06.05.06
Denver Post Exposes Exaggerated Estimates
Last week, the Denver Post published “Truth Be Tolled”, an eye-opening look at the growing toll-road industry.
- Roads to riches: Paved with bad projections
- No 2-way street: When landowners help pay the toll
- Oregon may get some mileage out of fee experiment
In “Roads to riches”, reporter Chuck Plunkett looks at 23 new turnpike projects nationwide, and discovers that in the vast majority of cases, the traffic and revenue estimates were wildly exaggerated.
Plunkett found that all 23 projects hired the same three companies to produce traffic and revenue (T&R) projections: URS, Vollmer and Wilbur Smith. Though the Central Texas Regional Mobility Authority (CTRMA) and the Central Texas Turnpike Project (CTTP) were not included in the 23 projects studied by the Denver Post, the local entities responsible for bringing dozens of miles of new toll roads to the southern half of Williamson County employed both URS and Vollmer to do their T&R forecasts.
Business is booming for URS and Vollmer because they have been using inflated numbers to help mislead investors about the risk of investing in bonds used to fund the projects. If the estimates are so inaccurate that the turnpike can’t pay its bills, they simply re-hire the same consultant to produce new exaggerated T&R numbers, then sell a new round of bonds.
Naturally, there is a financial incentive for URS, Vollmer and Wilbur Smith to inflate the projections. In most cases, when the bonds sell, the T&R contractor finds itself the winner in a no-bid contract for design and engineering work.
When the turnpike’s revenues are too far below projections, the taxpayers end up with the bill. The turnpikes play a ponzi-like game of calling back the same consultants to produce new T&R research that enables another round of bond sales.
Little wonder it is then, that Vollmer touts its ability to sell bonds for the projects it estimates in its glossy marketing brochure:
Spanning over twenty-five years, Vollmer Associates has been involved in traffic and revenue reports that have led to financing $21 billion worth of bonds. These studies have allowed a wide range of public and private clients to construct, expand, or rebuild toll road infrastructure.
Though a single car has yet to pay a toll on the new roads being built in Williamson county, there is already growing concern that the T&R forecasts are going to be off.
URS and Vollmer are standing behind the estimates despite the fact they assumed gasoline would remain below $2.50 per gallon for the next 40 years.
Rising energy prices, in particular, have created some anxiety during 2005, since consumers have become reliant upon cheap fuel to create and sustain sprawling development patterns. Although it is too soon to determine whether rising fuel prices will affect growth patterns in the Austin MSA, it is likely over the long-term that rising fuel prices will begin to curb the desire for exurban development. However, suburban development will likely continue because there are simply few alternatives for the average income household to purchase a single-family home in central Austin.
Rampant suburban sprawl will continue, regardless of the price of gasoline, the CTTP says, because “there are simply few alternatives for the average income household”. It looks like we’ve just been made an offer we can’t refuse.
[Ed.: If you have not noticed yet, take a close look at the banner photograph across the top of this page. That is a picture of CTRMA's TX 45 / Loop 1 interchange.]
Eye on Williamson » Toll Road Vote Postponed Until After The Election said,
June 29, 2006 at 9:45 am
[...] That consulting firm is CRA, International. With an assist, of course, from one of the firms named in this Denver Post series “Truth Be Tolled”, URS. The series basically told the story of how three consulting firms (Vollmer, URS and Wilbur Smith) – which do almost all of the traffic & revenue (T&R) studies for these CAMPO type boards around the country – almost always overestimate how much traffic and revenue these roads generate. I bring this up because at the end of the AAS article yesterday Rep. Mike Krusee is quoted: State Rep. Mike Krusee, R-Williamson County, the House transportation committee chairman and architect of the toll road plan, said it’s too early to conclude that Phase II is in trouble. The study, he said, is unlikely to be the political magic bullet CAMPO members are looking for. [...]
