Stop CANAMEX, Stop the Intermountain West Corridor and I-11! Stop the Sun Corridor! Stop the 202!

Thursday, August 27, 2015

Arizona-Mexico Trade: Inroads to private gain, Part 2: Blowing Smoke

Read Part 1 of these series, about the infrastructure and people behind the AZ/Mexico trade corridor here.

Remember when Phoenix was being called the number two kidnapping capital of the world? And when former governor Jan Brewer claimed that beheaded bodies related to illegal border crossings had been found in the Arizona desert? Even if you don't, you might recall that the sorts of things that Donald Trump is saying about migrants were more acceptable not that long ago by many politicians who distance themselves from those remarks today in the interest of building a trade relationship with Mexico.

Even while the beheadings and the scale of the kidnappings were not true, gruesome violence does occur in Mexico, partially due to US policy. But with the new governor, Doug Ducey, hammering the idea via the press that the Arizona-Mexico trade relationship relies on Arizona repairing its reputation with Mexico after the disgrace of SB 1070—with no mention of violence in Mexico—it appears that not only is the fear-mongering no longer politically useful, but it is to be avoided in the interest of the image of Mexican security.

While the myths about spillover violence were used to sow fear of border-crossers, to pass laws like SB 1070 and to secure the border, they also had the effect of scaring away business and slowing movement of goods and impacting business trips and tourism. Considering Ducey has made no effort to make Arizona more safe for migrants, it becomes clear that he and others are more concerned about the business climate than with SB 1070 itself. A focus on what seems to almost be characterized as rudeness on the part of Arizona distracts from the real issues, most likely on purpose.

Let's be real here: the benefit of trade (and border enforcement) for US business is considerably related to access to cheap labor on both sides of the border. The competitive advantage sought by Arizona requires poverty, political stability and security, and infrastructure in Mexico, imposed upon the people through displacement, dispossession, and repression. The North American Free Trade Agreement (NAFTA) played a major role in accomplishing this. The Mérida Initiative, supposedly meant to combat the drug trade, is a continuation of this effort.

A well-designed effort on the part of Mexico, especially with the latest president, has been made to direct attention away from what was and is happening in Mexico so rich men can benefit from (more) foreign investment. In the US, officials and the media have followed suit to initiate the trade corridor through Arizona, and to justify all the money spent on the drug war via the Mérida Initiative (over $2 billion since it began in 2008); for to acknowledge the continuing violence is to admit the failure of Mexican President Enrique Peña Nieto, and the failure of the purported goals of the North American Free Trade Agreement (NAFTA) and the Mérida Initiative.

John McCain's recent announcements of the legislation that facilitates the Intermountain West Corridor/Interstate 11 trade corridor curiously reference Arizona's southern border while minimizing or avoiding direct mention of Mexico, which may speak to the public's current concerns about Mexico due to drug lord "El Chapo" Guzman's escape and the lesser-known murder of a journalist and activists from Veracruz in Mexico City.

Back in 2010, McCain was repeating the fear about Phoenix's alleged high rate of kidnappings. A few months ago, no such mention of the violence on either side of the border was included in his article promoting Arizona-Mexico trade that was printed just days after mass graves were found during the search for the missing students of Ayotzinapa; and in response, protesters, demanding to know where the students were, had set the Guerrero capitol statehouse on fire. While some, including parents of missing students, have posed the idea that the Mérida Initiative is related to what happened in Guerrero, McCain believes that “the Mérida Initiative may be more important than any agreement that we've made." Meanwhile, his proposals for Comprehensive Immigration Reform are heavy on border militarization.

Today, of the 129 bodies found in those mass graves, none of them have definitely been identified as any of the 43 disappeared students, which means the story the government told based on their "investigation" (using torture to gain confessions) is not true, and also leaves the mystery of those 129 bodies. There are many other examples that point to something being especially wrong in Mexico.

When references in Arizona media were made to the organized crime in Mexico and the potential of spillover, it was never acknowledged that in many ways free trade facilitated an increase in organized crime by shifting drug smuggling routes and creating a situation in which the drug trade was lucrative with fewer other means of income to survive on available. It definitely was never mentioned that the Mérida Initiative has been shown to increase homicides, torture, and other such violence. And it was most certainly never mentioned that many of the homicides and disappearances, such as those targeting activists and journalists, are actually the responsibility of law enforcement or military.


Buying Credibility

When Peña Nieto ended up on the cover of Time Magazine in February 2013 accompanied by the words "Saving Mexico," many Mexicans were dumbfounded and disgusted. A similar response was evoked when he appeared a couple months later among the list of the same magazine's 100 most influential people. Evidence shows that there has been a calculated—and costly—effort to paint a pretty picture of Mexico with a very proficient public relations campaign.

The latter Time feature was penned by Bill Richardson, described simply as a former Governor of New Mexico even though he was instrumental in coordinating Democrat support for NAFTA in the early nineties, and when he wrote the Time piece he worked for a company called APCO World Wide, a pro-free trade global opinion research consultancy (he's also very much in favor of the Mérida Initiative). APCO Worldwide was enlisted through NODO Research for a public relations campaign for which Nieto paid around $50,000. Two payments were also made to Time Warner that year totaling approximately $43,000, which seems to be for a 14-page advertorial TIME had printed only two months before, of which, as Bill Conroy of Narco News pointed out, the "Saving Mexico" story generously echoed.

Peña Nieto has made many efforts to improve Mexico's image in conjunction with his own. The Dallas News reports,
According to a recent report from the Observatory of Violence in the Media, an independent watchdog group, coverage of organized crime and violence in the Mexico City press took a dive during the first three months in office of President Enrique Peña Nieto: The use of the words homicide, narcotrafficking and cartel declined by half from the year before. Similar results were found for TV and radio. 
The Mexican government was claiming that crime has gone down in recent years, which many have said isn't true. Many crimes go unreported due to the growing distrust of the police. Even the way statistics on crime are gathered and interpreted has changed, making them appear more favorable. In some cases violence has become more isolated to certain areas in Mexico.

Peña Nieto's stature relied heavily on the 2014 capture of "El Chapo" Guzman, head of the Sinoloa Cartel, who had been on the run for over a decade. With "El Chapo's" second prison escape this July and the poor state of the economy, it's clear that Nieto is in a bad position.

The Washington Post discussed Nieto's ongoing scandals in relation to the recent escape of "El Chapo" Guzman.
But as [Jeremy] McDermott from InSight Crime pointed out, the jail break is just the latest in a string of high-profile problems for Peña Nieto.
“He’s had some very severe setbacks,” McDermott said. “The killing of the 43 students. A series of accusations of human rights abuses against the military. And now the escape of El Chapo.” Add to the list a political scandal in which the first lady purchased a luxurious house on credit from a developer who received lucrative government contracts.
The president, his wife, and the finance minister were recently cleared by none other than a friend of Peña Nieto of any wrongdoing related to the conflict of interest allegations.

Accessing Cheap Labor

Officials and businessmen in Arizona are just as interested in portraying Mexico as a viable business partner mainly because they want that to be true. They are also interested in drawing businesses to Arizona by portraying Arizona as a good choice due to its proximity to Mexico and its infrastructure. Mexico's attractiveness for business has to do with cheap labor, and less strict environmental and labor laws. Even Mexico's ports are more attractive for these reasons than California ports for those businesses shipping between other countries such as China.

Central to the collaboration on Arizona-Mexico trade with Governor Ducey is one of the few beneficiaries of NAFTA-related privatization reforms, Carlos Slim, who made dozens of billions of dollars over the years since he gained access to the Mexican telecommunications industry monopoly. It almost seems that Slim is portrayed as proof of Mexico's economic development success, even while he made his money off the backs of millions of Mexicans. Slim, the second richest man in the world, visited Arizona in the spring, and then hosted Ducey and various Arizona officials and business people in Mexico City this past June.

