Media & Public Relations
COMMISSION NEWS RELEASE
Contact: Carl DeFebo
Phone: 717-920-7176
or
Bill Capone
Phone: 717-939-9551, ext 3040
 October 30, 2009
State Files I-80 Tolling Addendum to Answer Federal Questions

Submission puts PA one step closer to addressing its transportation-funding gap.
HARRISBURG, PA (10/30/2009)(readMedia) -- Pennsylvania today submitted a formal written response to the Federal Highway Administration (FHWA) memorandum issued last fall about the Commonwealth's joint application to convert Interstate 80 to a toll road. The filing by PennDOT and the Pennsylvania Turnpike Commission (PTC) includes a detailed financial analysis in support of the I-80 tolling application that was submitted in October 2007.

"By filing this addendum, we're taking a vital step toward closing a huge transportation-funding gap for our state," said PTC Chief Executive Joe Brimmeier. "Without tolls on I-80, state lawmakers and the administration would have to plug a $473 million gap in next year's budget, and that gap will steadily widen, resulting in a $60 billion decrease in infrastructure funding over the remaining 47-year term of the I-80 lease."

The independent financial analysis - completed by Provident Capital Advisors of Baton Rouge, La. - responds to issues raised in FHWA's 2008 application review. It concludes that lease payments being made to the state under Act 44 are reasonable compared to recent North American public-private highway leases. (A copy of the filing is accessible at www.paturnpike.com/i80.) The submission is seen as a milestone by transportation officials who say that the state has done its best to address federal questions to date.

"Act 44 directed PennDOT and the Turnpike Commission to enter into a lease giving the Turnpike oversight of Interstate 80 as a toll road," said PennDOT Secretary and PTC Chairman Allen D. Biehler, P.E. "We have the lease in place, and, with the additional information being provided to the Federal Highway Administration, we hope for a speedy decision."

Under Act 44, signed into law in July 2007, the Turnpike has been making quarterly payments to PennDOT for more than two years. A tenth payment made Oct. 29 brings the total furnished thus far to more than $2 billion in supplemental funding for roads, bridges and mass transit. Today, Act 44 funds are at work on hundreds of infrastructure projects statewide: PennDOT has so far improved 980 miles of roadway and replaced 92 bridges with Act 44 funds. Up to now, Act 44 funds have come entirely from Pennsylvania Turnpike tolls (all new revenue from a 25 percent toll increase in January has been dedicated to support Act 44). In contrast, if Act 44 is fully implemented, I-80 motorists would support about 35 percent of the payment obligations, while about 65 percent would derive from Turnpike travelers under the current financial plan.

Yesterday's filing provides an analysis of the I-80 toll-funded payments being made under the lease agreement between PennDOT and the PTC. A study of comparable highway lease agreements or Public-Private Partnerships (P3s) completed in North America over the past decade demonstrates that the Act 44 payments are within market levels - a key policy concern of FHWA.

"The study provided to FHWA shows that the I-80 rent levels fall within the market range for public-private transactions," Brimmeier said. "The financial terms make sense both for the Turnpike and the Commonwealth, and we're certain that the FHWA will give the information we provided a fair and thorough evaluation as they've done every step along the way."

The filing also includes the following FHWA-requested information: current and future capital needs on Pennsylvania's interstate system and funding available to meet them; existing I-80 condition and planned capital investment; comparison of a 2005 PennDOT I-80 tolling study with the current proposal; and documentation of the nine proposed tolling locations that appear to be most favorable at this time.

If I-80 is tolled, Act 44 provides that annual payments to PennDOT would increase by 2.5 percent per year starting in July 2010, growing to an average $1.67 billion a year over the 50-year lease. However, if I-80 is not tolled, payments would drop to a fixed $450 million per year. Accordingly, Act 44 will produce $83.3 billion in new funding over 50 years if I-80 is tolled, but only $23.7 billion if I-80 isn't tolled - a nearly $60 billion difference.

PennDOT and the PTC formally applied to toll I-80 under the federal Interstate System Reconstruction and Rehabilitation Pilot Program on Oct. 13, 2007. In a response dated Dec. 13, 2007, FHWA requested additional information, including a traffic-and-revenue study and an engineering analysis. That information was provided July 22, 2008. On Sept. 11, 2008, FHWA replied that it could not move the application forward at that time due to technical concerns. Primarily, the FHWA sought to understand how the I-80 lease payments related to market levels for similar rental payments. (FHWA did indicate that paying rent was an eligible use of toll revenues under the pilot program.)

Among the other features in the state's tolling application are:

  • a cashless, Open-Road Tolling (ORT) system where vehicles pass at highway speed under one of nine tolling sites - or "gantries" - located between I-80 exits at proposed intervals of 20-50 miles;
  • an incentive that would allow all non-commercial E-ZPass customers to travel through their first I-80 toll point without being charged (meaning passenger vehicles equipped with E-ZPass could travel an average of 50 miles on I-80 without paying a toll);
  • an E-ZPass rebate for commercial carriers that could lead to savings of up to 20 percent for truckers, depending on their average monthly toll bill; and
  • a comprehensive, $2.5 billion, 10-year capital plan to inject $250 million a year in various I-80 improvements - nearly four times greater than the $60 million per year now spent on I-80.

To see more correspondences between FHWA and the Commonwealth or view additional background materials, please visit www.paturnpike.com.
 

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