Surface Transportation Innovations #37

Topics include: talking tolling with stakeholders; paying for better transportation in California; reflections on the election results; video tolling comes to America; evacuation
In this issue:

Report Outlines Tolling/Pricing Strategies

The last few years have seen a huge increase in interest—by DOTs, Metropolitan Planning Organizations, and the private sector—in making greater use of toll finance to expand the highway system and of pricing to better manage that system. Needless to say, such proposals have also encountered a lot of opposition. Hence, I'm very pleased to tell you about a recent report, commissioned by the Federal Highway Administration's Office of Transportation Policy Studies, that focuses on "the nature and basis for opposition to tolling and pricing . . . and ways to turn resistance into acceptance if not advocacy."

The report is titled "Issues and Options for Increasing the Use of Tolling and Pricing to Finance Transportation Improvements." It's dated June 9, 2006, and you're only hearing about it from me now because it's taken me a long time to get through this inch-thick report. It's the product of an AECOM Consult team headed by Dan Dornan. I'm not sure it will be on the FHWA website by the time you read this, but it's already posted at www.trb-pricing.org/modules.php?name=Content&pa=showpage&pid=5.

The project team identified a dozen key highway stakeholder groups with which they engaged in various forms of structured dialog. The report is especially valuable for its detailed discussions of the many facets of the trucking and logistics industries, and how each subset might react to various forms of tolling. From all these discussions, the team came up with 17 key issues that will arise with most tolling/pricing projects, and cross-referenced them to the major interest groups. The trucking industry was linked to 16 of the 17, more than any other stakeholder group.

Based on that assessment of the problem, the report than lays out and explains a dozen suggested strategies, illustrating them with real-world examples. The 12 include:

  • Institute a proactive outreach program to explain the benefits of the toll project;
  • Make it optional to use the tolled facilities;
  • Use electronic toll collection, and standardize ETC systems;
  • Avoid tolling existing highway lanes;
  • Liberalize truck size restrictions on dedicated truck toll lanes;
  • Clearly specify the purposes for which toll revenues can be used.

Also of interest is a set of road pricing case studies, as well as the transcript of a fascinating "private-sector dialog on tolling and road pricing issues and strategies."

This is a big report, but it provides a wealth of useful information. If you are even thinking about any sort of tolled or priced project, you should read this report.


How California May Pay for Better Transportation

California voters approved a $20 billion general-obligation bond measure for transportation infrastructure, despite criticisms that it flouted long-established user-pays principles for transportation funding and would not necessarily target funds to projects that would produce the greatest return on investment. My guess is that voters figured some new spending was better than none . . . and that few realized that paying off the bonds will take a significant bite out of the state's hard-pressed general fund over the next 30 years. Had they realized that, the outcome might well have been different.

As evidence, I point you to a statewide public opinion survey done earlier this year regarding transportation funding alternatives. Jennifer Dill from Portland State University and Asha Weinstein of San Jose State presented their results at a transportation infrastructure funding conference in Banff in August, and it is being published by the Mineta Transportation Institute at San Jose State (though not until after the election!).

The survey asked residents about 13 options to raise money for new transportation capacity in California�a variety of tax and toll mechanisms. In each case, they actually provided a brief description, since not all of the options were likely to be well-known to the respondents (e.g., HOT lanes and TOT lanes). Very significantly, when it came to general obligation bonds, instead of implicitly treating this as a source of free money (as is often done in political discourse), that material explained that "paying off the bonds from the state's general fund over 30 years would use money that otherwise might be spent for other state programs and services," which is precisely the case.

The results surprised the researchers, and they surprised even me. The top three alternatives gaining support were truck-only toll lanes (64.3%), HOT lanes (55.2%), and new toll roads (46.7%). Faring less well were the traditional alternatives of increasing the gas tax (40.4%) and increasing the sales tax (40.1%). Indexing the gas tax scored only 26.8%, while a mileage fee to replace the gas tax was rock bottom at 22.4%.

How did general obligation bonds with an honest explanation do? That option scored only 29.9%, which raises serious questions about what the voters thought they would be getting when voting in favor of Prop. 1B, the $20 billion G.O. bond measure.

Analyzing the demographics of the results, the authors note that:

"Support for pricing options was not clearly related to income or ethnicity, as might be expected based upon the debates over equity that arise when tolling options are considered. Lower income respondents were about equally likely to support toll roads, express toll lanes, and HOT lanes. With few exceptions, Asians, Hispanics, and blacks were also equally likely to support the tolling options."

These important results should make elected officials less nervous about supporting new projects that can be funded by tolling. And since the transportation bonds will provide only a small fraction of the funding California needs for new infrastructure, there is still a great need for toll-funded projects.


