Surface Transportation News: High-Speed Rail Proposal, Infrastructure Stimulus, and More
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Surface Transportation Innovations Newsletter

Surface Transportation News: High-Speed Rail Proposal, Infrastructure Stimulus, and More

Plus: How coronavirus is impacting automated vehicle development, private financing infrastructure trends, and more.

In this issue:

An Amazing U.S. High-Speed Rail Proposal

Last month centrist Rep. Seth Moulton (D, MA) released a 30-page proposal that calls for Congress to put $205 billion into creating a national high-speed rail network. It’s an expansive, imaginative proposal that, unfortunately, could have used some fact-checking and peer review before being made public.

There is lofty rhetoric about how America must “catch up” with China and Europe, where hundreds of billions of tax dollars have been put into high-speed rail (HSR) projects. It bashes highways and airports as “supporting the sprawly suburban office parks of the 1970s that are increasingly out of favor.” It offers HSR as a way to improve commuting (to central business districts), ignoring that multiple stops cut seriously into the travel-time advantages of HSR as inter-city transportation. And it claims that revitalizing central business districts (CBDs), by connecting them to HSR, would somehow promote walkable downtowns “in favor across the country by Americans of all political stripes.” It compares a proposed 90-minute high-speed rail trip from downtown Dallas to downtown Houston with the several hours it would take to make the trip by car—but what fraction of those travelers start or end their trip in the downtowns of these huge metro areas?

The proposal makes the usual HSR advocates’ mistake of comparing federal transportation funding by mode to claim that passenger rail is grossly underfunded and that highway and air travel are “propped up with huge artificial government subsidies.” This ignores the fact that the large majority of highway funding comes from dedicated user taxes, not general revenues; likewise for air travel, whose airports (except the very smallest) are fully supported by a combination of user charges and user taxes. Only transit and passenger rail get the large majority of their funding as subsidies from general taxpayers—as would HSR under this proposal.

The proposal is seriously math-challenged, presenting some unbelievable numbers and in other cases leaving out huge costs. On the former, it quotes a Washington state Department of Transportation (DOT) official as saying HSR between Portland, OR, and Vancouver, BC, would cost half as much as adding one lane each way to I-5. Yet FHWA cost estimates for rural Interstate lane additions are about $2.7 million per lane-mile. For the 624 lane-miles in question, that comes to $1.68 billion—not the claimed $108 billion. The proposal also calls for electrification of major U.S. rail lines, without a word about the cost of doing so. A 2015 Federal Railroad Administration cost-benefit analysis of electrifying the Keystone Corridor in Pennsylvania estimated a cost of around $4 million per mile. For the national total of 92,837 route-miles of just the Class 1 railroads, electrification would cost $371 billion, which is why no railroads are even considering electrification.

This proposal, like several other passenger rail proposals I’ve seen, attacks the U.S. DOT’s well-established benefit/cost analysis methodology, claiming that it “treats many of the benefits of high-speed passenger rail as externalities.” It claims there are “so many undeveloped [HSR] projects with huge benefit-to-cost ratios,” but identifies none or their huge B/C ratios. And on page 14 it provides a list of “opportunity costs” from our current highway/airline model that HSR would fix, such as pollution, deaths and injuries, walkable communities, independence from foreign fuels(!), and competing with China. And page 16 has a chart listing a notional approach to estimating new-age “return on investment” for HSR projects.

Incidentally, on the deaths and injuries, it cites total auto accident deaths, most of which take place on non-limited access highways, rather than on the Interstates that HSR would be competing with. And U.S. passenger airlines have had minuscule deaths in recent years. So like much else in this proposal, it counts on its readers not knowing very much about transportation.

Finally, whoever actually wrote this must be living in some kind of a time warp. Yes, a decade ago pundits in New York City and Washington were claiming a “return to the city” by retirees and companies while asserting that millennials wanted to live in downtown apartments and not own cars. All those trends have been falsified by data on what people and companies are actually doing. And then there is the potential aftermath of the Covid-19 pandemic, ignored in this document. It seems the more likely trends in the near future may be people and companies shifting out of high-density CBDs and away from commuting by crowded mass transit. Also, the United States is now the world’s largest oil producer, so what is this concern about foreign oil?

I could go on, but I think this is enough for you to get the flavor of this proposal.

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Private Finance: The Overlooked Infrastructure Resource

With talk in Washington, DC, once again turning to hundred-billion-dollar infrastructure bills (without any built-in funding source), policymakers should take a further look at the continued growth of private investment being raised specifically to invest in infrastructure improvements. I researched and wrote a recent Reason Foundation report on this subject, released last month. Here are a few highlights.

