Surface Transportation Innovations #75

In this issue:

• Performance vs. Livability
• Cash and All-Electronic Tolling
• User-Pays Transportation in Germany
• Who Are the Non-Drivers?
• Interesting Pavement Innovations
• Inter-City Buses in Europe
• Upcoming Conferences
• News Notes
• Quotable Quotes

New FTA New Starts Policy Elevates “Livability”

For the past several years, a growing number of transportation policy experts have called for rethinking how the federal government funds surface transportation. Reports from the Mary Peters DOT, the Policy & Revenue Commission, the Infrastructure Financing Commission, the Brookings Institution, and the Bipartisan Policy Center have all called for a more “performance-based approach,” as has the Government Accountability Office. All these various experts have argued that one of the big problems with current federal policy is that it largely just doles out money by formula (and by earmark), with little or no consideration of whether that money goes for boondoggles or for sound transportation investments.

One minor exception to this has been the Federal Transit Administration’s New Starts program. For many years, projects seeking funding under New Starts had to demonstrate at least minimal cost-effectiveness, originally by having to show that the taxpayer cost per new transit passenger trip would be less than $24. During the Bush administration, that was changed to a (looser) standard of cost per user benefit. But many transit advocates still protested that having to demonstrate that a new light rail line would produce quantifiable benefits such as passenger travel time saving, reduced emissions, or reduced congestion (at a reasonable cost per unit of benefits) short-changed many projects that they wanted to build-like streetcar lines.

At last week’s Transportation Research Board annual meeting, DOT Secretary Ray LaHood announced a major policy change for New Starts. Rather than requiring such projects to demonstrate cost-effectiveness in transportation terms, the FTA will now be taking into account “livability” criteria such as “how transit helps the environment, how much it improves development opportunities, and how it makes our communities better places to live.” The policy change has two parts. First, DOT is rescinding the 2005 cost-effectiveness threshold that every New Starts project had to meet (except for those, like BART to San Jose, specifically exempted by Congress). Second, the FTA will initiate a rulemaking to determine how environmental and economic benefits will be used in New Starts project evaluations.

I find this change very troubling. At a time when we face huge shortfalls in surface transportation funding, what we need is more, and more rigorous, benefit/cost analysis, not less. Cooking the books so that “popular streetcar projects and other transit systems that people want” can get access to limited federal funds is a move in precisely the wrong direction-and an ironic one from an administration that came to office promising “evidence-based” policy.

As Alan Pisarski said in recent congressional testimony, “livability” at this juncture is far too vague to be measured. Without a more rigorous definition, “it would become perhaps the perfect federal program: almost anything could be funded under the rubric of livability. With such an amorphous goal, there would be no real measure of success or failure, and funding could go on forever with no real accountability.”

If this is really the direction this administration wants to go, it should stop the pretense that the FTA is a transportation agency, rather than an urban development agency. You may recall that what is now FTA began life as the Urban Mass Transportation Administration and was located in the Department of Housing & Urban Development. If we’re now going to be deciding on light rail and streetcars based not on objective criteria like congestion reduction per dollar spent but on community development criteria, HUD would be a better fit than U.S. DOT. Re-envisioning transit as social infrastructure (like sidewalks and bike paths and city parks) would fit in well with HUD’s role in helping make cities more livable and economically vibrant places. And those projects would properly compete for livability funding with other HUD projects.

All-Electronic Tolling Must Still Handle Cash

Some years ago, before toll road operators were talking seriously about going to all-electronic (cashless) tolling systems, I came across an academic paper criticizing transponder-based tolling systems on equity grounds. In many urban areas, the author wrote, large numbers of (mostly lower-income) people lacked either a credit card or a bank account and therefore could not make use of electronic toll systems. A couple years later a transportation consultant told me about a project he was working on in Puerto Rico to address that very problem.

Fast-forward to today. All-electronic tolling is now being implemented in Denver, Dallas, Miami, and elsewhere-and is coming up against these same constraints. And fortunately, the AutoExpresso program in Puerto Rico has been a big success. My source for this story is an article in the Autumn 2009 issue of Tollways, “Cash Collection in a Cashless System,” by Jim Wilson of Transcore.

