Georgia’s Rest Area Sledgehammer

February 4th, 2010

The Georgia state government is proposing to take a sledgehammer to business and jobs at a time when its bankruptcy and unemployment rates are among the Nation’s highest.

The Georgia Department of Transportation this week said it aims to bolster state budgets by renting some of its right-of-way parcels and adding gas stations and restaurants to its highway rest areas – a practice currently banned under Federal law.

If Georgia succeeds, this ill-conceived idea will devastate local businesses whose survival depends on motorists exiting the Interstate.

Government-run rest areas offering food and fuel and other retail services will alter the competitive landscape. The Government gets the advantage by owning prime real estate directly along the Interstate — locations most easily accessed by motorists.

A University of Maryland study confirms this. The state kills the local businesses due to its competitive advantage of being located on the right-of-way as opposed to the exit.  The study found that state-run commercialized rest areas resulted in 50 percent fewer businesses along those corridors.

Allowing Georgia to overturn this ban is a sure-fire way to make a weak economy worse. Georgia already boasts the third-highest business bankruptcy rate in the nation and double-digit unemployment figures. It can ill-afford to further depress its local economies.

The Federal Government barred states from operating retail services in rest areas more than five decades ago precisely to spur local business development. Today, more than 60,000 businesses operate along the interstate system.

Lifting the ban is a short-sighted solution to the short-term hurdle of a down economy.

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Commercialization Threats Emerge Across the Country

February 2nd, 2010

With state governments still struggling to balance their budgets, several state lawmakers have eyed rest areas as a potential revenue stream.  In at least four states, legislators have introduced bills examining the possibility of commercializing rest areas, signaling a heightened interest in this issue.  Let’s hope these lawmakers consider the impact of such a policy on local communities and businesses, which would suffer tremendously if commercialization were allowed.

So far in 2010, commercialization bills have been introduced in:

  • Virginia – a state which attracted widespread criticism in 2009 for shutting down 23 rest areas. State representative David Nutter introduced legislation (HJ 126) that, if approved, would study the feasibility of rest area commercialization.
  • Mississippi - similar legislation has been introduced by state Representative John Mayo (HB 374), calling on Mississippi to investigate the prospects of commercialization.
  • Washington - five state senators introduced a bill (SB 6465) allowing full-scale commercialization of rest areas if approved by the federal government.
  • Georgia – six state senators introduced legislation (SR 822) urging the Georgia Department of Transportation to seek a waiver from the Federal Highway Administration allowing retail developments at Interstate highway rest areas. The Chair of the Georgia State Transportation Committee has even said he supports a “yard sale” for the state, selling off any land possible.

We recognize that these are tough economic times. But the ban on commercialized rest areas has been good public policy for over 50 years, fostering intense competition among businesses for the services of interstate motorists. Changing this policy now would serve as an act of desperation to combat the short-term challenges of a down economy.

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Coalition Supports Virginia’s Efforts to Reopen Rest Areas

February 2nd, 2010

Earlier this month, Virginia’s recently inaugurated Gov. Bob McDonnell announced that all 19 rest areas in the state that were closed last summer would reopen by mid-April. McDonnell had made reopening the rest areas a top pledge during last year’s campaign. McDonnell’s plan would use reserve funds to reopen the rest areas, while Virginia Transportation Secretary Sean Connaughton develops a more sustainable plan for operating the facilities over the long term. In confirming this approach, the prospect of commercialization was not discussed as an option.

Prior to McDonnell’s announcement, the Partnership to Save Highway Communities sent a letter to the Governor, offering to assist the new administration in developing ways to preserve the rest areas without resorting to commercializing them. Gov. McDonnell has suggested programs such as an “adopt a rest area” plan or the use of state inmates for maintenance projects, both of which would cut costs to the state without directly competing against private businesses located just off the right of way.

We hope that Virginia can serve a model for other states seeking solutions to keeping their rest areas open without resorting to unfair competition. Our coalition is eager to work with the Virginia Department of Transportation in this endeavor.

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Arizona Closes Rest Areas, But Resists Calls for Commercialization

October 16th, 2009

The Arizona Department of Transportation (ADOT) last week announced it was closing 13 of the state’s 18 rest areas, citing budget difficulties. ADOT officials called the closures temporary, and said they will look into reopening the facilities next summer when the state’s new fiscal year starts.

On the surface, ADOT’s decision to close rest areas to meet budgetary shortfalls resembles Virginia’s decision to close 19 rest areas in the state earlier this summer. But unlike Virginia, Arizona has resisted the urge to call for an end to the prohibition of commercial activity at rest areas to solve this problem. Virginia used its budget woes as a political maneuver to push for a repeal of the commercialization ban, opening up rest areas to unfair competition against private businesses.

Arizona is taking a more prudent approach. So far, the state appears to be working toward local business partnerships to meet motorists’ needs.

