Maryland Managed Lanes Have Developer, But Still Face Opponents

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Last month, the Maryland Department of Transportation (MDOT), its State Highway Administration (SHA), and the Maryland Transportation Authority (MTA) selected Accelerate Maryland Partners LLC as the public-private partnership (P3) developer/operator for Phase 1 of the $11 billion I-495 and I-270 managed lanes project. The team is led by equity providers Transurban and Macquarie, with Dewberry Engineering and Stantec Consulting as designers. 

Accelerate Maryland Partners had the highest-ranked financial proposal. The company also offered to pay a $145 million development rights fee and agreed to a $54.3 million limit on what it will be paid during predevelopment. (Under “predevelopment,” they will work with MDOT to fine-tune the design, prior to negotiating the 50-year concession agreement.) The team also proposed a higher rate of return on its equity investment in exchange for taking greater construction cost risk, reducing the state’s risk in the project. 

Transurban and Macquarie both have proven P3 track records in the region. Transurban financed, developed, and operates the managed lanes on I-95, I-395, and I-495. Macquarie was half of the P3 team that did likewise for the Elizabeth River Tunnels project. Both companies have delivered transportation megaprojects on time. And both have the experience to manage any unanticipated project hurdles. 

Much of the opposition to the project has suggested that the state should be investing in mass transit, not roadways. Yet, a rail line along the I-270 and I-495 corridor would cost state taxpayers billions of dollars and need ongoing taxpayer operating subsidies. By contrast, the managed lanes are expected to be paid for only by those who choose to use them.

The project will also create a new transit option for the 272,000 workers who commute into Fairfax County, Virginia, each day, many of them from Montgomery County, Maryland. These workers currently have no viable transit option and can only get to work by driving. The consortium is making a commitment to transit in the area, providing at least $300 million for bus services that can use the new managed lanes, as well as $5 million for Vision Zero improvements and bicycle and pedestrian connections. Managed lanes provide a virtual exclusive busway, in which buses can bypass congestion for faster and more reliable trips. Several different agencies including the Washington Metropolitan Area Transit Authority (WMATA), Montgomery County’s Ride On, and the Fairfax Connector bus service could offer transit service using the new lanes.

The next steps for the project are review and approval by the Maryland Transportation Authority board later this month, a 30-day review by Maryland’s comptroller, treasurer, and the legislature’s budget committees, with final approval hoped for by May 2021. MDOT, SHA, and the Federal Highway Administration are finishing up the Environmental Impact Study in parallel with the team’s pre-development work. 

Unfortunately, some environmental groups are still seeking to stop the project. The Maryland Sierra Club argues that the project has serious, negative environmental effects. The group commissioned a study that argued that the managed lanes will actually make congestion worse by shifting traffic from shoulder to peak hours, that managed lanes are an inefficient use of infrastructure, and that induced demand will occur.

While some traffic may shift from the shoulder hours to the peak, this is an economic benefit to the region. Those travelers would then be commuting at a more convenient time for them. Since the managed lanes provide a virtual exclusive busway and give commuters who need a reliable, guaranteed travel time a new option, they are hardly inefficient. Finally, tolling helps reduce induced demand by ensuring commuters pay the full cost of their trip.

But the Maryland Transit Opportunities Coalition argues that the toll lanes are unaffordable. The group uses a worst-case model to argue that drivers will pay “up to $49” to travel from Frederick to Shady Grove at the height of the morning peak travel periods, despite the state’s estimate of an average toll rate of $4-to-$5 for the same distance. Whatever the highest toll is, it will be paid by only a small fraction of commuters during the peak of the peak periods. The coalition, which advocates building more rail lines, including a Southern Maryland light rail project and an extension of the MARC train to western Maryland, fails to mention the likely new bus service option in the managed lanes. The coalition also claims that its rail expansion would be cheaper than the managed lanes, ignoring the fact that drivers who use the toll lanes would be the people paying for the toll lanes. In contrast, all taxpayers would end up paying for most of the cost of the rail expansions. 

There are also some opponents in the Maryland legislature. Their bills, HB 67 and SB 843, do not accurately reflect the terms of the P3 project. They would require duplicative environmental studies. Worse, they would require any toll changes to be subjected to a public hearing. Managed lanes are effective because tolls are allowed to increase or decrease based on demand and congestion. Requiring a public hearing to change the tolls would undermine the congestion relief, which is the primary benefit of priced managed lanes. Finally, a bill would require a monorail feasibility study along I-270, which has nothing to do with the project itself.