AutoExpreso works as follows. Point-of-sale terminals are located at more than 150 gas stations and pharmacies in Puerto Rico. A new toll road cash customer inserts $20 into the machine and receives both a sticker tag (with a unique ID number) and $10 worth of prepaid tolls, tied to that (anonymous) ID number, along with a mag-stripe card and an instruction booklet. Once the sticker tag is affixed to the windshield, the customer can zip through toll lanes just like those with regular transponder accounts tied to a bank account or credit card. When the initial $10 in tolls is used up, the customer can replenish the account at any of the retail locations by using the mag-stripe card and cash. After five years in operation, during which electronic tolling has grown to about 7 million transactions per month, 56% of all AutoExpreso users are still cash-only customers (and their transactions are 33% of the total).

In October 2008, the Puerto Rico Highways & Transportation Authority added a new service. It created In-Lane Replenishment (ILR), under which newly added toll lanes offer sticker tag sales and account replenishment, to supplement the retail locations. In the first two months, reports Wilson, 45% of all tag sales and account replenishments took place in the initial four ILR lanes, and the agency is planning to add them at other locations.

I’ve been a long-time advocate of phasing out manual toll collection and going all-electronic. But now that toll providers are moving seriously to do that, they are realizing that (1) not all potential customers use credit or even debit cards, and (2) not everyone is comfortable with records of their automobile travel being created, as is done with conventional transponder accounts. For both reasons, off-line cash payment arrangements will probably be essential components of workable all-electronic toll systems.

User-Pays Transportation in Germany

The debate over how to fund surface transportation is not limited to the United States. Indeed, long before the creation of our Policy and Revenue Commission and Infrastructure Financing Commission, the German federal government appointed the German High Commission on Financing the Federal Transport Infrastructure (better known as the Paellmann Commission). Its report, released in October 1999, called for shifting federal funding of highway, railroad, and waterway infrastructure from general taxpayers to the users of each mode.

Ten years later, the only result has been the successful German program under which heavy trucks on German autobahns now pay direct mileage-based user fees. But instead of those fees being used to increase highway infrastructure investment (to address large-scale investment shortfalls, similar to what the U.S. commissions identified in our infrastructure), the proceeds have simply substituted for general-fund spending on that infrastructure. And instead of the highway user-fee monies being dedicated to highways, as the Paellmann Commission called for, the government has used only 50% for highways, with 38% for rail, and 12% for waterways.

Hence, on the 10th anniversary of the release of the Commission’s report, Dr. Paellmann and Commission advisor Dr. Andreas Kossak released a 230-page book re-stating the case for user financing of transport infrastructure and calling on the newly elected center-right government to go forward with implementing the balance of the original recommendations. Dr. Kossak gave a presentation on this during the Congestion Pricing Committee meeting at the Transportation Research Board 2010 Annual Meeting last week in Washington, DC. His article reiterating the case for these changes is to be published in the next issue of Traffic Technology International (www.ukipme.com/mag_traffic.htm).

This article makes excellent reading for Americans, as we contemplate reauthorization of the federal surface transportation program. Since, in my view, the federal fuel tax has over the years evolved into a general public-works tax rather than a true user fee, Kossak’s critique of tax-based transport funding is also applicable to this country. He cites poor priority-setting for projects of national importance, a costly and drawn-out planning process, and considerable politicization of decision-making. Speaking for the Commission, he argues that “the only future-safe principle for transport infrastructure financing is: ‘Transport finances transport.'” There should be a direct connection between using infrastructure and paying for that use “without any detour via general budgets and/or departments of finance.” And he goes on to endorse both congestion pricing and public-private partnerships.

The original Paellmann Commission recommendations “were fully accepted by all stakeholders when they were published,” including the auto club and trucking groups. However, that support began to fall away when the government, in 2004, decided to use only 50% of the revenues from truck tolling for highways. And support disappeared when the new government in 2005 removed further road pricing from its agenda.

