Charlotte tholl road deal unraveling?

payupWe’ve been following the drama around the plan to toll drivers on a stretch North Mecklenburg’s I-77 since Senator Thom was merely Speaker Thom. It’s been  amazing.  Despite the tremendous outcry from area residents and local governments, state government has been pushing forward with a public-private partnership with a Spanish firm to expand and manage a stretch of I-77 via tolls.

Stories have emerged about the Spanish firm being entangled in a pay-to-play scandal in Europe.  The debt for the project has been classified at ‘junk’ level.  Activists fighting the toll project have discovered the Spanish firm’s contract with NCDOT contains enough loopholes to possibly allow the Spaniards to avoid sharing ANY revenue gained from the tolls with the state of North Carolina. 

“Blood-and-Guts” Carrington over at Carolina Journal has a piece raising possible  state constitutional issues with the I-77 toll deal: 

Even though Gov. Pat McCrory has said the tolling project along the Interstate 77 corridor north of Charlotte will go forward, it faces a challenge to its constitutionality, as well as allegations the contractor did not meet full-disclosure requirements.

The lawsuit, filed in January by the nonprofit organization Widen I77, claims the deal violates the state constitution. Among other allegations, the lawsuit charges that the General Assembly delegated too much authority to the N.C. Department of Transportation, which will allow the contractor to set toll rates without legislative oversight.

In addition, the lawsuit claims a provision in the contract for NCDOT to compensate I-77 Mobility Partners LLC for state and federal tax liability if the state terminates the contract also is unconstitutional.

NCDOT closed the deal with I-77 Mobility Partners on May 20 to build what is officially called the I-77 Hot Lanes Project. The 26-mile-long project, running from Charlotte to Mooresville, is expected to cost $648 million.

Mobility Partners will set toll rates, collect the tolls, and — for the most part — keep all the proceeds. This would be the second toll-road project built in North Carolina and the first using a public-private partnership.

In addition to the lawsuit, Diane Gilroy, a Cornelius resident and a Spanish professor at UNC-Charlotte, lodged complaints in July with Attorney General Roy Cooper and NCDOT Inspector General Mary Morton, claiming that the parent companies and affiliates of I-77 Mobility Partners failed to disclose fully all past legal problems as part of the bid process. An NCDOT spokesman acknowledged that the agency is looking into her concerns.thomsigh

Opponents of the project want the state to build additional lanes without charging tolls, and pay for them using existing funding mechanisms or with highway bonds McCrory has proposed.

Robert Poole, director of transportation policy at the Reason Foundation and a longtime advocate of privately financed toll roads, told Carolina Journal he continues to support the project as a way to relieve congestion along that segment of I-77. He also acknowledged that the proposal had significant opposition. “This is perhaps the most in-depth opposition to a toll project I have seen in the country,” he said. […]

Cornelius resident Diane Gilroy went as far as traveling to Spain to probe the Spanish contractor’s woes:

[…] Opponents of the I-77 toll project may have just gotten a needed break as a result of documents revealing that Cintra, the subsidiary of parent company Ferrovial, failed to disclose in required contractual documents that its affiliate was being investigated for breaking Spain’s anti-trust laws. Ferrovial’s waste management subsidiary called Cespa had their offices raided in 2012 and 2013, yet failed to disclose those investigations as required by the NCDOT’s Request for Proposal (RFP) process in 2014. As a result of those investigations, Cespa (Ferrovial) was fined more than 13.6 million Euros (approximately $15 million USD) for engaging in market sharing and collusive activity.

Journalist Baltasar Montaño explained in Spain’s January 28, 2015 digital publication Vozpópuli how the “garbage cartel” was rigged. He explained, the CNMC [Comisión Nacional de los Mercados y la Competencia – Spain’s National Commission of Markets and Competition] went through thousands of emails from companies like Ferrovial, FCC, ACS, and Sacyr in which they divided contracts, clients, territories, and they expelled possible competitors among other illegal practices.pat worried

“A 198-page document by Spain’s CNMC dated January 8, 2015 details the investigations, scandalous emails and documents showing collusive joint agreements between Cespa (Ferrovial) and others,” said Diane Gilroy, a local Spanish professor who recently traveled to Spain and researched Cintra’s parent company Ferrovial. “Because Cintra failed to disclose this serious anti-trust investigation that Ferrovial/Cespa was notified of by the CNMC in 2012 and 2013, the toll contract documents signed in 2014 between Ferrovial and the NCDOT are likely invalid and the so-called $100 million penalty is baseless.”

Current US senator — and North Meck resident — Thom Tillis was one of the most powerful state government officials at the time this deal was being pulled together between the state and the Spanish firm.  Reports surfaced during the US Senate campaign that the consulting firm that aided Cintra in obtaining the deal was being represented by Tillis’s brother-in-law’s Mssachusetts-based law firm. 

It would be interesting to learn more about private discussions that occurred, in reference to this deal, between Tillis, his brother-in-law, Governor — and fellow Charlottean — Pat McCrory, and the governor’s emissaries.  Hopefully, North Meck residents and North Carolina taxpayers are not being saddled with this stinker of a deal all because of a cronyistic, sweetheart deal between politicians.

12 comments for “Charlotte tholl road deal unraveling?