Maryland DOT has ensured that the managed lanes include dedicated funding for mass transit, environmental remediation, a pedestrian path, and bike lanes over the new American Legion Bridge. The growing Washington, DC, region needs additional roadway capacity, and it is past time for opponents to acknowledge this fact. 

A version of this commentary originally appeared on March 4 in the online Surface Transportation Innovations Newsletter.

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Congress Rushes in Where Richmond Democrats Fear to Tread

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One key goal for many of Virginia’s new progressive Democrats has been repeal of Virginia’s venerable Right To Work Law, and in 2020 they crossed one milestone by passing repeal in a key committee. But the Democratic leadership, perhaps wary of losing the bill in the Senate or angering too many moderate voters, ended the effort there and snuffed that bill.

This year the same bill was stalled in committee, but patron Delegate Lee Carter, D-Manassas, did force a roll call with a motion to discharge the committee and bring it to the House Floor. It also failed.

Where General Assembly Democrats feared to tread, Virginia’s Congressional Democrats happily rushed in. Every House of Representatives Democrat from this state has voted for H.R. 842, sponsored by Virginia’s own Rep. Robert Scott, D-Newport News. All the Republicans were nays.

Scott calls it the Protect the Right to Organize, or PRO Act, and the hot potato is now firmly on the plates of Democratic U.S. Senators Tim Kaine and Mark Warner. Kaine’s vote of yea is as sure as sunrise, putting the heat on our senior senator with his lightly-worn pro-business mantle. Will he shed it to give the unions and his new president what they want?

Scott chairs the House Committee on Education and Labor, where the bill originated. If you doubt the intent to repeal state right to work laws, the committee has issued its own propaganda piece on the bill which includes this among the talking points:

Gives workers the power to override so-called “right-to-work” laws that prevent unions from collecting dues from the workers they represent. “Right-to-work” laws advanced by anti-union politicians are design to strip workers of the power and resources to defend themselves against wealthy special interests. The PRO Act allows employers and unions to enter into a contract that allows unions to collect dues from the workers they represent.

The other perspective, of course, is that right to work laws allow employees to make a free choice to join a union or not, to fork over a percentage of their pay or not, to finance the union’s preferred political candidates or not. Without doubt, Congress has the authority to take that away because it was the 1947 Taft-Hartley Act which gave states the authority to create such protections.

It followed on the heels of the tumultuous labor battles that hamstrung America’s war production efforts, with strikes crippling key industries at key times in World War II. It is a bitter history which has faded over 75 years (try Arthur Herman’s Freedom’s Forge), but the economic benefits of Taft-Hartley’s restraint on unchecked union power remain. They are now in real jeopardy.

Repealing any and all state right to work laws is just one aspect of this union wish-list bill, which also passed in 2019 but then faced a Republican Senate. Virginia’s Democratic House members, who campaign as pro-business and individual liberty when needed, have also voted for this:

  • Secondary strikes, where the union targets a company’s suppliers and customers as well to add pressure, which is now banned.
  • Federal binding arbitration, as opposed to mediation, even in the case of first contract negotiations. The bill makes major changes to the arbitration and mediation rules, all of them adding power to the union.
  • Punitive damages, civil penalties, personal liability, and private right of action are added to the list of weapons on the side of the union in contract disputes.

There is a good summary of the bill from the employer’s point of view here, balancing the sales pitch put out by Scott’s committee. It also points to what might prove the Achilles Heel if the House insists, and those are the new rules sought to limit independent contractors. The National Law Review writes:

Unions have long pushed for legislation to expand the definition of “employee” and limit the definition of “supervisor” to bring a greater number of individuals under their sway. Independent contractors are also currently exempt from the scope of the (National Labor Relations Act).

The PRO Act would expand the definition of “employee,” adopting the California “ABC” test to exclude most workers from exempt independent contractor status. The PRO Act would also require employers to act at their peril, even if acting in good-faith; employers found to have mistakenly classified their workers as independent contractors would be in violation of the NLRA.

California’s hardly right-wing electorate has actually repealed many of the same provisions in that state’s Assembly Bill 5. The same battles over who is or is not an independent contract have raged in the Virginia General Assembly. Again, Congress is about to ride in and settle the argument for everybody, with the help of Virginia’s own elected representatives.

As progressive as the Virginia General Assembly has become, where it has failed to push dramatic change across the finish line the new Congress is stepping in. Right now, all 50 Senate Democrats are potential swing votes, but Mark Warner is one of the obvious ones. In reality, the key vote will first be on maintaining the filibuster rules. That goes, the world changes fast.