Eye on Williamson » The Daily Texan On Toll Roads said,
July 1, 2006 at 1:56 pm
[...] These roads are not being billed as a way to keep people from driving. Far from it, we’re being told – by our elected officials and the consulting firms they hire – that these roads will be so heavily traveled that the bonds will be paid off in no time. But as the Denver Post series “Truth Be Tolled” showed that is the exception and not the rule. Nor does he mention the national and international issues involving the Trans-Texas Corridor. [...]
Eye on Williamson » Be Skeptical Of TxDOT Analysis On Toll Roads said,
September 13, 2006 at 7:33 am
[...] What this means is that the flawed projections by all the consulting firms on how much money the state will make after corporate guaranteed profits are paid from these toll roads would take a 17-cent increase in the gas tax. The earlier figure of 2.4-cents is still valid if you just wanted to build these current roads without putting tolls on them, and not have to guarantee corporate profits. It’s hard to believe that anyone is still buying this kind of “analysis”, especially after how these consulting firms, and the games they play, were exposed earlier this year, Denver Post Exposes Exaggerated Estimates. Here’s who presented this study at the CAMPO meeting last night (Item 8 on the agenda), CTRMA Executive Director and former Williamson County Commissioner Mike Heiligenstein, a huge toll road supporter, and a TxDOT employee. It’s always nice to see a hypothetical $2 billion thrown into this “analysis”. [...]
Eye on Williamson » Cintra/Zachry Allow Your Government To Release TTC Plans Today said,
September 28, 2006 at 1:35 pm
[...] Remember this is not a commuter road this is a road built for corporations to move there products from the Mexico, Central and South America through the US and Canada. Whether or not this road will ease traffic in the major metropolitan areas is the only line they have to use to sell this to the average person and is speculative at best. The consultant studies paid for by toll road builders have been shown to overestimate the money these roads will generate. Not to worry, the corporation’s profit is guaranteed by the state, aka you tax money. That’s right, the state has guaranteed the corporations profit, whether or not the traffic materializes like the consultants predicted. Isn’t the free market great!? It will cost a is going to cost .50¢/mile for 18-wheelers to drive, $216 one way. Is that enough incentive to keep a trucker off of I-35? That 200 mile trip from Austin to Dallas will cost you an extra $30. But that will probably rise: Final toll rates will be set when the state negotiates contract terms on each section of the toll road. [...]
Eye on Williamson » The Plan Is To Toll Every Road, From Here To Eternity said,
November 14, 2006 at 12:49 pm
[...] With the election over CAMPO’s consultant, CRA International, has released it’s report on “Phase II” toll roads in and around Austin. Here’s Ben Wear’s treatment of this report, Study no boon for toll opponents. No boon, funny that’s exactly what Mike Krusee predicted back in June. Well anyone who’s been paying attention to this debate knows that there are many issues with toll roads across the nation not, shall we say, showing taxpayers the money, as the consultants predicted.My main issue with this report is that all the projections are based on URS Corporations traffic and revenue analysis which have been shown to be flawed in the past. Here’s how the game works in case you forgot: Business is booming for URS and Vollmer because they have been using inflated numbers to help mislead investors about the risk of investing in bonds used to fund the projects. If the estimates are so inaccurate that the turnpike can’t pay its bills, they simply re-hire the same consultant to produce new exaggerated T&R numbers, then sell a new round of bonds. [...]
Eye on Williamson » Economist Says The TTC Will Make Everyone Rich And Money Will Fall From The Sky said,
November 21, 2006 at 10:33 am
[...] When studies like this are done by distinguished economists who goes back over them in 25 years and calls bullshit? Ray Perryman does have a very distinguished resume. He also has some big time corporations on his client list – and one consulting firm, Wilbur Smith, that responsible for faulty toll road projections – that’s all I’m saying. Don’t see many average Texans or farmers on that list. [...]
Eye on Williamson » Toll Roads - Disturbing Numbers said,
January 12, 2007 at 4:31 pm
[...] He states that’s a drop in 48 – 60% usage. If the roads don’t produce like the “consulting firms” said then it’s hello Denver and higher tolls to make up the difference. Remember the “easy tags” are still free. When everybody has to pay those numbers should go down even more. [...]