After various media outlets approvingly covered the Arizona governor's visit to Mexico City, Ducey finally shared his own perspective in a July 4th op-ed.
Mexico is an important ally to advancing in the global economy — it is forecast to be the world's fifth-largest economy by 2050. The ascending and fast-growing Mexican economy will be good for both sides of the border, and it is not just all about GDP, job growth and investment.
As the Mexican people reap the benefits of free-market reforms taking place in Mexico today, and the resulting economic growth, we can expect to see a positive impact on security — specifically, border security. And that's something every Arizonan can get behind.
The forecast of Mexico's economic growth is highly questionable. Accounts of whether or not NAFTA was beneficial to the average Mexican, how opening up PEMEX to privatization will affect the country, and to what degree Peña Nieto has been successful in curtailing homicides, kidnappings, the drug trade, and other organized crime, are all disputed. Nonetheless, this is not an argument over whether Mexico is a smart investment for Arizona. The point is that we are being sold lies — or guesses at best — about political and economic stability in Mexico so business and politicians can gain support for building trade infrastructure and continue the militarization through the Mérida Initiative, which comes at a high human cost with the use of our tax dollars.


Even if there is a growing Mexican middle class as some claim, businesses involved are still looking to benefit from cheap labor and minimal environmental standards more than they're interested in a larger Mexican consumer base. Either way, oil prices are down and Mexico's economy is doing much more poorly than predicted. One of the reasons Mexico is expected to host more manufacturing facilities is that Chinese workers' wages have slowly increased, making Mexican labor more attractive.

As Albert Lannon of the Avra Valley Coalition pointed out, the I-11 Corridor Justification report use of certain projections to explain the benefits of the Interstate meant as a trade corridor is telling.
The planners predict that, as Chinese wages rise, Mexico will become more attractive to corporations. With U.S. manufacturing labor costs at 100 on an [Arizona Department of Transportation] index, China is 5 and Mexico 12. As “trade with Mexico expands,” the report argues, so will “the current trend of moving manufactured goods production … to Mexico... Mexico was the most popular choice for nearshoring, where hourly compensation costs are nearly as low as China.”
The report suggests “industry clusters” and “integrative manufacturing” to house the making of parts in the U.S., with assembly in Mexico...
The report discusses planned improvements at the Mexican port of Guaymas for container traffic. That impacts high-paying jobs in the West Coast stevedoring, trucking and warehouse industries. The report discusses receiving even more goods from Asia as another “alternative future scenario.
In their discussion of marketing I-11 to the public, the pitch is “enhancing economic vitality” and “commercial opportunities.” I-11 is being sold as a way for corporations to make more money. Period. There is no expressed interest in workers except as cheap labor across the border.
Interstate 11 is the primary project Arizona is attempting to accomplish in order to facilitate trade with Mexico. Despite the fact that many people in both Arizona and Mexico lost jobs due to the free market reforms, Arizona officials and businessmen are looking to extend NAFTA trade, with the participation of the Arizona Department of Transportation (ADOT).


Securing Trade

Ducey implies that trade with Mexico will slow migration, that economic development will improve security by increasing incentives for Mexicans to stay in Mexico (and presumably also not get involved in criminal activity). The pro-NAFTA crowd likes to pretend that free trade doesn't rely on forces that make labor cheap in Mexico, which is a primary causal factor of migration. Migrant labor is kept cheap mainly through criminalization.

The public relations strategy of the governor essentially involves apologizing for the disrepute SB 1070 caused for Arizona, although this isn't quite the misdeed Arizona should make up for. (Not to mention that criminalization of migrants is not decreasing and border militarization is only increasing.)

While Arizona is unlikely to broach the subject of the corruption of the Mexican government, considering Arizona was rated the most corrupt state in the US by a Harvard study last year, the state can hardly take the moral high ground in comparison to Mexico anyway. The real harm Arizona is perpetrating is through pushing trade (which encourages the neoliberal reforms on the part of the Mexican government, such as austerity measures), and its promotion and/or use of the Mérida Initiative and other intervention to support this trade, via the federal government.

Free trade policy means accumulation: cheap labor, privatization, and resource extraction. Through the support of NAFTA, NAFTA-related infrastructure such as Canamex/Interstate 11, and the Mérida Initiative, Arizonans and other U.S. officials have made things far worse in Mexico. The Mérida Initiative as an extension of NAFTA has largely benefited the capitalist class and transnational companies (many US-owned).

The Mérida Initiative, also called Plan Mexico, has its emphasis, like Plan Columbia, on the supply-side rather than largely US demand for drugs, but does not even seem to be intended to stop the drug trade. It is a "drug war" aid package costing more than $2 billion, involving training and military hardware provided to the Mexican military. It not only increases US political power and control in Mexico, it provides the US military industrial complex with further profits.

Dawn Paley, author of Drug War Capitalism, laid out in her book many examples of militarization related to the Mérida Initiative occurring in places of interest to transnational corporations and leading to increases in homicides. "Without a drug war, Mexico would have continued to implement neoliberal reforms, but there is little doubt that the fear, distraction, and terror created by the war, as well as the special funding provided through it, helped speed up the reform process." 

Many have linked what happened to the disappeared 43 students to the Mérida Initiative. Chicago-based group Semillas Autónomas (Seeds of Autonomy) wrote,
Ayotzinapa students and their parents, as well as the National Indigenous Congress, have always insisted that the violence that has engulfed Mexico over the past decades is not simply a matter of narco-trafficking and a few “corrupt” officials. They accuse that governing through violence and terror is the nature of the colonial state, and that the so-called “War on Drugs” — sponsored by the US and carried out on both sides of the border — is actually a war against the poor, campesinxs, indigenous, and resistant peoples of the Americas.
"El Chapo" Guzman's prison break is a major blow to the assertion that the Mexican government is no longer colluding in the drug trade on a massive scale. But it would be a mistake to portray the problems in Mexico as due to some natural tendency towards corruption and violence. The US government, partly through the Mérida Initiative, described as "arming NAFTA," has played an immense role in contributing to these problems, with the participation of the Mexican ruling elite. These consequences of arming NAFTA do not outweigh the governmental gains made through militarization.

Explaining the context behind the Mérida Initiative, Dawn Paley described in a journal article about how an earlier phase of the drug war in Latin America relates to the current context,
What are the primary insights from Plan Colombia from the perspective of the U.S. government? First, that the war on drugs can be used as a mechanism to promote business-friendly policies and, second, that the paramilitarism that results from militarizing drug trafficking and drug production can assist in the maintenance of control over territories and populations. A refined version of the comprehensive U.S.-backed “drug war” strategy is what has been applied in Mexico, beginning in 2007. Seen through this lens, the war on drugs appears to be a bloody fix to the United States’ economic woes. The drug war, as embodied in Plan Colombia, Plan Mérida, and [Central America Regional Security Initiative (CARSI)], combines terror with policy making in a neoliberal mix, cracking open social worlds and territories previously unavailable to globalized capitalism. 
One of the main advantages of the Mérida Initiative for corporations is that "The violence deployed by the state and justified with claims of combating trafficking can lead to urban and rural populations being displaced, clearing territory for corporations to extract natural resources, and impacting land ownership and property values," wrote Paley in her book Drug War Capitalism. The violence of the "drug war" can also undermine labor organizing, journalism, and other forms of resistance.

The US government (not innocent of corruption itself) likely took into account the risks involved with providing this aid to a government with a reputation for its high level of corruption, but found it worth it anyway. The Mérida Initiative seems meant to manage violence and other crime, to create a sort of political stability that is favorable to foreign investment but that functions to facilitate control and access via violence or the threat of it.

Aside from the infrastructure such as roads, ports, and rail to support trade, Arizona has more of a role in relation to the Mérida Initiative, besides just McCain's support for it. Arizona has connections to people and policy relating to other interventions in Latin America. Discussed elsewhere on this blog is how one of the main proponents of NAFTA and the CANAMEX trade corridor in Arizona, Jim Kolbe and colleagues of his were also involved in the creation of NAFTA. One of whom, John Negroponte as Ambassador to Honduras, also played a role in the Iran/Contra Affair. The other, Henry Kissinger, was complicit in the military coup against Allende in Chile. Negroponte was also involved with promoting the Mérida Initiative.

