Contract Cancellation Efforts Hamstrung by Legislation

The good news is NCDOT is working with us to solve the I77 toll issue. The bad news is that’s the only good news.

I77 Advisory Group Meeting

Yesterday Transportation Secretary Trogdon presented the results of NCDOT’s analysis on several termination/modification scenarios. Here’s a summary:

The important number on this chart is not cost, but rather the “Hypothetical Score.” Under state law, all transportation projects over $50 million must be scored and ranked through a process called the Strategic Transportation Initiative (STI). Those that score high enough get funded; those that do not are either dropped or put back in the hopper for the next funding cycle.

Let’s look at the scores for the various options.

Option E is buying out the contract and operating the toll lanes publicly. Option F is “Complete and Delete,” option C-1 is “Complete and Modify” discussed earlier. These score the lowest, from 45-55. They happen to be the only ones that involve cancelling the contract.

Option J is basically hardening the shoulders so they could be used during peak hours. This an incremental improvement that, while providing some measure of relief, obviously does not address the main issue of 50 years of private tolling.

Option I converts a toll lane to a general purpose (GP) lane up to exit 28, and adds a GP lane across the causeways up to exit 36. This option scores highest at 70-75.  (Option H is basically a subset of this: adding GP lanes across the causeways.) Under this option, the contract remains in place.

So what do the scores mean?

Since STI was adopted in 2013, the general rule of thumb is a project must score 73 or better to be “in the money.”  Therefore only option I has a realistic shot of being funded. By way of comparison, widening I77 south through Charlotte scored 87. Widening I77 north from Mooresville through Troutman scored 85.

The begs an obvious question: how could widening I77 with a new lane through Troutman score higher than widening I77 through LKN on a project that’s three quarters finished?

The Wrong Tool

The answer is that STI was designed to prioritize new road projects and improvements. It was never intended to rank/score cancelling a contract.

STI calculates a numerical score on criteria like congestion relief, benefit vs cost and safety.  While this makes sense for construction projects, STI a square peg for our situation.

For example, cancelling the contract incurs a substantial cost with zero benefit. It does not improve safety and, to NCDOT’s rubric, had a marginal impact on mitigating congestion (though most of us would disagree). The net result is the nature of our issue hurts the STI score, and we end up with the stupid conclusion that widening I77 through Troutman is a superior project.

STI is simply the wrong tool. It’s like we were stuck with I77 toll lanes by being dealt a losing poker hand, and now NCDOT is trying to make us whole by playing canasta. Not their fault because they didn’t make the rules, but that’s small comfort given the outcome. (More on that in a moment.)

It Gets Worse…

That’s not all. STI is an incredibly laborious, plodding process. The best-case scenario is option I would be scored and ranked by 2020, and construction bids let in 2021. Final completion/modification would be around 2025. Again, that’s the best-case scenario, assuming we have support from the governor’s office and everything goes perfectly. As we seen, things never go perfectly and governors change.

And remember, under this option the 50 year contract remains in place.

Clearly I77 is an exceptional situation and should be dealt with on an exceptional basis. This means specific, targeted legislation addressing the issue. Which means we need help from the state legislature, ie the North Carolina General Assembly (NCGA).

…and Worse

Unfortunately, in every situation, every interpretation, and every opportunity where the NCGA could have helped they have made canceling/modifying the contract more difficult. In the last legislative session alone, the NCGA passed laws that:

  • Prohibit using STI for any funds needed to modify or cancel the contract
  • Subject any such funds to an express appropriation by the entire legislature
  • Force repayment of the bonus allocation if tolls are ever eliminated
  • Prohibit any proceeds from the $3 billion Build NC road bond package from being used for I77
  • Force the I77 LKN project to compete directly with I77 through Charlotte and I77 through Iredell as part of the STI corridor cap

Then there was H1029 which set aside $300 million in surplus highway funds to pay for cancellation cost. It passed the House unanimously but never got to the floor of the Senate because it was brushed off as “unconstitutional.” Really? Every bill is run through a legislative analyst for constitutionality. At the very least, is it too much to ask our senators and representatives to talk to one another?

And those are the fruits of just one legislative “short session.”


NCDOT successfully argued in court that the ultimate safeguard of the public interest was their ability to cancel the project at any time in their sole discretion:

While the court bought that argument, we’ve since learned it’s patently false. Not only that, the legislature has since passed laws that make it extremely difficult- pragmatically impossible- to cancel or modify the contract.

In essence the court ruled this mess was legal because the legislative process was followed, but you have to wonder: at what point does getting out of this mess become an undue burden? Where else in the history of the State of North Carolina has a region been required to obtain approval of the entire legislature to modify or cancel a road project?

Maybe the courts could provide an answer, because barring a paradigm shift in attitude, the legislature is not going to help.




One Response to Contract Cancellation Efforts Hamstrung by Legislation

  1. Conway Jolly says:

    Toll lanes, in general, are a state-wide issue. Toll lanes all over the state and new travel cost, along each road. Consultants have told us this is a typical contract. So, we can expect toll trouble all over the state.

    The state should get ahead of the curve as the population grows. Spending money on lawyers and consultants to defend bad contracts will not build roads. Toll lanes should be outlawed.

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