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ROADS TO RUIN

Jane White's house is a noisy place, and not just because of the cars zipping past on the new, improved Pima Road, barely 50 feet from her front door. The phone rings constantly, and the caller is usually somebody with something to tell her about freeways, or about meetings about freeways, or about a memo that came from a meeting about freeways. Her kitchen table is covered with maps of freeways, and design plans for freeways, and thick budgets for freeways.

A bookshelf in the corner of her living room holds bound volumes filled with nearly every newspaper story written about Maricopa County freeways since 1986.

This morning, she is talking about freeways between pulls on a Benson & Hedges 100. She has been scrapping about freeways with state and local leaders for ten years, and the past few months have left her busier and more upset than ever. She is dedicated to killing Proposition 400, the freeway-funding plan on the November election ballot.

If approved, the proposition would extend the current half-cent freeway sales tax for ten years past its scheduled end in 2006, and create an additional half-cent tax for the next 20 years. Half of the revenues will be earmarked for freeway construction, and the other half for transit-system improvements. The total value of the freeway package is expected to be $5.6 billion.

Some people are broken records, and some others are dictionaries. White sounds like a broken recording of a dictionary when she talks on the subject of freeways. And although she may be less than impartial in that regard, few people--even people who doubtless wish she'd find some other hobby--would argue that she has anything less than a formidable collection of facts.

By her lights, one "fact" overrides all others: The organizations that launched the Titanic of local government boondoggles--the 1985 freeway plan--are poised to do the same thing again.

"People call me antifreeway, but I'm not. I'm antibureaucratic incompetence," she says.

Relatively few people would consider White's freeway fixation to be normal. Normal people throw up their arms and complain about taxes and traffic jams, but they don't fill their houses with planning documents. They don't sit through public policy meetings that would put a turtle's feet to sleep.

It must also be said that the arguments of many in the antifreeway crowd are not entirely logical. The failure of the 1985 freeway plan does not necessarily, automatically mean that new proposals to build highways will be economic disasters. Even governments occasionally learn from mistakes.

And the government claims it has gone to great lengths to avoid a rerun of the 1985 fiasco.

But research shows that White's concerns cannot be dismissed lightly.
A review of records from the two entities charged with building Maricopa County freeways--the Maricopa Association of Governments and the Arizona Department of Transportation--reveals that plans for completion of the freeway system are not nearly as well-developed as officialdom would have voters believe.

In fact, MAG and ADOT records show that plans for funding, building and buying property for the proposed freeway system are vague at best, inadequate in some cases and nonexistent in others.

And vague, inadequate planning is what gave Maricopa County its current patchwork of incomplete freeways to nowhere, at prices hundreds of millions of dollars higher than estimated in 1985.

This is the history most everyone agrees upon: As late as a dozen years ago, Maricopa County residents were insisting that they didn't want freeways. In fact, voters had killed every freeway initiative presented to them over 25 years. But the county kept growing, its population doubling between 1970 and 1985. By then, trying to get across town using only surface streets made a freeway trip across L.A. look like a day at Venice Beach. Enter ADOT and MAG, and their master plan for valley commuters. Just a half-cent sales-tax levy for 20 years, they said in 1985, would give the voters and drivers of Maricopa County the 231-mile freeway system of their dreams. Playing against type, Valley voters, by a three-to-one margin, agreed to tax themselves.

Work on the most ambitious and expensive metropolitan freeway project in history was set to begin.

MAG and ADOT never came close to completing the system. In fact, just a bit more than 10 percent of it has been built, and what was constructed often connected with nothing, and led to nowhere.

Like the bridges east of Pima Road. Six of them shimmer like mirages, tantalizing gridlocked Scottsdale commuters with the promise of a north-south freeway yet to come. Construction on the bridges started in 1991, after a protracted right-of-way struggle between ADOT and the City of Scottsdale.

The original alignment would have laid the Pima Freeway right on top of Pima Road, winding back and forth between Scottsdale and the Salt River Pima-Maricopa Indian Community, and would have meant the razing of at least several dozen Scottsdale homes. Scottsdale fiercely resisted the plan for years, ultimately threatening a lawsuit.

 

ADOT relented, and set about making the deal with the Indians that put the bridges on the reservation. The freeway connecting the bridges, according to MAG's original plan, was to have been completed in 1995.