Arranged in meetings between Arizonan and Mexican officials, the Querobabi military checkpoint along Route 15 between Hermosillo and Nogales is currently being "improved" upon with $6.8 million from the US government in Mérida Initiative funds (plus funding from the Mexican government). It is too soon to say what the consequences of this will be. It could be that Ducey is not as concerned about border security at the border because some of it is being taken care of via the Mérida Initiative on the other side of the border. That some of the equipment provided to the military at this checkpoint so close to Arizona will be used in the drug trade is a concern, however.

The significance of the corridor south from Arizona stretching to the coast or to Mexico City will rise if trade increases. Fortunately, Sonora has not faced a large amount of violence, but has seen NAFTA-related growth of a mining industry and expansion of the hydraulic society to serve agribusiness. The water wars there could just be the beginning, especially as Arizona (which is cutting back on agriculture to maintain urban water supplies) becomes dependent on produce imported from Mexico.

While those of us in Arizona do not have to contend with the same kind of force when it comes to resisting megaprojects such as Interstate 11 or the Resolution Copper mine, Sonora and other areas along Route 15 might be affected.

Abel Barrera, director of a human rights group in Guerrero was quoted in Drug War Capitalism,
What we've seen up until now is that the militarization is not only a way to enter into the territories, but that it serves to impose megaprojects. [The police and army] are the offensive front that goes and enters into territories in order to guarantee that transnational capital can be established there, and install itself via mines, megaprojects, dams, and ecotourism projects. Regardless of the fact that they are in their own lands, a village cannot go against a mine or a multinational company. Companies need a guarantee that capital is worth more than the lives of the peasants that are blocking it.
As of now, the unofficial plan is to connect the Interstate 11 to Mexico City, which means the area of San Francisco Xochicuautla, Lerma, in the State of Mexico, where Grupo Higa (the same construction group that has been more than favored by Peña Nieto) plans to build a road connecting Mexico City to a nearby airport to the west would be more significant as part of an official trade corridor. Even without involving the drug war, the indigenous people's resistance is met with worsening force.

Arizona is being plundered as well. Destruction, displacement, and desecration happens or would happen in the name of economic development in Arizona, especially affecting many indigenous people. The border militarization and the wall, the South Mountain Freeway, Resolution Copper's land grab of the Oak Flat area, the coal and uranium mining up northall are justified in the name of economic development, when really it is a few who gain profits at the expense of the people and the land.


In the same way that immigration enforcement is not meant to stop migration but to render migrants a permanent underclass, US intervention in Mexico is meant not to stop, but to manage, the movement of drugs, organized crime, and the associated violence. The US certainly is not interested in curtailing the demand for drugs north of the border (for which they could put more resources towards public health and treatment), nor the movement of arms southward. Although the violence has consequences for business, in broader terms it also has its benefits. As long as it is isolated and it can be mostly ignored, it is beneficial to business interests.

Are Donald Trump's racist comments about migrants worse in comparison to all of this? The bi-partisan effort to gain access to Mexican resources is portrayed as a friendly transaction while Trump plays an extremist role that makes anything else seem reasonable. It is necessary to cut through the smokescreen and see how the projects in Arizona are connected to the plunder of Mexico.

Wednesday, August 5, 2015

Arizona-Mexico Trade: Inroads to private gain, Part 1


This series is dedicated to Krazy Bill.


If Arizona destroys part of South Mountain/Moahdak Do'ag to build the freeway, it will to a large degree support the trade traffic recently being promoted by the new Governor Doug Ducey in collaboration with one of the biggest beneficiaries of NAFTA-related reforms, the Mexican extreme billionaire Carlos Slim.
 
Yes, the South Mountain Freeway/Loop 202 extension concept dates before NAFTA, but Arizona's promotion of trade with Mexico has accelerated in the past couple of years, with an emphasis on the Phoenix/Tucson area as a trade hub called the Sun Corridor. Another road, Interstate 11, a mega-project that would connect Las Vegas with Phoenix and beyond creates a north-south trade route.

Costing billions of our tax dollars, the planned roads and other infrastructure would physically facilitate the trade that business and politicians desire. The federal and local facilitation of a public-private partnership (P3) arrangement, also aligned with free market ideology, is what seems to be pushing the Loop 202 plan along. A P3 can be understood as federal subsidization for private companies to build infrastructure that would prioritize projects that would benefit other private companies, such as mining companies--again, with our tax dollars.

There is a much-increased emphasis on infrastructure for trade with Mexico—a country whose people, except for the rich minority, were and continue to be negatively impacted by NAFTA and associated reforms and intervention including the drug war. The international trade corridor through Arizona would further promote the use of cheap labor south of the border, which also impacts US jobs, as many have experienced.

Ducey has gotten a lot of positive press in Arizona for reaching out to Mexico, but one can't help but notice, if one is aware of the circumstances in Mexico, the complete silence in this same press coverage around the recent and continuing homicides, disappearances, torture, massacres, and kidnappings in Mexico—something that should factor into a discussion on trade with our "good neighbor" to the south. Whether the authors and editors are ignorant, in denial, or playing pretend, this speaks to the successful public relations campaign to brand Mexico as tame and stable. The denial also stems from the fact that the same policies that support free trade with Mexico are largely to blame for this violence.

It wasn't that long ago that the threat of spillover violence was used to justify anti-immigrant laws and border militarization, but now the tragedy and turmoil that is in large part due to these free trade reforms can be ignored with the help of some very powerful people. Does Ducey actually believe that increasing trade with Mexico will improve the economy and well-being of both countries, as he says, or is it just media spin to attain infrastructural improvements for business gains?

Despite his expensive PR campaign, Mexico's president Enrique Peña Nieto is suffering a crisis of legitimacy, not only because of "El Chapo" Guzman's recent escape from prison, but due to the recent attack on the students of Ayotzinapa last fall—to name only the most attention-grabbing recent incidents. Meanwhile, the violence in Mexico would not be what it is if it weren't for neoliberal reforms and especially the Mérida Initiative, a U.S./Mexico plan purportedly meant to curtail the drug trade, but with the effect of benefiting transnational corporations seeking to accumulate more wealth from Mexico at the same time as increasing militarization and violence across the country.

The following is part one of a series in which the broader implications of Arizona-Mexico trade will be discussed as it relates to the public relations campaign to portray a calm and secure Mexico ready for trade. Both in Ducey's constant references to SB 1070 and Jan Brewer, and in Peña Nieto's enlistment of pro-NAFTA international consulting agency, can be seen a propaganda campaign to portray Mexico, NAFTA, and the drug war, as successful while achieving a misdirection away from Arizona and the U.S.'s role in perpetuating the violence. Increased trade with Mexico will lead to increased border militarization, with consequences for those living along the border and those trying to cross. Attempting to politically and economically stabilize Mexico for transnational investment comes at an immense price. The series will address the pivotal roles of Governor Ducey and Carlos Slim (and a few other players) in the countries' relationship and what Slim's wealth and influence represent. The promotion of economic development is not about improving our lives, but is about cheap labor, resource extraction, and privatization. The relationship between Ducey and at least one mining company that epitomizes this, exploiting its workers and contaminating the environment, will be discussed as well. Finally, how trade and infrastructure impact and create demand for water will likely be included in the series.


The Roads

Back in April, multi-millionaire sports executive Jerry Colangelo and another Arizonan in real estate, Michael Ingram, who would both profit from one of the proposed alignments for Interstate 11, extolled the corridor in conversation with Carlos Slim, convincing him to promote its extension down to Mexico City.

Similar discussions about facilitating Arizona-Mexico trade were continued when Governor Ducey, claiming to polish Arizona's reputation that former Governor Brewer tarnished with SB 1070, took a trip to Mexico city in June, meeting with Slim again and also meeting with mining executives, other business leaders, and working on a few agreements with Mexican officials.

Arizona sees a lot of room for improvement if the state is to compete with Texas, California, and New Mexico in facilitating trade with Mexico. Arizona infrastructure, like roads such as the South Mountain Freeway Loop 202 Extension and Interstate 11, as well as border ports, rail, etc. are being built or expanded at the behest of business interests looking to create an international trade corridor through Arizona.

