Company Governor Lamont Relying on for Toll Estimates has History of Inaccuracy

April 11, 2019

Senator Fasano Raises Concerns


The consulting firm that has received $20 million from Connecticut to provide the “sketch” and “hypothetical” toll rates Gov. Lamont shared publicly yesterday has a history of providing inaccurate estimates that have led to devastating results in other parts of the country.


CDMSmith was formed in 2012 when CDM and Wilbur Smith Associates – a transportation and infrastructure firm in South Carolina – merged. Wilbur Smith Associates, which is one of the few national firms that calculates toll revenue and traffic projections, has a history of providing overly optimistic projections in situations where the company stood to benefit from toll proposals being implemented. Their inaccurate projections were relied upon for the Indiana Toll Road, San Diego’s South Bay Expressway, Greenville South Carolina, Orange County toll projects, and Denver’s Northwest Parkway – all of which faced significant problems when traffic did not match up to estimates.


Yesterday, Gov. Lamont released potential Connecticut toll rates, which were based on a 2018 CDMSmith that provided a “sketch level” assessment (page 2-1, CDM Smith Report) of potential toll revenue. These sketch level estimates were  calculated assuming 82 gantries on I-95, Route 15, I-84, I-91, I-395, I-691, Route 2, Route 8, Route 9 and I-291, a significantly broader proposal than what Gov. Lamont has said he wants to pursue (page 4-6 and 4-7 of the 2018 CDM Smith Report). The CDM Smith report also states, “These rates are hypothetical, intended to inform future toll discussions” (page ES-4 of the 2018 CDM Smith Report).


For the governor to rely on any data contained in the 2018 CDMSmith report to generate projected toll rates is setting up Connecticut for failure. That is because:


  • The 2018 CDMSmith Report states clearly that these are only rough “hypothetical” estimates, yet the governor is using them as fact.


  • The 2018 CDMSmith’s rough calculations are based on MORE toll gantries and MORE tolled roads than Lamont claims he wants to pursue. The report specifically states that these numbers are based on an 82 gantry plan, and the fewer gantries the more likely traffic will decrease as people will avoid the tolls.


  • CDMSmith has a history of providing overly optimistic traffic projections and toll revenue estimates, which has led to disastrous results in other states. CDM Smith has been paid $20 million over the last seven years to perform consulting for the state of Connecticut, including to produce multiple studies on toll revenue. CDMSmith this year has hired a lobbying firm to represent its interests in Connecticut.


“History shows that the companies that calculate projections for toll revenue and traffic on tolled roadways often have flawed forecasts,” said Senate Republican Leader Len Fasano (R-North Haven). “The same companies that stand to gain by toll installation are the same ones that are calculating these projections. The better a toll revenue projection looks on paper, the more likely a state will move forward with it – a decision that could benefit those same companies calculating the projections. In addition to my concerns that Gov. Lamont is pricing out a plan that does not even exist, by using data that was calculated for a completely different hypothetical proposal, I also am concerned about relying on projections from a company that has a questionable track record in other states and that could stand to benefit from CT installing tolls. There is a history of the inaccurate projections putting the public at risk.”


History of Inaccurate Estimates by Wilbur Smith Associates/CDM Smith


Indiana Toll Road

  • Projections were made by Wilbur Smith Associates (company merged to become to CDMSmith)
  • Projections said traffic would increase at a rate of 22% over the first seven years. Instead traffic volumes shrank 11% in the first eight years.
  • By the time they filed for chapter 11, debt on the road ballooned to $5.8 billion.


Southern Connector Greenville South Carolina

  • Wilbur Smith was offered $12 million in contracts if the bonds to finance the project were sold.
  • Wilbur Smith Associates prepared the revenue projections that justified the loan, helping to persuade investors in 1998 to loan a newly created toll authority $200 million.
  • The road only saw one-third to one-half of the traffic predicted by Wilbur Smith, and declared bankruptcy is 2010.


San Diego’s South Bay Expressway

  • Traffic projections performed by Wilbur Smith Associates.
  • Filed for bankruptcy in 2010 after disappointing traffic revenue.
  • The $658 million project had been backed by $130 million in equity from Macquarie, $340 million in private loans, and a $140 million TIFIA loan from the federal government.


Orange County

  • “The firm [Wilbur Smith Associates] has been way off on both original and revised projections for the San Joaquin Hills tollway and wrong on original forecasts for the Foothill/Eastern Transportation Corridor.”
  • “Their original estimates for the San Joaquin Hills toll road were wildly off the mark, overestimating actual traffic by more than 40%. When they tried again during the road’s 1997 refinancing, actual traffic turned out to be 20% short of forecasts. This time the repercussions were serious–causing Orange County toll road board members to dig into $40 million in savings to guarantee debt on the road.”


Denver’s Northwest Parkway

  • Projections were done by Wilbur Smith, URS Corp. and Vollmer Associates
  • Attracted just half the cars forecasted in its first three years.
  • Collectively the three companies missed first-year projections on 19 of the 22 operating roads.
  • Some consultant employees that worked on the traffic study were promised lucrative jobs if the road was built.


Questions Raised About CDM Smith’s Work on the Dulles Toll Road

An independent review of the traffic and revenue forecast of the Dulles Toll Road projected by Wilbur Smith Associates (which merged to form CDMSmith) found that CDM Smith had a “pattern of overestimates” which created “substantial risk.”

  • A record of overestimating revenues and unexplained discrepancies between two WSA/CDMSmith studies and various parties to the Dulles project.
  • Forecasts of revenue by WSA/CDMSmith are on average 2.27 times – or 127% too high – as compared with subsequently realized toll revenues.
  • WSA/CDMSmith had a pattern of understating the sensitive profit maximizing toll initially, then subsequently raising those estimates.
  • WSA/CDMSmith routinely uses the highest population and employment forecasts for forecasting traffic, often starting with inflated numbers. (for example, estimates for Dulles Toll Road revenues overstated Fairfax County employment by 25%)
  • The report identified risks as:
    • Lenders wont fund the project without state guarantees or at investment grade rates
    • Tolls much higher than forecasted will emerge
    • Corridor economic growth will be hampered by high costs
    • MWAA (Metropolitan Washington Airports Authority) may default and face much higher costs than cited



Need for Caution Regarding Any Estimates Without Specific Plan


The pattern of inaccurate estimates is something that has been seen throughout the toll-revenue-projection industry as well, going beyond just CDMSmith. Reports indicate it is a problem amongst the limited amount of companies that calculate toll revenue projections because these are the same companies that benefit from toll projects.


A Denver Post investigation found that:

  • 86% of new toll roads in 8 states failed to meet expectations in their first year, even with adjustments for the break-in period in the opening years.
  • 75% of new tolled roads remain poor performers after 3 years.
  • This pattern has been noted amongst investors, which have responded by demanding greater returns on bonds, “forcing toll authorities to borrow more money to use as a hedge against roads that don’t perform as expected. The extra money is set aside to cover payments in early years should the toll collections not be sufficient.” (Denver Post).


According to the Tampa Bay Times, URS, another company that calculates toll projections, has a history of inaccurate projections in Florida:

  • URS said that the Polk Parkway would make $100 million by 2020. Seven years later they cut that prediction to $15 million.
  • URS said the Suncoast Parkway would rake in more than $100 million in 2006. The road made less than $20 million that year.
  • URS retained Florida DOT as a client until 2014, when the company was acquired by a rival, Aecom, for $6 billion. Since 2000, the DOT has paid URS/Aecom a total of $143.2 million. About $28.6 million of that was on toll studies.