Reflecting on the Election Results

Speaking of election results, the shift to Democratic control of the U.S. House means that Rep. James Oberstar (D, Minn.) will be the new chairman of the Transportation & Infrastructure Committee. During the last reauthorization battle, colleagues from Minnesota lamented that despite years of briefings and presentations, their congressman was still generally opposed to toll finance and value pricing. So although Congress has little immediate role to play on these issues (the next reauthorization is scheduled for 2009), those hoping for expanded tolling and pricing will not be cheered by this outcome.

But I think it's way too early to be pessimistic. Tolling and public-private partnerships can and should be seen as bipartisan, pro-economic-growth issues. And that's exactly how former Congressman Dick Gephardt sees them. In a stunning op-ed piece in the San Antonio Express-News the Saturday before Election Day (www.mysanantonio.com/opinion/stories.MYSA110506.5H.gephardtcomment.262ba3c.html), Gephardt showered praise on Texas's Republican Gov. Rick Perry for launching the state into the tolling and PPP era, saying that these trends "reflect a progressive and democratic tradition of pragmatic public works that have served working people well and driven the state's prosperity." He specifically lauded the Trans-Texas Corridor (which has been opposed by some Texas Republicans) for attracting billions of foreign dollars to the state and creating thousands of jobs. It is, he wrote, a kind of "reverse outsourcing."

Gephardt also praised the long-term leasing of the Chicago Skyway by Democratic Mayor Richard Daley and of the Indiana Toll Road by Republican Gov. Mitch Daniels. Also of note is that former California State Treasurer and Democratic candidate for governor Kathleen Brown, now works on PPP toll projects for Goldman Sachs. Given that tolling and PPPs will permit significant increases in highway construction, which means large numbers of construction-trade jobs (as well as all kinds of other economic benefits, if the projects pass a market test, as toll projects must do to get financed), it should not be surprising that many Democrats can warmly embrace them. I look forward to an era of bipartisan support for this new way of doing highway projects.


Video Tolling Comes to America

The next step in nonstop electronic toll collection is to have your license plate "imaged" by a video camera, which permits identifying the vehicle owner for purposes of charging the toll. Video tolling has been offered as an option on Toronto's Highway 407ETR (as a more expensive alternative to transponder use) since the day it opened in 1998. It's also in use on the Melbourne CityLink in Australia, the Cross-Israel Highway, and the system of private urban tollways in Santiago, Chile. But until now it has not been available in the United States.

That has just changed. As of November 1st, customers of the elevated reversible express lanes in Tampa who don't have a transponder can establish a Pay-by-Plate account with the Tampa-Hillsborough Expressway Authority. Thereafter, whenever they use the express lanes, the system's video cameras will spot them as an authorized user and charge the correct toll to their account.

That's the way the Melbourne system works, as I learned when I drove on it in late 2000 in my Avis rental car. When I rented the car, Avis asked it we planned to drive on CityLink and when I said "Of course," they explained that for a small extra daily charge, they would enter the car's plate number in the toll road's system.

The Tampa system is a joint effort of the Expressway Authority (which owns the road) and the Florida Turnpike Enterprise (which operates its tolling system). The Turnpike sees this as a pilot project on its path toward eventual statewide all-electronic tolling.

The Toronto and Israel systems require no advance contact between the road company and the customer. They are set up to take all vehicles, with those not having a transponder having their license plate numbers looked up in cooperating motor vehicle agency databases for after-the-fact billing. A transportation consultant friend of mine in Milwaukee tells me that when he drives to Toronto, the system always reads his Wisconsin plates and sends him an accurate bill.

In getting their video tolling system up and running in November, the Florida agencies have one-upped Texas, by offering the first U.S. video tolling option to all customers. The Texas DOT plans to begin offering video billing (like Toronto's) on SH 121 north of Dallas on December 1st. North Texas Tollway Authority meanwhile has been engaged in a 90-day trial of video tolling with Dollar and Thrifty rental car customers. That system is offered by a Plano, TX company called Rent a Toll Ltd. Competitor PlatePass has meanwhile enrolled the entire North American fleets of Avis, Budget, and Hertz (for details see the Sept. 24 article at www.tollroadsnews.info).

So with little fanfare, it looks like video tolling has arrived in the USA.


Evacuation—Another Reason to Add Highway Capacity

It used to be that evacuating cities was something people planned for only in Florida and along the Gulf coast, where hurricanes happen frequently. But in the age of terrorism, as the saying goes, a small nuclear bomb can ruin your day. I recently read a chilling scenario of a small nuke going off at the Long Beach port, with the next 48 hours witnessing incredible chaos as millions tried to flee the resulting fallout using the region's grossly inadequate highway system (see "Considering the Effects of a Catastrophic Terrorist Attack," by Charles Meade and Roger C. Molander, RAND Center for Terrorism Risk Management Policy, at www.rand.org/pubs/technical_reports/TR391/). So at least in principle, transportation planners in every major metro area should be looking into the ability of their transportation system to handle a large-scale evacuation.