Interstate 11 has been in the works for years. After much lobbying, the interstate was designated as such by congress through MAP-21 legislation in 2012, due to its importance in completing the international corridor for trade freight traffic between Phoenix and Las Vegas since Route 93 was inadequate. The rest of what was called the "Canamex Corridor" already exists. However, as the years have gone by and different influences come into play, the emphasized international trade route has changed in some ways.

For example, likely due to the influence of Harry Reid and others in Nevada, the international trade corridor referenced with the Interstate 11 is called the Intermountain West Corridor and is a more western route north of Las Vegas to go through Reno then Oregon and Washington, rather than cutting over to Utah then through Idaho and Montana.

Because an interstate promises access to some federal funding, some people and organizations south of Phoenix have been pushing to have the Interstate 11 officially run down through Tucson and Nogales to the border with Mexico, as well. On July 30, the US Senate passed the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act, which "would designate the Sonoran Corridor as a future interstate to connect I-19 to I-10 south of the Tucson International Airport, and extend the future I-11 from Phoenix north to Las Vegas and I-80, and south to Arizona’s southern border."

The Sonoran Corridor, which would run through Avra Valley and benefit corporations like Raytheon, may act as a piece of the Interstate 11 by connecting Interstate 19 with Interstate 10 south of Tucson. In reference to the legislation introduced, McCain said, “The Sonoran Corridor project will have a significant impact on state, regional, and national commerce by connecting major trade routes and improving transportation along the CANAMEX Corridor and the future Interstate-11.” I-11 legislation, a few steps from being enacted, would lead the way for funding from the federal government.

"Specifically, its designation would provide both states’ Departments of Transportation the flexibility to develop a Northern Nevada and Southern Arizona connectivity corridors as part of the I-11 effort," states the DRIVE Press Release. This means it'll be easier to prioritize and get financing for the transportation routes that are meant for trade.

Additional efforts in Nevada are being made to get funding for the interstate. Currently there is no sources of funds in either state, even for the route that is already designated as an interstate, and it will likely be composed of public-private partnerships, facilitated and incentivized by the federal government, either way. The first portion, the Boulder City Bypass, which may be contaminated with asbestos, is already under construction.

Now due to the meetings with Carlos Slim, Mexico may in the future also officially recognize I-11 as extending to Mexico City. Although perhaps not officially, the trade corridor called Canamex currently has its southernmost point at the Port of Guaymas where powerful mining companies such as Freeport McMoran (who was present at the meetings in Mexico City) and BHP Billiton (of Resolution Copper who plans to destroy Oak Flat/Apache Leap with their copper mine) do business. Mexico has already made improvements to Route 15 at the behest of Arizona officials.

An announcement came out prior to Ducey's trip to Mexico that it was expected that the meetings would result in four agreements, one of which included I-11's extension to Mexico City, but only three agreements resulted. What resulted regarding the I-11 issue was less specific according the the US Embassy website:
"[A Memorandum of Understanding] between Arizona Department of Transportation (ADOT) and the Ministry of Communications and Transportation of Mexico (SCT) for the establishment of a binational commission that will endeavor to conduct a study on how to further optimize the Arizona-Mexico trade corridor, including road and rail infrastructure and industrial clusters."
From Transportation and Trade Corridor Alliance website. The small square does not seem to include the Loop 202 extension but clearly that area is quite central to the trade corridor traffic flows.

While Interstate 11 is a long way from being completed, the Loop 202 South Mountain Freeway is nearing the beginning of construction, unless it is stopped. It has been pointed out by critics that the road is meant as a truck bypass, and although it is not part of the official CANAMEX Corridor route, it had been proposed as such (among other options) due to its location. Its position in relation to Phoenix and other freeways means it would very likely be used by many freight trucks with business in Phoenix. As shown in the TTCA website capture, the Loop 202 is in an area very central to the key commerce corridors.

From ADOT 3D Fly-Through Video
To the dismay of many, largely because it would "remove over 4 Million cubic yards of South Mountain and make a cut 20 stories high and wide enough for 8-10 lanes through 3 mountain ridges," things are moving along on the freeway, a lawsuit poses a serious challenge to the project. Protecting Arizona's Resources and Children (PARC brought the first lawsuit, and the the Gila River Indian Community brought the second lawsuit and they have been recently consolidated. A failed attempt at getting a temporary injunction against the freeway is a setback but is not wholly discouraging. Other forms of resistance including a recent protest against a Loop 202 networking event, provide avenues for those outside the legal system, especially those who don't have much faith that the system works in favor of the people or the environment, especially indigenous people and sacred sites.

Currently, there's a shortlist for the public-private partnership to build the Loop 202. ADOT announced it would release a final Request for Proposals late this past spring, but it has not yet been seen. A developer will supposedly be chosen by the end of this year. ADOT is in the process of right-of-way acquisition.

As discussed in the "Trade and Growth" section of the post on this blog entitled "South Mountain Freeway Justified by Controversial Traffic Projections?" the traffic projections for the road, among other problems, likely were influenced by knowledge of the intentions and plans for the international trade corridor and its geographical relationship to the road.


The (Public-) Private Interests

Ducey may be taking credit for initiating a trade relationship with Mexico, but much has been in the works over the last few years. Notably, two Arizona trade offices have been opened in Mexico. Arizona, with the cooperation of Mexico has initiated upgrades to border ports and security, and expansion of a military checkpoint between Hermosillo and the border with Arizona, with Mérida Initiative funds. Of course, the Interstate 11 has been in study phase since 2012 as well.

The Arizona Department of Transportation (ADOT) has led the charge in driving these projects, along with the Arizona-Mexico Commission (AMC), the Arizona Commerce Authority (ACA) and their offspring: the Transportation and Trade Corridor Alliance (TTCA). The TTCA was created by former governor Jan Brewer as a public-private partnership unit that would carry on the role of the Governor's Camamex Taskforce (which had been started by the previous governor, Janet Napolitano). Led by members of ADOT, AMC, and ACA, with various private participants (including Freeport McMoran), the TTCA acts as Arizona's freight advisory committee. The AMC, with members including the governor and the director of ADOT, as described in Arizona's Roads Meant for Trade with Mexico Despite Corruption and Violence?, is largely responsible for moving the trade corridor along.

As outlined in From Ayotzinapa to Arizona: NAFTA Persists, AMC Canamex Expert and co-chair of the TTCA, Jim Kolbe, a former Congressman, was involved in the passing of NAFTA twenty years ago, along with various current colleagues.

A number of organizations including ACA as a presenting partner, and AMC as a sponsor, were involved in putting on the Carlos Slim event in Phoenix in April. Both men reported to have discussed I-11 with Slim, who are interested in the road passing along their Douglas Ranch project, are on the board of directors of the ACA; Jerry Colangelo also having been on the board of directors of the Interstate 11 Coalition, and Michael Ingram also on the board of directors of the AMC.

Marco Lopez, who works for Carlos Slim, was involved in the AMC and was central to the coordination of Slim and Ducey's meetings wrote in April for the Arizona Republic,
In 2009, Gov. Jan Brewer passed HB 2396 to promote the use of public private partnerships to improve Arizona's aging transportation infrastructure. We need to be far more aggressive in using that law to leverage private sector capital and expertise so we can improve and build new transportation infrastructure and safely increase the flow of trade and commerce into the United States and Mexico.
The AMC and the TTCA are very much in favor of the public-private partnership (P3) approach to the problem of lack of funds for transportation infrastructure. Essentially a form of privatization that is subsidized via federal incentives such as tax-free bonds and loans with low interest rates, P3s allow for the leveraging of state assets for projects that might not otherwise have funding. It is largely a project of financial institutions and consultants who profit off of complicated financial strategies, and is promoted by construction companies and engineering firms due to the promise of more funded projects. State officials are interested in gaining access to federal funding and being able to advance projects that businesses gain from, such as the Interstate 11 which would benefit Jerry Colangelo and others with real estate along a possible route.

Again, the plan is for the South Mountain Freeway to be a public-private partnership. It is likely to be a test run for more P3s in Arizona, including the Interstate 11.

