Public-Private Partnership Policy Casebook/I-77 HOT Lanes

Summary

Text - Both

Because of a major population increase in the last quarter of a century, the Charlotte, N.C. area is seeing more vehicles travel on the Interstate 77 corridor.

The I-77 Express Lanes, for which the contract has been signed and construction will soon begin, will allow consumers a choice when traveling I-77 between north Charlotte and Exit 36 in Mooresville, 23.5 miles north. The express lanes will run adjacent to the existing two general purpose lanes on I-77. Two express lanes will run on I-77 in each direction between Charlotte and Exit 28. One express lane in either direction will run from Exit 28 to Exit 36 to minimize environmental impacts on Lake Norman. By converting the current High Occupancy Vehicle (HOV) lanes to Express Lanes, more vehicles will travel more quickly through the north corridor. During each trip, motorists will be able to decide if they want to use the Express Lanes, the general purpose lanes or a combination of both to allow for a more efficient drive.

Electronic signs placed overhead before each entry point will display the current toll rate for that particular segment of road. The merge lanes are designed with safety in mind, providing plenty of room for drivers to enter and exit the express lanes using six designated points.

Dynamic pricing, based on traffic demand, will provide a more predictable travel time. As traffic levels and demand increase on the express lanes, the toll rate will increase. Once the traffic volume drops, the price goes down.

Drivers will have two payment options:

• NC Quick Pass Drivers: Drivers who buy an NC Quick Pass transponder and install it on their front windshield will have the charge for the use of the Express Lanes billed to the driver's account, managed by the North Carolina Turnpike Authority. NC Quick Pass transponders will be equipped with a switch that drivers will be able to switch on when three or more people are in the car, and tolls will not be charged when the switch is on. (Note that other transponders, such as E-ZPass, will not be compatible with the Express Lanes.)

• Non-Quick Pass Drivers: Drivers can use the Express Lanes without a transponder as the overhead tolling equipment can capture the vehicle's license plate. A bill will be sent to the registered address and can be paid via mail, phone, or online. Drivers without an NC Quick Pass will not be able to use the lanes free of charge if carrying 3 or more people in their vehicle.

A public private partnership between NCDOT and I-77 Mobility Partners allows the construction of the I-77 Express Lanes and infrastructure improvements to advance significantly sooner than would have been possible under traditional public provision.. I-77 Mobility Partners will manage design, construct, finance and operate the project. NCDOT will own the road and will ensure that the standards set forth in the contract are met.

Annotated List of Actors

Charlotte Regional Transportation Planning Organization: Regional intergovernmental body which supports the project (largely thanks to the City of Charlotte holding the majority of votes on its Board of Directors) and has included it in its long-term transportation plan for the region.

Cintra, S.A. (Concesiones de Infraestructuras de Transporte) : One of the world's largest developers of transportation infrastructure, particularly toll roads. Parent company of I-77 Mobility Partners. Based in Madrid, Spain.

City of Charlotte, North Carolina: Southern terminus of the I-77 Express Lanes. The majority of the City Council supports the project.

Federal Highway Administration: Division of the US Department of Transportation responsible for overseeing the Interstate Highway System and providing formula funding to states from the Highway Trust Fund. Also the provider of the Transportation Infrastructure Finance Innovation Act (TIFIA) loan for the Express Lanes project.

I-77 Mobility Partners: The private Special Purpose Vehicle (corporation) created as a subsidiary of Cintra to construct, operate and collect revenue from the Express Lanes. Contractor with NCDOT.

Iredell County, North Carolina: One of two counties in which the section of I-77 with Express Lanes is located. Located directly north of Mecklenburg, with Statesville the county seat. The majority of the county's Board of Commissioners opposes the project.

John "Mac" McAlpine V: Director of Electronics at Michael Waltrip and former minister at Charlotte's Pleasant Hill Presbyterian Church who has organized other regional business leaders to lobby state legislators in opposition to the Express Lanes.

