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| Original News Release |
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| Original News Release |
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The province’s vision: A strong, vibrant gateway for economic growth
Since 1986, when phase one of the Coquihalla Highway from Hope to Merritt was completed, it has become an important trade and commerce route for the southern Interior. The completion of phase two from Merritt to Kamloops in 1987, and the Okanagan Connector in 1990, helped to significantly increase use of the highway.
Three million trips are completed on the Coquihalla system each year, and 81 per cent of travellers reside outside the communities of Hope, the Thompson-Nicola and the Okanagan, creating significant tourism, investment and economic opportunities for the region. However, there are challenges to realizing this economic potential.
The opportunity for improvement
1) New infrastructure improvements are required.
New infrastructure improvements are urgently needed – especially in the southern Interior – to help reduce congestion and open up new economic growth and opportunities across the province.
2) Resources are limited.
The province’s ability to fund new infrastructure is limited. The provincial debt has doubled over the past decade to a projected $41 billion this year, and further fuel-tax increases are simply not feasible. Yet, up to $300 million in new infrastructure is required in the southern Interior alone.
3) Coquihalla capital costs remain.
To date, the complete Coquihalla Highway system has cost $955 million for capital and $225 million for operations. By comparison, just $550 million in toll revenue has been raised – less than half the total cost, which does not include interest costs.
Although $42.9 million in toll revenue was raised in 2001-02 to offset the original capital costs, almost half that amount – $21 million – now goes to maintenance, operations and rehabilitation. As the highway ages, increased rehabilitation will be required. For example, the current cost to replace just one of the 26 bridge decks on phase one of the highway would be $500,000.
4) Rehabilitation costs increase with age.
Phase one of the Coquihalla Highway is 17 years old. It passes through high elevation where extreme weather conditions require ongoing rehabilitation, such as resurfacing, road upgrades and bridge repairs.
The associated costs can accumulate over time, depending on road use and decay. For example, in 2001-02, more than $4.7 million was required for rehabilitation on phase one alone, compared to a typical yearly average of $2 million. Moreover, costs grow if the highway is not rehabilitated on a timely basis. The cost of rehabilitating one kilometre of road after 12 years is $65,000, but the cost after 20 years increases by up to six times, to $400,000.
5) New investments must benefit local residents.
Clearly, new solutions are required to open up new private-sector investment while ensuring fair, predictable and stable services for residents. New investment is needed to maximize the potential of this asset while enhancing service levels. And in order to be successful, new revenue options must be fair to local residents and attract new customers to enhance traffic flow.
The new maintenance and operations arrangement will not only provide new investment; it will make it advantageous for users – especially local residents – to travel the highway more frequently.
A new arrangement to improve services
The new maintenance and operations arrangement to manage phase one of the Coquihalla Highway will improve services for motorists, reduce costs for residents who are frequent travellers and provide new economic growth and infrastructure for the southern Interior.
A legally binding services and operations contract will detail the responsibilities and obligations of the operator, in return for the transfer of operational rights for 55 years. This will mean:
1) Public ownership of the Coquihalla roadbed and right-of-way.
The province will own the Coquihalla roadbed and right-of-way. It will retain authority to resume full operation of the highway if the operator is in ongoing violation of the agreement. And operation of the highway will revert to the government after the duration of the agreement.
2) Improved maintenance and rehabilitation.
By providing long-term reliability and predictability for how the highway will be managed, the new arrangement will allow the operator to properly plan future rehabilitation and maintenance priorities in a way that best meets the needs of the region, communities and motorists.
Because the operator will only be paid if motorists use the highway, the arrangement provides a built-in incentive for improved customer service to increase traveller visits to the region.
In particular, the arrangement will allow for new innovation and creativity in customer services compared to what has been available under public operation of the highway, including the potential for retail and service enhancements to roadside service areas.
3) Guaranteed, legally binding service and safety standards.
The services and operations contract will include prescribed service and safety standards and will regulate all areas of highway safety and maintenance.
The Ministry of Transportation will continue to set highway safety and maintenance standards. All current and future government policies and standards for safety and maintenance will be binding on the operator, and the agreement will include strict financial consequences for non-compliance – including the ability for the province to revoke the agreement and resume full operation of the highway.
4) Low frequent-traveller rates, to reduce costs for residents.
The services and operations contract will require the establishment of a frequent traveller pass to provide greater fairness for residents, by reducing travel costs and ensuring that infrastructure improvements are funded by travellers from outside the region.
The improved tolling structure will provide for unlimited, 90-day travel. Frequent travellers will pay for a 90-day pass plus the cost of two round-trips, receiving all subsequent trips free. The cost will be $10 for the unlimited-travel pass, plus $10 for each of the first four one-way trips.
For a motorist making a round-trip every two weeks, travel costs over the three-month period will decrease by nearly 60 per cent, from the current $120 to $50. For a construction worker who lives in Merritt and travels to the coast three times a month, the annual cost will decrease to $200 from $720.
5) Fair, limited toll levels.
For non-commercial motorists who are not frequent travellers, tolls will increase marginally to $13 from $10 – the first increase since 1988. There will be no increase for commercial vehicles. Future toll increases for passenger and commercial vehicles will be capped under the agreement, in line with the rate of inflation, to ensure fairness and predictability for motorists.
Importantly, besides reducing costs for frequent travellers, the new arrangement will mean the 81 per cent of users who live outside the region will fund the vast majority of new improvements and the revenues generated.
No tolling changes will be introduced until a new operator is selected – a process that will conclude by December – and the frequent-traveller pass is implemented thereafter.
The arrangements will be consistent with the new tolling principles adopted by the government in April 2003. These prescribe that tolling is only permitted where an untolled alternative is available, and that limits on the level and frequency of increases must be established in advance.
6) New regional economic development.
Better service, combined with the benefits of the frequent-traveller pass, will help to increase traffic flow, resulting in more tourism, commerce and investment for the southern Interior.
7) Added revenues for infrastructure improvements, with no new public debt.
All proceeds from the arrangement will be dedicated to transportation infrastructure projects, allowing for the construction of new infrastructure improvements with no new public debt. Specifically, the operator will pay an upfront fee to the province in return for the right to operate the highway. The fee level will be determined through the competitive selection process.
Under its Heartlands Transportation Strategy, the province plans to invest between $250 million and $300 million over three years in the southern Interior alone. Every $1 million invested in infrastructure creates an additional 13 direct person-years of employment – representing a total potential of up to 3,900 jobs in the southern Interior.
Time frame
· May – Request for Expressions of Interest issued. · July – Request for Qualifications issued, and mayors’ council convened to provide input and advice to development of the Request for Proposals. · Fall – Request for Proposals issued. · December – Operator selected, and services and operations contract finalized.
No tolling changes will be made until the frequent-traveller pass is implemented following finalization of the contract. That implementation date will be determined in part by the new operator and is expected to be within three to six months.
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