A Lesson for the Outer Beltway dreamers

[thelakelander]

Sometimes if you build it, they don't come!  It was mentioned earlier today in the Greenville Elements of Urbanism article that this city has a privately funded toll road.  Our proposed +$2 billion Outer Beltway is supposed to be of the same cloth.  Before we get in too deep, taking a closer look at Greenville's situation should be considered.

Greenville Southern Connector headed for bankruptcy - default likely Jan 1 2010



US Bank, trustees for the bondholders of Connector 2000 Association, the owner of the Southern Connector tollroad in Greenville South Carolina have issued an official notice that they expect a default Jan 1, 2010 with insufficient funds being available from the pike to make debt service that's due. They say the Association concluded that converting the not-for-profit into a for-profit toll concession to avoid default - as occurred with the Pocahontas Parkway in Richmond VA - is not feasible.

In or outside bankruptcy there will be a forced "restructuring" of the bond capital, the US Bank trustees say.

Investors will take a hit. (NOTE: US Bank would like us to note that they did not use the word "forced" of the capital restructing, though that's what we think it is! Also we have corrected the second sentence to reflect that the Association concluded sale to a for-profit concession was infeasible ahead of bankruptcy restructuring, not US Bank - editor 2009-10-07)

South Carolina DOT has already declared "an insolvency Event of Default" in a letter of June 12 which called on the not-for-profit owners to seek a "plan of adjustment." SCDOT says it reserves the right to terminate the Association's License Agreement under which the Connector Association operates the tollroad. Macquarie Capital is working for the trustee.

Accountants blast Association

Things may be worse than the official reports. Association accountants Bradshaw Gordon & Clinkscales in a statement accompanying an Update on the association's financial condition say that accounting standards board (GASB) requirements have not been met, and warn that the effect of the pike's departure from accounting standards has not been determined.

They say in one passage: "Management has elected to omit substantially all of the disclosures and statements of cash flows required by accounting principles generally accepted in the US...."

Deficiency of $163m

The statement reports as of June 30  liabilities of $322m against assets of $160m for a net deficiency of $163m - comically they report cents as well as individual dollars. The largest liabilities are bonds of $304m but the Association also owes  the state DOT some $8m in unpaid license fees and interest.

Interest ten times operating profit

Toll revenues in the first half of the year were running at barely $5m/yr against operating expenses of $3.2m for an annual operating surplus of just $1.8m. Interest expense was ten times that and net loss was running at $22.8m after interest, depreciation and amortization.

Accumulated deficits are $163m, and they are being added to at about 14%/year.

Toll revenues for the first half of 2009 were running at 4% below year-ago levels, pretty much within the normal range for tollroads around the country. Since then they have been flat or slightly above year ago monthly levels.

Trouble from the get-go, traffic below half forecast

The Connector looked to be in trouble from virtually the day it opened in March 2001.

Traffic had been forecast after 'ramp-up' at the end of the first year to be around 28k/day so traffic of 20k was expected in the beginning.

Traffic has always been below half forecast levels, starting at 10k and rising at about expected annual percentage rates, but from the disappointing base.

Eight years after opening traffic is 15k to 16k/day versus 33k forecast when the original financing was done in 1998. 

The original traffic studies seem to have been fundamentally flawed.

Law suits on forecasts

Robert Bain - UK-based author of the recent book on toll road forecasting - tells TOLLROADSnews that he has been engaged as an expert witness twice in the last 18 months by lawyers contemplating taking legal action against traffic forecasters for over-optimistic predictions.  Neither engagement resulted in lawsuit to date.  "It's only a matter of time", says Bain.

Why forecasts failed

Our analysis is that the Connector (I-185) simply does not serve major commuter flows within the 540k pop metro area. These flows are on a southeast-northwest axis Simpsonville, Mauldin, Greenville and along US276 and I-385. This is mostly to the north and east of the Connector.

The Connector including the toll-free portion of I-185 swings too far south, southwest and west to compete for major internal metro area traffic.

Located to serve development, not to relieve congestion

The pike was loccated to serve new industrial and residential development on the southern and southwest fringe of the area, development which has occurred, but more slowly than the tollroad promoters predicted. 

Higher paying truck traffic is tiny. 96% of vehicles are 2 axle.

Slower employment growth than predicted in the area has meant that for the most part the free roads have adequate capacity even for peaktime work trips. The exception is I-385 northbound through Mauldin in the
mornings weekdays.

But trips on the Connector are too much longer in distance to be an attractive alternative for most motorists.