Kurt Naas: A civil engineer and owner of A-Line Corporation residing in Cornelius, NC and founder of Widen I-77 who is a vocal opponent of the Express Lanes project who is often quoted in press reports.

Mecklenburg County, North Carolina: One of two counties in which the section of I-77 with Express Lanes is located, and the county in which Charlotte (the county seat) is located. The majority of the county's Board of Commissioners opposes the project.

North Carolina Department of Transportation (NCDOT): State agency responsible for building and maintaining state roads, including Interstate highways. The owner of I-77 and future owner of the Express Lanes, and the public partner in the P3.

Pat McCrory: Current Governor of North Carolina and former Mayor of Charlotte, who supports the Express Lanes project, while many of his fellow elected Republicans oppose it.

Town of Cornelius, North Carolina: Located at the northern end of Mecklenburg County, immediately west of Davidson, along I-77 between Charlotte and Mooresville. The majority of the Town Council opposes the project.

Town of Davidson, North Carolina: Located at the northern end of Mecklenburg County, along I-77 between Charlotte and Mooresville. The majority of the Town Council opposes the project.

Town of Huntersville, North Carolina: Located in Mecklenburg County, just north of Charlotte along I-77. The majority of the Town Council opposes the project.

Town of Mooresville, North Carolina: Located in Iredell County, the northern terminus of the I-77 Express Lanes. The majority of the Town Council opposes the project.

Widen I-77: Organization of citizens who oppose the I-77 Express Lanes project, and favor instead adding more free lanes to the congested section of the highway.

Timeline of Events

Text - Corey

• 2007-NCDOT, SCDOT, the Charlotte Department of Transportation and other agencies form the Fast Lanes study to determine where express lanes could help minimize congestion over a 10-county area. The study finds the I-77 North corridor located in the Charlotte area, as a "high priority."

• July 2010- NCDOT conducts a feasibility study to convert existing I-77 HOV lanes into express lanes while also lengthening

• 2011 - NCDOT announces the I-77 project will be a public-private partnership, citing private funding would allow the project to be constructed faster and opener sooner than public funding

• 2012 - NCDOT explores use of variable tolling on the express lanes to address long-term congestion issues

• 2013 - Four potential bidders are shortlisted and have over 70 meetings with NCDOT officils. The meetings produce numerous draft proposals with bidders conducting an analysis to ensure they can meet the project requirements of generating enough revenue in the longterm to offset an initial investment

• March 31, 2014 - Bids are due and are sent to review through 200 pass/fail criteria

• April 11, 2014 - Cintra is announced as the selected company with a total investment of $647 million, requiring only a $95 million contribution from NCDOT and federal monies

• May 20, 2015 - Cintra and NCDOT achieve financial close on the project

• June 26, 2015 - Project reaches commercial close

• August 2015 - Construction begins

• Mid-2018 - Projected projection completion date (3.5 years from financial close date)

Maps of Locations

Maps - Corey

Map of the I-77 Corridor

Clear Identification of Policy Issues

Text - Malcolm

Narrative of the Case

Text - Corey

Interstate 77 is part of the Eisenhower Interstate System spanning from Columbia, S.C. northwest to Cleveland, Ohio. While the interstate passes through major metropolitan areas such as Charlotte N.C. and Charleston W. Va., its main route is through rural and mountainous areas.

Due to the abrupt growth in Charlotte and surrounding suburbs, NCDOT leaders [NEED TO COMPLETE SENTENCE].

NCDOT identified a number of benefits of the Express Lanes project [NEED TO CITE SOURCE]:

• Decreased fuel consumption and shortened commute time for drivers
• Increased carpooling and transit incentives
• Reliable travel times, especially during peak times
• Revenue generation to assist in paying for congestion relief along the I-77 corridor

Project Segments

Southern Section (I-3311-C)

This section extends from the Brookshire Freeway near Tryon St. onto I-77 N for approximately two miles, and along I-277 from I-77 to N. Brevard St. in north Charlotte. This portion requires right-of-way acquisition, along with current HOV lane conversion and new express lanes next to the existing general-purpose lanes.