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Centuries of Future Energy Sitting in a Can

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If you are serious about making electricity without carbon emissions and also serious about making enough electricity to run a real economy 24-7-365, the discussion keeps coming back to nuclear energy. It is the obvious choice if you believe we must eliminate natural gas soon.

Less obvious is that a serious nuclear renaissance in this country could be sparked and sustained by recycling used nuclear fuel.  It is not “waste” or “spent,” but only “slightly used.” The fuel rods removed from the North Anna and Surry reactors in Virginia still have 97 percent of the energy potential they had going into the reactors.  We know how to extract it and make new fuel.

Yet the fuel recycling concept was not even referenced in a new Virginia-specific nuclear strategic plan, despite the massive energy and financial value languishing in fuel assemblies  sitting in giant casks at the two power plants.  About the bravest, most forward looking-idea in the 15 pages of fluff (here) is to support extended licenses for those four old-tech reactors, which provide about 30 percent of Virginia’s electricity.  

By not mentioning recycling, one need not address the even more bold idea of doing it here in Virginia, building a plant that could provide new nuclear fuel to the entire country, ending the need for dependence on foreign suppliers. 

The United States has 90,000 tons of used commercial nuclear fuel and 600,000 tons of depleted uranium. Combined, those are the equivalent in energy to 4.5 trillion barrels of oil, four times the world’s proven reserves.  Used by itself in a fleet of next generation reactors or coupled with all the wind and solar your heart desires, our electric grid becomes carbon free, stable, and reliable for the foreseeable future. 

The first governor and first state to jump at this may be able to tap into the $40 billion in cash sitting unspent in a federal fund, built with ratepayer fees, intended for dealing with used commercial nuclear fuel.  Decades of effort have found no politically viable solution and the money accumulates.  Forget disposal and move the focus to recycling.

Virginia is already a major nuclear state, although most Virginians don’t know it.  The nuclear fuel used by the Navy is assembled here in Virginia.  It is installed in new submarines, new aircraft carriers and carriers being overhauled in Newport News.  Nuclear ships have been docked at Norfolk Naval Base for decades now, their reactors never fully turned off.

Will Virginia have the vision or courage to move on this, or will some other state go first?

The pitch is being made to Virginia.  An advocacy group has formed and is growing and made its pitch to the Virginia Nuclear Energy Consortium about a year before it published that report, which then didn’t mention their idea.  They call themselves the Virginia Program Office for Recycling and Disposition of Used/Spent Nuclear Fuel. It is a high falutin’ name but it remains a fairly informal effort. 

A former police officer, helicopter pilot and police boat operator who navigated the waters of Long Island sound and New York to perform rescue missions on 9-11, Tom Dolan of Charlottesville, is the Virginia connection.  His career advanced into radiation detection and terrorism counter measures. That brought him in contact with Steve Curtis, a nuclear emergency response expert who spent his career in Nevada but now lives in Minnesota.  Others with the right technical backgrounds have gotten involved.

There are two main recognized methods for recycling the fuel into new fuel and other products, but one objection to the most common (used by France and others) is the amount of water it requires. So, Dolan and Curtis are pointing to a process recently planned out at the Argonne National Laboratory in Illinois known as pyroprocessing, using electroplating without the water demand. This is hardly secret stuff. You can watch this for an overview.

With that process, 100 tons of used fuel produces 93 tons of uranium pure enough for fuel use, 2 tons of metal fuel ingots for use in the new fast reactor designs, and five tons of fission byproducts with no current use that need safe storage. But after pyroprocessing the highly radioactive byproducts need only be stored for a few hundred years rather than a few hundred thousand years, and in the Argonne video they are encapsulated in glass.

That’s the first 100 tons. As mentioned above, multiply that by 900 for the total potential.

Why is the United States sitting on all this energy and pretending it doesn’t exist? The public’s fear and misunderstanding about nuclear energy is deep, with many happy to feed it. The industry’s incredible safety record, especially compared to coal, is unknown. Too well known are recent stalled or failed U.S. commercial nuclear plant construction efforts in Georgia and South Carolina. China, on the other hand, has no such problem and just opened a new plant.

Curtis and Dolan have pitched Southwest Virginia, with its proximity to the nuclear facilities in Tennessee, or Louisa County next to North Anna as possible Virginia locations for such a plant. But they are also in other states regularly seeking the needed capital and courage. One day they may find both.

If the courage and capital exist somewhere in Virginia, the opportunity remains wide open.

Posted in Energy, Environment | 2 Comments

Alexandria City Staff Urges Restraint on Government Union Negotiations

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Without clear guardrails, city officials are warning wide-open bargaining with government unions would hurt city government’s ability to respond to emergencies while costing taxpayers up to $1 million a year in additional administrative costs.

