- Texas: Robbing Peter to pay Paul
- Opening up Interstate rest areas
- Should toll-payers subsidize transit?
- CAFE vs. SAFE emission regulations
- Why TIFIA needs reform
- Gross misrepresentation of tolling and P3s
- Marc Scribner joins Reason transportation team
- News Notes
- Quotable Quotes
Texas Commission Robs Peter to Pay Paul
Austin has the second most-congested freeway corridor in Texas: I-35 through downtown. It has needed expansion and modernization for many years, and the best solution would be to adopt an innovative design that was used last decade to modernize the LBJ Freeway (I-635) in Dallas. Thanks to commitments made the last time lanes were added, the LBJ’s footprint could not be widened, nor could its height be increased. The innovative solution was to add variably-priced express toll lanes in a newly depressed median and to rebuild some of the main lanes cantilevered over the express lanes. Priced express lanes are the most sensible way to add capacity, since pricing delivers both high speeds and high throughput even during peak travel times. And this benefits both time-urgent motorists and express bus service.
A fix of Austin’s I-35 is long overdue, and the Texas Transportation Commission voted on April 30 to add the $6.6 billion I-35 project to its 2020 Unified Transportation Plan. While somewhat resembling the LBJ project in appearance, it has three key differences:
- Instead of priced express lanes, the new lanes will be high-occupancy vehicle (HOV) lanes, which stimulate little actual carpooling and don’t control congestion.
- Instead of being funded primarily by variable tolls, the project will be funded by an uncertain grab-bag of statewide discretionary transportation funds, totaling $3.4 billion, in addition to previously dedicated funds.
- Instead of being procured as a long-term public-private partnership (P3) concession, this $6.6 billion megaproject will be procured traditionally, with all the risks borne by taxpayers.
This appears to be entirely a political decision. The Texas legislature, in 2017, ceased approving large-scale P3 projects and also banned the use of tolls in any project that included state funding (from gas taxes and other state revenue sources). Doing the I-35 project as a tolled P3 would have required next year’s state legislative session, at the very least, to make a one-time exception for the I-35 Austin project. This might not be as big a long-shot as it seems since the chairs of both the state House and Senate transportation committees urged the commission not to do the project conventionally. And the state’s largest business group, the Texas Association of Business, said repeatedly that a long-term P3 like those used for Dallas, Fort Worth, and Houston highway megaprojects, and priced express lanes rather than HOV lanes, was the far better way to go.
Moreover, there are serious negative consequences statewide with the commission’s plan. The $3.4 billion of TxDOT discretionary money would otherwise have been spent across the whole state—rural areas as well as urban areas. And the COVID-19 recession is leading to large shortfalls in nearly all the state revenue sources used for transportation: fuel taxes, sales taxes, and oil severance taxes. A lot of the money the commission is counting on is based on business-as-usual projections, not the uncertain and declining revenues from the current economic downturn during the pandemic and a potentially very deep recession. While the project is needed, an outsider like me would expect state legislators from every part of Texas, except Austin, to be vocal about distributing that smaller pot of discretionary money for the most-urgent rural and urban highway projects around the state, instead of spending it all in Austin.
There is also a growing body of research that supports the idea that adding variably-priced express lanes is the best form of freeway capacity expansion. As I noted in my submission to the commission last month, a major economic study used data from the DFW metro area to compare adding free lanes, HOV lanes, priced express lanes or adding tolls to all lanes. The research team (from Cornell and McGill Universities) found that the express lanes alternative added the most value. After being presented at the Transportation Research Board annual meeting, it has now been published in Case Studies in Transportation Policy.
TxDOT executive director James Bass told the Austin Monitor that the commission’s amendment to the 2020 plan is not a funding commitment, which seems to hold open the door for next year’s legislature to reconsider how to fund and procure this $6.6 billion I-35 megaproject.
Opening Up Interstate Weigh Stations and Rest Areas: A COVID-19 Side Effect
While everyone is focused on very large decreases in highway traffic, an overlooked element is the continued strength of truck traffic. Indeed, America’s truckers are among the unsung heroes of the pandemic, keeping goods flowing to the supermarkets, home-supply stores, pharmacies, and other providers of necessities while much of everything else has been shut down.
But truckers don’t work 9-to-5 jobs. Within the limits of federal hours of service (HOS) regulations, truckers may be on duty at all hours of day and night. And that raises several problems—including safe places to sleep in the cab when a driver’s hours run out and getting food on the road when restaurants are closed (and trucks often don’t fit into drive-through lanes at fast-food restaurants).