Germany in 2010 has a new center-right government that claims to be more market-friendly than its predecessor left-right coalition. A major test of its market-friendliness will be whether it embraces the Paellmann Commission’s still highly relevant recommendations.

Who Are the Non-Drivers?

A major premise of those supporting “smart-growth” type transportation policies is that densifying urban land uses and shifting highway monies to expanded mass transit and non-motorized transportation infrastructure (bikeways, sidewalks, etc.) will be effective in expanding the mode share of non-auto forms of urban transportation. (A separate question is whether such shifts would be a cost-effective way to reduce greenhouse gas emissions or traffic congestion, but let’s leave that aside for now.)

I have not seen much research on this question, though in all the reading of long-range transportation plans that I’ve done over the past decade, I’ve hardly ever found projections of significantly larger transit or bicycle or walking mode shares in horizon years such as 2030 or 2035, even when the majority of transportation funding is proposed to be for non-highway modes. But I recently came across a fascinating piece of research on this question, in the TRB’s Transportation Research Record No. 1981, published in 2006. Its author is Kevin J. Krizek, then of the University of Minnesota and now at the University of Colorado.

Krizek took advantage of a large Travel Behavior Inventory Home Interview Survey carried out in the Minneapolis/St. Paul metro area. Using the data from that survey, he used factor analysis and factor loading to identify seven distinct lifestyle types, defined in part by their travel behavior. Three distinct lifestyles (numbers 1, 2, and 3) do a lot of walking and transit use. However, their combined total is less than 8% of the sample, and Krizek suggests that “these populations likely self-select into neighborhoods conducive to walking or transit use.” A full two-thirds of the sample fell into Lifestyles 6 and 7, which are heavy auto users (though one is urban and the other suburban).

Krizek soberly concludes that populations who would take part in densified, transit-friendly neighborhoods are largely of two types. “The first is people who would switch their behavior for such types of neighborhoods. The research here is unable to shed light on this population. The second is households that already take advantage of such opportunities, which have been shown to be a small percentage of the population.” Overall, he concludes, “On the basis of the results of this study, it would be remiss to conclude that mixed-use or higher-density development would trigger noticeable changes in travel, time use, or even residential location decisions.”

This is an important piece of research, particularly in the context of proposed “livability” initiatives.

Pavement Innovations: Noise, Water

Lest you think pavement is just the same-old, same-old, I continue to come across interesting innovations in pavement design. Here are two that look promising, though both are still in the testing stage.

The Texas Transportation Institute’s latest newsletter reports on a “permeable friction course” (PFC) aimed at making roads less hazardous in response to severe rainfall. It’s a porous pavement layer that allows water to drain away. It does this because the hot-mix asphalt in question has a high content of air voids, which lets the water drain instead of staying on the surface where it can lead to skidding as well as dirty water being sprayed onto windshields, obscuring driver visibility. TxDOT and TTI are in the first year of a four-year study, observing the performance of PFC under a range of weather and traffic conditions on roads in various parts of the state. How long will the PFC remain effective before the voids fill up with dirt and debris? How much will it cost to remove a worn-out PFC and replace it? (It can’t be left in place because it could trap water if another pavement layer were added over it.) The intended result is a database on PFC performance.

The other innovation is a quieter asphalt being tried out on four miles of the 23-mile Los Angeles Long Beach Freeway (I-710). The new multi-layer asphalt pavement is laid on top of the previous concrete, and consists of five layers (one of which is a reinforcing fabric). It was designed by the UC-Davis Pavement Research Center. The inch-thick top layer is porous asphalt mixed with recycled tire rubber, for reduced noise. Just beneath this is a three-inch polymer-infused asphalt layer that is designed to be waterproof, so that the porous top layer’s water will run off to either side. Like the Texas project, this one will take years of service before enough data are in hand to assess its cost-effectiveness as a repaving method.

Surprise: Inter-City Bus is Big in Europe

Who would have thought! Europe, the land of flashy but costly high-speed rail, has extensive and affordable inter-city bus service. And this form of inter-city transport, like its U.S. counterpart, is almost entirely unsubsidized.

