoggle! You just can't make this stuff up!
T-Bird July 12, 2012 at 07:21 PM
Bob, your confusing the issue. That artice was about MWAA applying for a $1.7 billion TIFTA loan, which is absurd. I am not the least bit surprised, and the board is even worse it seems. We, I thought, were talking about the RT 28 station and the shunting of responsibility for that station to Fairfax. A TIFTA loan for that would be reasonable. As for the use of the term "boondoggle", it was in the context of describing the underground station at Dulles, and not the entire project. Although I wouldn't use the term, I would agree that the underground station idea was vain and short sighted. MWAA wanted a Lexus and had money for a Honda, and just expected us to not notice. Bulovia did a good job in taking them to task on that one, and made a very out-of-charater public show of it. So no Bob, you can't make it up, but you sure can take it out of context when it suits you.
Bob Bruhns July 13, 2012 at 01:43 PM
So let me see if I understand, T-Bird. You advocate that Fairfax County and Loudoun County should finance Dulles Rail infrastructure with Tifia Loans? http://www.fhwa.dot.gov/ipd/tifia/ Are you aware that we might have to, you know... pay those loans back? With interest? (Surprise!!!) Along with the repayments for the Great Big Bond we will be floating to pay down the Dulles Toll Road tolls when riots break out as drivers abandon the Toll Road and jam side roads for miles every day? (Surprise!!!) And along with the payments we will be making to help WMATA pay their rather huge Maintenance and Capital Needs costs? (Surprise!!!) And along with the payments we will be making to expand the Rosslyn Tunnel when people get tired of the delays that will result from shuffling the Orange, Blue and Silver Lines through it? (Surprise!!!) Not to mention the construction costs that we WERE told about...
T-Bird July 13, 2012 at 04:16 PM
Yes Bob, I am aware of the definition of a loan. That's why it's not called the TIFTA Grant. The rest of your commentary is just assumptions. You assume that people will not pay. Being from NY as I am, where tolls are much higher, I would not assume that. Frankly, I think the Toll Road was vastly underpriced. I mean 50 cents? I would call $5-$7 a reasonable toll for Dulles to 66. And a higer rate may actually relieve the congestion a bit. You also make the undelying assumption that the rail, once working, will not relieve any of the existing congestion. Again, I don't think this is true. Although again I say that I think a VRE style service would have been more attractive in terms of getting people to give up their car. AQs for maintenance costs, MWAA didn't have enough to do proper maintenance as it was. The Red line crash should have shown you that. So an increase in maintenance funding should be welcome. As for the tunnel, that is a seperate huge undertaking that would, frankly, happen anyway eventually. The overriding truth Bob is that Fairfax and points west desprately need more rail service. The reason why those cars are clogging all your roads is because there are no alternitives, not the other way around. And this seems to serve where they anticipate the most development. I would've thought an extension of the Orange line down 66 would have been better served, but nobody asked me. And, like it or not, the toll road is a source of funding.
T-Bird July 13, 2012 at 04:21 PM
Bob, I don't think anybody is saying that the Silver line is the solution to all of the regions traffic problems. They are fools if they do. But it is a major start to changing the transit dynamic of this area that, if you hadn't noticed, does not work already and it's only going to get worse if we do nothing. The next thing is doing something about the 66 corridor. And then, somebody is going to think long and hard about Rt 7 and possibly making it a limited access highway for most of it's span. One thing at a time Bob, and we'll get there.
Bob Bruhns July 13, 2012 at 08:54 PM
I wish that this region had not jumped to rail without using a dedicated-road bus backbone first. Such a system could have carried a lot more people to and from a lot more places than this one rail line, at much lower cost. And, it would have reserved future rail routes, and prepared business zones there, for the time when rail might actually become appropriate. Instead, not only did we jump the gun, but we also paid nearly two times what the rail system should have cost! That's a lot of wasted money, and now we will be paying for that mistake, plus interest on the money we have to borrow in order to make that mistake, for generations. The arguments in favor of this blunder are a little like saying, "Oh it makes sense to buy a home, so it doesn't matter what the home costs." Wrong... Yes, maintenance on Metro would definitely be a good idea. However, since its region could not pay for that, maybe the story about Metro as a big economic boon needs to be reviewed. Based on the maintenance and Capital Needs shortfall that WMATA has now, it is evident that the supporting tax zone needs to grow faster than the rail footprint, meaning that Metro simply doesn't pay for itself - not only in terms of its ridership not fully funding it, but even in terms of its local region failing to fully fund it. Will we have to fund our own area's maintenance and capital needs, AND the maintenance and capital needs of the other areas as well? I wouldn't call that good, T-Bird.


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