Two innovative policies have been launched on a temporary basis. Some states, such as Virginia, have opened shuttered weigh stations to be used for additional truck parking. Virginia’s Department of Motor Vehicles, in early April, announced the availability of 246 truck parking spaces at 10 of its weigh stations for as long as the weigh stations are out of service. Other states subsequently followed suit, including Arizona, Georgia, Indiana, and Missouri.
A nationwide policy change was announced by the Federal Highway Administration on April 3. For the duration of the national emergency, FHWA is waiving enforcement of the 1956 ban on commercial food services at Interstate highway rest areas—but only for food trucks. Still, this is the first known exception to that ancient ban that is kept in place by lobbying and political contributions by members of the National Association of Truck Stop Owners (NATSO). As I write, during the first week of May, I am aware of 11 states that have legalized food trucks at rest areas: Arkansas, Arizona, California, Connecticut, Florida, Idaho, Indiana, Maryland, Minnesota, Ohio, and Oklahoma. The North Carolina Trucking Association reports with dismay that its state department of transportation has declined to act.
Christian Britschgi at Reason.com reports that NCDOT wrote in an email that it “will not pursue allowing food trucks at rest areas because state law prohibits commercial activities within the right of way.” But the president of the North Carolina Trucking Association, Crystal Collins, said, “They don’t want to hinder or take business away from the truck stops that are open.”
Unfortunately, that reflects typical NATSO zero-sum thinking. There is a serious shortage of food available for purchase by truckers, and food trucks at rest areas are a welcome addition to the supply. Kudos to FHWA for changing (even just temporarily) this obsolete prohibition, and shame on the majority of state DOTs who are letting our truck drivers down.
New Jersey Groups Want Toll Payers to Subsidize Transit
By Baruch Feigenbaum
Earlier this year, the New Jersey Turnpike Authority (operator of the Turnpike and Garden State Parkway) released its $24 billion 2020 capital plan. Approximately $16 billion is devoted to new construction with the remaining $8 billion for maintenance and operations. The majority of the total, $20 billion, is funded by existing revenue. Toll increases of 27 percent on the Garden State Parkway (Parkway) and 36 percent on the New Jersey Turnpike (Turnpike) will fund the remainder, which is debt service.
Overall, the Turnpike’s plan is a good mix of roadway widenings, maintenance, and other improvements. The plan will widen the Turnpike between exits 1 and 4 and much of the Parkway between exits 98 and 163. The plan also includes spot widening in other locations and completes several interchanges along the Parkway. It upgrades lighting, improves intelligent transportation systems (fiber optics, software, hybrid signs), and converts both highways to all-electronic tolling. Further, the plan includes funding to improve pavement conditions.
But not everybody is a fan. A gaggle of groups condemned the plan. The Tri-State Transportation Campaign noted that the plan “clearly illustrates how misaligned and how off-base the Turnpike Authority’s vision is for where we should be growing.” The Sierra Club said the “current plan by the Turnpike and Garden State Parkway moves us backwards to the 1950s. We need to move into the 21st century.”
The environmental groups released their own $36 billion plan: “Rail and Road to Recovery.” The green plan includes $26 billion for transit projects and $10 billion for roadway improvements. The plan appears to devote roadway funding to projects throughout the state, most of which are not on the turnpike system. And most of the transit funding is for 26 new transit projects, all but four of which are light rail or commuter rail lines.
There is a lot to unpack in both plans. The environmental groups attack the Turnpike’s plan because it leads to additional car travel and thus additional greenhouse gas emissions. Yet much of that increased demand is for roadway freight, which is forecast to grow 26 percent by 2030. This freight is transported by trucks, not cars. Most trips include bulky goods traveling between origins and destinations, some of which are located out of state. This freight cannot take a New Jersey Transit train to its destination.
The “Rail and Road” plan largely ignores how New Jersey’s economy is structured. The state has a number of pharmaceutical, life science, transportation, and logistics companies. Many trucking companies are based in the state. Many high-tech companies located in New Jersey because of its high-quality roadway network and rely on roadways. If congestion worsens, particularly in rural areas of the state, many of these companies could consider relocating elsewhere.
While more travel can lead to more greenhouse gas (GHG) emissions, the ongoing increase in electric vehicles could reduce emissions over the medium- to long-erm. But reducing GHG emissions at the expense of the economy has its own problems. The COVID-19 pandemic and shelter-in-place orders have reduced travel and GHG emissions. Unfortunately, the coronavirus and economic downturn have also caused unemployment to spike and could have many Americans and businesses on the edge of economic ruin.
