A $9 Billion Highway That Promises to Pay for Itself

A $9 Billion Highway That Promises to Pay for Itself
ANDREW ZALESKI SEP 26, 2017
Maryland Governor Larry Hogan’s “Traffic Relief” plan would add toll lanes to the state’s busiest thoroughfares. Does the megaproject’s math make sense?

Last Thursday, Maryland Governor Larry Hogan unveiled a $9 billion project to widen three of the state’s most heavily trafficked highways: I-270, I-495—also known as the Capital Beltway—and MD-295, the Baltimore-Washington Parkway.

What the governor’s office dubbed the Traffic Relief Plan involves constructing two express toll lanes each way—or four total toll lanes—to all three highways. Widening the Capital Beltway and the section of I-270 connecting the growing commuter-city of Frederick to Washington, D.C., would cost an estimated $7.6 billion, which the state expects to be financed via public-private partnerships: Private companies would build and maintain the new toll lanes, sending a portion of their revenue to the state every year. Hogan’s office billed that effort as “the largest proposed P3 highway project in North America.”


The revenue from those toll lanes would also fund the expansion of the Baltimore-Washington Parkway, a comparatively bucolic 32-mile-long two-lane that largely parallels four-lane-wide Interstate 95. Doubling its capacity to four lanes is expected to cost $1.4 billion and comes with the added hurdle of convincing the National Park Service to hand over the woodsy route to the Maryland Transportation Authority.


On paper, this looks like a textbook example of the sort of voter-friendly infrastructure project that the Trump Administration has been promoting: privately funded and auto-centric. But in a state once considered a leaderon sprawl-containing “Smart Growth” policies, this is also a kind of pave-a-thon from another era—one that comes with some extremely unrealistic cost estimates.

“When I heard about the governor’s announcement, I thought, ‘There’s a 20th-century solution to a 21st-century problem,’” says Emily Scarr, director of Maryland Public Interest Research Group (PIRG).

A P3 Primer

America’s second-most popular governor is a blue-state Republican who has been adept at maintaining a safe distance from President Donald Trump while serving the needs of the state’s millions of suburban voter-drivers. This plan is aimed squarely at that cohort, and they are indeed hurting: Washington, D.C., now tops the list of gridlock-plagued cities in the U.S., with 82 hours of delay per commuter, according to the Texas A&M Transportation Institute. Maryland Department of Transportation spokeswoman Erin Henson told the Baltimore Sun that rush hour traffic on each of the highways in the Hogan plan “amounts to seven hours every weekday.” Daily, that’s 260,000 cars on I-270, 240,000 on I-495, and another 120,000 on the Baltimore-Washington Parkway. “These three massive, unprecedented projects … will be absolutely transformative, and they will help Maryland citizens go about their daily lives in a more efficient and safer manner,” Hogan proclaimed at the unveiling event.


A key feature of Hogan’s proposal is the premise that high-occupancy toll lanes are essentially self-financing: With private developers shouldering the design, construction, and maintenance costs and tolls serving as a reliable source of regular revenue, the project would be subsidized by the legion of well-heeled commuters willing to pay extra to escape gridlock. And the suburbs of D.C., home of America’s four wealthiest counties, have no lack of them. “Not only do P3s dramatically decrease the cost to taxpayers, they also have the potential to generate billions of dollars in much-needed revenue for the state,” Hogan said at the announcement last week. “It won’t cost us tax dollars.”

But toll roads aren’t always cash-making slam-dunks: Virginia, a leader in P3-style highway projects, has tempered its enthusiasm for the model lately. And there’s a similar project nearby that shows this new highway expansion might be making promises it can’t keep. In 2014, 8-mile-long, two-lane express toll lanes opened on I-95 north of Baltimore. Then-Governor Martin O’Malley’s administration pegged the cost of the project at $645 million, an estimate that ballooned to $1.49 billion. Anticipated revenue from tolls has fallen short: The total toll collected on those lanes over one year from 2015 to 2016? Just $11.4 million, according to Ben Ross, chair of the Maryland Transit Opportunities Coalition.


“They say it’s a P3 and claim the taxpayers don’t have to pay any money, but even if the entire $9 billion is put up by a private partnership, that doesn’t mean residents and taxpayers aren’t paying in another way,” says Matt Casale, transportation advocate with U.S. PIRG.

For Whom, the Tolls?

The highway plan’s main goal, as the name says, is traffic relief. The principle of induced demand is a familiar one to CityLab readers, and gets frequently invoked by foes of highway-widening. But making the new lanes a priced resource can change that equation. “If new lanes are ‘free,’ everyone crowds in, so you pay for using the road in time and gas wasted rather than money,” says Loyola University Maryland economics professor Stephen Walters. “But there’s lots of evidence that the price system—tolls—works very well to reallocate demand over time, coaxing those who value the road least at peak times not to use it then, while making high-valuing users pay for the privilege.”

When Stockholm implemented congestion charges on several highways in 2006, traffic was shown to decreaseby 22 percent. Maryland’s Intercounty Connector was constructed in 2011 as a toll highway expressly for the purpose of easing congestion on the Beltway, and, according to AAA, it looks like that has slowly begun to happen.

Still, PIRG’s Casale submits that the danger of induced demand lurks in any sort of highway expansion, even one that makes use of toll lanes. As PIRG has discussed in a series of reports, many highway expansions in the U.S. are tolled expressways, yet exhibit the same problems that non-tolled expressways do: New lanes attract more drivers, which leads to more traffic, which leads to congested roadways—even before the lanes are fully operational.


In North Carolina, tolled express lanes are currently being added to I-77 through a P3 arrangement. But since construction began, the project has already run into many problems. “The private construction firm that the state hired … has created a 26-mile work-zone where drivers had to dodge roadway debris. Congestion has increased and crashes are up 41 percent,” Casale says.

New toll expressways also raise the divisive specter of “Lexus lanes,” something with which Californians are familiar: tolled expressways that are too expensive for many drivers to use. In 2009, the Maryland State Highway Administration completed a study to assess potential costs incurred to widen I-270 from Frederick to Shady Grove using tolled expressways, and concluded it would cost no less than $4 billion. To pay that back over 30 years, the pro-rail Maryland Transit Opportunities Coalition estimated that the state would have to charge $38 per car to drive the 28 miles from Frederick to Shady Grove in Montgomery County.

What’s more, expanding I-270 and the Capital Beltway in what are already crowded population centers and residential regions will require displacing people and houses—further driving up costs. That same 2009 studyfrom the SHA said a widening of I-270 “will displace a large number of residences and requires minor property takings.”And development around the Beltway is far more dense; the current ring road threads through some of the most valuable real estate in the country.


“Where the heck do four lanes go around the Beltway?” wonders Dru Schmidt-Perkins, executive director of the transit-friendly advocacy group 1000 Friends of Maryland.

A Rebuke to Rail Fans

For Baltimore-area residents like Schmidt-Perkins, a highway mega-project aimed at suburban commuters is also a galling reminder of Hogan’s decision two years ago to cancel the Red Line, a 14.2-mile-long east-west Light Rail line that was supposed to help connect Baltimore’s most overlooked and impoverished neighborhoods to public transit. “A major transportation project that had been planned for decades was stolen from Baltimore,” she says

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