Now the association says it should be built by 2006.
For the time being, however, what you see is what you get, and what you see are bridges--lovely, tall, graceful-looking structures with lots of decorative concrete touches, and no road to connect them. Native American designs are inlaid in the side banks. The concrete surface on top is smooth and white, seeming to beg to be driven on.

There are "No Trespassing or Dumping" signs all over the place, but discarded beer cans and cigarette butts litter the site, along with the occasional empty nine millimeter shell casing. A closer inspection of the Indian artwork reveals that much of it has been supplemented by graffiti.

ADOT and MAG officials have a standard refrain when asked why so much of their vaunted system now exists only in useless, deteriorating bits and pieces. They deny (publicly, at least) that the politics of MAG resulted in some sort of freeway goodie for each of the association's member cities.

They say they just wanted to start everywhere at once, so the whole system could be finished more quickly.

But in about 1987, they found a glitch in the program. They had grossly overestimated the amount of money the sales tax would bring in. In short, they ran out of money.

The department's 1985 projections for annual sales-tax revenue had been based on the explosive 11-plus percent annual growth of the preceding 25 years. But in the late '80s, the Arizona economy went in the tank. The $5.7 billion in revenues ADOT had predicted over the life of the tax was looking more and more like it might be $2.9 billion.

By the time MAG and ADOT saw that money was just trickling in, but gushing out, there were parts of incomplete freeways all over the place.

Now, though, the transportation planners say roads and bridges to nowhere are a thing of the past. If only voters will approve more taxes, they say, there will be enough money to finish the entire freeway system.

A "fact sheet" generated recently by MAG puts it this way: "Revenue projections are prepared using a methodology that has been reviewed by outside experts." This ADOT "Risk Analysis Process" should, according to MAG, produce reasonably accurate projections of tax collections for the freeways.

Jack DeBolske, MAG's executive secretary, says he does not know whether MAG has reviewed tax projections beyond 2006, but his group has studied ADOT's estimates until then, and is happy with them.

"We're comfortable with their revenue projections," he says. "Frankly, I think they've done a credible job since they restructured their process."

It appears that DeBolske is comfortable with projections that do not exist.

ADOT's own documents make it clear the department has prepared no formal estimate of revenue from the proposed sales taxes.

New Times has obtained a September 16 letter to a member of the Maricopa County Board of Supervisors from ADOT director Larry Bonine. The letter says: "The department has produced no official forecast of the future value of the proposed ten year extension and new 1/2-cent, 20-year sales tax. We have, however, produced an estimate of these values for internal financial planning purposes only. This estimate has not undergone the Department's rigorous forecasting methodology employed in forecasting revenues through [fiscal year] 2006."

The letter goes on to say, however, that producing official revenue forecasts is the responsibility of MAG, which may not agree with ADOT's unofficial numbers. In other words, ADOT says the forecasts are MAG's responsibility; MAG says it's the other way around.

While they point forecasting fingers at one another, both agencies continue to claim publicly that if voters approve additional freeway taxes, the government will collect enough money to complete the Valley's 231-mile freeway plan. MAG and ADOT say they know the money will be there, because of improved forecasting methods.

But, according to Bonine's letter, those methods had not been employed by mid-September, less than two months before the sales-tax vote.

Gazing 15 or 20 years into the future to predict real estate prices, bond-market fluctuations, national and local economic trends, traffic patterns, environmental regulations and population growth--the way urban freeway planners must--is not easy.

Sometimes the predictions are wrong in immensely expensive ways.
Like the Red Mountain Interchange.
As is the case with a lot of the MAG freeway system, this intersection of the Pima, Price and Red Mountain freeways wasn't always supposed to look the way it does now. In fact, it wasn't supposed to be where it is now.

 

ADOT and MAG had to scrap their initial plan for the interchange because of money disputes with the Salt River-Pima tribe. A second interchange proposal ran afoul of the Environmental Protection Agency, which said ADOT was planning to build on land that just happened to be a Superfund site. The environmental cleanup costs were projected to be astronomical.

Now, under plan three, the approaches to the three-highway interchange, located in northeast Tempe, run right down the middle of the Salt River.

Despite three weeks of requests for the information, ADOT declined to provide New Times with the original planned cost of the interchange. ADOT documents now show that in the process of devising three plans for the interchange, scrapping two, and adding two milelong bridges in the riverbed, the construction cost of the whole project is expected to top $170 million.