The “Rail and Road” plan also fails to consider highway safety. Because of its design (straight, clear lane marking, ample lanes, long on-ramps and off-ramps), the New Jersey Turnpike is one of the world’s safest highways. Weaving near tollbooths is the biggest cause of accidents. The Turnpike is reducing this problem by transitioning to all-electronic tolling. The southern parts of both highways, as well as select interchanges, also have above-average accident rates. The Turnpike Authority aims to fix this problem by widening nine of the 10 sections with the highest accident rates.
By diverting $26 billion of toll revenues to transit, the “Rail and Road” plan violates the users-pay/users-benefit principle, in which revenue provided by toll road users is spent on improvements for those users. Most highway funding in this country is based on the users-pay/users-benefit principle. This principle improves fairness. It requires those who travel more to pay more. It limits arbitrary toll or tax increases. It allows predictable budgeting and provides an investment signal of how much infrastructure to build.
“Rail and Road” also seems to lack an understanding of who owns, and who is responsible, for which infrastructure. The Turnpike and Parkway are maintained by the Turnpike Authority and funded by tolls. Other state highways are maintained by the New Jersey Department of Transportation and funded by gas taxes. Local roads are maintained by county and local governments and funded by property taxes. Generally speaking, the Turnpike and Parkway are in good condition; other state highways are in okay condition and local roads are in poor condition. Yet the environmental groups’ plan wants to reward the Turnpike for keeping its roads in good condition by taking its toll revenue and shifting it to county and local governments. Why should local governments be bailed out for potentially poor maintenance practices?
“Road and Rail” fails to mention that the Turnpike Authority is already required by the state legislature to shift 20 percent of its toll revenue to New Jersey Transit. How much revenue does New Jersey Transit need? Some travelers have complained about the toll increase. Yet, if the Turnpike Authority could dedicate all the tolls to roadway improvements, no increase would be necessary. The five state toll agencies with the highest per-mile toll rates must all divert tolls to transit. The two toll agencies with the lowest rates do not divert any funds.
Given that New Jersey Transit (NJT) needs more revenue, the most straightforward approach would be for transit customers to pay higher fares. Yet, NJT has not hiked fares for several years. Instead, the agency has relied on an increase in state general funds to pay its bills. And NJT is hardly a national model for good management. Just 18 months ago, the agency was faulted for having too many managers, a lack of spare parts, dismal communication practices, poor training, and no long-term vision. While NJT has improved of late, it lags behind most peer agencies.
The Turnpike’s plan focuses on needed long-term improvements. If New Jersey Transit needs additional revenue, it should start by asking its riders to pay more.
CAFE vs SAFE Emission Regulations
The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) recently rolled out revised federal fuel economy regulations for passenger cars and light trucks. The new regulations have significantly lower miles per gallon (mpg) requirements through 2026 than the previous requirements promulgated during the Obama administration. The new ones are dubbed the Safer Affordable Fuel-Efficient (SAFE) Vehicles as opposed to the older Corporate Average Fuel Economy (CAFE) regulations. There is bitter controversy over both old and new regulations, but rather than getting into the politics, I’d like to point you to some research you might not have seen.
In March, my Reason Foundation colleagues Julian Morris and Baruch Feigenbaum released a 33-page policy brief that focuses on the economic consequences of fuel-economy regulations. It’s too long for me to fully summarize, but here are a few key takeaways. First, this is a very complex problem, and there is a wealth of academic research on the pros and cons. The Reason brief, the latest in a series, focuses primarily on vehicle owners and the trade-offs facing them in terms of paying somewhat more for a vehicle that will save them money in the years they own it by using less fuel. Doing those calculations is complicated by known behavioral factors such as the rebound effect (better fuel economy leads to somewhat more driving) and the scrappage effect (people keep older cars longer if new cars cost a lot more). Modeling requires making assumptions about these and other factors, and there is only some relevant data on which to base assumptions.
My friend Emil Frankel of the Eno Center for Transportation posted a brief critique of the new SAFE regulations on May 1. He criticizes the less-stringent mpg requirements (new passenger cars 47 mpg by 2025 instead of 54 mpg) because they will, ceteris paribus, lead to more CO2 emissions than the prior requirements. Noting that “transportation” (which is not just motor vehicles affected by SAFE) is the largest contributor to U.S. greenhouse gas emissions, he writes that, “Nothing that the Trump administration has done or is likely to do will do more to accelerate the pace of climate change.”