I learned of this phenomenon in November, while taking part in the OECD/International Transport Forum’s 18th annual International Transport Research Symposium, whose theme was “The Future for Interurban Passenger Transport.” The paper on this subject is “Long-Distance Bus Services in Europe: Concessions or Free Market?” by Didier Van de Velde of Delft University in The Netherlands. It’s Discussion Paper No. 2009-21 and is available at www.internationaltransportforum.org.

Van de Velde finds that “long-distance express coaches cater for a substantial part of the mobility of Europe’s less-wealthy citizens,” and do it almost entirely without taxpayer subsidy. A growing number of countries have deregulated the service in recent decades, including Britain, Italy, Norway, Poland, and Sweden. A few, such as Spain, grant exclusive concessions to private operators. Both Germany and France, by contrast, have focused mostly on protecting their state-run passenger rail systems from competition, which has prevented the emergence of an inter-city coach market. This appears to be on the verge of change in France; state railway operator SNCF appears to have recognized that it “may benefit from replacing some of its loss-making interregional services by more profitable coach services.”

Besides bus companies operating within individual countries, Europe also has an international coach service, under the auspices of a joint-venture company called Eurolines. Officially non-profit, as a kind of member cooperative, it has recently seen the entry of a major company, Veolia, which owns the brand in four countries and operates the brand in partnership with local companies in several others.

What is the mode-share of inter-city bus service in Europe? Van de Velde finds this difficult to assess, since what most government transport statistics report as “bus” includes both local/regional transit bus and inter-city coach services lumped together. He estimates that inter-city coach service could be 50% or more of the total inter-city passenger traffic in Spain, but is probably significantly less in most other countries. This is one area where better statistics would serve the public interest, by making more visible what the private sector can do to serve inter-city passenger transport markets.

Upcoming Conferences

Note: I don’t have space to list all the transportation conferences going on; below are only those that I or a Reason colleague are speaking at.

51st Annual Transportation Research Forum, March 11-13, Arlington, VA, Westin Arlington Gateway Hotel. Details at:

www.trforum.org/forum/2010/?PHPSESSID=266c1af0df9ceb7f6b66fdfe8919cb75

Infrastructure Investment World Americas, April 26-29, New York, NY, Bridgewaters. Details at:

www.terrapin.com/2010/IIWA

Innovations in Pricing of Transportation Systems: Workshop and Conference, May 13-14, Orlando, FL, Royal Plaza Hotel in Walt Disney World Resort. Details at:

http://conferences.dce.ufl.edu/pricing

Fourth International Conference on Financing Surface Transportation, May 19-21, New Orleans, LA, Roosevelt Hotel. Details at:

http://onlinepubs.trb.org/onlinepubs/dva/ConferenceFinance2010Call.pdf

News Notes

Motor Vehicle Inspections Fading

Last month the District of Columbia government decided to scrap annual motor vehicle inspections. In its article on this decision, USA Today helpfully provided a table listing the 19 states that still carry out this function, all of them annual except biennial in DE, MA, MO, NJ, and RI and at-resale in MD. This is relevant for those designing possible systems to use vehicle-miles-traveled charges to replace motor fuel taxes as the principal highway funding source. Some such plans would rely on annual odometer readings concurrent with annual motor vehicle inspections–except that the majority of states no longer have such inspections.

Two Billion Cars-Book and Review

Last year Oxford University Press published Daniel Sperling and Deborah Gordon’s important book, Two Billion Cars: Driving Toward Sustainability. It calls on policymakers to come to grips with the high likelihood that the number of individually owned motor vehicles will double, from one billion to two billion by 2030. While the book makes important points, I think its proposed agenda for coping with this development falls short. The best critique I’ve read is by Gabriel Roth. His review, “Preparing for Billions of Cars,” appears in the Fall 2009 of the Cato Institute’s excellent journal, Regulation.