  1. Vallee Bubak
    September 8, 2015 at 6:24 pm

    Here’s another question to ponder — why was there only one final bidder? The other three dropped out before providing a final bid…which makes me wonder if there were some sort of shenanigans going on like Ferrovial’s (Cespa) garbage cartel. If the Governor wants out of this deal, he has plenty of outs. And about that $100 million to cancel the contract — that’s most likely an arbitrary number to make us believe we’re stuck.

    • patrick
      September 8, 2015 at 7:02 pm

      My understanding might be wrong but I understood no other company could meet the requirements outlined by the ncdot so thats why they were the only bidder…. I hope someone can correct me and explain more

      • Jay Privette
        September 8, 2015 at 8:06 pm

        I was told by our reach out representative for the NCDOT that the other companies wanted more money. They were probably right. Look at the other toll operations by Cintra across the country. Indiana Toll Road – Bankrupt. Chicago Skyway – after 10 years of a 99 year contract Cintra wants to cash out: Texas SH 130 – Bonds down rated to junk status: Virginia US 460 – Cintra was paid $300 million and did no work before the contract was canceled for lack of environmental review (that’s competence?). As for Cintra being the only one that meets the requirements, they own no bulldozers, shovels or trucks to my knowledge. They hire locals for that. So what do they have that makes them so special, office space? Maybe it’s the three lobbyists they have in Raleigh, which is sizable for a company that does no business in North Carolina.

    • A Mooresville Resident
      September 9, 2015 at 8:35 am

      As told to me by a N.C. DOT official–his name is not necessary here–two of the other bidders withdrew because they “..could not make the numbers work.” An the third withdrew because “N.C. DOT would not write in MORE taxpayer guarantees the contract.”

    • September 9, 2015 at 12:26 pm

      August 3rd, 2011: At the ALEC conference in New Orleans, Cintra and their occasional infrastructure partner Macquarie proposed the “Establishing a Public-Private Partnership (P3) Authority Act” model legislation. It was adopted, in a Task Force whose membership included Charlotte-area Rep. Lewis Dockham and then-NC ALEC State Chairman Rep. Fred Steen.

      The next day, Thom Tillis was named “ALEC Legislator of the Year”, and that’s when his fervor for tholl roads began.

      The P3 model legislation, written by Cintra and Macquarie, was approved by the ALEC Board of Directors in October 2011. (NC Reps. Fred Steen and Harold Brubaker were either on the Board at that time, or were named immediately thereafter. Thom Tillis and Rep. Tim Moffitt would soon replace them.)

      Moffitt had been named co-chair of the House P3 Committee the month before, by Thom Tillis, along with Rep. Bill Brawley. He also appointed Fred Steen as a member.

      Macquarie’s chief lobbyist was invited to come and present to the committee (Jan. 10, 2012) on why North Carolina should create a statewide P3 agency (remarkably similar to the P3 Authority proposed by the ALEC legislation co-written by Cintra/Macquarie).

      One entire meeting (April 4th 2012) was taken up by Mark Foster of NCDOT’s presentation describing the value of P3s for transportation funding. The “Potential P3 Opportunities” slide only had two projects: the Charlotte multi-modal “Gateway” station, and “I-77 HOT Lanes”. (Last I heard, the Gateway Station was unfunded and stuck in limbo.)

      That’s as far as I’ve gotten.

      Frankly, I don’t think we should be surprised that Cintra was the only bidder.

      • September 9, 2015 at 12:40 pm

        Oddly enough, former NCDOT CFO Mark Foster, who brags on his LinkedIn page that he “negotiated” the I-77 HOT lanes project, is now Asst. County Manager for Finance… for Mecklenberg County.

    • September 25, 2015 at 1:08 pm

      There are 56 Asphalt and paving companies in North Carolina. But because the “Design and Build” components of the contract to bid on had such a high value, all 56 companies became disqualified. This was done on purpose by NCDOT. They on purpose put out a bid contract that eliminated all state bidders. I guess and am not sure how this works but bidders have to out up a bond. The amount of the contract eliminated companies because they couldn’t put up a big enough bond.
      Thus “Cintra”/”Mobility Partners” wins the bid by default.

  2. Vallee Bubak
    September 8, 2015 at 7:44 pm

    Patrick — that’s the NCDOT spin I suppose. It makes no sense to not get more than one bid. That should have been a huge red flag that something was not right.

    • patrick
      September 8, 2015 at 9:30 pm

      It is the ncdot spin at least from a dot employee and it makes as much logical sense as hillary’s email server

  3. Pete Carter
    September 8, 2015 at 8:27 pm

    If you really want to start having fun, check out the spider web of shell companies. Also, take a look into the contractors license.

  4. Jay Privette
    September 8, 2015 at 8:46 pm

    Cintra and their parent company Ferrovial aren’t alone. Parsons Brinckerhoff with a long record of doing business in Charlotte has a history of scandals involving shoddy workmanship and project cost overruns like the Big Dig in Boston and the Blue Line in Charlotte, is Technical Director for the I-77 HOT Lanes. The Lewis Berger Group was recently banned by The World Bank from doing work for them because of corrupt payments made to government officials in Vietnam and India, are the lead designers. SHOULD THIS CAST OF CHARACTERS RAISE SOME CONCERNS OR WHAT?

  5. Tom
    September 9, 2015 at 7:47 am

    Here in the triangle our toll road is used sparingly. I ended up on it on night and it was so empty I had 3 lanes all to myself.

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