Studies show the  Connector corridor generally has good developmental potential still, although portions are handicapped by lack of utilities like sewer.

New Stantec T&R study

A traffic and revenue study by Stantec published in May this year found toll rates were too low to maximize revenues. Toll rates should be increased 50 to 75%, it recommended.

The Association has since gotten SCDOT permission for three 25c toll increases, the first immediately, a second Jan 1 2012 and a third Jan 2016. 25c toll increases could be implemented every four years thereafter. Ramp tolls would be increased proportionately. 
Stantec now project toll revenue of $10.2m by 2016 based on 16.3k daily traffic and $20.3m in 2026 based on traffic of 25k/day.

The Stantec report contains no analysis or suggestion as to why the 1990s study was so wrong.

Indeed they don't even mention the existence of that report.

Maybe the bankruptcy court can exhume it?

Southern Connector website:

http://www.southernconnector.com

http://www.tollroadsnews.com/node/4390

[thelakelander]

For those who have followed the HSR corridor debates on this forum, the Southern Connector experience is one of the main reasons, many at Metro Jax are not in favor of an I-4 route.  These are also the same reasons the feasibility of the Outer Beltway has been called into question.

Why forecasts failed

Our analysis is that the Connector (I-185) simply does not serve major commuter flows within the 540k pop metro area. These flows are on a southeast-northwest axis Simpsonville, Mauldin, Greenville and along US276 and I-385. This is mostly to the north and east of the Connector.

The Connector including the toll-free portion of I-185 swings too far south, southwest and west to compete for major internal metro area traffic.

Located to serve development, not to relieve congestion

The pike was loccated to serve new industrial and residential development on the southern and southwest fringe of the area, development which has occurred, but more slowly than the tollroad promoters predicted. 

Higher paying truck traffic is tiny. 96% of vehicles are 2 axle.

Slower employment growth than predicted in the area has meant that for the most part the free roads have adequate capacity even for peaktime work trips. The exception is I-385 northbound through Mauldin in the mornings weekdays.

But trips on the Connector are too much longer in distance to be an attractive alternative for most motorists.

The comments mentioned in bold also describe the Outer Beltway's path:

1. Does not serve main commuter flows...

2. Swings too far south to compete for major internal metro traffic...

3. Located to serve new development instead of relieving existing traffic hotspots....

4. New development has not occurred at the pace predicted in original estimates (sounds like the skyway)...

6. Less truck traffic than anticipated.  Why pay when the free route gets you there just as fast?...

5. Route to far out of the way to be attractive alternative to most commuters....

[Ocklawaha]

Well the old Salt still has a memory, after a 1/2 night search, THIS IS THE GREEN COVE SPRINGS BASE property that will be killed by the Beltway. Oh and Lake, the answer wasn't quite right, it was 800 SHIPS! + Air Station.

Lake, I see it doing a couple of negative things right off the top. The worst is Clay County letting it box in the former Green Cove Springs Naval Air Station Lee Field. That runway wrap on the South fence, would prevent this beautiful facility, with all of it's wasted sundry infrastructure, from ever being expanded into a modern Jet Port or Master Jet Base. It may indeed be the best sight for either type of aviation related use. 

There is not much chance of it relieving any pressure from SR21, to the North. Due to the long dip toward the Southwest between Green Cove Springs and SR16, there are so many wasted miles, that the truckers will avoid it like the plague.

Note that it also slices a whole new corridor through Black Creek, one of Florida highest rated natural wild rivers, canoe, and fishing streams. Worse still, it will chew up more of the realestate that lays east of Middleburg above the North Prong of Black Creek. This area is sacred soil to the military and NOBODY is shouting! In 1864, the Battle Of Middleburg, took place after a Federal raid on the village from a landing at Green Cove. Somewhere along the creek, east of Middleburg, loaded with "bounty" the Federals were jumped by the 2Nd Florida Cavalry and a section of the Marion Flying Artillery. While deaths were limited due to the small size, it is one of the few stand up battlefields left in Florida.

To the North, if that segment is EVER built makes much more sense as it could serve as a connector between Cecil Field, the CSX and NS huge containers and piggyback facilities in NW Jax and perhaps somehow hook back into 295, Dunn, Hecksher, for an easy sprint to the port. Something like THAT could even be built as multimodal from the start. Hell, we might even get back on the I-22 Map.

The Southern route is a disaster waiting to happen.