First of all, infrastructure investment funds are a growth industry. Over the last five years, the 50 largest funds have raised just under $500 billion, with transportation and renewable energy as the two most sought-after categories. About 48% of this capital has been raised by funds based in the United States and Canada, with another 37% by European funds. Most of the rest is by funds based in Asia and Australia.

Infrastructure funds invest in two types of projects: greenfield and brownfield. The former includes things like $2 billion projects to add express toll lanes to congested freeways or new terminals at growing airports. Brownfield investments in the United States are mostly long-term leases to operate, maintain, and upgrade existing assets such as a toll road, seaport, or airport. In either case, a competitive bidding process leads to the selection of a winning team that will design, build, finance, operate, and maintain (DBFOM) the facility for a term typically from 30 to 75 years.

These projects are financed based on two different models, called revenue-risk (RR) and availability payments (AP).  In either case, a financial model is developed with sufficient credibility that bonds can be sold to finance the majority of the project, with the balance generally the equity investment from the private-sector partners. For the revenue-risk projects, the revenue stream consists of payments by the facility’s users (tolls in the case of highway projects). For the AP alternative, the government owner of the facility commits to a stream of annual performance-based payments over the life of the agreement.

Table 8 in my report provides specifics of the financing of 18 greenfield RR projects and 15 greenfield AP projects in the United States. Here are a few summary figures from that table:

Revenue Risk Availability Payment
Average project size $1.196 billion $1.510 billion
Average % equity invested 28.7% 5.7%
Average % government funding 13.8% 36.9%

A previous Reason Foundation study discusses the pros and cons of each of these models.

Public-sector pension funds are increasing their investments in the kinds of infrastructure in which they can invest equity—traditional infrastructure such as investor-owned utilities and railroads but more recently privatized airports, seaports, and toll roads overseas or comparable U.S. facilities managed under long-term public-private partnership (P3) leases. Australian and Canadian pension funds have pioneered this kind of infrastructure investment, and their U.S. counterparts are increasingly doing likewise. One of the U.S. pioneers is the California Public Employees’ Retirement System, CalPERS, the country’s largest public pension fund, which has a 12.78% shareholding in privatized London Gatwick airport and a 10% stake in the Indiana Toll Road concession company. Australia’s Industry Funds Management, which invests on behalf of pension funds, put together a large group of U.S. pension funds for the Indiana Toll Road concession. And three of Canada’s largest pension funds bought out the original private investors in the Chicago Skyway concession.

With the largest U.S. infrastructure need being reconstruction and modernization of existing highways and other existing infrastructure, any new federal infrastructure bill ought to take full advantage of the funds available to invest by infrastructure investment funds and public pension funds.

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Experts Weigh In Against Infrastructure Stimulus
By Baruch Feigenbaum

With the country facing coronavirus pandemic-induced economic challenges, many interest groups are pressing the federal government to spend money like never before. While Congress has seemingly punted on an infrastructure-specific stimulus for now, many lobbyists are looking for any opening to add to the $114 billion in federal stimulus money that has been disbursed to the transportation sector in the last two months.

Senate Majority Leader Mitch McConnell (R, KY) says he opposes additional transportation stimulus spending at this time. Yet Senate Environment and Public Works (EPW) Committee Chairman John Barrasso (R, WY) is interested in more funding. The House, which passed the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, is ready to pursue more infrastructure stimulus. And the White House is continually sending mixed signals on its intent on stimulus and infrastructure.

On the other hand, two respected non-partisan transportation research groups have examined stimulus funding for transportation and concluded it is ineffective. The Congressional Research Service (CRS) examined the American Recovery and Reinvestment (ARRA) Act of 2009 and found a number of problems.

First, transportation spending occurred more slowly than other types of aid. While 44% of unemployment compensation was disbursed within six months of bill passage, only 9% of DOT spending was disbursed in that time frame.

Transportation is a poor fit for stimulus funding because projects are long-term in nature. Ongoing funding supports roadway resurfacing and new bus purchases. While useful, these are not game-changing projects for which the ARRA stimulus was intended. One reason for the slow disbursement is the program structure. Formula funds can be authorized quickly, but can’t be disbursed until a state DOT does the work and asks the Federal Highway Administration (FHWA) for reimbursement. Awarding discretionary grants also takes time. USDOT has to design the discretionary grant program, create the rules, and review the applications before it can award funds. More troubling, much of the funding for USDOT’s two most recent discretionary programs was awarded for political reasons and some of it was never spent.

Another problem with stimulus spending is when the federal government increases highway funding, state and local governments often decrease funding. During ARRA at least 10 states decreased transportation funding in direct response to the increase in federal funding. States were supposed to spend all of the money allocated in their transportation improvement plans (TIPs), but they didn’t. And DOT has few legal options to enforce the spend-state-funds-first rule.