Design and construction cost overruns throughout the freeway system were major factors in the failure of the 1985 MAG/ADOT plan.

Now, the agencies say, if the public approves more freeway taxes, the overruns won't happen again.

To back that assertion, officials point to documents they didn't have in 1985, documents known as Design Concept Reports. Those reports supposedly plot the exact location and construction specifics for the entire freeway system. Department officials say that complications such as buried utilities or toxic-waste sites already show up in their Design Concept Reports.

But MAG's own records make it clear that planning for the freeway system is far from complete.

For major portions of the system--including large sections of the Red Mountain, South Mountain, Estrella, Grand Avenue and Paradise freeways--the design process is just beginning, according to a July 1994 ADOT planning map. Those sections add up to almost 100 miles of the 231-mile system.

Janice Burnett, president of the Arizona Consulting Engineers Association, says it is her understanding that major portions of at least three freeways have yet to be designed. Burnett says her information is taken from MAG and ADOT planning maps.

And, she says, freeways must go through the design process before potentially expensive obstacles can be found.

"The design is the first thing that's done," she says. "From our end, we don't know what's underground, we don't know what's going to have to be removed until we get out there. We don't know if we're going to run into some Indian dwelling, some environmental remediation problem.

"It's all these unknowns. That's what the design takes in."
In fact, MAG announced just last month that ADOT found a previously unknown landfill along a stretch of the Red Mountain Freeway from Pima Road to Dobson, which connects to the Red Mountain Interchange. Cleaning up the site is expected to cost $1.85 million.

Building that section of the Red Mountain now will cost 75 percent more than was anticipated just months ago.

The Paradise Freeway has been troubled almost from its beginning in 1960. It was originally planned to link the Agua Fria and the Pima freeways, spanning the Valley from west to east. Although its backers pushed hard for years, in 1981 the freeway was deleted from the state highway system because it was considered too costly to build.

The Paradise was included, however, in the 1985 freeway initiative, with one change: It would run east just to the Squaw Peak Parkway.

The total cost of the project, according to a January 14 ADOT report, is now $710 million in constant dollars. Adding inflation and other factors, the total cost is expected to exceed $1 billion. Much of that money will be spent on acquiring the project's right of way, the land on which it is to be built.

And the speedy and economical acquisition of right of way has never exactly been ADOT's strong suit.

After the 1985 initiative was passed, the massive purchasing of land for the system set off a real estate speculation frenzy that would have left Donald Trump reaching for the Maalox. A loophole in Arizona law allowed landowners in the system's path to claim in condemnation court that a planned freeway on a property enhanced the value of that property--in other words, it allowed a planned improvement to raise the cost of the land where the improvement would go.

That ballooned the system's right-of-way cost from its 1985 projection of $802 million to more than $2 billion.

ADOT pleaded with the state legislature for four years to close that loophole and stop the fiscal hemorrhaging, but by 1990, when the law was finally changed, most of the damage had been done.

 

ADOT now says it owns 41 percent of the right of way necessary to complete the freeway system.

ADOT, however, owns just 14 percent of the right of way necessary to complete the Paradise, which will run through what used to be a conservative, middle-class neighborhood with well-manicured lawns and American cars in the driveways. (According to MAG's Annual Freeway Report, released last February, the remainder of the land needed to complete the Paradise will cost about $230 million.)

MAG and ADOT say that right-of-way costs can't spiral out of control this time because they have improved their methods of predicting what the houses, buildings and land will cost.

But there is more than a little reason to wonder how accurate their predictions can be:

In some cases, MAG and ADOT are trying to forecast land values decades in advance. In 1986, as the department was paying top dollar for land all over the Valley, it wasn't able to predict that within two years, a recession would hit and property values would plummet.

MAG's Annual Freeway Report says that systemwide, the projected per-acre cost for future acquisitions is about $106,000. The actual cost per acre for land acquired to date has been about $193,000. In other words, ADOT is betting that the land it needs to complete the system will cost about 45 percent less than the land it has already bought--even though that land was purchased over the past eight years, when the market was softer than it is now.

Much of the land that remains to be acquired--for the Grand Avenue, Paradise and Squaw Peak freeways--is in the Valley's highest-growth areas, and is the most expensive anywhere in the system. (Their projected per-acre acquisition cost for the Paradise corridor alone is a dizzying $370,000.)