OCKLAWAHA

[CS Foltz]

Greenville escapade is a classic example of "Build it and they may come"! That part of the world is even more depressed then Florida, at least last time I was through there it sure did look like that! We don't need building for the sake of building, we need to have some vision and some kind of a plan not just knee jerking responce to perceived issue's!

[tufsu1]

Failures like this will make it even harder for the Jax. Outer Beltway to move forward.

[tufsu1]

Greenville escapade is a classic example of "Build it and they may come"! That part of the world is even more depressed then Florida, at least last time I was through there it sure did look like that!

I sure didn't see that on my visit...maybe you should make a trip

[will]

We don't need more roads. We can't take care of the ones we have and it will only encourage more sprawl. Imagine if the billions spent on road projects had been put even in part towards public transportation that encouraged denser centralized growth. We'd have a livable, vibrant city surrounded by real countryside, rather than the sprawling concrete mess we have now.

[jandar]

Thats why most of us who wanted the road were/are pissed they changed the routing. The bridge should have been in Fleming Island, not Green Cove Springs.

Developers got their hands in too much on this road.

[Ocklawaha]

No comments?  I still think closing in the old base is very short sighted, even suicidal to more upper income growth. A restored airport, with runways lengthened from 5,000 to 8,000 feet, fixed base operator, lighting, beacon etc. could cause the boom Green Cove Has needed since the Navy left town.

Another consideration, the Navy's search for a new master air base in the Jacksonville area. Look at the land east and south of the old base. The approaches are over either water or pine trees. Clay County should be asking itself, now that it OWNS the airport after all of these years, "Would 30,000 certain jobs help our economy?"

OCKLAWAHA

[Ocklawaha]

  IDEA! IDEA!?

There would be no better way to shoot this southern alternative in the head, then for MJ and our "force" to do a study and articles, comments, and see some threads on the old air base, aka: "Sleeping Giant of Green Cove Springs. So many opportunities, MAJOR OPPORTUNITIES, that have sat dormant since 1965. The new PORT OF GREEN COVE SPRINGS, Clay County Port Authority, is already making some headway across the street in the old Naval station portion. Think of the development ad's they can run that not even Jacksonville can touch... Need to tie up your ship? We have room for 800!  Need rail to port? We have it! Need rail to barge to air? We have that too! Guys, this is HUGE, we could move that highway.

OCKLAWAHA

[Dapperdan]

I see no value to this roadway whatsover, because it meanders around in the southern end, it will probably be quicker to just contiue going North on 95 go up to 295 and hit 10 that way and vice versa. I think it is a terrible mistake and since the road is already partway built, with Better Jacksonville taxes no less, it seems like they are going to toll a road that is already paid for in some spots. Doesn't make any sense to me.

[JeffreyS]

The bri

Thats why most of us who wanted the road were/are pissed they changed the routing. The bridge should have been in Fleming Island, not Green Cove Springs.

Developers got their hands in too much on this road.

Very true it would then serve people already there and suffering from traffic in Flemming Island and Julington creek. Out west it would serve Oakleaf and Cecil. I still wouldn't love the project but the rational would not have been build more sprawl.  And my friends more sprawl is the only reason this project was ever conceived.

[tufsu1]

In this case, the Developers wanted to route the road AWAY from their project.

[CS Foltz]

tufsu1 ....the last time I was in that area was 9 yrs ago and that area was depressed even then! There may be some building taking place but does not appear to be enough there to make a difference one way or the other! That part of the world seems to be a lost cause for a variety of reasons - that route does not take into account the population demographics or the centers! Building a road, especially a TOLL ROAD, without figures to substantiate that road going in, is silly and a waste of money! Rail for Dames Point should have been a gimme from the start but was not........road was the first choice not rail and they are just trying now to integrate rail into the transportation picture.........no vision and darn sure no plan! Choice of rail or road for transporting many many containers should have been rail from the on start, trucks for local only not intermodal use out bound to who knows how many miles. Green Cove Springs has much more potential than Jacksonville has between possible Airport and related services, Shipping for both storage and useage and so on! Developers will have a field day outside of the area and then some!

[Ocklawaha]

Final approach over the St. Johns...

I keep saying, OLD NAVAL AIR STATION and NAVAL BASE, GREEN COVE SPRINGS! Wave that under the developers noses... Wake the hell up and smell the money...

"Oh God, something JUST roared over my house by 6 mile creek! Swore to God that I just saw two Bearcats and an Avenger, heading west!"


Isn't Green Cove Springs beautiful?


CLAY COUNTY, Green Cove Springs, "Hello", anyone home? This could be your future calling!

More SOCO please!


OCKLAWAHA