December 5, 2022

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Stalled federal loan increased cost for Nice/Middleton Bridge

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Federal transportation officials stalled on approving Maryland’s loan application last summer to replace a Potomac River bridge crossing, using a six-month delay to raise questions about bike lanes on another section of the highway.

In 2019, the agency responsible for Maryland’s toll roads and bridges decided not to include a proposed bike and pedestrian path as part of a $463 million replacement of the Governor Harry W. Nice Memorial/Senator Thomas “Mac” Middleton Bridge, about 37 miles south of Washington. Maryland officials said it was that decision that appeared to bring additional federal scrutiny.

The bridge was already under construction without the path, and Maryland refused to consider alterations to the plans. The loan ultimately was approved without new conditions — but the wait increased its cost by at least $20 million as interest rates rose, according to a February estimate provided in documents obtained by The Washington Post.

The episode highlights the challenges faced by the Transportation Department, which under the Biden administration is seeking to promote bike and pedestrian safety, racial equity and the environment. To achieve those goals, the federal agency must work with states that sometimes have other priorities — and typically have the final say. It’s a dynamic that will help shape $350 billion for road funding that’s part of the infrastructure law, which gives states near-complete control over which projects move forward and leaves federal authorities looking for informal ways to influence what gets built.

“This is a microcosm of the broader challenges of the federal program structure,” said Kevin DeGood, director of infrastructure policy at the Center for American Progress, a liberal think tank. “You can point to this as a great example of where the administration is constrained by the law.”

The infrastructure package handed the Department of Transportation new discretionary grant programs and increased the size of other programs, which the administration has tied to goals like combating climate change and promoting racial justice. But the bulk of federal highway money is passed to states with few conditions on how it is spent. Attempts to influence the decisions of state transportation departments — such as a December memo encouraging them not to widen highways — have provoked opposition from state leaders.

The Transportation Department said in a statement that the loan to Maryland ultimately “closed to the satisfaction of both parties.”

“As part of the process to greenlight a $200 million loan, our team did its due diligence, which includes asking standard questions and exploring alternatives that could benefit the people who rely on the bridge and help protect safety, which is a priority in everything that DOT does,” the statement said.

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The Maryland Transportation Authority, which operates toll roads and bridges, had already been working with federal authorities for more than a year when the state formally applied for the loan last summer to help replace the 80-year-old bridge. Officials expected a quick approval to lock in a favorable interest rate.

Instead, the Transportation Department subjected the application to months of scrutiny, making what Allen Garman, the Maryland authority’s director of treasury and debt, called in an email obtained by The Post “seemingly unprecedented demands for unrelated bicycle projects.”

Garman briefed the authority’s finance committee about the application in December, saying federal officials initially wanted guarantees about an unrelated project on Interstate 95, then requested the state install bike and pedestrian lanes on another stretch of highway. Garman told board members that, in his view, the federal money was in “jeopardy.”

But Maryland transportation officials refused to alter their plans, according to the documents obtained under the Maryland Public Information Act. And after a six-month delay, the Transportation Department approved the 30-year loan without new conditions.

The Nice/Middleton Bridge opened in 1940 and carries two lanes of U.S. 301 for 1.7 miles over the Potomac, connecting Charles County, Md., and King George County, Va. It supports about 6.5 million vehicles annually. With the aging, narrow bridge seen as a traffic bottleneck, Maryland Gov. Larry Hogan (R) announced a plan in 2016 to replace it with a new crossing that would carry four lanes of traffic and include a separated bike and pedestrian path.

But the toll authority decided the $64 million it would cost could be better spent converting shoulders to additional driving lanes on a section of Interstate 95. The decision came as a disappointment to Maryland bike advocates, who viewed the bridge as a key link in what they envision as a 50-mile network spanning Maryland and Virginia.

“It just doesn’t make sense in this day and age” to build a bridge without dedicated space for cyclists and pedestrians, said Bill Niedringhaus, president of the Potomac Heritage Trail Association.

The new bridge will include signage alerting drivers to cyclists and special joints between sections to accommodate bikes, but Niedringhaus said even die-hard cyclists have told him “they’d rather ride on the Beltway.”

The law gives federal officials little say in how projects are designed — generally requiring them to approve loans to creditworthy applicants — but Maryland’s application was pulled from the agenda of the Transportation Department’s Council on Credit and Finance in August. Approval by the council was one of the final steps in securing the loan, but federal officials wanted to wait “pending further discussions with project sponsor regarding pedestrian safety questions,” according to the agenda.

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In late September, then-Maryland Transportation Secretary Greg Slater and Stephanie Pollack, the deputy administrator of the Federal Highway Administration, discussed the project by phone, according to emails.

Jim Ports, then the executive director of the Maryland Transportation Authority, followed up in a Sept. 30 letter to Pollack, saying his state agency lacked the authority to build bike lanes on U.S. 301 because it doesn’t control the road. The agency had already spent $1 million on the application process, Ports wrote, and “failure to close the loan would mean that public funds would be wasted.”

With the loan stalled, Slater wrote to Ports in October while Slater was in California attending a convention of the influential American Association of State Highway and Transportation Officials.

“Based on some conversations here in California, I think we might need [to] get a ‘put our foot down’ letter drafted,” Slater wrote in an email.

In December, Slater wrote to Garman to wish him a happy birthday. Garman had the still-stalled Transportation Infrastructure Finance and Innovation Act loan application on his mind.

“I greatly appreciate your help with the TIFIA loan and am sorry that USDOT has made seemingly unprecedented demands for unrelated bicycle projects,” he wrote. “Perhaps we can offer them the old bridge for bicycles and save on the cost of demolishment.”

Slater, now the head of the Tampa Hillsborough Expressway Authority in Florida, declined through a spokeswoman to comment on the Maryland project. Ports, who replaced Slater as state transportation secretary, said in an interview that Maryland officials were trying to make sure their position was understood by a relatively new set of leaders at the Federal Highway Administration.

“I think it’s reasonable that with new people, you would have different questions,” Ports said.

With no signs of movement on the loan application, a manager at the contractor building the bridge wrote to the toll authority in January to make sure the company would still get paid. Maryland officials then began laying the groundwork for alternative forms of borrowing.

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Still, the federal loan was more appealing because it would allow the state to lock in what would likely be a lower interest rate before drawing on the federal funds in 2023. On Feb. 9, Garman wrote to colleagues to say the loan remained uncertain and that the delay would cost an estimated $20 million more as interest rates crept up.

Ports said in the interview that Maryland officials ultimately were able to satisfy federal authorities and clear up misunderstandings they might have had about the loan application. In February, it was put back on the federal committee’s agenda and the loan was closed in late April.

Advocates for the bike path are exploring ways to keep the original bridge as a dedicated bike and pedestrian crossing. Local leaders in Charles County previously concluded they couldn’t manage the cost of maintaining the bridge, and the transportation authority plans to demolish it, using the debris to build a fish reef.