Arizona officials would argue that all of this is for economic development. That's what they said about NAFTA and NAFTA has led to the enrichment of the few, and problems for many many others. Trade with Mexico benefits the mining and energy companies, and industries that rely on cheap labor and low environmental standards. Arizona wants to deny the damage it does by continuing this trade relationship, but check back for subsequent parts of this series that explores this further.

Friday, July 17, 2015

Following the Money: Why Big Business Backs Pima Bonds

The following is published with the permission of the author, Albert Vetere Lannon, who has been following the politics and impacts of the Interstate 11 in southern Arizona much better than I have. This will be interesting to those living outside of Pima County as well.


FOLLOWING THE MONEY:
WHY BIG BUSINESS BACKS PIMA BONDS
By Albert Vetere Lannon

O what a tangled web we weave / When first we practice to deceive
--Sir Walter Scott

The Yes On Pima County Bonds Committee’s expensive website (http://www.yesonpimacountybonds.com/) states on every page, “Major Funding Provided by Diamond Ventures Inc.” Why is millionaire real estate developer Don Diamond so interested in the bond propositions to be voted on November 3? It may be the result of the “love fest” between Diamond and Pima County Administrator Chuck Huckelberry (Arizona Daily Star, 5/18/14), or it may just be about money, politics and crony capitalism.
The Yes Committee is chaired by corporate lawyer Lawrence Hecker. Hecker has been involved in local politics for years, chaired the Bond Advisory Committee, and served as Governor Bruce Babbitt’s Chief-of-Staff when the National Guard was sent to Morenci with tanks to break the 1983 Phelps-Dodge copper strike.
The Yes Committee’s treasurer is retired Raytheon Chief Financial Officer Steve Eggen, recently chair of the TREO business group and now a “business consultant.”
The $816 million bonds include a number of gifts to the private companies and property owners these guys consort with: A Y for the Fortune 500 companies at the University of Arizona Tech Park, two business start-up facilities, and expansion of the University Medical Center, now merged with the private Banner Health Corporation operating 28 hospitals in seven states,
The largest single amount, $95 million, is for unspecified purchases of “open space.” Without a listing of the specific properties, it looks like a repeat of 2004 when bond money enriched some real estate speculators and took properties off the tax rolls, shifting the burden to homeowners (Arizona Daily Independent, 3/20/15).
There is also $5 million for expansion of Davis-Monthan. A few years ago the county bought some land to expand the air base from Don Diamond for 200 times its assessed value (Arizona Daily Independent).
THE ‘SONORAN CORRIDOR’

Chuck Huckelberry is a champion of the Interstate 11 “Intermountain West Corridor/Canamex Highway” and has proposed a 56-mile route through the Avra Valley west of Tucson. That would bring urban sprawl into a rural valley, families forced from their homes, traffic noise and air pollution and their effects on health, impacts on wildlife and archeological sites, potential groundwater contamination, loss of tourist dollars due to pollution and noise at Saguaro National Park, the Desert Museum, Kitt Peak, Ironwood Forest National Monument, etc., and the end of a peaceful way of life that has lasted for thousands of years.
While temporary construction jobs would be created, there would be a loss of permanent jobs along the existing I-10 corridor. According to ADOT’s numbers, it would also cost three times what double-decking a few miles of I-10 would cost to accomplish the same traffic ends.
Huckelberry inserted the “Sonoran Corridor” into the bond package and Senator John McCain, with the support of the entire Arizona Congressional delegation, introduced federal legislation to make the road an interstate highway.
Originally county maps showed the highway linking I-10 and I-19 west of I-19 as “I-11,” but that provoked a reaction from Avra Valley residents, hundreds of whom pledged to oppose any bonds with I-11 money in them. Most media attention has been directed to Phase 1 of the Sonoran Corridor, not-quite-linking I-10 and I-19 for the benefit of Raytheon, the UA Tech Park, and the Tucson Airport.
Phase 2, however, drops south right alongside a planned 3000-acre Swan Southlands housing development on land owned by Diamond Ventures. Phase 3 goes west to connect with I-19 – and Huckelberry’s proposed Avra Valley I-11 route. It also duplicates a long-planned El Toro Corridor ADOT and Sahuarita have been working on.
In preparation for Phase 1, Pima County has already bought 382 undeveloped acres near Raytheon from Diamond and others for $6 million (Arizona Daily Independent). Critics acknowledge the missile company’s economic importance to the area, but question whether public funds should be used to benefit a private corporation reporting billions in profits.

IT’S A SMALL WORLD

Huckelberry, as Pima County Administrator – at over $300,000 yearly the highest paid county employee -- has dealt with real estate powerhouse Don Diamond and his Diamond Ventures as both ally and adversary. Huckelberry and Diamond have served together in many civic groups. Huckelberry has been among the select few invited to Diamond’s exclusive birthday bashes, and has described Diamond as “extremely influential…he’s a smart, crafty and intelligent individual.”
The New York Times described Diamond as “Arizona’s answer to Donald Trump – an outsized personality who invites public officials aboard his flotilla of yachts (the Ace, King, Jack and Queen of Diamonds), specializes in deals with the government, and unabashedly solicits support for his business interests from the recipients of his campaign contributions.” Those include Senator John McCain (4/22/08).
Among Diamond’s legal counsel is the Tucson-based firm of Lewis & Roca. Real estate lawyer and L&R partner Si Schorr, who has worked for Diamond, chaired the State Transportation Board in 2008 when approval for a “major investment study” of an I-10 bypass through the Avra Valley was rammed through. According to Inside Tucson Business, Chuck Huckelberry supported Schorr’s bypass. Schorr now supports I-11. It’s a small world.
Wilford (Wil) Cardon is a multi-millionaire real estate investor based in Mesa. He ran unsuccessfully in Republican primaries for U.S. Senate in 2012 and Arizona Secretary of State in 2014. Prominent on his campaign committee were Don Diamond and Diamond Ventures president David Goldstein.
Cardon’s companies own large chunks of vacant land in the path of Huckelberry’s Avra Valley highway. According to Pinal County records, Cardon’s BOA Sorte Company owns 175 acres in the Casa Grande area, where Huckelberry’s highway would begin.
In Pima County Arizona Corporation Commission and County Assessor filings show that Cardon’s companies own at least eight parcels with over 1500 acres along various parts of Sandario Road – near Amway, Picture Rocks, Manville, Ajo and Valencia Roads. Clearly, Cardon stands to make a chunk of money if the Huckelberry Highway goes forward.
And it may be that the speculators, realizing that continuing drought will limit the projected 11 percent Pima County growth the bond proposals are based on, want to make sure they get a return on their investment now, before Colorado River water gets rationed. Future developments like Swan Southlands are worthless desert without water.
Cardon – Diamond – Huckelberry – Hecker – Eggen – Schorr – McCain – Sonoran Corridor - I-11 – Raytheon – Banner Corporation - Pima Bonds: It’s a tangled web, but the links are clear. It’s a shame that taxpayers are being manipulated into giving more of their hard-earned wages to keep the big boys laughing all the way to the bank.

Yes on Pima County Bonds: http://www.yesonpimacountybonds.com/.
Taxpayers Against Pima Bonds: http://pimabondfacts.com/stop_high_taxes.html.

Albert Vetere Lannon is a member of the Avra Valley Coalition opposing an I-11 route through the Avra Valley. He can be contacted at albertlannon@powerc.net.

Friday, March 13, 2015

AOYC: It’s time to turn up the heat! FHWA In Favor of Building Freeway!

from https://aoycblog.wordpress.com/2015/03/13/its-time-to-turn-up-the-heat-fhwa-in-favor-of-building-freeway/

March 12, 2015
On March 5th, 2015, the Federal Highways Administration (FHWA) released their Record of Decision (ROD) in favor of building the South Mountain Freeway. The ROD is a document that gives the Arizona Department of Transportation (ADOT) the approval to begin acquiring right of ways and to begin construction of the 22-mile-long freeway that blasts through three ridges of Moadak Do’ag (South Mountain). Moadak Do’ag is sacred to all O’otham tribes and holds cultural significance to eighteen other tribes.

