Reason Foundation

[Op-Ed] Privatize Parking, But Not for the Kings

Posted on March 3, 2012, 3:38pm | Harris Kenny and Leonard Gilroy

Sacramento is on the verge of becoming the third U.S. city to privatize its parking assets. As my colleague Leonard Gilroy and I explain in our recent op-ed in The Sacramento Bee entitled "Privatize Parking, But Not for the Kings":

Sacramento's burning desire to keep the Kings in town has the city considering privatizing its parking meters and garages. By itself, the plan to bring the private sector in to modernize and operate the city's parking assets would be a good one. But taking the proceeds from a privatization deal to help build an arena and subsidize an NBA team is not.

The City Council recently voted unanimously to see which companies might be interested in operating the nearly 13,000 city-owned metered parking and garage spaces. Privatizing city parking assets makes a lot of sense. Cash-strapped governments do a poor job of maintaining and modernizing parking meters and facilities. And urban parking rates are rarely what they should be because few politicians want to be blamed for raising parking costs.

The piece goes on to detail successful public-private partnerships for surface transportation projects, such as parking assets in Indianapolis and the Indiana Toll Road. Next we debunk arguments for using parking proceeds to finance the arena:

First, taxpayer subsidies to the arena are likely to be higher than advertised. In a 2005 study of major U.S. professional sports stadiums and arenas, Harvard University's Judith Grant Long found each NBA arena costs taxpayers $53 million more than advertised due to unexpected operating costs, capital improvements, municipal services and forgone property taxes that weren't accounted for in initial projections. Grant Long found that, across all major professional sports, taxpayers end up paying an average of 40 percent over initial facility cost projections.

Perhaps worse than the hidden costs, a large body of academic research suggests that sports arenas are economic losers for cities. A study by researchers from Vanderbilt University and Smith College found "there is no correlation between sports facility construction and economic development." Arenas tend to simply reallocate what's already there, as opposed to drawing new jobs and money into the local economy.

Finally, we conclude:

Sacramento could invest the parking lease revenue to build infrastructure and transportation projects, pay down city debt or even shore up underfunded public employee pensions. Any of these steps would put the city on significantly better fiscal footing and deliver greater long-term benefits to taxpayers than the arena.

Government should focus on what is essential. It shouldn't be in the business of building NBA arenas. And it shouldn't run parking meters and garages, either. The current arena plan to do both is a steal for the Kings and an air ball for taxpayers.

Read the full piece available online here. For more on leveraging parking assets through public-private partnerships, see here, here and here.

Technology Can Help Reduce Traffic Congestion

Posted on February 29, 2012, 9:43am | Baruch Feigenbaum

As first reported in The Wall Street Journal automakers are using the power of technology to reduce road congestion. This technology can help reduce traffic congestion and accidents. While fully automated cars will not arrive tomorrow, adaptive technology that assists the driver may become widely available.

Ford, Volkswagen and BMW are three automakers with big plans:

For instance, the auto maker (Ford) will invest in systems for its vehicles that will lead to cars that avoid traffic jams, reserve parking spaces and, under certain conditions, drive themselves, in an effort to cut down on global gridlock. The company also is moving to expand the use of crash-avoidance technology and will broaden its collaboration with car-sharing companies such as Zipcar Inc.

Mr. Ford—who has been speaking out for the past two years about the need to address urban traffic—envisions a future in which fully autonomous cars are connected to a database that coordinates automobile travel with public transit and other transportation methods and parking. Mr. Ford wouldn't say how much money the company will invest in these efforts. But last year, Ford said it doubled its investment in vehicle-to-vehicle communications and created a 20-member task force to help implement the technology in its vehicles.

Other auto-makers are exploring ways to address the problem. Some are working on developing standards for technology to allow vehicles to signal each other on the road in order to avoid collisions and feed more information to systems designed to minimize highway congestion. BMW AG has launched a fund to invest in mobility start-ups to gain access to new technology and ideas. 

"We think that the technology we are coming up with will help us avoid gridlock," said Wolfgang Steiger, Volkswagen AG's director of future technology. Mr. Steiger said it is likely that major cities will react to current traffic through development planning and public transit, lessening the problems. 

There are actually two concepts involved. The first is the possibility of driverless cars. While driverless cars may seem more science fiction than fact, some of the technology is already available. According to several sessions at the past Transportation Research Board conference, Google has driven several cars more than 150,000 autonomous miles and successfully lobbied Nevada to legalize driverless cars. The short-term goal is to reduce the number and severity of crashes through intermittent automated braking or steering. Automated cars may also improve productivity by reducing congestion and crashes. But completely automated cars are some years away. Transitioning to driverless cars will have Technological, Economic, Insurance, Psychological, Sociological, Legal and Political issues 

Driverless cars are only prototypes and the technology is very expensive. The system has a few glitches; the technology that guides Google’s cars get confused in certain types of driving conditions. This could be dangerous in real-world conditions. As the average vehicle on the road today is ten years old, replacing all the vehicles with driverless cars could take 30 years. And that assumes government action and a starting date of tomorrow. There might be safety issues if passenger operated and machine operated cars are on the same highways.