More on Safety Improvements from Open-Road Tolling

In last month’s issue, I reported on the large reduction in toll-plaza accidents following the Florida Turnpike Enterprise’s conversion of a growing number of plazas to highway-speed open-road tolling. A reader pointed me to similar data from the Orlando area’s toll road system and the Central Texas Turnpike project in the Austin, TX area. That information is discussed on PBS&J’s website blog:

www.pbsj.com/Press_Room/pressreleases/Pages/Open_Road_Tolling.aspx

I-95 Express Lanes Data Now Online

The Miami-area Urban Partnership project that converted HOV lanes to HOT lanes celebrated its first anniversary of northbound toll operations in December, and opened its southbound lanes this month. For those wanting to dig into the details of its first year of operations, the 95 Express operational performance and evaluation reports are now online. Go to www.95express.com and then click on Report.

New Book on Gridlock Published

Randal O’Toole, whose work is often cited in this newsletter, has just released a new book under the auspices of the Cato Institute: Gridlock: Why We’re Stuck in Traffic and What to Do About It. I couldn’t be at this week’s launch event at Cato, which included comments by Michael Replogle (Institute for Transportation & Development Policy) and Anthony Downs (Brookings Institution), but I’m sure it was very lively.

50-Year Concessions in Mexico

Mexico was one of the first Latin American countries to invite the private sector to finance, build, and operate toll roads, starting in the 1990s. Unfortunately, the poorly designed program led to most of the toll roads becoming insolvent, since concession companies had only a decade or so in which to recoup their investments-and the resulting sky-high tolls deterred most potential traffic. Having learned its lesson, Mexico’s government has introduced new PPP legislation providing for up to 50-year concession terms, reports Public Works Financing.

Cleaner Trucks at LA Ports, Ahead of Schedule

After much wrangling, the Ports of Long Beach and Los Angeles launched a clean-trucks program on Oct. 1, 2008. The goal was to reduce diesel pollution from the 8,000 trucks in drayage service by 80% by Jan. 1, 2012. The program levied fees on trucks that did not comply with federal 2007 clean-diesel standards, but also offered financial assistance for operators to convert or replace non-compliant trucks. The good news is that by January 1st of 2010, about 5,600 clean-diesel and alternative fuel trucks had entered the fleet serving the two ports, and another 2,400 were on order. The targeted emission reductions are likely to be achieved in the first quarter of this year, nearly two years earlier than expected.

Poole Suggests Two-Tier Congestion Pricing

The Autumn 2009 issue of Tollways, the magazine of the International Bridge, Tunnel, and Turnpike Association, includes my article “The Case for Two-Tier Congestion Pricing on Urban Tollways.”

Excellent Texas Managed Lanes Video

A new video produced by Texans for Safe Reliable Transportation profiles the multi-billion-dollar Managed Lanes projects being added to the Dallas/Ft. Worth freeway system thanks to public-private partnerships. Go to:

http://www.youtube.com/watch?v=3qdLTL804lA

Quotable Quotes

“Jeff Rosen, a general counsel for the Department of Transportation during the Bush administration and now a partner in the Washington law firm Kirkland & Ellis, said one danger of using non-economic criteria [for New Starts] was that it risked politicizing the process. ‘When jurisdictions are pushing to get their projects approved, if there are not clear economic criteria, there’s more risk’ that influential members of Congress will win favor, Mr. Rosen said. He also said that using criteria geared toward multiple ‘soft’ objectives raised the risks of ‘achieving none of them.'”

–Melanie Trottman and Josh Mitchell, “New Transit-Funding Rules Make Streetcars More Desirable,” Wall Street Journal, Jan. 15, 2010.

“[M]ost future carbon emissions will not come from the currently industrialized world, but from the emerging economies, especially China. . . . China’s carbon intensity is now five times that of the U.S.; it is extremely carbon inefficient. By the time the Chinese cut emissions intensity by 45% [as they recently promised], its yearly total will be over twice that of the U.S. . . . If the issue is rising emissions in the next several decades, the bottom line is simple: The developed world is rapidly becoming irrelevant. Every 10% cut in the U.S. is negated by one year of China’s growth. . . . [T]he bottom line is that 80% cuts in U.S. emissions will have only a tiny benefit. The bulk of our effort is best directed at helping the emerging economies conserve energy and move rapidly toward efficient solar, wind, and nuclear power. ”

–Richard Muller, professor of physics, UC Berkeley, in “Naked Copenhagen,” Wall Street Journal, Dec. 12, 2009.

