The Coastal Conservation League, a non-profit organization dedicated to enhancing the quality of life in South Carolina’s coastal communities, recently released an independent analysis it commissioned to compare the costs and benefits of the proposed I-73 interstate to the Myrtle Beach area with improvements to the existing SC 38/US 501 corridor, dubbed the Grand Strand Expressway (GSX) by proponents.
Prepared by Columbia-based Miley & Associates, the study found that improvements to existing roads would create jobs and deliver significant economic benefits at a fraction of the cost of building I-73.
“We’ve taken a hard look at the I-73 project and simply cannot find a viable economic or environmental reason to support it,” said Nancy Cave, Director of the Coastal Conservation League’s North Coast office. “The smart decision – especially in light of our state’s dire transportation funding situation – is to improve existing roadways to meet the objectives of the I-73 project without saddling taxpayers with millions more in public debt.”
The study, “An Economic Analysis of I-73 and the Grand Strand Expressway (GSX) Alternative” uses the Transportation Economic Development Impact System (TREDIS) model to compare GSX revitalization with the proposed I-73.
The findings indicate that the proposed I-73 has a benefit/cost ratio of .26, significantly less than the 1.0 ratio threshold that typically determines whether a project is in the public’s best interest. The GSX revitalization has a positive benefit/cost ratio of 1.4 and can be upgraded at 1/10th the cost of the interstate. Revitalizing the GSX would produce 22,000 jobs, would not displace existing jobs and has the opportunity to improve access to the Myrtle Beach area without requiring more than $1 billion in taxpayer dollars that could go to higher priority state transportation projects with greater economic benefit to the state.
“According to the TREDIS modeling system, an integrated framework for transportation planning and project assessment, the better investment is clear,” said Harry Miley, principal of Miley & Associates.
“In fact, the comparison is not close. The GSX offers clear advantages over an entirely new roadway that in many respects merely duplicates what the GSX already offers.”
The analysis concludes that revitalizing the GSX is a more cost-effective use of state transportation resources, provides economic benefits to rural counties without displacing local businesses and improves access to the Myrtle Beach area without spending $1 billion that could go to higher priority transportation projects.
The American Public Transportation Association, American Society of Civil Engineers, U.S. Conference of Mayors and many other organizations have relied on TREDIS modeling for project planning and approval.
In addition, the departments of transportation of New York, Massachusetts, Pennsylvania, Michigan, North Carolina and other states have all applied TREDIS modeling to public transportation decision-making.
“The proposed interstate is a clear and present danger to the small businesses and communities already established along the GSX corridor,” said Harold Snipes, Town of Latta Director of Public Utilities. “We don’t need a new interstate, we need to revitalize our infrastructure and existing roads, which will in turn revitalize our businesses.”
Jan Pate, owner of the now-closed D & J Convenience Store and the subsequent Jan’s on Main in Latta said, “I-73 forced me to relocate my 23 year old business, the relocation destroyed my business. I‘m just one of many small business owners being displaced. The interstate will wreck rural business and our communities.”
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To learn more about the Coastal Conservation League, go to www.scccl.org.
Prepared by Miley & Associates, Columbia, SC for the Coastal Conservation League
Upgrading SC 38/ US 501, an existing major highway corridor between I-95 and SC 22, provides a realistic and preferable alternative to the proposed I-73 interstate. This existing corridor, referred to by proponents as the Grand Strand Expressway (GSX), offers substantial economic benefits at one-tenth of I-73’s estimated $1.3 billion cost and would result in improved access to the Myrtle Beach tourism market. Upgrading the GSX would create thousands of jobs and save businesses along the existing routes. Furthermore, upgrades to SC 38/US 501 could 2. be undertaken as funds are available, providing ongoing transportation utility and other economic benefits sooner than the proposed I-73.
This report is intended to help policy makers and citizens compare the economic benefits of the proposed GSX alternative versus those of the proposed I-73 interstate. The analysis focuses on the most important economic factors needed to make an informed decision on a transportation investment that will not only affect those in the region, but all South Carolinians.