The design includes a bridge providing direct access from I-77 to I-277. The southbound lanes of I-77 narrowed during construction of the existing HOV lanes will also be widened, resulting in two express lanes in each direction.

Central Section (I-5405)

The central section begins at the I-85 interchange (Exit 13) and continues approximately 15 miles to Catawba Ave.(Exit 28). It includes converting the existing HOV lanes to express lanes, allowing for two express lanes in each direction.

Northern Section (I-4750AA)

Beginning at the Catawba Ave. interchange and continuing approximately nine miles to State Route 150 (Exit 36), this section will feature one express lane in each direction, but no HOV lanes.

I-77 Feasibility Study

Text to come.

Project Structure and Finance

Solicitation for Proposals

Discussion Questions

Text - Both

Complete References of Cited (primary and secondary) Documents (with hyperlinks as appropriate)

BloombergBusiness. “No Easy Pass for North Carolina’s First Privately Run Toll Lanes.” Online Journal. BloombergBusiness, June 29, 2015. http://www.bloomberg.com/news/articles/2015-06-29/no-easy-pass-for-north-carolina-s-first-privately-run-toll-lanes.

Duncombe, Ray. “10 Things You Don’t Know about the Toll Lanes Planned for I-77 North.” Blog. Charlotte Agenda, August 11, 2015. http://www.charlotteagenda.com/12520/10-things-you-dont-know-about-the-toll-lanes-planned-for-i-77-north/.

Harrison, Steve. “Toll Lane Default Deal for I-77 Is under Scrutiny.” Charlotte Observer. August 18, 2015, sec. Local. http://www.charlotteobserver.com/news/local/article31384736.html.

Harrison, Steve, and Jonathan McFadden. “Bill Would Make County, Towns Pay for I-77 Toll Cancellation Penalty.” Charlotte Observer. August 6, 2015, sec. Local. http://www.charlotteobserver.com/news/local/article30344061.html.

Mecklenburg-Union Metropolitan Planning Organization, and North Carolina Department of Transportation. “I-77 HOT Lanes FAQs.” Cornelius.org. Accessed September 29, 2015. http://www.cornelius.org/DocumentCenter/Home/View/117.

North Carolina Department of Transportation. “I-77 Express Lanes.” NCDOT. Accessed September 29, 2015. http://www.ncdot.gov/projects/i-77expresslanes/.

Poole, Robert. “An Argument For Toll Lanes on I-77.” Online Magazine. Carolina Journal Online, July 30, 2015. http://www.carolinajournal.com/daily_journal/display.html?id=12260.

Puckett, Jim. “An Argument Against Toll Lanes for I-77.” Online Magazine. Carolina Journal Online, July 31, 2015. http://www.carolinajournal.com/exclusives/display_exclusive.html?id=12262.

Rochelle, Rodger. “I-77 Express Lanes Project: Project Update.” Raleigh, NC: North Carolina Department of Transportation, October 2014. http://www.letsgetmoving.org/images/uploads/pages/NCDOT-I-77-Managed-Lanes-Project-Oc’17’14.pdf.

“Snapshot.” Accessed September 29, 2015. http://www.bloomberg.com/news/articles/2015-06-29/no-easy-pass-for-north-carolina-s-first-privately-run-toll-lanes.

Sprague, Megan. “McCrory in Mooresville: ‘We Can’t Delay the I-77 Toll Lanes’.” Mooresville Tribune. June 14, 2015, sec. Local News. http://www.mooresvilletribune.com/news/mccrory-in-mooresville-we-can-t-delay-the-i-/article_808eac42-11f0-11e5-978d-cf8ed0d49ec7.html.