Most importantly, stimulus spending does not increase transportation employment. There was no significant increase in transportation employment after the 2009 stimulus. There was no sustained increase in employment until 2015, six years after the stimulus was passed, CRS found.

Yet those facts haven’t prevented House Transportation and Infrastructure Chairman Peter DeFazio (D, OR) from arguing for a New Deal-style infrastructure-spending bonanza. But the country’s current crisis is far different from 2009 and completely divorced from the Great Depression. Last month, Jeff Davis of the Eno Center for Transportation examined the Congressional Budget Office’s (CBOs) post-Covid economic forecast and compared it to the Great Depression.

CBO expects the current economic slowdown to be short-lived. The economy contracted in FY 2020 Q1 and is likely to shrink by another 12% in the second quarter. But the economy is forecast to grow by more than 5% in the third quarter and 2.5% in the fourth quarter, leading to an annual economic decline of only 5.6%, according to CBO. And the economy is expected to grow by 2.8% in 2021, again according to CBO. Unemployment is expected to peak at 16% in the third quarter of 2020 before falling to 10% by early 2021.

A shrinking economy and double-digit unemployment are obviously bad news. But as Davis point out, the CBO’s estimates are far from the Great Depression, in which the U.S. had two bad economic years in a row followed by a year that was twice as bad as the previous two years, and then a year that was slightly worse economically than the third year of the depression.

An economic stimulus, it might be argued, could have a role in a multi-year-long economic depression. But the actual coronavirus-induced economic downturn is expected to last less than a year, according to CBO. In fact, I would note that in the past 100 years the only economic crisis that stayed at crisis levels for multiple years was the Great Depression, something that due to current economic factors seems unlikely to happen right now.

Another justification used for infrastructure stimulus spending is that it creates lots of jobs. But as Davis points out that’s not true either. During the Great Depression, every million dollars spent on roads translated to 550 person-years of work. Assuming we were stuck with 1930’s-era technology, $1 million in converted dollars would support 29.4 person-years. But construction today is far more efficient. One person operating an excavator can do the work that a dozen folks shoveling by hand could do. As a result, during our last transportation stimulus program, the 2009 Great Recession, every $1 million in spending supported 13 person-years of work, providing less than half the benefit during the Great Depression. That’s not much benefit but with technology improvements there would be even fewer employment benefits today.

In previous economic downturns, many of the people out of work were in heavy construction. Today, almost 80% of recent job losses have been in the leisure and hospitality section. How many bartenders can operate an excavator?

Further, I question how much infrastructure spending we really need. Lobbyists often remind us that the percentage of GDP spent on infrastructure peaked in the 1960s and has been declining since. But in the 1960s we were building the Interstate system, a massive capital-intensive enterprise. We don’t need to be building anything as expansive today. And as spending on other programs, like social programs and the military, has increased, the percentage of spending devoted to transportation has decreased. Perhaps we could try cutting spending in other areas.

As we seek to emerge from the shutdowns and ongoing challenges from the Covid-19 pandemic, we need to make sound transportation policy decisions based on actual numbers and realistic forecasts as opposed to increasing our reliance on the government credit card to further political ambitions.

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U.S. Truck Platooning Making Progress

Often dismissed as a side-show in vehicle automation, truck platooning is gaining momentum, according to a recent Forbes.com piece by Richard Bishop. Platooning refers to one or more trucks following a lead truck that is equipped with automated safety features and vehicle-to-vehicle communications. First-generation platooning has the follower driver keep his feet off the pedals but retain the ability to steer; this is Society of Automotive Engineers (SAE) Level 1. With second-generation platooning, the follower truck operates at SAE Level 4, with a safety driver in reserve, potentially eliminated once the system is well-proven.

The U.S. leader in developing first-generation platooning is Peloton Technology, with its much-tested PelotonPro system. Customer trials of the system continue, and Peloton reports that commercial Level 1 platooning is legal in 27 states thus far, encompassing over 80% of annual truck freight traffic. Peloton told Bishop that automated following (Level 4) has been confirmed to them as allowed by Arizona, Texas, and Utah, and five other states are considering this. And while several large U.S. trucking fleets have shown interest, the only one that has been public about it is UPS (120,000 vehicles). At a Bloomberg New Energy Finance conference in San Francisco, UPS Chief Strategy and Transformation Officer Scott Price confirmed that they are testing platooning technologies with Peloton Technology.

Bishop reported several other developments that were news to me. First, the Port Authority of New York and New Jersey in December announced a $4.8 million demonstration program for driver-assisted buses that would allow shorter following distances for commuter buses using the Lincoln Tunnel exclusive bus lane. The technology is expected to increase peak-hour bus capacity by up to 30%—200 more buses carrying 10,000 more passengers per hour during weekday mornings. Robotic Research and Southwest Research Institute will each develop a system, with the better one selected for pilot testing.

