Source: The Virginian-Pilot
Tolls, tunnel closures and related road construction projects are hurting Portsmouth badly, according to the latest study on the impact of the Downtown and Midtown tunnel tolls.
Perhaps the most significant finding is an estimate showing the city is missing out on $24 million in taxable revenue a year.
"The danger for Portsmouth is what that number is likely to increase to in the future if businesses go out of business," said James Koch, the Old Dominion University economist who did the $18,000 study for the city.
Tolls on the tunnels began Feb. 1, 2014, to pay for a new Midtown Tunnel and other projects.
The study also makes clear what many have long suspected: Portsmouth is affected by the tolls much more than any other city, and fewer drivers are passing through the tunnel.
"The estimation of the impact on taxable sales is not positive," said interim City Manager Brannon Godfrey.
Using an economic formula, Koch estimated tolls are costing the city $14 million in taxable sales a year and tunnel closures are costing the city another $10 million.
Koch said 1-1/2 percent of the $24 million could be expected to come to the city through taxes. That equates to $360,000 in annual lost revenue.
Joe Elder, owner of Skipjack Nautical Wares and Marine Gallery in Olde Towne Portsmouth, said the tunnel closures - some at night and some on the weekend - are the biggest problem.
"They've been the kiss of death," he said.
The study found tolls have led to a 6,300-vehicle decline at the Downtown Tunnel on weekdays and 17,000-vehicle decline on weekends. It found a weekday decline at the Midtown Tunnel of 5,700 vehicles and 7,900 on weekends.
"The biggest take-away from this is, yes, people are changing habits, and it's impacting Portsmouth more dramatically than anywhere else," said Tony Goodwin, president of the Olde Towne Business Association. "We feel like we've been served a box of lemons, and you can't drink but so much lemonade."
In addition to tolls and tunnel closures, Koch's economic formula took into account the size of the labor force, port activity, the unemployment rate, the weather and whether area colleges were in session.
Frankie Edmondson, Portsmouth's commissioner of the revenue, didn't dispute the findings but said the city hasn't seen a decline in taxable revenue.
"If you look at individual business, I'm quite sure some are seeing difficulties, but citywide that hasn't translated into a major downturn," he said. "We're kind of holding our own."
Godfrey said that while the city's taxable sales might have stayed flat, the tolls and closures are negating the effects of the rebounding economy.
"We haven't been able to take advantage of economic growth," he said.
On a positive note, Koch pointed out that the tolls sometimes keep people from Portsmouth and Suffolk from crossing the river, which is good for Portsmouth businesses. This effect would be more pronounced, he said, if Portsmouth and Suffolk had larger populations.
He said the tolls and closures impact Portsmouth 31 percent more than Suffolk, 459 percent more than Norfolk and 616 percent more than Virginia Beach.
Godfrey said the city is trying to find a silver lining by directing economic development marketing efforts to the west, toward people who don't have to cross the Elizabeth River to get to Portsmouth.
"It's a careful tightrope, being realistic about the impacts and not overstating them and affecting economic development."