Alexandria’s city attorneys are sounding alarm bells about the consequences of not putting limits on government union negotiations.

In a Feb. 3 memo to the Alexandria city council and mayor, the city manager urged restraint in allowing government union negotiations in the city, noting that unrestricted negotiations could hurt efforts to improve city services and even prevent an effective response to emergencies like the COVID-19 pandemic. Broad bargaining rules would also come with more negotiating and administrative expenses costing taxpayers up to $1 million a year.

These warnings come in the wake of a bill passed in 2020, Senate Bill 939, which lifted Virginia’s ban on public sector collective bargaining. The bill allows cities, counties and other Virginia local governments to start government union negotiations by passing an ordinance or resolution, and it takes effect May 1.

But unlike most other states, which dedicate entire portions of code to how government union negotiations are run and what can be bargained, SB 939 was brief and vague. Instead, Virginia law with very few exceptions puts the onus on local governments to create labor law from scratch.

Alexandria is one of the first local governments to suggest a model for its local labor law. While nothing has been enacted, staff attorneys in the northern Virginia city advised significant guardrails on what government unions can negotiate and how they are grouped. They also warned about the potential hazards of unrestrained public sector collective bargaining.

Limiting bargaining to wages and benefits

The memo makes clear that the collective bargaining ordinance should always be conducted with the understanding that “the community’s interest in uninterrupted and effective government is paramount.”

With this in mind, they suggested limiting negotiations to only wages and benefits. The attorneys said allowing government unions to negotiate over too many issues could harm the city and teamwork among its employees by causing an “adversarial environment.” The expansion of collective bargaining beyond wages and benefits could “undermine current internal organizational improvement efforts aimed at fostering collaboration and teamwork among City employees.”

The staff recommend “taking the approach of setting a finite and clearly identifiable set of subjects in the ordinance to establish ‘the line’.” As they are concerned with “[v]ery often costly and time-consuming dispute resolution aris[ing] from the vagueness or breadth of language such as ‘matters affecting the health and safety of employees’ or ‘conditions of employment.’”

The memo stressed the need for flexibility in any agreement, noting the city’s response to the COVID-19 pandemic may have been hampered if certain work rules were restricted by a union contract:

“If there had been collective bargaining agreements in place that covered work rules and work conditions, moving with alacrity and being … responsive to immediate threats would have been likely impaired. While the COVID-19 threat and response are outsized in comparison to the typical day-to-day, or month-to-month, challenges and demands that the City government faces, the issues are very similar in the ability of the City government to … be flexible and timely in responding to the needs of the Alexandria community, its residents and businesses.”

The cost of unfettered government union negotiations

While noting collective bargaining by itself may not have an immediate effect on the city’s credit, it could when combined with other losses of flexibility harm Alexandria’s ability to borrow. The memo quotes the city’s financial advisor Davenport & Company LLC, which responded “collective bargaining is not a credit positive” to questions regarding government union negotiations and Alexandria’s bond rating.

The memo notes the cost of administering the bargaining process “is estimated at approximately $500,000 to $1,000,000 per year depending on whether collective bargaining is limited to wages and benefits (lower end of administrative costs) or is expanded to cover all terms and conditions of employment (higher end of administrative costs).”

This is just administration costs, rather than any increase in benefits to city employees.

Larger bargaining units simplify and streamline negotiations

The attorneys also advised creating larger but fewer bargaining units to streamline negotiations. These would be police, fire, trades and general government. By contrast, unions wanted double the number of bargaining units, shrinking the units to groups of library staff, clerical workers, etc.

A bargaining unit is a group of employees sharing similar interests who will be covered by a contract. Allowing more bargaining units means the city would need to spend more time and resources negotiating more contracts and unions would have an easier time organizing more specific units. An article in Alexandria Living Magazine noted city staff felt “[t]oo many units would pose an unnecessary fiscal burden and drain manpower.”

They also suggested excluding managers, supervisors and some other employees because “[t]hey are policy makers whose inclusion in bargaining may create conflicts of interest … arising from their responsibilities to manage operations or services in management’s direct interest.”

How to handle an impasse

Even with the new state law, city staff attorneys noted multiple other sections of state code that would limit collective bargaining in Alexandria.

The memo pointed to what would happen if both sides could not agree on a contract, resulting in an “impasse.” In the event of an impasse, city attorneys suggested mediation, which is more like marriage counseling, instead of arbitration, which allows an arbitrator to impose a final contract without the parties agreeing.