The second concept is vehicle-to-vehicle communication. Various studies have found vehicle-to-vehicle communication can improve emergency vehicle responses by reducing travel times to the emergency room, creating a system that alerts drivers when they are too tired to drive, and lessening the amount of pollution from vehicles. While totally automated cars are not currently realistic, advanced safety and technology features built into the GPS system can improve the driving experience today.

Technology by itself cannot solve all of our transportation challenges. Automation is no short-term replacement for new highways, cost-effective transit service, and other safety research. But technology is a small part of the solution. Any new vehicles that can brake to avoid a crash or route its driver around traffic congestion is one part of the solution.

China High Speed Rail's Hard Lessons for the US

Posted on February 28, 2012, 6:50pm | Samuel Staley

I've weighed in on China's high-speed rail debacle and what lessons it has for the US in commentary just published by Reason Foundation (February 28, 2012). I wroter a much longer version for National Review (December 19, 2012), but this story has important implications for US policymakers.

One of the critical weaknesses of the China high-speed rail program was the national profile given to it by the national government. The mere size of the program combined with its political profile pushed the program faster than it could keep up while inviting corruption.

As I point out in the Reason commentary:

"China's enthusiasm for high-speed rail and the national pride it engendered outpaced the ability of its engineers to adapt technology safely and efficiently. China began to adapt technology to the particulars of the Chinese system through joint partnerships with experienced foreign firms in 2004. As glitches became apparent (none of which appeared significant at the time), the government moved the goal posts to achieve even more ambitious objectives, according to extensive investigative reporting  by the Chinese business magazine Caixin. Instead of 200 kph trains, the trains were expected to achieve speeds of 250 kph, then 300 kph. Technology never really caught up, a factor compounded by the uniqueness and vastness of the Chinese system."

China is not retreating from commitment to high-speed rail (it's system is largely built out at this point), the cost of moving too quickly has been significant in terms of its international prestige as well as the damage to the government's domestic political credibility. One of the "learnings" from China is fairly simple: Once a program achieves national prominance and becomes part of a broad-based political platform, it's a good time to step back, reassess, and slow down.

Toll Road Forecasts Come Under Scrutiny in Virginia

Posted on February 26, 2012, 3:59pm | Samuel Staley

An important discussion is taking place in Northern Viriginia over the veracity of traffic and revenue forecasts for the Dulles Tollroad. The forecasts are critical for this corridor because higher toll rates have been justified based on their ability to finance a the extension of the Washington, DC Metro to the Dulles Airport (and beyond).

According to Tollroadsnews.com (Feb 24, 2012), the forecasting company, CDM Smith (formerly Wilbur Smith Associates), has made over 200 forecasts for 100 projects. In a response to criticism that the CDM Smith forecasts suffered from "optimism bias," the company's CEO writes (in a letter available at Tollroadsnews.com):

"The previous traffic and revenue studies undertaken for the DTR [Dulles Toll Road] highlight our continued success and reliability in effectively forecasting its traffic and revenue potential. Comparison of CDM Smith’s 15yr forecast for the DTR in 1989 with the actual performance indicates that actual 2003 transactions were 98.2% of forecast (the 2004 toll increase was not assumed in 1989).

"The 2009 study forecasts also compare favorably to the actual revenues following the 2010 and
2011 toll adjustments:

- 2009 Study 2 yr forecast: Actual 2010 revenue was 100.7% of forecast

- 2009 Study 3 yr forecast: Actual 2011 revenue is expected to be 97.5% of forecast

"The 2005 DTR Study cannot be tested against actual performance as none of the toll scenarios in that study were implemented."

This is very important issue, and we've written about this elsewhere (see here). Given a few high-profile bankruptcies (e.g., the South Bay Expressway in San Diego, Southern Connector in South Carolina), and the rising important of public-private partnerships in financing these projects, the accuracy and reliability of these forecasts are critical, and I personally have worried that the forecasting track record hasn't received enough public scrutiny.

The article at TollroadsNews does a good job of exploring the complexity of these forecasts. In many ways, it's more art than science. Nevertheless, decisions about long-term infrastructure need to be bounded, and forecasts are an essential part of evaluating risk and uncertainty. But they also have to be subjected to independent scrutiny and the full range of uncertainties in these forecasts need to be part of the public decisionmaking process.

Thanks to TallroadsNews for helping to broker this public discussion.