House Bill Allocates $300M To Cancel Or Modify I-77 Toll Contract

Jun 13, 2018


  Updated 4:03 p.m.
North Carolina lawmakers say they've come up with a way to pay for canceling or modifying NCDOT's contract with a private company building toll lanes on I-77 north of Charlotte. But NCDOT officials have warned there may be problems with the idea.

Construction on I-77 toll lanes near I-85 in April.
Credit I-77 Mobility Partners

A transportation bill that passed the House Wednesday would set aside up to $300 million in surpluses from the state's Highway Fund and Highway Trust Fund.

The proposal is in an amendment offered by Rep. John Bradford (R-Cornelius). He said the highway funds have had surpluses of 200 million dollars a year or more over the past three years. His amendment would divert future surpluses to a special I-77 account until it reaches $300 million.

In a Facebook post, Bradford said, "This amendment is significant because it creates a pathway to set aside monies today while also creating a future repayment structure without negatively impacting other transportation projects."

Toll opponents have been pushing the NCDOT to cancel or change its $650 million contract with I-77 Mobility Partners. Most local officials on an NCDOT local advisory committee last month recommended deleting one of two planned toll lanes between Charlotte and Cornelius and having the state take over management of the toll lanes. But how to pay for it has been a big question mark.

WHAT IF THERE'S NO SURPLUS?

An NCDOT spokewoman said Wednesday no surplus currently exists in the two funds. And she said the department already earmarks any extra funds it does have to pay for snow removal, storm damage and to buy right-of-way for planned projects.

And there's another hitch, the Department of Transportation says the amendment still could wind up taking money away from local road construction and maintenance. It would require the department to repay the funds, first using toll revenues for the next 10 years.

"At this time, we do not envision any toll revenues to be available for repayment for the next 10 years," spokeswoman Carly Olexik said in an email.

If there are no toll revenues, the bill says the repayment would have to come from other DOT funds currently allocated to road repairs in Mecklenburg and surrounding counties.

During brief debate on the bill Wednesday, lawmakers from around the region asked Bradford if the funding mechanism meant projects in their districts could lose funding. "It was not my intention to use any other members' projects money," Bradford said.

With Wednesday's passage, the bill now goes to the satate Senate. Bradford said the Senate bill could be fixed or lawmakers could agree to pass it as is, and fix the problems in future years. He said he wants the money to come from toll revenues only, for 20 years or as long as it takes to pay off the debt.

In an interview, Bradford says his bill assumes that NCDOT will modify the contract, and that toll operations would be taken over by the N.C. Turnpike Authority. "Every penny for the whole term comes out of revenues generated by a Turnpike Authority-run tolling project," he said.

WILL SENATE GO ALONG?

The bill could face a tougher challenge in the Senate, which has not supported past efforts to kill the project. In 2016, a bill to cancel the contract died without action

John Hettwer, who leads the anti-toll group I-77 Business Plan, said the bill is an important step, "but we're celebrating," Hettwer said Wednesday.

"The big caveat to that is it now rests in the Senate Republicans hands," Hettwer said. "And at the end of the day we're going to have to continue to encourage the Senate Republicans to take the leadership from House Republicans or follow the House Republicans, and how they did it and agree to something similar."

Bradford said that encouragement should come from the administration of Gov. Roy Cooper, who has said he wants to fix the contract.

"I think we've all been very patient, and I continue to be patient. But we now have a possible funding source. The DOT and the governor's office should be lobbying the Senate," Bradford said.

Transportation Secretary James Trogdon is expected to make a decision on how to proceed in late July.

"Secretary Trogdon is actively reviewing all contract modification options and intends to meet with the local advisory group this summer to discuss a path forward," Olexik said.

Any change or end to the contract with Cintra and its local subsidiary I-77 Mobility Partners would require negotiations with NCDOT.  I-77 Mobility Partners hasn't commented publicly on the recent developments. But its top executive has written letters to the department of transportation expressing concern and suggesting that some estimates of the penalties and other costs are too low.

I-77 Mobility partners has said it expects the toll lanes to open by the end of the year.

RELATED LINKS

Text of House Bill 1029, at NCLeg.net.

Amendment to add up to $300 million to a new fund for any contract change or cancelation penalties.

NCDOT STATEMENT

Here's a statement from NCDOT provided by spokeswoman Carly Olexik. 

"For the past 15 months, NCDOT has worked closely with community leaders to determine a path forward that responds to the concerns of the residents of Northern Mecklenburg County regarding the contract entered into by the McCrory administration for I-77. NCDOT is seeking options that respond to the concerns of people in Northern Mecklenburg County but at the same time do not negatively impact other critical projects or NCDOT’s ability to maintain existing roadways.

"The amendment voted on by the House must still pass the Senate. As currently written, the amendment appears to direct all credit balances from the Highway Trust Fund and Highway Fund (up to a total of $300M) to pay for any fees related to cancellation or modification of the current I-77 contract. Traditionally, any credit balances in those funds are utilized for snow and ice removal, hurricane and other disaster recovery (Highway Fund). Credit balances from the Highway Trust Fund are traditionally utilized for advanced highway right-of-way acquisition ($25M) and any additional funds for STI projects.

"The amendment states that Highway Trust Fund and Highway Funds utilized would be repaid over 10 years with toll revenues from I-77. At this time, we do not envision any toll revenues to be available for repayment for the next 10 years. As written, the amendment states that if the toll revenues do not cover the payment amounts, funds currently allocated for highway maintenance in Mecklenburg County and Division Tier STI funds for Division 10 (Stanly, Union, Anson, Cabarrus, Mecklenburg) would be utilized.  Secretary Trogdon is actively reviewing all contract modification options and intends to meet with the local advisory group this summer to discuss a path forward. Regardless of funding source or availability, any path forward must follow both State and Federal laws."