This project has been opposed by members of the Gila River Indian Community since the 1980s. There are numerous harmful impacts of freeway construction which include destroying the prehistoric villages of Villa Buena and Pueblo del Alamo, the destruction of threatened/endangered animal habitats, and the destruction of plants that are central to traditional O’otham culture. Environmental impact studies of the 202 freeway also state that the habitat for wild horses in Gila River would be irreversibly lost if the freeway is built, and that no alternative habitats for the wild horses exist. One of the Gila River Indian Community’s entertainment destinations is named after the wild horses that the freeway would destroy if it is built. The path of the approved design also would destroy many groundwater wells, with no replacement wells planned for by ADOT. It is for these reasons and many more that in 2012, the Sierra Club named the South Mountain freeway one of the worst transportation projects in the United States.

Read more (seriously, follow the link and read the rest)...

Friday, March 6, 2015

Interstate 11 might exacerbate cancer risks in Nevada

There's a major health concern surrounding the construction of the first part of Interstate 11. Scientists found asbestos at the site where the Boulder City Bypass would be built. It seems that some Nevada officials are trying to suppress the investigation of the extent of the problem. Asbestos, a naturally occurring mineral fiber, is likely already causing health problems such as the rare cancer called mesothelioma in local residents, but construction of new roads would make it all the more worse as it gets stirred up in the air.

The I-11 is a big deal to the state of Nevada (and to Arizona). Construction was delayed on the Boulder City Bypass, which is considered part of the I-11, for several months but has been approved by NDOT. Blasting will begin in May or June. It does not seem implausible that state officials would try keep this quiet, even at the risk of further endangering residents.

The Las Vegas Review Journal said of the Nevada Governor, "[Brian] Sandoval called the bypass one of the most important infrastructure projects for Southern Nevada and a key link in what could become a new Interstate 11 linking Las Vegas and Phoenix."

Michael Kies, of the Arizona Department of Transportation was quoted by the Mojave Valley Daily News, pointing out the importance of the corridor.
If the economy of Mexico does grow ... we’ll have a lot more trade coming into our state... And so, this interaction between Arizona, Nevada and Mexico, creating components in our state, selling them to Mexico for assembly, and moving that product to market, becomes the justification for a new trade corridor between Nevada, Arizona, and Mexico.
The study, of which Kies is part, includes a corridor running south to the border in addition to the federally recognized Interstate between Phoenix and Las Vegas replacing Route 93 with one more fit for freight traffic. It is part of the CANAMEX Corridor or what is now called, with perhaps a somewhat different route, the Intermountain West Corridor, running up through Canada as well.

The news that new roads could cause health problems is being treated as an inconvenience. State officials in Nevada doing more than just denying there's a problem. As the New York Times describes,
Upon learning of the report, the Nevada Department of Health forced the epidemiologist, Francine Baumann of the University of Hawaii, to withdraw a presentation of the findings at a scientific conference and revoked her access to the state cancer registry. Dr. Metcalf and Dr. Buck offered to meet with state officials but say they were rebuffed.
In the years since, “no one from the health department has ever contacted us to ask for any information about the minerals,” Dr. Metcalf said.
In an interview with KNPR news and elsewhere, state officials reference the cancer, mesothelioma, and asbestos rates in the state of Nevada in general to be no higher than other states. Yet they seem to ignore the specific study area of Southern Nevada and the Boulder City region in particular. The study results also seemed to indicate, based on age and sex, that the rates of mesothelioma pointed to an environmental cause rather than residents' past occupational exposure to asbestos.

KNPR reported, "Buck said when asbestos gets into the lungs it causes a whole host of diseases.
'All it takes is some wind,' Buck said. 'Any kind of disturbances to those fragile desert surfaces will create dust and the fibers become airborne.'”

If Nevada took this asbestos concern seriously, it may be a big blow to the trade corridor. This would not be the first health risk brought by a massive transportation project, of course and would not be the only health risk brought by the I-11. The corridor is likely to be built in sections, and each one will have to involve a NEPA study. The asbestos issue seems to have come out after the NEPA study for the Boulder City Bypass, but my impact other sections of the Interstate.

Further reading:
http://www.reviewjournal.com/news/asbestos-delays-work-boulder-city-bypass
http://www.nytimes.com/2015/02/10/science/a-controversy-in-the-wind.html
http://www.jhunewsletter.com/2015/02/19/toxic-asbestos-found-to-affect-nevada-residents-65913/
http://knprnews.org/post/health-concerns-and-highway-expansion-converge-boulder-city

Thursday, February 5, 2015

South Mountain Freeway Justified by Controversial Traffic Projections?

A consultant listed on the Environmental Impact Statement for the Loop 202 South Mountain Freeway, Wilbur Smith Associates (now CDM Smith), is now known for their controversial socioeconomic and traffic projections across the country, which have in some cases led to toll road bankruptcies. These types of forecasts, and in particular their use to justify the Loop 202 extension, are questionable, as you'll see. The inaccuracy of traffic projections in general is a problem across the world, but Wilbur Smith's relationship to this road, including the fact that they did traffic projections for a company that wanted to make it a toll road, needs to be examined.

To be clear, while others may call for more transparency, the position of this blog is that, for a whole range of reasons, the South Mountain Freeway should not be built whether or not one can conclude that justification for the road is based on intentionally inflated projections. Even if overestimation is unintentional, the details of the Wilbur Smith issues are compelling enough to examine.

While a lot of the problems with traffic projections revolve around toll roads, these concerns are not irrelevant despite the fact that the Loop 202 is not currently being proposed as a concession project. A toll road has been considered a possibility for much of the life of the concept and its studies (1994, 1995, 2010). The relationship between Wilbur Smith (and HDR Engineering) to toll road projects for Loop 202, and the timing with which they got involved with ADOT on this project may still be relevant. Also worthy of examination is the position of ADOT's consultant, Nossaman, and their involvement in and promotion of public-private partnerships, including several of these toll roads involving Wilbur Smith.

Big Numbers

The Loop 202 South Mountain Freeway is being justified by the need to address future traffic congestion but we know at the very least that the inputs used are inaccurate. Various organizations/experts pointed out that traffic and socioeconomic projections in the Draft Environmental Impact Statement (DEIS) for the Loop 202 South Mountain Freeway were based on old data (Census 2005), as well as aggressive estimates, rather than a range of data acknowledging a margin of error and limits to predicting the future. In response to comments, one of ADOT's repeated responses is that they incorporated the new data (Census 2010) for socioeconomic projections in the Final Environmental Impact Statement (FEIS) and they determined, without explanation, that the updated data validated the conclusions about purpose and need in the DEIS. This despite the fact that updated numbers showed that population figures were significantly lower than predicted. Socioeconomic data, such as population, employment, and vehicle miles traveled (VMT) are studied to come up with traffic forecasts.

Wilbur Smith Associates (CDM Smith), while not the only consultant for the socioeconomic portion of the DEIS and FEIS for the South Mountain Freeway, likely contributed to the Maricopa Association of Government's traffic projections cited in the DEIS and FEIS. It is not simply the use of inputs such as older census data that is the issue, but likely also the method by which traffic projections are arrived at.

Wilbur Smith's exact relationship to the traffic and socioeconomic forecasts presented in the DEIS (and FEIS) are not known to this author. It may not be irrelevant that HDR Engineering Inc., a primary consultant in the traffic portion of the DEIS and FEIS, had also been involved in an attempt at building Loop 202 as a toll road. Whatever the exact relationships and intentions are, traffic projection overestimates seem to be a systemic problem.

A report that investigated Wilbur Smith and the broader problem of traffic projections stated, "'Optimism bias,' the overestimating of toll road traffic and revenue in forecasts, is endemic in the industry. One industry expert estimated the mean forecast error at 25%-30% above actual traffic based on data from 104 toll roads worldwide. A major national study and industry and media research indicate sponsor political bias and profits are key drivers of 'optimism bias' in addition to a variety of methodological issues." No matter what the cause, there may not be any real reason to build the South Mountain Freeway. However, this would not be the first time Wilbur Smith Associates' figures have been found to misrepresent reality for new roads across the country, especially for toll roads.

The recent article, "The Great Traffic Projection Swindle" scrutinizes Wilbur Smith Associates' credibility. The article describes how a Virginia-based group "collected data from 26 toll road projects on which Wilbur Smith had produced the traffic projections. During the first five years that were forecast, traffic projections overshot actual traffic every single year, and by an average of 109 percent, according to the report."