Bishop also reported that the U.S. Army is working on leader-follower capabilities for convoys. The aim here is not closer following (which could be dangerous in a hostile environment) but rather, as GPS World recently reported, to improve their ability to survive attacks. In the Army version, all trucks in the convoy would have the same automation capabilities, so that any of them could take over as the convoy leader, if necessary. The service’s Ground Vehicles Systems Center is purchasing commercial, off-the-shelf technologies to add these capabilities to sets of vehicles, including navigation systems (inertial plus GPS) and lidar. Startup Robotic Research won a contract to deliver 60 leader-follower truck pairs to Ft. Polk, LA, and Ft. Sill, OK, for evaluation.

Overall, Bishop expects U.S. commercial automated follower platooning to be introduced within two to three years. Peloton and competing startup Locomation both expect automated following to expand geographically once the first commercial operations are under way. And Peloton hopes to convert its initial Level 1 platooning customers to automated (Level 4) following in due course.

Note: Bishop’s article also reports truck platooning developments in Europe, whose trucking industry differs in many ways from ours.

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New California Policy Threatens Highway Widening

For several decades, California has added very few new lanes to congested freeways. Needless to say, as the state has continued to grow, the problem in the three major urban areas, in particular, is akin to trying to stuff 10 pounds of potatoes into a five-pound. bag. Various environmental and anti-highway groups have long sought a legal way to prevent further widening of freeways, and in SB 743, enacted in 2013, they may have succeeded.

Following that law’s passage, both the Governor’s Office of Planning & Research (OPR) and the California Natural Resources Agency conducted several hundred stakeholder meetings and amassed a library of reports on topics such as “Disadvantages of LOS [Level of Service],” “Environmental, Health, and Fiscal Benefits of VMT[Vehicle Miles of Travel] Reduction,” and “VMT Reduction Strategies.” Finally, in April 2020, Caltrans issued a six-page memorandum, “VMT CEQA Significance Determinations for State Highway System Projects Implementation Timeline Memorandum.”

The bottom line is that whenever Caltrans has a project that would widen any road on the state highway system, instead of justifying the widening by citing a failed Level of Service (such as level F), it must assess the project to see if it would increase the vehicle-miles traveled (VMT) handled by that roadway. “Caltrans has determined that VMT is the most appropriate primary measure of transportation impacts for capacity-increasing projects.”

The battle between VMT and LOS has been under way for more than a decade, as indicated by the slew of articles and policy papers gathered in support of SB 743 by OPR. The logic of this begins with the fact that the large majority of vehicles on today’s highways are powered by petroleum and therefore emit greenhouse gases (GHGs). Although California has the nation’s most aggressive set of policies to subsidize and promote electric vehicles, the medium/long-term impact of these policies on making motor vehicles non-polluters is ignored in these permanent policy changes.

Those promoting the VMT-is-bad approach make a big deal out of “induced demand” allegedly caused by widening highways. A raft of academic studies claims that adding lanes to a freeway causes more people to drive than before. One of the most-cited studies, by economists Gilles Duranton and Matthew Turner, failed to measure the extent to which drivers shifted from surface streets to freeways in response to widening, which appears to account for most of the near-term addition of VMT to the widened freeway. (See my assessment of their study.) More recently, induced demand is being cited as what happens over time when a freeway is improved and developers decide that their potential suburban shopping area or residential development is now more accessible and proceed to develop it. California environmental policy is also trying to stop that directly by mandating development controls on vacant exurban land.

Ultimately, this conflict boils down to a question of what role infrastructure is supposed to play in a growing economy. Should electric or water utilities be forbidden from adding capacity to keep pace with population growth? What about schools and hospitals? If not them, then why only restrict highways?

There is one exception that might reduce the damage caused by this anti-VMT policy. The new requirement would not apply to converting existing general purpose (GP) highway lanes to priced managed lanes, or to adding tolled lanes “where tolls are sufficient to mitigate VMT increase.” No GP lanes in California have been converted to priced managed lanes, ever, so that is not much of an exception. And tolls high enough to keep the new lanes free-flowing would definitely reduce toll-payers’ greenhouse gas (GHG) emissions (which are lowest around 45-50 miles per hour), but would that be enough to satisfy the new regulations? Before anyone would risk investing in the addition of toll lanes to California freeways, that question would have to be answered.

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How Covid-19 Has Altered Automated Vehicle Developers’ Plans
By Marc Scribner

Significant advances in vehicle automation have occurred in recent years as upstart Silicon Valley developers were joined by traditional automakers in an effort to produce what the Society of Automotive Engineers (SAE) terms Level 4 automated driving systems. These are what are popularly called driverless cars, enabling a vehicle to be directed by computer for the entire duration of a trip without any human driving responsibility—albeit subject to a limited types of roads and weather conditions. Then came Covid-19, leading a number of developers to push back their estimated deployment dates in the face of problems stemming from the pandemic. These delays are in part the result of the financial liquidity problems plaguing businesses generally, but are also caused by health-related business model risks, reduced ability to reliably train automated driving systems in real-world traffic conditions, and broad uncertainty surrounding post-Covid-19 travel demand. Understanding all of these factors can provide a better picture of when and how enthusiastic development may resume.