“The Brookings report [“Shrinking the Carbon Footprint of Metropolitan America,” Brookings Institution, 2008] fails to show that compact development is a cost-effective way of saving energy or reducing greenhouse gases from residential or other buildings. According to the Department of Energy, single-family homes actually consume less energy per square foot than multi-family homes. Despite their shared walls, two- to four-unit multi-family homes use 25% more energy per square foot, while residences with five or more units use 8% more, than single-family detached homes. This means the Brookings study is really proposing to save energy by forcing Americans to drastically reduce the size of their living spaces.”

–Randal O’Toole, “The Myth of the Compact City,” Cato Institute, Policy Analysis No. 653, November 2009. (www.cato.org/pubs/pas/pa653.pdf)

“[T]he number of people who live and work in rural areas is just about identical to those who live and work in central cities (about 25 million), yet we somehow tend to expend the major part of our focus on those in central cities. . . . In the future when jobs return and skilled workers become again a key issue, assuring employers access to a larger commuter shed spread over larger and larger areas will be the norm. I suggest in that environment work trip lengths will get longer, not shorter-and that will be a good thing, one of the keys to greater economic competitiveness. It will mean workers with greater access to more jobs and employers with greater access to potential employees.”

–Alan E. Pisarski, testimony before the House Committee on Science & Technology, Subcommittee on Technology and Innovation, Nov. 19, 2009.

“Not-for profit (NFP) toll roads, a unique manifestation of the 1990s, now have a perfect score: two failures out of two. First Pocahontas Parkway in Richmond, VA; now the Southern Connector in Greenville, SC. Although well-intentioned, it’s a bad model, which skews all the incentives the wrong way-toward road developers and builders and financial and legal brokers who make their money before the pike opens and leave all the obligations and risks to bondholders. When all the profit is up-front and there is no skin in the game long-term, it’s only natural that you get too much road built, at too much expense, where it’s not really needed.”

–Peter Samuel, “Greenville Southern Connector Headed for Bankruptcy,” TollRoadsnews.com, Oct. 5, 2009 (www.tollroadsnews.com/node/4390)

“Proposing radical re-engineering of society does not constitute a winning political program. Environmentalists would do better to embrace a vision of “greenurbia,” allowing for dispersed living but in an environmentally responsible way. This could be done with practical steps-increased telecommuting, more tree-planting, and flexible work arrangements-that would enhance not only the environment but also day-to-day life for hundreds of millions of people.”

–Joel Kotkin, “The Green Movement’s People Problem,” Dec. 22, 2009, (www.newgeography.com/content/001280-the-green-movements-people-problem)

“While much may change in 50 years, there are some things we expect to remain constant. Travel is fundamental to the human desire to interact for social and economic benefit. We anticipate that the desire to travel to socialize will continue as it has through the history of mankind. Similarly, the role of travel in enabling economic interaction and the transportation of products will continue. The fundamental trend toward specialization of labor continues to underlie the historic trend toward trade and urbanization of the population. Continuing specialization of labor is now being played out through globalization of the economy. The geographic specialization of labor and production has created a strong interdependency across geography. This interdependency creates travel demand. Be it importing fresh seasonal produce from the Southern hemisphere, taking a trip across the country to visit a grandchild, visiting a medical specialist across the state, or sending a child to a magnet school across town, the dispersion and specialization of people and economic activity create demands for travel and commerce. Absent significant economic upheaval, these conditions are likely to continue to create travel demand and, to the extent that economic growth continues here and abroad, the trends are likely to continue to create pressure for more travel and commerce.”

–Steven Polzin and Xuehao Chu, “Exploring Long-Range U.S. Travel Demand,” June 11, 2007 (prepared for the National Surface Transportation Policy and Revenue Study Commission).