This report reaches three key conclusions:
1. The GSX is a more cost effective use of state transportation resources. The GSX has a positive benefit/cost ratio while I-73 does not.
2. The GSX provides potential economic benefits to rural counties without displacing local businesses.
3. South Carolina can improve access to the Myrtle Beach area, without spending $1 billion that could go to other transportation infrastructure projects with greater economic benefits than the proposed I-73 interstate.
Upgrading the GSX between I-95 and SC 22 has been shown to be a viable transportation alternative to the proposed I-73 interstate. It is estimated that the GSX alternative will cost approximately $150 million.1 Like the construction of I-73, the GSX alternative creates jobs in its construction phase and facilitates tourism along the Grand Strand at one-tenth the cost of the proposed I-73.
This report utilizes the TREDIS modeling system, the premier transportation/economic modeling system widely used by state departments of transportation throughout the country.2 TREDIS clearly demonstrates that the benefit/cost (B/C) ratio of the GSX is far better than that of I-73. The B/C ratio of the GSX is 1.4 while the B/C ratio of I-73 is 0.26 (well below 1.0).
It is important to note that traditional public finance decision criteria recommend that if a project’s B/C ratio is less than 1.0, the project is not in the public’s best interest. In business and government, investing in a project with B/C ratio less than 1.0 would be analogous to investing in a project knowing that the project would lose money.
TREDIS is specifically designed to estimate transportation impacts. In comparison, the report by Chmura Economics & Analytics titled, “Economic Impact of I-73 in South Carolina,” utilized the IMPLAN modeling system.3 IMPLAN is appropriate for estimating some impact scenarios, but it is a simplistic methodology for evaluating transportation systems. TREDIS incorporates the IMPLAN model, but builds and expands on it to make it more appropriate for transportation applications. TREDIS is an integrated framework for transportation planning and project assessment designed to cover a wide range of applications – from looking at the benefit/cost impact of a single transportation investment to analyzing the macroeconomic impacts of alternative long- range plans such as the I-73 proposal.
The assertion that I-73 will have widespread economic development benefits is largely based on the report by Chmura Economics which estimated there would be thousands of jobs created as a result of the road’s construction as of the year 2030. These jobs would be generated primarily from two sources: the physical construction of the road and the improved access to the Grand Strand area from the proposed highway. Most of these jobs are projected to be 20 years in the future. Chmura estimates that approximately 30 percent more jobs will be created by I-73 than those estimated in this study for the GSX. These jobs, however, come at 10 times the cost of GSX. It is also important to note that the additional jobs relate to the construction rather than adding permanent economic benefits to the Grand Strand and the rural counties along the proposed route. This report concludes that the GSX alternative is also a substantial job creator. And these jobs could be
created much sooner due to the smaller investment required.
It has been suggested that I-73 will benefit the rural areas along the road’s route during and after completion. However, this conclusion is not substantiated in the Chmura report or other existing empirical research. The areas along the proposed routes rank relatively low in terms of economic development and per capita income. Historically, interstate construction in South Carolina has not resulted in rural economic prosperity. One only has to look at the counties along I-95, from Dillon to Jasper, to see how littler an interstate benefits rural or example, of the 13 South Carolina counties adjacent to I-95 only Dorchester and Jasper had unemployment rates lower than the state average of 9.5 percent in January 2012. The unemployment rate in the other 11 counties averaged 14.0 percent, 4.5 percentage points higher than the state’s average.
With fully controlled access highways, such as the proposed I-73, business opportunities are limited to major interchanges. Due to the sudden increase in the value of the land at these interchanges, the majority of businesses are large, national corporations—not small or locally owned businesses. The upgrading of GSX would maintain the viability of businesses adjacent to the current SC 38/US 501.
