November 17, 2003

Dan Wallace, MICC (Montgomery Intercounty Connector Coalition),
Transportation Task Force Public Hearing

My name is Dan Wallace, I live in Silver Spring, MD, I'm here on behalf of the Montgomery Intercounty Connector Coalition, and I'd like to thank the commission for giving me this opportunity to testify today. I will comment about the financial impact of constructing a 17.5 mile Inter County Connector, or ICC, from the Laurel area to the Rockville/Gaithersburg area.

The current capital cost of an ICC is estimated at $1.7 billion, a considerable amount of money in anyone's book. Simple division informs us that this total breaks down to $97.14 million per mile. ThatÕs quite a lot of money in itself, but it's not the whole story, because it does not address the matter of financing. Neither the federal or state government can come up with this sum at once, so schemes are being offered to make up the difference. One under serious consideration is the issuance of $1 billion in Garvee bonds, which allow the state to borrow against future federal transportation funds. However, since the federal government is running a $400 trillion deficit this year, plus $87 billion in grants for Iraq, and most economists forecast an even larger deficit for next year, investors will consider Garvee bonds high risk, which means that servicing them will be high. The projected interest on these bonds over 30 years is $800 million.

That brings the real cost of an ICC up to $2.5 billion without adding in cost-overrun estimates, though the U.S. Department of Transportation uses 3% compounded annually to account for inflation, including the CPI for materials, etc. With this added in, the cost of an ICC begins to close in on $3 billion. However, just sticking to the $2.5 billion figure raises the cost of an ICC to $142.9 million per mile. Again, that's a huge amount of money for a highway, an amount that demands a close cost-benefit analysis.

To do this, allow me to refer to the 1997 State Highway Administration's Draft Environmental Impact Study, in which cost-benefit studies were done for an ICC on the Master Plan Alignment and an upgrading existing roads alternative (UERA).

Let's start with the cost then. In 1997 the capital cost of an ICC was estimated at $1.09 billion compared to $650 million for the UERA. Now, for the perceived benefits; according to 11 sample trips via highway shown by the SHA at peak travel hours in 2020, an ICC was projected to save 23% in travel time minutes over a no-build scenario compared to an 8% savings from road upgrades. However, if you translate this into minutes saved, an ICC saves only an average of 6.36 minutes over the road upgrade alternative. If you divide the 1997 cost difference between an ICC and road upgrades, $440 million, by 6.36 minutes, you will find that each minute saved would have cost $69 million. Apply the US DOT inflation figure of 3% compounded annually, and you're looking at a cost of $82.4 million per extra minute saved in 2003 dollars. You can imagine what the adjusted cost would be in 2020.

One thing you should know about this analysis, too, is that it is the SHA's best-case scenario. That is, in the 1997 DEIS, they published a sample of the 11 trips that had produced the best results in their model. Out of 500,880 total trips modeled, they used 11,017 trips, only 2.2% of the total. This means that the SHA average of 6.36 more minutes saved over road upgrades could be much lower than that in reality. For example, if the average additional time saved with an ICC is 5 minutes, then the cost per minute saved goes up to $105 million in todayÕs dollars.

It gets worse, because if you look at models for 2025 in the 2002 final report of the Montgomery County Planning Board's Transportation Policy Task Force for, you will find that a road scenario with an ICC costs $4.217 billion compared to $3.776 billion for a transit scenario that includes upgrades but not an ICC. The difference in projected cost is $441 million. However, this report projects that in 2025 the average time per trip for the road scenario with an ICC will be 17.33 minutes, whereas the average time per trip for the transit scenario is 17.31 minutes. That's virtually a dead heat. Except, that a road scenario with an ICC in the mix will cost an additional $441 million with no gain in benefits.

You will find copies of the various tables from the DEIS and the TPR report appended to this testimony to show you that I'm not making this up. Tonight, we are considering straight finance, nothing about the additional costs to communities and environment, or the toll charges that also seem inevitable. Even so, sticking to the straight financial math shows that an ICC will drain Maryland of almost all of its transportation dollars for three decades without benefit to the citizens of this state who would end up paying for it. Therefore, I urge you to make the wise financial transportation decision: drop the ICC and revive a road upgrade/transit scenario.