I’m not so sure. My Reason colleagues cite a 2017 University of California-Irvine research paper by another friend and colleague, economist Ken Small. He used a version of the National Energy Modeling System to estimate new light vehicle fuel economy if NHTSA and EPA were to not increase the light-duty vehicle requirement beyond 33.7 mpg in 2025. His model estimates that the average actual new-car average by that date would be 41.7 mpg in 2025. This seemingly counterintuitive result is due to plausible assumptions about the changing market shares of gasoline, diesel, hybrid, and electric vehicles; the price of gasoline; and the turnover rate of vehicles. His paper is “The Elusive Effects of CAFE Standards,” UC Irvine, Aug. 22, 2017.
At the very least, these conflicting assessments suggest it is premature to conclude that the new regulations are a disaster either for urban air quality or for greenhouse gases. I will note in passing that all major auto companies—American, European, and Asian—are investing billions in developing electric vehicles, and I would not be surprised if their market share exceeded Ken Small’s projection of 7 percent by 2025 and 11 percent by 2035.
Why TIFIA Needs Reform
By Baruch Feigenbaum
The Transportation Infrastructure Finance and Innovation Act (TIFIA) provides long-term low-interest loans to sponsors of major surface transportation projects. First enacted in 1998, TIFIA has provided more than $35 billion of assistance to almost 80 projects nationwide. The average TIFIA-supported project costs $1.5 billion and the average loan is $430 million. TIFIA has supported at least one project in 21 states, the District of Columbia, and Puerto Rico.
TIFIA became so popular that the 2013 surface transportation reauthorization Moving Ahead for Progress in the 21st Century (MAP-21) increased the TIFIA authorization to $750 million 2013 and $1 billion in 2014 and 2015. Unfortunately, the program was undersubscribed and the subsequent FAST Act reduced funding to between $275-$300 million annually for 2016 through 2020.
Several factors led to the decrease in TIFIA funds awarded, but the largest was that US Department of Transportation started treating TIFIA as a discretionary grant program rather than a check-the-box application. While discretionary grants can be useful in some circumstances, that was never Congress’ intent with TIFIA. In the legislation Congress specified five minimum criteria for a project to receive funding: 1) the project is in the state transportation plan, 2) an application is submitted to the DOT secretary, 3) the total cost must be $100 million or more ($30 million for intelligent transportation systems projects), 4) the project must have a dedicated revenue source, and 5) the project must be publicly sponsored. The bill also provided selection criteria including that the project be nationally or regionally significant and that it fosters a public-private partnership (P3). However, Congress did not require the project to have each criterion. For example, many non-P3 projects receive federal loans.
Unfortunately beginning with the Obama administration and continuing under the Trump administration, the TIFIA office has added many hurdles to sponsors receiving a loan. First, there are no clear standards. TIFIA’s terms and risk profile shift from one project to another, sometimes even within a single project. While the changes are designed to protect against new challenges such as project lawsuits, they drive up project costs and delay construction.
One of TIFIA’s key selling points is its subordinate position in the capital structure, which reduces the risk for senior lenders. This feature has helped promote TIFIA’s policy directive to provide “facilitative” financing that brings lenders and investors to the table. Over time, TIFIA has required terms that increasingly reflect senior debt status, chipping away at a key benefit and policy objective of the program.
Another problem is over the last five years the TIFIA program has become increasingly risk-averse. This might help low-risk projects secure loans, but these projects can easily secure conventional funding. TIFIA’s value is funding innovative projects such as managed lanes. While TIFIA applies a capital charge based on a project’s risk profile to offset default, current TIFIA staffers are seeking to reduce project risk further by requiring less-flexible terms and standards in loan and creditor agreements.
An additional problem is that the loan application process takes too long. The financing timeline ranges from five to 15 months. Recently, Transurban decided not to pursue TIFIA funding for the I-395 managed lanes project in Virginia. In this project, the design-builder could only hold the construction price for a few months. And given the strong economy, the sponsor was worried about rising interest rates. In this instance, the state of Virginia provided a loan. But if the state had not provided that financing, the project may not have been viable.
Congress has admonished the TIFIA Office for its approach, but nothing has changed. Clearly, Congress needs to pass clarifying language in the next surface transportation bill. A good model is TIFIA’s sister program for water infrastructure, the Water Infrastructure Finance and Innovation Act (WIFIA). WIFIA, established in 2014, has awarded 19 loans worth $4.2 billion.
