“Plenty of Room for Error,” a new study released by the Reston Citizens Association, demolishes the shaky financial footings of Dulles Rail Phase II and vindicates The Washington Examiner’s repeated warnings that this $3 billion-plus mass transit project is not financially viable. The 81-page analysis by RCA board member and retired federal economist Terry Maynard eviscerates the toll and revenue forecasts prepared for the Metrorail extension to Washington Dulles International Airport by Wilbur Smith Associates Inc. The key problem lies in how much revenue to expect from the Dulles Toll Road, funding without which the rail project simply cannot continue.
Maynard cites data from two national studies showing that the transportation consulting firm’s “optimism bias” — and its consistent use of the highest population and employment figures available — caused it to overestimate toll revenues for 12 projects by an average of 127 percent — more than double the actual revenue collected. Four toll roads experienced shortfalls within the first two years, causing major losses for owners and bondholders. Two even had to file for bankruptcy when the actual revenue proved insufficient to pay their debt service.
As RCA President Colin Mills said in a cover letter to federal, state and local officials, “WSA’s work in its two studies of the Dulles Toll Road so far show the same disturbing trends,” including “overestimating 2010 Fairfax employment by 25 percent in 2005 and 52 percent in 2009” when compared with 2010 census data. The pattern, he said, “suggests a substantial risk in proceeding with the Metrorail line’s current financial plan” — which depends on tolls collected on the DTR for 75 percent of Phase II funding.
If WSA’s updated revenue projections for Dulles Rail are as wildly inaccurate as they have been elsewhere in the past, Maynard warns that DTR tolls (now scheduled to rise to $4.50 one-way next year) would have to double. Mills added that the total cost of the Silver Line “will likely run to more than $14 billion in debt servicing and other obligations over the coming decades.”
The RCA study is particularly significant because the association has consistently supported Dulles Rail. That fact makes the Maynard study’s call for an independent second opinion before any final decisions on Phase II are made doubly important. As the RCA correctly points out, the risks of proceeding without accurate revenue estimates include depressed economic growth in the Dulles Corridor, increased traffic congestion on local roads, major debt restructuring and possible default. The Maynard study is a waving red flag that federal, state and local officials ignore at their constituents’ peril.