The article continues,
Phineas Baxandall, a senior researcher with the U.S. Public Interest Research Group... says the engineering firms that provide the figures know how things work. “Companies seeking investment for privatized toll roads shop for the forecasting they want,” he said. “[There's] no incentive to tell bad news. And if the deal appears promising, then the forecasting company gets other opportunities to sell further analysis, legal advice, raising debt, selling equity, etc." 
Examples are given in this article of companies, including Wilbur Smith Associates, who were promised or granted future business by toll roads after their projections were sold to investors. One example was of a "traffic forecast for the $200 million Southern Connector in Greenville, South Carolina. In that case, Wilbur Smith was offered $12 million in contracts if the bonds to finance the project were sold. Toll Roads News reports the road only saw one-third to one-half of the traffic predicted by Wilbur Smith, and declared bankruptcy in 2010." (They did collect that $12 million.) The primary company involved in the consortium that built the Southern Connector tried to build South Mountain Freeway as a toll road, as discussed below.

Another project led to bankruptcy. "Wilbur Smith Associates had predicted that traffic volumes on the Indiana Toll Road would increase at a rate of 22 percent over the first seven years. Instead, traffic volumes shrank 11 percent in the first eight. The result was financial disaster for the concession company, owned jointly by Australian firm Macquarie and Spanish firm Ferrovial. By the time they filed for Chapter 11, debt on the road had ballooned to $5.8 billion."

In the case of this Indiana Toll Road, Streets Blog USA reported in another article titled, "How Macquarie Makes Money By Losing Money on Toll Roads" that Wilbur Smith "blamed the bankruptcy on the fallout from the recession." The banks were bailed out and the companies involved, including Ferrovial--one of the companies interested in the P3 for the Loop 202--continue to make money off other projects.

The article details the complicated financial methods used to continue to profit despite bankruptcies. Chuck Plunkett with the Denver Post reported that Ed Regan, a Wilbur Smith forecaster specifically blamed "a downturn in the local manufacturing economy," for the failure of the Southern Connector. Yet as Plunkett wrote, "federal Bureau of Labor Statistics records shows that manufacturing jobs were falling in Greenville long before Regan started on the projections for the Southern Connector." Regan claimed that the forecasts were actually conservative.

The problem revolves around these financial schemes and the ways the projects are sold to the investors. "The Great Traffic Projection Swindle" article states, "UK-based consultant Robert Bain literally wrote the book on traffic projections, warning in 2009 against forecasters who blamed faulty predictions on the economy. Commenting on the flurry of global toll highway bankruptcies that was just starting then, Bain said they had 'less to do with the present economic climate, and more to do with a market readiness to be seduced by hopelessly optimistic traffic and revenue projections.'" Nonetheless, a recession is going to impact projections, but this possibility should've been and should be taken into consideration. Aside from that, what does it mean that the projections for the South Mountain Freeway initially incorporated pre-recession numbers, yet even still the FEIS basically denied that the updated and very different numbers from 2010 altered the purpose and need justification for the project?

Controversy of the Past
There's an intriguing tale about a 1995 proposal for a toll road for the South Mountain Freeway and its connection to Wilbur Smith Associates published by the New Times in 1997. Arizona's proud public-private partnership history--highlighting a variety of controversial projects taken on by Richard Lloyd Carr and his company Interwest Management--is largely explored in the article. Included are some shady dealings such as one in Apache Junction for which Carr was sued by Allstate for fraudulent revenue forecasts. Interwest later planned to build what would've been Arizona's first toll road and none other than Wilbur Smith Associates was brought in to do the traffic projections.

The consortium responsible for building the toll road was Interwest Carolina Transportation Group, LLC, which with SCDOT formed Connector 2000 Association for a project in South Carolina, which recently filed for bankruptcy due to lack of revenue, as mentioned above. Had the traffic projections by Wilbur Smith Associates been accurate, the creation of the toll road and/or the bankruptcy could've been avoided.

The New Times article details issues with Wilbur Smith and another construction company that joined the consortium for the Southern Connector, involving two South Carolina highway engineers who, after receiving bribes from the construction company and were no longer employed by the state, became employees of Wilbur Smith Associates. This all points to a suspicious relationship among transportation officials and these private entities. The article also states that Wilbur Smith "signed on with Interwest to conduct traffic studies for the South Mountain Toll Road."

Adding to this complicated mess are some other details from an article by Forbes about the Southern Connector, "When the toll road came up for bid, two experienced highway construction management companies, Flour Daniel and Perini, Harbert-Yeargin, using Smith’s figures from a 1994 study to formulate their bids, lost out to Carr’s group, which has never built a toll road. How did Carr’s Interwest win the contract? By projecting traffic and toll revenues 50% higher than in the original study made by Smith, now on Carr’s project team." This would seem to imply that Wilbur Smith increased its own traffic and revenue projections to a significant degree for the Interwest bid, or they joined the team knowing the that the projections had been inflated that much.

Supposedly because the project would not be financially feasible, the Interwest consortium decided at some point against continuing their efforts to build the Loop 202 extension. More likely it was the controversy stirred up by the media, which also caused Carr to be removed as manager and CEO of the company he essentially started under a former employer, DLR Group, and led him to sue Forbes for critical media coverage. Interwest remained involved in the Southern Connector, however. Additionally, it is no secret that toll roads would be unpopular in Arizona. If the reason for dropping it was really because the lack of financial feasibility, this might not necessarily indicate that Wilbur Smith's traffic projections weren't financially favorable. At the time, public-private partnership laws were not as conducive to profit-making as they are now. The consortium had to be set up as a 63-20 non-profit, a situation which many were skeptical of, well, except for Nossaman, the firm that acts as a consultant for various partners involved in public-private partnerships, including Interwest (at least as of 2007).

"Purpose and Need" 

Wilbur Smith's relationship to the Interwest toll project for the South Mountain Freeway might have something to do with the justification of the project. Just a few years after Wilbur Smith's job was over with Interwest, the firm was working on the road project for ADOT. In or before January 2001, HDR Engineering was chosen by ADOT to be the consultant for the "South Mountain Highway Project," specifically for the EIS, with Wilbur Smith Associates as one of the subconsultants (recall that HDR had also been interested in building it as a toll road). There was a meeting of the South Mountain Community Advisory Team in early 2002 that included someone from Wilbur Smith Associates as a staff member (and two from HDR). It seems it was this same team and around this same time that determined that the EIS process was worth continuing. It is reasonable to suspect that Wilbur Smith's projections for the Interwest toll road would not be much different from those that, just a few years later, justified the beginning of the EIS process which is the main federal legal obstacle to such a project.


Howard Shanker, attorney for Protecting Arizona Resources and Children (PARC), points out that ADOT has been purchasing land in the right of way areas of the "preferred route" for the South Mountain Freeway for over a decade. It is likely that Wilbur Smith Associates had some influence in this decision back when it started. If Wilbur Smith was ever motivated to inflate traffic numbers to justify the road as a toll road, would they ever have corrected this after Interwest was out of the picture and especially since a toll road was a consideration almost this whole time since? And is ADOT equally invested in making the road project happen even if it's not truly justified?

Even as the Loop 202 is not being planned as a toll road, there might be similar motivations to increase the numbers. The Maricopa Association of Government's incorporation of the high traffic projections to justify the building of the road would also attract companies and their financiers to a promising revenue source whether it is a toll road or not, considering that a public-private partnership has been a likelihood for a while, and tolls are not the only possible revenue stream available. At this point, many companies understand how risky toll roads are, although there are still complicated financial methods that allow for companies to lose money on individual tollways yet still profit on a larger scale. Not much discourages the consultants from projecting too high because there is no accountability.

Due to the risk of bankruptcy for toll roads, other forms of public-private partnerships (P3s) have become more pervasive and there are newer ways to profit. The particular model of P3 in the works for the South Mountain Freeway is unusual, and seems to put a lot of risk on the state and therefore the tax-payer, especially considering that the road is to be paid for largely using funds that rely on certain socioeconomic projections made by Wilbur Smith Associates (as will be discussed in Part Two).