Last month the American Highway Users Alliance issued its first "Emergency Evacuation Report Card 2006" (www.highways.org/pdfs/evacuation_report_card2006.pdf). It got a lot of media attention for a day or two, but if you're like me, you never know if the media are writing about a serious piece of work or a bit of heavily marketed fluff. So I downloaded the report and read it on a recent plane trip. It strikes me as a solid piece of work.

The methodology is quantitative, coming up with an overall Evacuation Capacity Index for each of America's 37 largest urban areas�those with a million or more population. Factors going into this score include the extent and capacity of the freeway and arterial system, the degree to which that system is overloaded at peak times (using the travel time index from the Texas Transportation Institute), and the extent to which households have access to an automobile (which was one of the big problems in New Orleans).

Who scored dead last? Alas, my old hometown Los Angeles, with a final score of just 25.6 out of a possible 100 points (too bad about that nuke). Best in the country was Kansas City, at 90.0, followed by Columbus, Memphis, and Pittsburgh (all in the low 80s). At 67.3, New Orleans actually finished far ahead of Tampa (58.9), Houston (54.8), Atlanta (48.1), Washington, DC (44.9) and Miami (36.9).

In the three years I've lived in Florida, I've seen a fair degree of lip service given to hurricane evacuation, and lots of signs indicating designated evacuation routes. But when I read long-range transportation plans of Florida metro areas, I haven't seen much focus on increasing highway capacity so as to facilitate evacuation. Perhaps this new report will bring more attention to this issue.


Speaking Engagements

Nov. 15, Atlanta: I will be unveiling Reason's new policy study on how Atlanta can roll back traffic congestion over the next 25 years. The event takes place at the Commerce Club (35 Broad Street) and is cosponsored by Reason Foundation and the Georgia Public Policy Foundation. It's a lunch event, with advance reservations required by Monday, Nov. 13. Details are available at www.gppf.org under Events.

Nov. 17, Washington, DC: I'm on a panel discussing toll truck lanes at the annual Public-Private Ventures conference sponsored by ARTBA. Chairing the panel is my old friend, former DOT Secretary Jim Burnley. This is always a worthwhile conference, so check it out at www.artba.org.

Dec. 4-5, Washington, DC: The International Bridge, Tunnel & Turnpike Association is holding their fourth annual Transportation Finance Summit, at the Capitol Hilton in DC. I'm chairing a panel on tolling and trucking, and my Reason colleague Dr. Sam Staley is speaking on reducing congestion. You can get details and register at www.ibtta.org/Events.

I will also be giving a couple of presentations at the Transportation Research Board annual meeting, January 22-24 in Washington, DC.


Resources

State PPP Laws: Friend and colleague Grant Holland has prepared a quick-reference guide to the two dozen state measures authorizing some form of public-private partnerships for transportation infrastructure. It's published by his employer, Wilbur Smith Associates. You can ask Grant for a copy: gholland@wilbursmith.com.

FT Guide to Infrastructure Finance: The Financial Times included in its Oct. 25 issue a special section on the global trend of large-scale private-sector investment in infrastructure. Anyone who has doubted whether this trend is real, as opposed to flash-in-the-pan hype that will soon be forgotten, should read this section to see what major players at investment banking firms, institutional investors like pension funds and insurance companies, and other global heavyweights are thinking and doing. Check it out at www.ft.com/corpfinoct2006.

HOT/BRT vs. Rail in Honolulu: A battle royal is under way in Honolulu (where I spoke last month) between city transportation planners trying (for about the 6th time) to implement a rail transit line and citizen/taxpayer advocates of an elevated HOT/BRT project like Tampa's reversible express toll lanes. You can follow the action at the latter group's well-done website, www.honolulutraffic.com.


Quotable Quotes

"The credibility that tolling has is that the public believes that its toll payments will be reinvested in the toll facility, so there's a direct benefit to what they're paying. There's a public trust and credibility that tolling has that the fuel tax does not have in the U.S."

—Private sector participant in AECOM Consult dialog, in Appendix to FHWA report 05-002, June 9, 2006.

"Simply raising the federal gas tax is not a solution, because it runs taxpayer money through a system that doesn't work. . . . In reality, federal law directs most of the available funds to non-construction purposes. When we subtract the funding that Congress directs toward other purposes in SAFETEA-LU, Texas is left with only 30 cents of every Texas-generated federal gas tax dollar to address our true highway needs."

—Ric Williamson, Chair, Texas Transportation Commission, in "The Federal Surface Transportation System: Options for the Future," Horizon, Issue #2, Fall 2006, Texas DOT.

Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy





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