Part Two of a four-part series analyzing Cintra’s and NCDOT’s public claims using their own numbers.
In Part One we discussed Cintra’s projected toll rates. In this installment, we’ll look at how that translates into annual toll revenues.
Fully Ramped Revenues Top $30M
The chart below shows Cintra’s estimate for annual toll revenues for the first twenty years of operation:
Cintra estimates “fully ramped” revenues, occurring in 2021/2022, on the order of $32M in 2012 dollars. Adjusting for inflation, this would be around $34M. (You may recall we reported this number in an earlier post.) By the contract’s end, Cintra estimate annual revenues will be $147million(2012 dollars) or $397million in 2068 dollars.
Total revenues over the life of the contract are $4.3 billion dollars. Remember, those are in 2012 dollars. In nominal dollars revenues total$8.3 billion.
This number is important because one of the main rationale for the project is we get $650 million in infrastructure for “only” $94million in taxpayer contributions. However, the $655million (of which a little over $400million is actual construction and the bulk of that is in Charlotte) no longer longer looks like a bargain given the LKN commuter will be paying for it ten-fold.
While $34Mmillion for starters sounds steep, Cintra notes that the per-mile charges are in line with what is charged at other private toll lanes in the U.S. Here is their chart showing the per-mile costs of I-77 vs other toll lanes:
I-77 are the green bars. When it opens, I-77 will have the fourth lowest per-mile rate in the country, and even by 2035 it will still be in the middle. Therefore the revenue estimate seems reasonable. However this analysis ignores the size of the metropolitan statistical area (MSA) supporting these revenues. The projects listed above are in large metro areas- Los Angeles, DC, Houston, etc. Charlotte is the second smallest metro area with private toll lanes. Comparing the estimated toll revenues to MSA population yields a far different answer:
Note how toll revenues roughly correlate with MSA population, i.e. the larger the metro area, the higher the toll revenues. The one glaring exception to this, of course, is Charlotte, which has projected toll revenues of the same magnitude as DC, Orange County (LA) and the Dallas-Fort Worth area yet less than half the metro population.
$283 Per Year For Every LKN Resident
Putting this in perspective, LKN currently has a population of around 120,000. In order to achieve $34million in annual revenues every man, woman and child in LKN would have to pay $283 a year in tolls. If you have a family of four, it would cost you over $1,000.
Of course, not every toll payer will be from LKN. Some will come from Charlotte and others will come from out of town. However, the toll rates are highest when there is the greatest congestion, and the greatest congestion occurs during rush hour. Who is on the road during rush hour? Probably not tourists….
Toll advocates like to argue that you will have a “choice” to use the managed lanes. (Let’s put aside for the moment that tolls are therefore discretionary income and this money will longer by circulated in our local economy.) Indeed, you will have a “choice”: pay an exorbitant toll or sit for ever longer periods of ever-worsening traffic.
The Lake Norman commuter will bear this cost one way or the other.
Up next: What Cintra’s numbers really say about congestion