In or before 2010, ADOT hired Nossaman as P3 Legal Advisor with Frederic Kessler as the lead attorney. Nossaman and Wilbur Smith have both been involved in a number of controversial projects across the country. Yes, they all have a lot of clients, but it may be significant that so many have had major problems.

One problem-filled project involving Wilbur Smith Associates, Frederic Kessler of Nossaman, as well as HDR Engineering, is the Knik Arm Bridge in Alaska. Although still meant to be a toll road, the bridge is transitioning to a similar P3 arrangement as the P3 for the Loop 202, no longer to be financed by the private partner due to earlier traffic projections proving overly optimistic. In this case, Wilbur Smith did the traffic projections, later also hiring HDR and another consultant to "massage" a university research institute's forecasts to make them more favorable, according to a report. The resulting forecasts were significantly higher.

The report listed yet another iffy project involving Wilbur Smith and Nossaman.
In the worst case, it took less than three years for the new South Bay Expressway to declare bankruptcy from its late 2007 opening, a situation complicated by a law suit from the road’s developers seeking additional compensation. In the end, South Bay’s equity investors were wiped out, bondholders took a major loss, San Diego had to take over the previously public-private partnership, and the value of the endeavor sunk by nearly half.
Additionally, Kessler advised on the original Pocahontas Parkway plan (as a non-profit) and continued to advise them during the 2006 transition to a different arrangement with an Australian private partner. TOLLROADSnews estimated by 2004 that the "traffic shortfall is about a third" for Wilbur Smith's projections made in 1996. The project was larger and more expensive due to the forecasted need. "[The Pocahontas Parkway Association] officials began looking for a private investor to buy out the toll road as revenues continued to lag forecasts and a default was foreseen" says the report about Wilbur Smith.

It is possible that the width for the South Mountain Freeway--eight lanes (an earlier proposal was 10 lanes)--was chosen due to traffic projection modeling for tolling. As HDR explained to ADOT more recently, the less congested the road, the more likely someone is to be willing to pay a toll rather than take a different route. So since it is not to be a toll road, and the traffic projections might be too high, does it need to many lanes, if the road is to even be built in the first place?

To get more specific on the issues with the Loop 202 traffic projections, PARC summarizes the various problems on their website,
MAG’s modeling, which is relied upon in the DEIS to establish the purpose and need for the Freeway expansion, fails to accurately identify short-range growth and uses outdated (2005 census) data to estimate long-range growth. It reports its projections in a manner that indicates that they are certain to happen, which is not supported by the data and modeling techniques used. Estimates of vehicle miles travelled [sic], which are built into the models, are also based on faulty assumptions about future driving habits.
There is much valuable information and insight contained within the comments to the DEIS, but some will be highlighted here. Kevin Kane, of the School of Geographical Sciences and Urban Planning at ASU concluded,
"...the model relied on by the DEIS to justify purpose and need based on socioeconomic factors extends aggressive, pre-recession growth rates decades into the future while ignoring recent data that reflects deep-seated regional and national structural changes that have become apparent in the last several years. MAG's modeling, which is relied upon in the DEIS to establish purpose and need for the freeway expansion fails to accurately identify short-range growth and uses outdated data to estimate long-range growth." (Comments from Special Interest Groups on FEIS, Kevin Kane submitted by Howard Shanker/PARC, B369, page 243 of PDF).
Comments from Special Interest Groups on FEIS, Kevin Kane submitted by Howard Shanker/PARC, B356, page 239 of PDF.
Considering the above information, it is relevant what information came from the consultants, particularly Wilbur Smith Associates, and how and by whom the information was interpreted. Wilbur Smith Associates are listed as a consultant in these documents, but the numbers are vaguely attributed to MAG. The documents have no authors' names. Although information about consultants or other sources of information is not specifically requested, the comments from PARC's expert Herman Basmaciyan, P.E. notes that the DEIS inadequately provides information about the data from which MAG extrapolated their findings. The response in the FEIS does not adequately address this. (Comments from Special Interest Groups on FEIS, Herman Basmaciyan submitted by Howard Shanker/PARC, B467, page 341 of PDF).

We know that ADOT is part of MAG and that Wilbur Smith has also been a consultant for various projects for ADOT over the years. We can also gather that Wilbur Smith as been involved with this project since before the EIS was even begun so they had done a lot of the groundwork. Nonetheless we don't need one single culprit to question the motivations of the parties involved and therefore the justification of the entire project. The fact that the updated census figures do not change the conclusions made in the EIS (in addition to the lack of explanation) signifies that other changes in data may not alter the assessment of MAG, ADOT, and its consultants, indicating a desire to justify it no matter what. Whether or not Wilbur Smith Associates in particular are to blame for the numbers in the DEIS and FEIS for the South Mountain Freeway, there's still a problem.

Trade and Growth

"If you build it, they will come" is clearly not always the case as the bankrupt toll road projects have seen. However, wishful thinking, rather than deceit might more likely describe the Wilbur Smith Associates' high traffic projections, although this doesn't make it acceptable. Wilbur Smith happened to have had access to insider information about plans for trade-based economic growth in Arizona which may have led to optimism bias. For example, they were involved in various studies ranging from 1997-2003 related to CANAMEX, the NAFTA trade corridor connecting Mexico with Canada, running through five US states including Arizona.

MAG, ADOT, their consultants and other organizations such as the Arizona-Mexico Commission all have an interest in selling the region as a place for investment. International trade, specifically with Mexico, is central to plans for Arizona's economic growth. Trade would supposedly bring growth and therefore, demands for new transportation infrastructure. Wilbur Smith (CDM) relies on new infrastructure projects to continue to be able to make money.

With the interests in creating the "Sun Corridor" as a trade hub, a "megapolitan" along the CANAMEX Corridor, various private parties, including consultants for ADOT, have been optimistic (with recession-based interruption) because of the moves towards encouraging increased truck traffic.


Wilbur Smith was listed as being part of the CANAMEX Consultant team. Linda Carpenter, who was involved with the CANAMEX Coalition study was also a revenue consultant as part of Wilbur Smith Associates for the Transportation Vision 21 Task Force final report to the Governor in 2001.

The Arizona Republic reported, "The CANAMEX Corridor Task Force has contracted with Wilbur Smith Associates of Columbia, S.C., to study what opportunities Arizona could get. A lot of the impact will depend on where any roads and railroads built from the port would lead."

It may seem contradictory that PARC's experts claimed both that the traffic projections were too high and that the road is meant to deal with increased truck/freight traffic. Despite the fact that it seems that Wilbur Smith's optimism bias has to do with their expectation that there will be an increase in truck traffic as part of this trade, ADOT has denied that the road is intended as a truck bypass. If the purpose and need for the road were to be justified as a truck bypass, there would be much more opposition and little support. If it is justified as addressing future commuter traffic, then it can more easily be sold to the public. And if trade increases, then Wilbur Smith's projections will not be questioned.

In other cases, Wilbur Smith Associates may choose the high end of the range of possibility regarding traffic forecasts, assuming that with increased infrastructure will come more growth. The question is how decisions about infrastructure are being made, such as with CANAMEX (of which the most recent development is the completion of the Interstate 11 study), for example, or with the way it was decided that the South Mountain Freeway should be a public-private partnership (P3). Note too that Wilbur Smith was hired as a consultant for the Office of P3 Initiatives and International Affairs, ADOT in 2010. They have been proponents of P3s for quite a while.

The extent of Wilbur Smith's relationship with ADOT and MAG may bring even more problems. While the risk of bankrupting a toll road is no longer part of the picture, the funds with which the Loop 202 extension would be paid for (to whichever private consortium wins the intended public-private partnership bid) rely on similar socioeconomic and traffic projections due to the funds coming from gas taxes, vehicle registration fees, and state sales taxes. Wilbur Smith Associates contributed to these projections as a consultant for the Arizona Department of Transportation (ADOT). If these numbers were inflated, how will that affect the state of Arizona? How many tax-payer dollars have been put into this project already, which may not even be justified? See the upcoming Part Two.