GM’s automated vehicle unit Cruise announced layoffs. Velodyne Lidar, which manufacturers a type of sensors used in most automated vehicles, did the same. Uber shuttered its artificial intelligence laboratory in the course of downsizing a quarter of its workforce. Lyft said its automated vehicle (AV) division was impacted by its decision to lay off or furlough more than 1,000 employees, without providing specific figures. Once-promising automated truck developer Starsky Robotics, which laid off nearly 90% of its staff in November 2019 amid growing financial difficulties, shut down and began liquidating its remaining assets in late March. This was accompanied by a melancholy message from CEO Stefan Seltz-Axmacher predicting the start of a five-year decline in AV investment and development.

Given the proprietary nature of these technologies and the intense secrecy that characterizes the industry, it is difficult to evaluate Seltz-Axmacher’s gloomy forecast. Intel’s MobilEye, in partnership with Volkswagen, has said its 2022 deployment of self-driving taxis in Israel remains on track. Ford and its partner Argo AI have pushed back the launch of their planned automated taxi service from next year to 2022. Others have yet to publicly adjust their estimated deployment dates. However, it appears that at least a one-year setback is likely for four reasons.

First, investors may tend to be more conservative until the pandemic passes and economy rebounds. This means risky, multi-billion-dollar bets on perfecting a Level 4 automated driving system over years with no revenue are less likely, especially for traditional automakers that can turn to more-proven business lines. Most companies are at least publicly optimistic about the limited impact of Covid-19 on their AV research and development activities, but investors will ultimately drive the outcome.

Second, many of these developers were building their initial AV business models around centralized fleets of self-driving taxis. As with all shared transportation, health concerns loom large. Will customers be willing to enter a vehicle that may have just transported an infected passenger? A deep cleaning following each use to ensure no viral transmission undercuts the economics of this business model. A May 2018 study in Transport Policy developed a low-cost Level 4 vehicle automation scenario where operating costs on a passenger-mile basis of a single-occupant self-driving taxi fall below those of a self-driving transit bus. However, the team of Swiss researchers highlighted cleaning as one of the uncertain costs that could make or break this prediction. Unless affordable cleaning technology is developed to automatically and quickly sanitize vehicle cabins after each use, developers may at least temporarily pivot to last-mile cargo delivery, such as the Level 4 vehicles from Nuro that are currently delivering groceries in Houston.

Third, with travel down on streets and sidewalks, companies are facing new challenges with machine learning. Contrary to popular narrative, these algorithms are not the brainy artificial intelligence from science fiction; rather, they are pattern recognition technologies. Abnormal traffic patterns are not very useful in teaching an automated driving system to safely drive in normal conditions. While minimizing public health risks was the primary reason for developers such as Waymo, Argo AI, and Cruise deciding to temporarily suspend public road testing, the Covid-19 travel decline likely played a role. They continued testing through driving simulators, which is particularly useful for rare “edge cases,” but this is no substitute for real-world robo-driver training.

Finally, general uncertainty about near-term travel activity may depress short-term interest in AV development. Will a large share of workers continue working from home? Will major cities that offer the most promise for many of the proposed AV business models see wealthier residents decamp to more bucolic telework settings? Will real or perceived health risks associated with shared transportation linger for an extended period of time? And these are just some of the known unknowns. These adverse trends may not come to pass, but the uncertainty will not be a boon to developers.

Despite all the challenges posed by Covid-19, the long-term outlook for automated vehicles remains positive. The large potential benefits to mobility and safety are unchanged. But we should accept that planned deployments may face further delays. One silver lining is that policymakers at various levels of government may have additional time to develop sensible regulatory frameworks that respect and promote AV innovation.

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New Data Shows Transit Is Changing
By Baruch Feigenbaum

Transit agencies are in crisis mode. The Covid-19 pandemic and shelter-in-place orders across the country led to ridership declines of up to 95%. But even before this crisis, transit agencies were losing ridership.

Recently, the Center for Urban Transportation Research (CUTR) at the University of South Florida analyzed the transit trends in the 2017 National Household Travel Survey (NHTS). Every eight years the U.S. Department of Transportation conducts the NHTS, which analyzes trends in personal and household data. The biggest takeaway is that while many imagine the primary transit customers to be low-income minorities, the reality can be very different.

