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Tuesday, June 24, 2014

Fuzzy Math Continues on HOT Lanes

It's not surprising that once the information NCDOT possessed on the projected costs of the I77 HOT became public, that the bureaucracy would go into full fledged spin mode.  That appears to be what happened yesterday as the date for signing the 50 year contract with the Spanish contracting firm, Cintra, looms later this week.

One could expect that to happen when the story went statewide stating roundtrip tolls would be in the $20/day range when the new lanes open.

WBT radio reported Monday some unnamed source from NCDOT saying "the tolls would end up being substantially lower - about $2 per trip".

$2 versus $10?  Reeeeeeaallly?  That does sound like a bargain!

But is it realistic?  Here are a few other numbers.

How many cars per day would need to pay $4 round trip on the HOT lanes to just cover the interest on the financing and give Cintra any sort of ROI?  To keep it simple, the below chart combines Cintra ROI and the financing interest rate and applies the same percentage to both.  Since these are likely going to be Triple-B bonds and Cintra as a private company probably demands a greater ROI than the below chart states, these numbers for required round trips per day are likely low.

Note: This is for the interest only.  No payoff of the bond principle or return of the capital.



Who knows?  Maybe this is what Cintra is planning on doing, but if so we can likely expect the same result as they are getting on their toll road in Texas.  See here for the story published just this past Saturday on that debacle.

What's more troubling is that Cintra won't release the details of their supposedly updated study on usage and toll rates until after the contract is signed.  According to this Time Warner report..."Cintra's most recent study on toll costs with revised estimates won't be released until the company signs the contract"

Channeling your best Nancy Pelosi, please say "we have to sign the contract before we know what's in it."

We all know how well that approach works out.

1 comment:

  1. Here's what it costs on a Parsons Brinkerhoff toll road to drive the same miles as Mooresville to Charlotte -- cost is $18.20. And this was last year. When left Colorado and moved to North Carolina, this toll road cost us $8 to get to and from the airport. By 2013, three years later, it had ballooned to $18.20. You can click on this link to see for yourself: http://ehi.htallc.com/Customers/PrintCustomerReceipt.aspx?Payment_ID=10763650&ContractNumber=321499653&BillID=3437&rAgentID=203

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