VOL. 9 | NO. 40 | Saturday, October 1, 2016

Lamar Avenue is a $300 million problem. Rush hour on Lamar turns into several hours, and for the hundreds of distribution centers located near the corridor, just-in-time delivery is nearly impossible in the face of miles of congested traffic.

For Memphis to continue to recruit and retain business, its main logistics corridor needs an overhaul.

“It’s two-and-a-half times the cost of any single project we’ve ever done in the state of Tennessee,” said John Schroer, commissioner of the Tennessee Department of Transportation. “So it’s a big, expensive, long-term project, and we’re looking at every possible means we can to get it built.”

Without any additional funding sources, it would take 10 years for TDOT to complete the $300 million renovation of Lamar.

Earlier this year, TDOT applied for a $180 million grant through the federal Department of Transportation. With the funds, Schroer estimates it would only take five years to expand four-lane Lamar to six lanes and construct new interchanges at three heavily congested intersections.

TDOT threw all of its weight behind the Memphis project while other states submitted multiple applications for the federal FASTLANE grant. The Greater Memphis Chamber coordinated the grant with the Memphis Metropolitan Planning Authority – the Mississippi Department of Transportation and the Arkansas State Highway and Transportation Department submitted their support as well.

When the grants were announced in July, Memphis’ project didn’t make the cut. TDOT plans to reapply for a FASTLANE grant next year and will continue on its uphill battle of acquiring rights-of-way for when the pieces fall into place.

A NATIONAL CORRIDOR

Lamar isn’t just the concern of local transportation entities. The Greater Memphis Chamber, which focuses on recruiting and retaining big business, sees the corridor as a vital economic artery.

“Anytime you go out there, it's extraordinarily frustrating just to get to your destination,” said Kelly Rayne, senior vice president of community development with the chamber. “And you see the truckers cued up trying to take the freight and cargo where it needs to go, and it results in lost time, which is, of course, money and sometimes damaged freight.”

Almost 20 percent of the jobs in Memphis’ MSA are concentrated along the corridor. It houses 20 Fortune 500 companies and supports more than 1,100 transportation and logistics companies that employ more than 42,000 people.

Companies outside of Memphis see U.S. Highway 78 – locally, it’s referred to as Lamar – as a nationally and regionally significant freight corridor that links Memphis to interstate highways, airports, rail and maritime ports from coast to coast. Every day, 13,000 trucks move through that area.

And if the corridor is choked up with congestion, it’s choking the local economy’s ability to grow.

“It's really one of the only areas that has all the components of multimodal freight, with FedEx’s largest distribution facility and BNSF and all the other Class 1 railroads that have facilities in Memphis,” Schroer said. “All those modes come together in Memphis, so Memphis has enjoyed that growth. And when that happens, it puts demands on infrastructure, and in a lot of ways we’re in the process of catching up.”

Many businesses along Lamar are located there for easy access to the BNSF Railway Co.’s Memphis Intermodal facility. The railroad completed a $200 million expansion of its site in 2009, which supports two outbound trains and 3.5 inbound trains each day.

“Congestion on Lamar Avenue limits trucker turns, creating congestion on the facility,” said Joe Faust, a spokesperson for BNSF.

And while Lamar’s intermodal pillars have enough capacity to withstand the corridor’s struggles, the smaller companies have a hard time staying competitive.

Rick Quinn, vice president of Steel Warehouse Inc., said Lamar’s congestion is hurting his ability to recruit truckers. His company moves more than 100,000 pounds of steel a year in and out of Memphis, but the truckers that move that steel could easily be persuaded to work for another business outside of the troublesome Lamar area.

“We're competing for our lifeblood with some guy who's over on Presidents Island who boasts that truckers can jump in and jump out and without wasting usable time being tied up in traffic,” he said.

Quinn said Steel Warehouse has been located on Lamar since 1954, and a relocation would be impossible.

“As long as we're a viable business, we're going to be a viable business along that road,” he said. “The strengths are obvious, but there has got to be a better way.”

Dexter Muller, a senior adviser with the chamber, said Lamar went through a growth spurt in the late 1990s. Around that time, a lot of manufacturing had shifted to Asia, and companies were shipping massive containers back to the states for domestic distribution of goods.

“They were looking for a central location where they could have a central distribution facility, so instead of having 12 facilities that are 50,000 square feet, they started having half a million square feet in the middle of the country somewhere,” Muller said.

Developers like IDI Gazeley and Panattoni Development Co. built up Lamar with huge warehouses to meet those trends in shipping. They supported a submarket with nearly 99 million square feet of industrial space.

Lamar’s industrial boom has slowed down considerably, Muller said. A speculative warehouse has not been built in Memphis since 2007. In the same time period, developers in DeSoto and Marshall counties in North Mississippi have constructed nearly 25 million square feet of industrial space.

Those same developers that supported Memphis’ big-box industrial boom are constructing sprawling industrial parks across the border thanks to Mississippi’s easily accessible tax incentives.

Muller said without infrastructure enhancements, Memphis’ competitive edge against North Mississippi will become dull.

“No one wants to build new buildings if the road in front of the property is in poor condition,” he said.