The memo also noted other parts of state law could restrict the ability of an arbitrator to issue a final decision: “Staff believes that Code of Virginia § 40.1-57.2(B) severely curtails the City’s ability to adopt an ordinance that subjects impasses in contract negotiations to binding arbitration. As noted previously, Section 40.1-57.2(B) prohibits localities from adopting collective bargaining ordinances that “restrict the governing body’s authority to establish the budget or appropriate funds.”

The memo continued:

“Staff contends that an ordinance making impasses in negotiations subject to binding arbitration would restrict Council’s authority to establish a budget or appropriate funds. It would, in essence, allow a third-party to make budget decisions for Council.”

This work from Alexandria’s city attorneys – in one of the most union-friendly parts of the state – provides critical guardrails for local governments and taxpayers across Virginia. And the message is clear: unrestricted government union negotiations can severely hurt city operations, taxpayers and those in need of government services.

A version of this commentary originally appeared on March 9, 2021 in the online blog of Virginia Works.

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Will the Feds Take Over Local Zoning?

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One of the Biden Administration’s first executive orders has revived the Department of Housing and Urban Development’s “Affirmatively Furthering Fair Housing Rule.” This rule was proposed by the Obama Administration, but time ran out before it could be fully implemented. The Trump Administration rescinded the rule.

The rule requires communities which receive grants from the Department of Housing and Urban Development (HUD) to evaluate the availability of affordable housing by a number of metrics including comparison to their neighbors. Actually, the rule is theoretically based on the racial composition of communities, not the economic class, because that is the only basis under the Fair Housing Act through which HUD is authorized to act. However, the true goal is the introduction of low-cost housing into what are currently high-cost suburbs.

Jurisdictions found to be lacking in fair housing must produce an action plan in order to be certified for whatever HUD funding they would otherwise receive. HUD has long been able to act under the Fair Housing Act if there are disparities within the same local jurisdiction. The new rule allows HUD to demand changes in local laws when wealthier jurisdictions if they are in geographic proximity to lower income jurisdictions. For example, if Stafford conducts the required evaluation and does not have as much low-income housing proportional to its population as does Prince William, even if Stafford has practiced fair housing practices among its own citizens, it will be required to produce an action plan.

One suggested mitigation strategy is to form a regional housing authority combining an urban jurisdiction with one or more of its suburbs. Whatever the action plan entails, it inevitably involves local government elected officials giving up autonomy on zoning and other traditionally local responsibilities. Advocacy groups can file lawsuits if they believe the action plan is inadequate or a jurisdiction’s self-evaluation is skewed – such as wealthy suburbs comparing themselves only to each other when there is an urban area nearby.

The Obama Administration, and now the Biden Administration, are not wrong in their diagnoses of a problem. When low-income families are concentrated in one area far from the economically vibrant areas of the region, they lack access to jobs, education and transportation. However, as usual, the federal government seeks to solve a problem caused by big government with more big government while trampling all over local governments’ role and the sovereignty of states.

While NIMBY sentiments with regard to residential development can be found on all points of the political spectrum, it is usually the left which claims there is not enough low-income housing while, in proffer states like Virginia, simultaneously demanding that developers pay more. Once excess proffers are added to the cost, affordable housing becomes no longer affordable. The most notorious cases of severe zoning restrictions which keep out low-income families are in the liberal cities of the Pacific northwest such as San Francisco, Seattle and Portland, in addition to the liberal city of Chicago. While the high cost of housing and homelessness in these areas have many causes, including overregulation by city and state governments, the opposition to the building of new low-cost housing is certainly a major part of the problem.

The flaw in the plan as far as its proponents are concerned is that local jurisdictions only come under its precepts if they accept direct grants from HUD. Many of the wealthy localities at which the regulation is aimed, do not receive such grants and therefore are not subject to its strictures. We can expect that HUD will try to entice jurisdictions such as my county of Spotsylvania with offers of grants which will then bring us under the new regulations. As we saw in the Medicaid expansion debate, there is great political pressure to accept any money the federal government makes available. But it is a fool’s bargain. Until the next Republican administration in Washington can cancel the regulation, the best defense for local governments who do not want to cede control of their city or county to unelected bureaucrats in Washington is to refuse such offers

In the meantime, we should challenge the contradictory demands of the left to add “affordable” housing while making it prohibitively expensive. If local governments will look past NIMBY attitudes: if they will allow a reasonable path to get low-income housing approved: if they will refrain from adding on exorbitant costs which makes low-income housing into middle-income housing, there will be no need for a federal takeover of zoning. The free market will fill the need for affordable housing if local governments merely will get out of the way.

Posted in Government Reform, Housing, Land Use | 1 Comment