Some of the survey results are not surprising. Almost half of transit riders live in zero-vehicle households. More than 30% of riders live in one-car households. Vehicle access is a primary determinant of transit usage; households with one vehicle take 80% fewer transit trips than households with zero vehicles.

Most zero-vehicle households cannot afford a car. However, some of the zero-households choose not to have a vehicle. While these households are a fraction of all transit users, they have much higher incomes and are concentrated in transit legacy cities such as New York or Washington.

Between 2009 and 2017, the number of transit trips per capita fell among every age group, on average by 0.5, from 4 to 3.4 trips per day. At the same time, the average age of riders is increasing. The transit mode share increased in many age groups, particularly ages 36-65. Part of the increase is due to the average age of U.S. residents increasing from 36 to 38, but part is due to increased use by older residents.

White non-Hispanic residents make almost 40% of trips, an eight-percentage point increase from 2009. Meanwhile, black and Hispanic transit usage was down more than 5%. This trend is significant because the percentage of white non-Hispanic residents in the overall population continues to decline.

The average transit trip time increased 14% from 2009 to 2017 from 21 to 26 minutes. While the average wait time decreased, the in-vehicle time increased by almost six minutes. Part of this is increasing traffic congestion on city streets since many cities ignore the problem of traffic congestion. More traffic congestion makes bus trips slower and less reliable. But part of this increase is also a growth in rail trips, which tend to be longer distances.

Ride-hailing constitutes a small but growing share of all trips. In 2017, almost 3% of commuters chose ride-hailing, four times as many as chose cycling and twice as many as chose walking. And those numbers continued to increase between 2017 and 2019. Of those who chose transit, almost 30% ride-hailed at least once per week. This suggests that transit usage and ride-hailing can be complementary, and transit agencies that try to restrict ride-hailing might be alienating some customers.

However, the biggest takeaway from the NHTS is the diverging incomes between bus and rail riders, which are two very different demographic groups. Rail use is highest among riders earning $125,000 to $200,000 and lowest for riders earning $10,000 to $50,000. Bus use is highest among riders who make less than $35,000 and lowest for those who make $75,000 or more.

Almost 8% of commuters making less than $10,000 use buses. Less than 1% of commuters making less than $10,000 use rail. Less than 1% of commuters making $100,000 or more use buses. Middle-class customers (those in the 3rd quintile) use rail the least, making fewer than two billion trips. The wealthiest commuters (those in the 5th quintile) use transit more than working-class customers (those in the 2nd quintile) and middle-class customers (those in the 3rd quintile).

Clearly, transit use is bifurcated. And while bus riders have lower incomes than average, rail riders have much higher incomes. Geographic location also plays a significant part. Rail transit systems are more concentrated in expensive metro areas such as New York, Chicago, San Francisco, and Washington, DC. But even after you adjust for geography, the average transit customer is becoming older, whiter and wealthier.

Therefore, we need to rethink government funding of mass transit. The biggest justification for subsidizing transit is to provide low-income residents who can’t afford a car a safe, reliable trip to work. Without transit, these workers may not be able to access jobs, hurting their opportunities and increasing their potential need for social programs, such as welfare. But given that many rail users today are middle to upper income commuters, taxpayers should stop subsidizing these trips. Rail operators should charge these customers the full costs of providing the trip. After verifying income, vouchers could be provided to low-income residents who use rail. Living car-free might make sense in parts of New York City or Washington, DC, but it should not involve a subsidy to the wealthy.

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Upcoming Transportation Events

Transportation Research Forum, DC Chapter, “Transit in the Age of Covid-19,” Washington, DC, Online, June 17, 2020 (Baruch Feigenbaum speaking). Link for reservations: jack.ventura@verizon.net

TRB/AUVSI Automated Vehicles Conference, Regulatory Breakout Session, Online, July 27-30. (Baruch Feigenbaum speaking).

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News Notes

Traffic Growing on Los Angeles Freeways
Inrix Transportation has reported a sharp increase in traffic on Los Angeles freeways in May. On April 6, LA traffic was off 60% from the previous year. By contrast, figures for May 23 were down only 25% from the comparable date in 2019. If this increase is sustained, it will be good news for express toll lane operators and for fuel-tax revenues needed by Caltrans. Also, Apple Maps reports that since January, its request for transit directions are down 68.6%, for walking directions are down 14.7%, and driving directions are down 4.2%.

Toll Road Offers Half-Price for Trucks in June
The SH-130 Concession Company, the successor to the former company that went bankrupt, has announced a Freight Rebate Recovery Program for commercial trucks traveling on its toll road (between the outskirts of Austin and the outskirts of San Antonio) between 10 p.m. and 4 a.m. The rebate for the full 41-mile trip will vary from $11.72 to $18.70, depending on the size and weight of the truck. It is open to trucks in Class 3 through Class 8. SH 130 is a tolled alternative to I-35 in Texas, which is a major north-south truck route.