Using the model known as the Interstate Oasis program allows state departments of transportation to work with existing businesses to ensure that motorists have a safe and convenient place to rest while on the highway. A successful implementation of this program will benefit local businesses while allowing the state to direct funds for more critical projects. It’s a winning solution for the state, its taxpayers and Arizona businesses.

This editorial in Arizona’s East Valley Tribune makes an effective case for an Interstate Oasis-style approach for handling the rest area closures. We hope the state will follow through on this concept.

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LA Times Discusses Commercialization Issue

September 1st, 2009

The Los Angeles Times ran this story yesterday regarding the issue of rest area commercialization and its potential impacts on highway-based communities and the motorists they serve. The story presents arguments both for and against commercialization, but ultimately frames the issue by suggesting that commercialization is the only option for keeping rest areas open.

As we have discussed before, even in these difficult economic times, commercialization isn’t the only way to preserve rest areas. Texas for example, is planning to spend $30 million to upgrade their rest areas to make them more attractive to motorists. Texas offers free Wi-Fi hotspots and kiosks that enable local businesses to advertise their services – a win-win for both the state and local communities.

In Virginia, the current epicenter of debate regarding rest areas and commercialization, lawmakers have tried on several occasions to keep the rest areas open, but Virginia Department of Transportation Officials have repeatedly closed the door on any attempts to save them.

The role of highway rest areas in state’s transportation strategy should focus solely on a state’s commitment to the safety of travelers in the state. In the case of Virginia, the commonwealth decided that the 18 closed rest areas were not worth the $9 million it would allegedly cost to keep them open.

The prospects of commercial rest areas are not an either/or proposition. There are plenty of ways to operate these facilities without seeking to unfairly compete with existing businesses that have invested heavily to meet the needs of highway motorists.

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Calls for Commercialization in Georgia Should Go Unanswered

August 12th, 2009

Recently, the Georgia Department of Transportation announced plans to close two rest areas along I-85. The rest areas are the oldest and most expensive to maintain, according to Georgia officials. What’s more, they said, criminal activity is rising at these locations and private development now provides the services once offered at them.

To its credit, Georgia has resisted the urge to turn these closures into a political statement by proposing to commercialize the facilities, unlike the Commonwealth of Virginia.

While Georgia’s public officials have avoided making this a political issue, the same can’t be said of the Georgian press, who are using the closures as a platform to call for an end to the ban on rest area commercialization.

A recent editorial in the Athens Banner-Herald calls for rest area commercialization as a government money maker, despite recognizing that existing businesses would suffer tremendously as a result. What’s more, the editorial suggests two impractical policies to mitigate the damages. The July 30 article proposes that the state offer businesses near the rest areas the opportunity to relocate while also limiting commercial development along the Interstate.

Neither of these are realistic solutions to the state’s budget crisis. In fact, they only serve to hurt the local business community and the motoring public.

The editorial’s premise supposes that it’s easy for a business owner to walk away from a long-term lease or mortgage, while at the same time raising the necessary funds for a new venture. In reality, such a proposal would significantly increase costs for a business owner who already has paid a premium – in many cases millions of dollars — for a location close to an Interstate exit. The costs to leave that establishment will be even higher.

Furthermore, limiting commercial development on the Interstate would grant a virtual monopoly to those who win the lucrative state contracts. Such deals shut out all other investors. This game of winners and losers for control of the right of way will only lessen motorists’ choices.

The best solution is to keep all businesses off the Interstate and let the state focus on constructing, maintaining and operating the highway system. Thousands of businesses nationwide already are available to help meet the commercial needs of highway motorists.

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Virginia’s Priorities Out of Whack

July 31st, 2009

Anyone who manages a budget knows that how you spend your cash is all a matter of priorities.

The Commonwealth of Virginia would have us believe that it was unable to find $9 million – the cost to pave just one-half mile of Interstate – in the state transportation budget to keep 19 of its 42 rest areas open.

But a review of budgetary spending clearly shows that Virginia consciously decided that funding those rest areas simply wasn’t a priority.

According to Virginia’s stimulus website, Virginia was awarded $4.8 billion from the $787 billion stimulus passed by Congress in February. Of those funds, Virginia allocated $1 billion for state infrastructure projects, including $123 million for highway projects.

Other states like Texas, in turn, see the value in putting stimulus funds toward new and enhanced rest areas.

The Dallas Morning News reported this week that Texas plans to bid contracts worth $30 million to expand and improve its highway rest areas before year’s end. Texas is funding the new facilities from its share of the stimulus package.

Virginia should follow Texas’ lead, and re-evaluate which expenditures merit making it into the final budget.

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Virginia Plays Politics with Rest Area Closures

July 21st, 2009

Early this morning, the Virginia Department of Transportation (VDOT) went through on its plans and began boarding up rest areas across the state. No one thought that this political game of “chicken” would ever go this far.