Even MAG is backing away from ADOT's right-of-way numbers. In its 1994 Annual Report, the association says, "ADOT expects to be able to acquire the remaining right of way at substantially less cost, on a per-acre basis, than it has paid in the past in most corridors. These results indicate that the budgeted right-of-way costs for the balance of the system may need to be looked at in more detail."

Local real estate experts are finding plenty wrong with the way ADOT goes about predicting what land inside individual corridors will cost. The department does not base its acquisition estimates on a per-property basis. Instead, the costs are estimated by the mile.

ADOT right-of-way planners consult commercially available data bases that chart sales prices and purchase trends in neighborhoods. From that information, they forecast what the land will cost per mile in, say, the Paradise corridor.

Phoenix condemnation attorney Tom Irvine says that method is simply inadequate.

For one thing, he says, such predictions do nothing to estimate the costs involved in a "partial taking," the purchase of a section of a commercial land parcel, rather than the entire parcel. After purchasing the land that it requires, ADOT must reach a settlement to pay whatever costs are necessary to ensure the future commercial viability of the site. If a front door needs to be relocated, or a parking lot needs to be redesigned, ADOT has to pay for it.

There is no way to reliably estimate such costs, Irvine says, until the site is actually appraised.

And very little of the remaining right-of-way land has been formally appraised. One place this is likely to become a problem is along Grand Avenue, where there is already heavy commercial development. (ADOT predicts that land in this corridor will be purchased for a whopping $255,000 per acre--and the department currently owns the right of way for just 4 percent of it.)

"Grand Avenue is an economic disaster in terms of acquisition costs," Irvine says.

The forecasting job isn't any easier on the residential side, either. The data-base information ADOT uses to predict property costs in residential areas is a fairly reliable "snapshot" indicator of values, Irvine says.

There's just one problem.
When governments acquire property through condemnation power, federal law prohibits the use of sale prices from comparable properties if the sales are more than six months old.

An example: ADOT needs to acquire Property X. Properties Y and Z are in the neighborhood and are comparable in terms of amenities, but they sold more than six months ago. By law, their sale prices are useless when it comes to negotiating the price for Property X, a fact that Irvine says any decent condemnation attorney will use to a client's advantage.

 

Irvine should know. He has made a lot of money representing more than 100 clients against ADOT over the past few years, losing only once. He sheepishly admits that he can't believe he's speaking against the current system, trying to take himself off the gravy train.

Typically, right of way is acquired five or six years before the opening date of the freeway to be built there. If a freeway is scheduled to be completed in, say, 2010, the land for it will not even be purchased until around 2005. Irvine says that trying to predict what the value of a property will be ten years in advance, by using sales data from today, is futile.

At least, he says, it's futile the way ADOT is trying to do it.
"It's just not a very good indicator," he says. "You tell me what IBM's gonna be on the stock market a week from Monday. They've created a phony sense of accuracy."

Overshadowed by high-profile races for governor and the U.S. Senate, the debate over Proposition 400, so far, at least, has been conducted in generalities and on a playing field that's anything but level.

On the pro-400 side is the Committee for Clean Air and Balanced Transportation, which describes itself as a "grassroots" organization. The committee, however, boasts a contributor's list that reads like a who's who of big Valley business. Bank One kicked in $75,000, as did Arizona Public Service Company. Blue Cross and Blue Shield of Arizona ponied up $50,000. So did First Interstate Bank.

Phoenix Newspapers, Inc., tossed in a whopping $100,000--then asked for and received a $25,000 refund. In addition, PNI's newspapers, the Arizona Republic and Phoenix Gazette, have run a spate of editorials praising the glories of Prop 400 and all the freeways it will build.

News stories in those dailies have done little but recount the general positions of those opposing or supporting the proposition. Research, and the specifics that might help voters determine whether ADOT and MAG have cleaned up their acts, have been notably missing from those news pages.

Jane White, meanwhile, has been busy with Reform Before Taxes, a shoestring-budget group that has pushed the notion that MAG and ADOT procedures need to be changed before any new taxes are approved.

So far, White and company have collected less than $2,000. It's not much, she says, but it's a start.

After a long, fruitless search, she and her fellow crusaders have gotten office space. The phones in the new space ring off the hook, but none of the calls are from the Committee for Clean Air and Balanced Transportation.

So far, the freeway-tax backers have refused to publicly debate her, or anyone else, on the issue.


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