Private Toll Road Companies Cope with Traffic Shrinkage
Ferrovial, the parent company of Cintra, announced that its first-quarter 2020 toll revenues increased by 6.9%. The increase was due primarily to continued traffic on the company’s U.S. express toll lanes, such as those on the North Tarrant Express in Ft. Worth. Moody’s revised its outlook on the company’s LBJ (I-635) bonds from stable to positive and affirmed its Baa3 rating. And  DBRS Morningstar gave an A rating to the refinancing bonds issued by the Cintra-led concession company for Highway 407 in Canada. Meanwhile, Transurban, which reported a 44% decline in its Australian toll roads traffic at the end of April, said traffic had improved from earlier in the month. CEO Scott Charlton announced in early May that the company will be looking to buy existing toll roads and to fund new toll projects as the pandemic winds down.

Fitch Affirms Rating on I-15 Express Lanes Project
On May 14, Fitch Ratings affirmed its BBB- rating on the Transportation Infrastructure Finance and Innovation Act (TIFIA) loan for the Riverside County (CA) Transportation Commission’s $472 million project that is adding express toll lanes to 15 miles of I-15. Fitch also affirmed its “stable” outlook for the project, which is scheduled to open in December. Projects in operation with similar ratings and outlooks include I-77 in Charlotte and US 36 in Denver.

The Sad State of LA Transit
That’s the title of a well-documented assessment by transportation experts Thomas Rubin and James Moore, published on New Geography May 21. They document the long-term decline in travel on the LA Metro system (bus and rail) over the past decade, long before the Covid-19 pandemic. At the time of their writing, ridership was down 70% from the year before. Rubin and Moore also note that the agency’s expansion plans depend heavily on issuing bonds backed by sales-tax revenue, which has also gone down precipitously.

New York Thruway Modernizing Service Plazas
The state toll agency has approved a 33-year P3 concession to upgrade and modernize the 27 service plazas on the 570-mile Thruway. The consortium, Empire State Thruway Partners, is led by John Laing. It will be partially financed via $350 million in private activity bonds (PABs). The upgraded service plazas will include electric vehicle charging facilities at all 27 plazas. Of the total, 23 plazas will be rebuilt and the other four modernized.

Touchscreens Distract Drivers, UK Study Finds
Britain’s Transport Research Laboratory reported the results of tests of driver attention when using touchscreens based on Android Auto and Apple CarPlay. The time needed to look at the screen and carry out activities was far longer than the time needed to carry out the activities via voice activation. A British car magazine, What Car, reported in its April issue that simple activities such as adjusting the heater fan can take twice as long when using a touchscreen compared with a knob, and selecting a new radio station took eight times longer.
(“Touchy Drivers,” The Economist, May 9, 2020)

Post-Pandemic Urbanism
Amidst predictions that major downtowns are due to suffer disproportionately as places to live and work, a thoughtful discussion of the fate of dense urban areas is welcome. Urban geographer Joel Kotkin and Chapman University real-estate research fellow Marshall Toplansky have obliged with “Towards a Better Urbanism,” posted on Quillette on May 14. Among their prognostications is the potential emergence of “smart sprawl” as a 21st-century version of Ebenezer Howard’s “garden city” model. Well worth reading.

Italian P3 Company in the Running for Maryland Express Toll Lanes Project
Inframation News reports that four teams have submitted their qualifications for Phase 1 of Maryland’s $9 billion express toll lanes project on I-495 and I-270. Three well-known players lead three of the teams—ACS, Cintra, and Transurban. The fourth is led by Itinera Infrastructure and Concessions, teamed with sister companies Halmar International and Itinera SpA, plus Atkins and Gannett Fleming. Itinera is the world’s third-largest toll road company, with 4,156 km of toll roads in operation in Europe and Brazil.

Transportation After the Pandemic
In his latest policy brief, Randal O’Toole makes seven predictions about the impact of the Covid-19 pandemic on transportation. They include telecommuting, moves to lower densities, continued low oil prices, fewer transit riders, delays in autonomous vehicles, reduced Amtrak ridership, and a difficult time for airlines. Some of these are quantitative, and O’Toole provides the background data on which his predictions are based. The piece is Policy Brief Number 53 from O’Toole’s Thoreau Institute.

Trucks are Toll Roads’ Bright Spot for Pandemic Revenue
At a media briefing last month sponsored by the International Bridge, Tunnel & Turnpike Association (IBTTA), leaders of two of America’s largest toll roads reported that strong commercial traffic has offset much of the decrease in personal travel during the Covid-19 pandemic. The Pennsylvania Turnpike’s commercial traffic was down only 10%, compared with an overall reduction of about 50% as of May. And the New Jersey Turnpike saw “no big drop-off” in commercial traffic despite overall revenue being down nearly 62% in May. Turnpike chair Diane Gutierrez-Scacetti reported that they have been “forging an even stronger relationship with our commercial traffic through the New Jersey Motor Truck Association.”

