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Tolling Points

Corporate Head Office Considers Relocating Due to Unsolved Congestion

By: 
Bill Cramer

The province of British Columbia got a harsh snapshot of the economic value of mobility late last year, when a delayed decision on a tolled bridge prompted a western Canadian pharmacy chain to consider moving its corporate headquarters out of the region.

It won’t stop London Drugs’ 80 retail outlets across four provinces from feeding the annual chocolate overdose for Valentine’s Day today. But the local congestion is reportedly driving parents to extreme measures to keep family together.

After B.C. deferred plans to upgrade or replace the Massey Tunnel, which runs between Richmond and Delta on B.C.’s highly congested Lower Mainland, London Drugs President and Chief Operating Officer Clint Mahlman said the congestion around the company’s headquarters in the suburban city of Richmond was becoming a deal-breaker.

"The costs of having trucks and employees delayed in traffic and the costs of being here are all impacting our business," he said, adding that some employees had quit their jobs rather than putting up with the fraught daily commute.

For Richmond, the source of that observation is as important as the observation itself. Founded in 1945, London Drugs styles itself as a 100% Canadian-owned pharma chain, with 7,000 employees across the western provinces of B.C., Alberta, Saskatchewan, and Manitoba. Some 900 of those employees have been concentrated in the company’s Richmond head office…until now.

Problem Solved, Solution Stalled

Mahlman and his 899 staff and colleagues thought they had a solution in 2017, when the province started work on a 10-lane, C$3.5-billion bridge to replace the four-lane tunnel, which cost $16.6 million ($140 million in 2017 dollars) when it was built in 1959. Then British Columbians went to the polls, the toll plan generated a degree of local controversy, and a new government took office. Now the decision on the crossing has been delayed until next year.

Meanwhile, the Richmond Chamber of Commerce says the commute to and from the city has become so unreliable that it’s boosting demand for local child care spaces.

"All these people who commute into Richmond don't dare leave their children on the other side of the tunnel because they can't guarantee they'll be home in time to pick them up," chamber chair Barbara Tinson told the Canadian Broadcasting Corporation. "So they put them in Richmond. That way, if they get stuck, at least they have the kid with them."

A Tale of Two Cities

IBTTA members know that the London Drugs decision is just the tip of the iceberg for Richmond. If you’re a city intent on building up the local economy, the first step is to hold onto the big employers you already have. The next is to attract new investment and jobs, with safe, reliable mobility and schools.

For a mirror image of what Richmond is going through, look no farther than Aurora, Colorado, where tolling along Highway E-470 has delivered a big boost to economic development.

“No one should ever just build a tolled facility without demand,” E-470 Executive Director Tim Stewart told Tolling Points in November 2017, just before he began his term as IBTTA’s 2018 President. “It has to be linked to people’s willingness to pay, and the reason they’re willing to pay is that there’s an identified need. There’s an economic opportunity.”

E-470 clearly meets that criterion.

The road “has produced a $38.4-billion increase in real estate value along the corridor since 1986,” he said, and “accounts for 12% of the annual economic activity across the six-county Denver Metropolitan Statistical Area. That’s outstanding, but it’s not unusual. It’s just what tolling does for a local or regional economy.”

Stewart acknowledged that “there isn’t going to be one silver bullet that will solve every problem in surface transportation. I’m not at all advocating that every road, bridge or tunnel should be tolled—that just makes no sense. But I am advocating that tolling has to be a part of the discussion.”

Get the latest on highway finance and tolling. Registration is now open for IBTTA’s Summit on Finance & Policy, May 19-21, 2019 in Philadelphia.