COSTS OF GROWTH

According to TDOT’s application for the FASTLANE grant, the project would increase the capacity to move goods along a problematic stretch of Lamar by 50 percent. TDOT estimates that over a 20 year period from the project’s completion, Lamar would see 1,950 fewer vehicle crashes. From 2013 to 2015, a total of 904 crashes occurred along the corridor which resulted in property damage and three fatalities.

The project, which would cost $150 million in right-of-way acquisition and $150 million in construction, would widen 4.5 miles of Lamar from Getwell Road to the Tennessee/Mississippi state border and add interchanges at Holmes Road, Shelby Drive and Winchester Road.

With Memphis out of the running for receiving a federal grant this year, TDOT has pledged to inch forward by acquiring right-of-way for the first phase of the project, which should cost around $500,000. Some of those costs could be lessened if a company elects to donate its land.

Schroer said Lamar has been a local priority for nearly 10 years. Last April, TDOT allotted $3 million for right-of-way acquisition for the first phase of the Lamar project, which extends from the Tennessee/Mississippi state line to Shelby Drive.

Schroer expects right-of-way acquisition for the first phase will take about two years. At that point, TDOT will begin construction and then right-of-way acquisition for the next phase, which extends from Shelby Drive to Raines/Perkins Road. The final phase of Lamar’s extension ends at Getwell Road.

“We'll have elevated roads at the interchanges, and entrance and exit ramps onto Lamar Avenue, and that means there are some businesses that we're going to have to purchase,” Schroer said. “Those acquisitions are always harder.”

He emphasized that at no point will the Lamar project halt traffic along the vital corridor. At times, traffic will trickle down to one lane each way, but that’s a necessary means to bring about increased capacity and safety. Without a federal grant, getting to that point could take even longer.

Tennessee is one of a handful of states with pay-as-you-go transportation authorities, meaning that funds are raised through gas taxes and vehicle registration fees instead of debt purchases.

TDOT has about $500 million in its budget to go toward new capacity projects across the state, and all of that can’t be poured into the Lamar project, Schroer said.

The gas tax hasn’t been raised since 1989 – U.S. Rep Steve Cohen said the state is overdue for a hike. If TDOT had been able to contribute more funds to the project, Lamar may have been more attractive to the U.S. Department of Transportation for a FASTLANE grant, he said.

“We need a lot of money, but we asked for more money than anybody got, and maybe we need to ask a little less next time,” Cohen said.

Under its application for the FASTLANE grant, the state was set to contribute $120 million to the Lamar project. Schroer said it’s possible that amount could increase to make the federal contribution less and hopefully boost TDOT’s chances of being selected.

TIGHTENED CRITERIA

The neglect of Lamar is the story of the nation’s freight thoroughfares. Before the FASTLANE grant, there had never before been a federal grant program targeted to freight-related projects.

“The question of moving goods had been an afterthought in Congress,” said Leslie Blakey, president of the Coalition for America's Gateways and Trade Corridors, a national advocacy group that lobbied for the grant program’s creation.

The FASTLANE grant program, or Fostering Advancements in Shipping and Transportation for the Long-term Achievement of National Efficiencies, will boost capacity of the nation’s freight network. The FASTLANE grant is focused on projects that produce more efficiency and connectivity in the country’s freight system, faster goods to market, lower cost to shippers and better options for consumers.

For the first round of competitive grants, the U.S. DOT awarded a total of $760 million to support 18 new freight-related infrastructure projects. TDOT’s application was one of 194 applications that didn’t make the cut.

The Lamar grant request for $180 million was greater than most of the grants the federal DOT awarded. No application could ask for more than 60 percent of a project’s total anticipated cost. The largest award, coming in at $165 million, went to the Virginia Department of Transportation. The total grant pool will increase over the next four years, so TDOT could find luck during the next award session.

The grant program is born out of the Fixing America’s Surface Transportation Act, the first federal law in over a decade to provide long-term funding for transportation infrastructure. The FAST Act authorizes $305 billion through 2020 for transportation-related projects.

Cohen, who worked on a House committee that finalized the FAST Act, said he was “disappointed” that some of the projects that received grants were more commuter-oriented than freight-oriented.

“I think the U.S. DOT did some grants that weren’t quite as tight as we wanted to be and conscious of freight,” he said. “Lamar Avenue is definitely a freight corridor, almost entirely.”

In the next version of the bill, Cohen said he will attempt to write in stricter guidelines about what will qualify for a grant.

With the FAST Act approved in December, DOT had to act quickly to fulfill its first round of grants. Blakey said in an election year when the fiscal year was already underway, she believes the U.S. DOT sacrificed some transparency in its efforts with the FASTLANE program.

As a global freight hub employing a higher percentage of logistics workers than any other region in the country, Memphis should have been chosen, Blakey said. In a formal statement, the coalition named Lamar and Memphis among four projects the DOT overlooked.

“We were a little bit disappointed in the outcome of the FASTLANE grant because we felt like a lot of important freight hubs were neglected,” she said. “The awards were not necessarily based on where the highest priority projects were.”

With a new administration, Blakey said there is an opportunity for the coalition to help DOT fine-tune the grant program.

“This project meets every single requirement that was in the application process,” Schroer added, “and I believe that in time, we'll get one of these grants. I really do.”