This report also raises questions regarding the validity of the Chmura assumption that the jobs created will be net new jobs. That is, many of the jobs estimated by the Chmura study may just replace jobs that could be lost if I-73 were to be completed. There is precedent for this job replacement phenomenon in South Carolina and elsewhere – the decline in jobs and establishments along Highway 301 and other routes when I-95 was constructed.
Even if all the jobs lost due to the construction of I-73 were to be replaced with new jobs along the interstate, the displacement would hurt local communities. Many of the businesses along the GSX route are small and locally owned businesses that would be negatively impacted with traffic being re-routed to I-73. It is unlikely that many of these small businesses would survive or have the financial resources to relocate to an I-73 interchange.
In the current environment of scarce highway construction funds, South Carolina needs to carefully consider the construction of I-73 in relation to all of the state’s highway infrastructure needs. While the $1.3 billion for I-73 has not been secured, if it was, it could supplant other state transportation infrastructure needs that are higher priority – especially since improved access to the Grand Strand could be achieved by the GSX at one-tenth the cost. For example, improvements to I-26 and I-85 would most likely provide greater economic benefits to the State than I-73. Road improvements to manufacturing areas have been shown to have more benefits than non-manufacturing areas. The construction jobs that would be created by building I-73 would be generated in the state no matter where $1.3 billion worth of road construction occurs.
Finally, the benefits outlined in the Chmura report do not address the increased maintenance costs of a new interstate. The current costs to maintain SC 38/US 501 would continue if I-73 were to be completed; requiring the state to fund maintenance costs for both routes. Based on SC DOT data, it is estimated that maintenance costs of the new interstate would be more than $4.3 million annually. Over a 30-year period I-73 maintenance costs would exceed $130 million.4
As a result of these findings, we conclude that the GSX (upgrading SC 38/US 501 from I-95 to SC 22) alternative is clearly superior to the I-73 proposal for South Carolina taxpayers.
Endnotes
1 The Grand Strand Expressway: An Alternative to the Proposed I0-73 to Myrtle Beach, South Carolina, Norwich: Smart Mobility, March 2011.
2 TREDIS is the Transportation Economic Development Impact System, 2010.
3 Chmura Economics and Analytics, Economic impact of I-73 in South Carolina. Florence: Northeastern Strategic Alliance, May 2011.
4 SCDOT data based on Maintenance costs o I-185 extrapolated for 43.5 miles and 30 years
1. The Grand Strand Expressway (GSX) has a positive benefit/cost (B/C) ratio, I-73 does not.
Benefit Cost Analysis
• B/C Ratio of GSX = 1.4.
• B/C Ratio of I-73 = 0.26.
• The GSX alternative has significant travel cost savings at one-tenth the cost of I-73.
2. GSX provides potential economic benefits to rural counties without displacing local businesses
• The GSX is estimated to create and maintain 22,000 jobs (3,200 construction and 18,800 other — and sooner than I-73).
• The GSX will not displace jobs – I-73 will displace jobs along existing routes.
• New interstates often do not help rural areas — the I-95 corridor is an example.
3. South Carolina can improve access to the Myrtle Beach area, without spending $1 billion that could go to other transportation infrastructure projects with greater economic benefits than the proposed I-73 interstate.
• South Carolina does not have the funds available for I-73 and will not for the foreseeable future.
• Other critical infrastructure needs exist in South Carolina that could provide greater economic benefits.
• The construction of I-73 could divert funds away from critical infrastructure needs east of Conway and SC 22.
• SCDOT would need to spend an additional $130 million to maintain the proposed I-73 over a 30-year period.
Summary and Conclusions In summary, this report reaches three key conclusions:
• The GSX is a more cost effective use of state transportation resources. The GSX has a positive benefit/cost ratio while I-73 does not.
• The GSX provides potential economic benefits to rural counties without displacing local businesses.
• South Carolina can improve access to the Myrtle Beach area, without spending $1 billion that could go to other transportation infrastructure projects with greater economic benefits than the proposed I-73 interstate.
