Thursday, August 11, 2005

"Free market ?" City government slows local traffic to assist private toll road.

Colorado highway "slowdown" sparks debate on toll roads

By Daniel Sorid
Reuters Copyright 2005

A stretch of country highway near Denver has become an unlikely rallying point for opponents of the privatization and tolling of roads.

The highway, known as Tower Road, was inexplicably slowed several years ago to 40 miles per hour from 55, and traffic lights appeared at three intersections.

The move had locals in the town of Commerce City, Colorado, population 35,000, scratching their heads. Just as a new toll road had opened up near the town, their lightly traveled local thoroughfare got a lot slower.

Newly disclosed documents show that, as part of a non-compete agreement with the toll road authority 10 years ago, officials from the town of Commerce City agreed to intentionally slow down the road -- now much busier with hotels and office buildings -- to discourage drivers from skipping out on paying to use the toll highway.

"They didn't want to have Tower Road be a competitive thoroughfare," said Robert Gehler, the Commerce City attorney, who was a part of the negotiations.

The disclosure of the Tower Road slowdown -- discovered by an inquisitive Colorado resident who posted it on the blog -- shines a light on the touchy issue of non-compete agreements, which are a common component of toll roads.

The issue is likely to become even more pressing now that President George W. Bush has signed the federal highway bill, which includes a $15 billion bonding provision designed to increase toll-road investment.

The nation's fixation with highway travel began in the 1790s with Pennsylvania's stone and gravel Lancaster Turnpike, the first major toll road, that cost about $2.25 to travel its entire 62 miles from Philadelphia to Lancaster.

Proponents of tolled roads, which can be operated by private companies, partnerships of government and business, or by governments alone, say that in congested urban areas tolls ensure that a scarce resource is allotted fairly.

They also say that toll roads are the future of the U.S. road system, at least for the foreseeable future, since budgets for new highway projects are far tighter. Today, 23 states permit private participation in road building, and five of six major private projects include non-compete clauses to ensure viability of the roads.

Opponents, however, say non-compete agreements, or at least some of their terms, violate free-market principles.

"They're putting a thumb on the scale," said Ellen Dannin, a law professor at Wayne State University who studies privatization.

Non-competes, she said, highlight the difficulty that many toll-road agencies are having meeting revenue targets.

In Southern California, where road congestion is a way of life, the state's first experiment with private toll roads ended in controversy when private owners of express lanes successfully fought an effort by officials to expand the parallel free lanes of a state highway.

Commuters, outraged that a non-compete agreement with a profit-seeking business prevented the highway expansion, complained, leading to the sale of the road back to the government.

Karen Hedlund, an authority on toll roads and a Virginia-based partner at Nossaman, Guthner, Knox & Elliott LLP, said non-competes serve a valuable purpose: they ensure that investors in toll roads will not suddenly have to compete with new highways after laying out billions of dollars up front.

Nevertheless, the idea of intentionally slowing down a public road is something, Hedlund said, that would never be written into modern-day, non-compete agreements. "We're involved in toll roads across the country, and I've never heard of such a thing," Hedlund said.


John Pommer, the chairman of the Colorado general assembly's transportation and energy committee, said the idea of paying for unnecessary traffic lights to convince drivers to avoid a free road sounded unusual.

"Good grief," Pommer said, "That sounds like a pretty raw deal." He plans to inquire about the Commerce City agreement during a previously scheduled hearing on Thursday with officials of the toll road, which is called E-470.

Completed in 2003, the E-470 beltway runs for 47 miles along the eastern perimeter of the Denver area. It costs $8.50 to drive the length of the road, which is owned by a group of local jurisdictions.

While technically public, the highway authority is run like a business, with revenue targets and customer service closely monitored, said Edward DeLozier, the executive director.

DeLozier said the Commerce City slowdown had been negotiated by his predecessor. Today, he said, the road competes on service, and does not view local roads as competition.

If Commerce City wanted to raise the speed limit, he said, he would take the matter to the authority's board.