Texas P3 Toll Lanes to Open This Summer
The $1.1 billion design/build/finance/operate/maintain (DBFOM) concession to add two express toll lanes each way on 10 miles of SH 288 south of Houston is on track to open this summer, thanks to expedited construction made possible by lower traffic on that freeway in recent months. The project was one of the last P3 concessions approved by the state legislature, prior to a policy decision to not approve any more until further notice. That ill-advised decision has played havoc with major metro areas’ plans for large-scale networks of express toll lanes.

Poland Plans $3 Billion for P3 Highways
Inspiratia Infrastructure reports (May 15) that the government of Poland has decided to move forward with four new P3 highway projects financed via availability payments. The four total $2.99 billion at current exchange rates. The first is likely to be the S6 Tri-City Metropolis Bypass, at an estimated cost of $500 million. In the early 2000s, Poland developed major highways A1, A2, and A4 as P3s, with investors including John Laing, Meridiam, and Skanska.

Replacement Genoa Bridge in Italy Nears Completion
Engineering News-Record reports that “about 20 months after the 1.1-km-long Polcevera viaduct in Genoa, Italy, collapsed and caused 43 deaths, the last span of its replacement went up the week of April 27.” The $220 replacement bridge is being built by Salini Impregilo and Fincantieri. The concrete roadway was to be installed starting in May, but no opening date for the new bridge has been announced.

Two Major Express Toll Lane Projects Under Construction in California
A $930 million project to add an express toll lane (ETL) each way to the I-10 freeway in San Bernardino County has completed its first 10 miles and is now starting work on the remaining 23 miles, extending east to Redlands. And in the San Francisco Bay Area, a $580 million project is adding one ETL each way to congested US 101 in San Mateo County. These lanes will become part of an emerging express lanes network in the Bay Area, most of which is being carried out by converting existing high-occupancy vehicle (HOV) lanes to high-occupancy toll (HOT) lanes. The US 101 project is one of the few that is actually adding new lanes.

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Quotable Quotes

“A city’s fundamental raison d’etre is that it’s where people go to find jobs. Cities grow based on their ability to provide economic opportunity and decline if that opportunity vanishes. The key role planners should play is not to choose which industries bolster these labor markets, but to set the conditions for growth, by allowing the development of housing and transportation that lets people access and expand these labor markets. Housing and transportation is where [Alain] Bertaud thinks planners could better apply economic thinking. . . . For transportation, planners should ignore their preconceived biases about the ‘right’ transport modes and layouts, and instead focus on what will actually shorten [the duration of] commutes and improve mobility. This, too, can be done through price signals—namely, tolls and congestion charging—that more efficiently delineate road space and ease traffic flow. Whether or not this leads to the overwhelming use of rails, buses, carpools, or single-occupancy vehicles will vary by city and depend on how those respective modes are priced.”
—Scott Beyer, “Book Review: Order Without Design, by Alain Bertaud,” The Market Urbanism Report, Nov. 27, 2019

“So, if we look at all the evidence, what do we conclude? Do we consumers need driverless cars? We can come up with countless alternatives to address each of the problems that the developers of and investors in driverless cars claim they will solve. There are much better ways to save lives. There are better ways to help people who need transport to obtain it without putting bus drivers and taxi drivers out of jobs and creating a monopoly on transport that is based on robot-driven cars. If people want to use their time more effectively, they don’t need a robot-driven car to help them do it. And lastly, let’s not try to conjure up the climate bogeyman to convince lawmakers that humans should be barred from driving—for our own sakes.”
—Michael L. Sena, “Musings of a Dispatcher: Driverless Cars,” The Dispatcher, June 2020

“Under routine circumstances, [LA] Metro ridership has a five-year half-life. That is, on average, half of Metro riders leave after this period, many due to improvements in their finances that make it possible for them to afford a car. Even in a period of financial hardship, our new circumstances will motivate many former riders to see if they can afford a car—at a time when an oversupply of used cars is predicted to drive down prices. But the bigger question—given the financial blow from the pandemic—may be, ‘What will happen with Metro’s capital program?’ Metro’s construction program is very dependent on a high level of sales tax revenues, in part because tax revenues drive Metro’s access to borrowing. A reduction of $1 million in annual sales tax revenues reduces Metro’s bonding capacity over $10 million. The projected loss in sales tax next year will be in the hundreds of millions.”
—Thomas A. Rubin and James E. Moore, “The Sad State of LA Transit,” New Geography, May 21, 2020

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Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation.