By Mary Ebeling
The first leg of Maryland’s Intercounty Connector—known locally as the ICC and envisioned as a multimodal transportation corridor—winds 18.8 miles between I-270/I-370 in Montgomery County and U.S. 1 in Prince George’s County. Supporters sold the project as one that would relieve gridlock, improve mobility, and respond to homeland security concerns. But the funding vision is currently challenged by reality, with traffic volumes and toll revenue much lower than projected.
Flat to declining VMT has been with us since 2004; to blame this trend on the recent economic downturn is probably not realistic. Upon consideration of VMT trends over the past decade, the importance of developing better models to predict automobile traffic volumes emerges as a key challenge faced by Departments of Transportation across the country. As more DOTs enter into public-private partnerships to build and operate toll roads, more accurate predictions of revenues from tolls are needed.
The importance of more accurate projections for travel demand hits home in more than one location. As numerous articles appear documenting the disappointing toll revenues generated from highway construction, it might be worth asking why this is the case. A recent report from Fitch Ratings calls demand forecasting “a key vulnerability…The probability of over-estimation remains high despite decades of experience with forecasting demand on transport projects.”
Volumes and tolls on the ICC are lower than what the low projections forecast. There are three routes paralleling the ICC and, while there is some documented congestion relief, it appears that many drivers chose to ride the toll-free routes rather than pay for the ICC.
The same has been found for other tolled road projects, notably the State Highway 130 corridor in Texas. Moody’s comments:
Traffic and revenue will continue to grow at a slow to moderate, yet inadequate pace in order to meet the current debt service profile….
Even under optimistic scenarios, Moody’s forecasts a shortfall in available funds to pay the June 30, 2014 debt service payments.… [A]bsent a sponsor injection of equity, a debt restructuring, or some other method of generating significantly more revenues, there is a high likelihood of a payment default in June 2014.
While the ICC is substantially complete, other large roadway projects with price tags of over a billion dollars are still on the books in many states. The Illiana expressway is one such recently-approved project. This project pits state traffic forecasts against the numbers generated by CMAP—Chicago’s metropolitan planning organization.
These experiences suggest that, when planning for major roadway expansions or tolling projects, DOTs should consider three new factors in traffic forecasting: first, how flat-to-declining VMT will affect revenues collected; second, how the presence of untolled parallel roadways will also impact toll revenue; and third, how driver value-of-time plays into roadway choice, also affecting toll collection.
Mary Ebeling is a Transportation Policy Analyst at SSTI.