Eye on Williamson » SB 792 Debate said,
May 17, 2007 at 3:54 pm
[...] guarded part of the deal Krusee says. You can read all about T&R and the issues with them here. This is where the numbers get jiggered and the corporations make there money and put the [...]
Eye on Williamson » Kolkhorst Amendments Are Sticking Points On Toll Moratorium said,
May 21, 2007 at 11:56 am
[...] not like there’s any evidence of that ever [...]
Eye on Williamson » Toll Road Lesson In Denver said,
May 30, 2007 at 3:51 pm
[...] Northwest Parkway, a toll road with a checkered history – see this EOW post – in Denver is being sold to a foreign corporation. The board of the financially ailing Northwest [...]
Eye on Williamson » The "New Way Forward" On Tolls said,
June 15, 2007 at 11:16 am
[...] know from the Denver Post series, which exposed the regular over-inflation of traffic and revenue (T&R) studies, that this [...]
Eye on Williamson » NTTA Gets Vote Of Confidence From The RTC said,
June 19, 2007 at 9:28 am
[...] wind up paying for this if the traffic and revenue (T&R) study was inflated. There have been many issues around the country with the T&R studies, and if this one is correct it would the the exception, not the rule. If the T&R study is bad [...]
Eye on Williamson » Texas Toll Road News said,
June 25, 2007 at 2:16 pm
[...] would recommend that all those who live near Texarkana to go read the Denver Post series on flawed T&R (Traffic and Revenue) studies and their [...]
Eye on Williamson » Bond Rating Service Gives NTTA A Negative Rating said,
July 2, 2007 at 10:37 am
[...] whole deal is riding on a the Traffic & Revenue study that are known to have issues many times. Sure hope this one is on the money, shall we [...]
Eye on Williamson » NTTA Executive Director Finalists said,
July 11, 2007 at 12:12 pm
[...] incestuous. PBS&J has had issues in the past. From the Denver Post series we know there have been many issues around the country with consultant traffic and revenue [...]
Eye on Williamson » Colorado Avalanche, Denver Area Toll Road Leased For 99 Years said,
August 30, 2007 at 2:02 pm
[...] and revenue study – that accompanies any proposed toll road. They deserve heavy scrutiny. As the Denver Post series showed. Most of the T&R studies are done by consulting firms who will benefit from the road [...]
Eye on Williamson » Sen. Ogden Wants To Gamble With Your Money said,
April 1, 2008 at 10:26 am
[...] not. The scam of toll roads was fleshed out very well a few years back by this Denver Post series, “Truth Be Tolled”. Basically corporations that build roads, and the consultants that are in bed with them, inflate [...]
Eye on Williamson » High Gas Prices Bad For Toll Roads said,
April 14, 2008 at 3:37 pm
[...] toll road consultants projections were already shaky enough, but add in age and demographic shifts, along with record high gas [...]
Eye on Williamson » Interesting Items From Today’s WCCC Agenda said,
June 17, 2008 at 3:27 pm
[...] for Williamson County. They hiring the consulting firm URS to do a transportation demand model. Should be fun. It will include updating demographic information, incorporating city and county roadwork plans, a [...]
Eye on Williamson » GOP’s toll roads get negative rating outlook said,
October 10, 2008 at 11:18 am
[...] course, we know, the traffic that the consultants predict is just a pie-in-the-sky scam to get the toll roads built. We also know that when the bonds can’t be repaid those same [...]
Eye on Williamson » CAMPO, CTRMA get hithced for 290E toll road said,
December 2, 2008 at 12:31 pm
[...] a traffic and revenue (T&R) study is brought up at toll road deal starts to get dicey – T&R studies have a checkered past as we know. In the article the T&R study states 290E “would” make a 30 percent profit with a [...]
Eye on Williamson » Comment on CAMPO’s 2035 plan, TxDOT public hearing in Austin on Thursday said,
May 11, 2010 at 10:09 am
[...] is not surprise because toll estimates, otherwise known as T&R (Traffic and Revenue) forecasts, are almost always inflated by consultants to make toll roads look too good to pass [...]