VDOT first announced its plans to close rest areas in March, a proposal that was met with almost universal opposition from state residents and motorists. Shortly after announcing the closures, both the Governor and Secretary of Transportation said that they could keep the rest areas open…if Congress would allow them to run businesses there. Because the well-reasoned prohibition against rest area commercialization is a federal law, Virginia was able to shift the blame from Richmond to Washington.

Closing the rest areas in Virginia will save the commonwealth $9 million, or 0.25% of Virginia’s entire transportation budget. In June, the Commonwealth Transportation Board, which approves VDOT’s annual budget, tried to save the rest areas by transferring the $9 million from an increase in the paving budget. According to Lt. Governor Bill Bolling, the amendment failed, with VDOT Secretary Pierce Homer casting the deciding vote.

While VDOT has discussed the rest area issue for several months, no one bothered to formally contact the Virginia congressional delegation to request help in their commercialization efforts until last Wednesday - two days before the House Appropriations Committee met to debate the 2010 transportation appropriations bill. Thankfully, the amendment to allow Virginia to commercialize their rest areas failed, but it will undoubtedly resurface in the coming days.

VDOT has had several opportunities to keep the rest areas open, but ultimately decided closing them was worth it in order to bring them closer to their long-time goal of commercializing their rest areas. Commercialization is not the only way to save Virginia’s rest areas – in fact, it will only result in job losses and a downturn in county and municipal taxes. Rest area commercialization will do far more harm than good to the small cities and towns that rely on interstate highway traffic to sustain their communities.

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Wall Street Journal Highlights Issues Surrounding Rest Area Closures

July 7th, 2009

The Wall Street Journal underscored the significant problems state governments are facing in maintaining highway rest areas amid budgetary shortfalls in a July 3 article titled “R.I.P: Budget Woes Spell Doom for Roadside Rest Stops.”

The article, written by WSJ reporter Mike Esterl, outlined how states like Virginia, Iowa and New Hampshire are pushing to close or commercialize rest areas. But resistance from rest-area defenders, including the National Association of Blind Merchants, AAA, and the American Trucking Associations, is gaining traction and curbing those efforts.

The Partnership to Save Highway Communities supports keeping interstate rest areas open. But it rejects the idea that commercializing rest areas to compete with private businesses is the only way to save them.

Already, several states have launched innovative programs to keep rest areas open without offering food and fuel as the only means of revenue generation.

The Interstate Oasis program, for example, was established by Congress in the 2005 highway reauthorization law and allows businesses operating at interstate highway exits to serve as de facto rest areas. Overseen by the Federal Highway Administration, the Oasis program ensures that participating businesses meet a set of minimum standards to participate. Oregon recently marked the first state in the nation to implement the program.

There are many options for preserving the delicate balance between the need for rest areas and the services offered by existing businesses at interstate exits. Allowing rest areas to compete with existing businesses ranks among the worst and ultimately would reduce services to highway travelers.

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Great Start, Long Fight in Commercialization Battle

July 2nd, 2009

Last week, the House Highways and Transit Subcommittee approved a draft of the House version of the highway bill and the full Transportation and Infrastructure Committee is scheduled to consider the bill sometime in July. The initial draft does not address the issue of rest area commercialization, leaving the ban completely intact, marking a great start in framing the issue during the reauthorization process.

However, it’s much too early to celebrate. The states of California, Washington and Oregon are still pushing their agenda to commercialize their rest areas and offer alternative fuels in addition to food and other services. Some in the Senate view this as a way to quickly develop an infrastructure for alternative fuels and charging infrastructure for electric vehicles. With virtually no demand for these forms of energy, the costs would be offset by other offerings at the newly commercialized rest areas.

While we’re generally pleased with House version of the highway bill, its chances of passage are far from clear at this point. Instead of a long-term full highway bill reauthorization, the Department of Transportation is advocating for a short-term, 18-month extension to current law with “critical reforms” to keep the Highway Trust Fund from insolvency. DOT hasn’t indicated what those reforms are at this point, but given comments by Senator Barbara Boxer, the Senate seems to be leaning towards an extension of the current law. The Obama Administration repeatedly has suggested that some form of privatization should be explored as a revenue source and it isn’t clear what the official Administration position is regarding rest area commercialization.

Budget shortfalls in many states are worsening. The Virginia Department of Transportation (VDOT) is in the process of closing 19 of its 41 rest areas due to funding issues. In a number of public meetings, members of the Commonwealth Transportation Board suggested that commercialization could save the rest areas, and suggested that Virginians should support overturning the ban. Similar funding scenarios are playing out in states across the country, setting the stage for more state agencies to suggest that commercialization is the answer to some of their funding needs.

So as you can see, the battle on this issue has just begun.

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