Why is WIFIA different? The program has firm standards and guidelines. WIFIA weights public credit rating and whether the project relies on a WIFIA loan the highest. By using credit rating, the project relies on sophisticated investors that have already given investment-grade ratings to applicants’ projects instead of public finance experts that don’t understand the private market. And if a project meets these standards, it receives a loan.
WIFIA awards funds to new, creative projects. The projects that benefit most are lowest-investment-grade borrowers with limited access to the tax-exempt bond market. In fact, at least 11 percent of projects so far would not have been possible without WIFIA.
Most importantly the WIFIA process is fast. Most loans are awarded in less than three months. The WIFIA office has sufficient staff to execute the program. And the communications process with applications is a federal government model. If applicants need to provide additional guidance, the WIFIA office lets them know, often in less than 24 hours.
In a nutshell, Congress should make the following changes to the TIFIA program office. The office needs to explain to borrowers its loan approval and review process. It needs to hold regular meetings to facilitate timely decisions. It needs to prioritize high-impact projects that have trouble receiving funds from other sources. The office needs to prioritize projects that leverage private capital since that is one of Congress’ prime program goals. It needs to ensure that there are sufficient staffing and resources to review projects. And the office needs to require regular reporting on the time required for a project to go from bid selection to financial close, to track timelines and improve the process.
With the COVID-19 pandemic, economic downturn, and expected budget woes for governments, infrastructure project financing will become even more critical. TIFIA can become the vital financing tool Congress intended. But that will only happen if serious reforms are made to the program.
Gross Misrepresentation of Tolling, Managed Lanes, and Public-Private Partnerships
Every so often a colleague sends me an article from a website called The Newspaper, which says it is a non-profit that ” provides objective information about the politics of driving.” The site seems mainly concerned with criticizing red-light cameras but sometimes veers into populist rants against 21st-century tolling. The latest appeared on April 15, in a piece headlined, “Toll Roads Falter During Pandemic.”
About the only straightforward information in this piece is that traffic, and hence revenue on toll facilities, has dropped considerably due to coronavirus stay-at-home orders in most major cities and layoffs. That is predictable and hardly news. But the seven-paragraph piece is chock-full of misrepresentations and misunderstandings of what is actually going on. You can see the animus in a sentence like this, from the first paragraph: “Traffic has plunged, hurting the foreign companies that attempt to monetize congestion as part of their business model” (emphasis mine, italics added.) First, not all the companies involved in variably-priced express lanes are based overseas, and, second, those with U.S. subsidiaries have American payrolls and use numerous American companies as contractors and suppliers, so how are they more foreign than your friendly neighborhood Toyota dealer?
The piece in several places confuses a reduction in a bond rating agency’s outlook and a reduction in its rating. The former is what the rating agency thinks might happen in the future (a rating decrease), while an actual rating decrease is more serious. As I reported last issue, Fitch has lowered the outlook for many of its rated toll operators, but few have had actual rating decreases. And as for the assertion that all express toll lanes are in serious trouble, at least one (the Northwest Corridor in Atlanta) just had a rating increase from Moody’s due to traffic that is higher than projected.
In the same sentence that criticizes Transurban’s express toll lanes in northern Virginia, it mentions tolls “as high as $50 each way during rush hour,” which have only been observed on VDOT-operated I-66 inside the Beltway, where HOV-2s use much of the capacity, reducing space for paying vehicles The occasional $40-50 price rations the scarcity which results from VDOT’s HOV policy for that corridor; all the other express toll lanes in the metro area (developed and operated by Transurban) require HOV-3 for free use and have generally lower peak tolls.
But the worst distortion in the piece concerns the statement that “Nearly every ‘managed’ toll road project in the United States has gone bankrupt within a few years of opening.” The word “managed” here is ambiguous. If the writer means priced managed lanes, not a single such project has gone bankrupt and there are now 53 in operation nationwide. If the word means investor-financed toll roads, which are the five examples it gives, here is their list (and what actually happened):
|Toll facility||Actual Outcome|
|91 Express, Orange County||In the black, sold to Orange County at market price|
|SH 130, Austin||Filed Chapter 11; no state bailout; operated by successor company|
|Indiana Toll Road||Filed Chapter 11; no state bailout; operated by successor company|
|South Bay Expressway||Filed Chapter 11; no state bailout; acquired by county government|
|TCA toll roads, Orange County||Difficult early years; no bailout; now investment-grade|
The last is especially egregious in claiming those well-run toll roads are “teetering on the edge of default.”
Transportation people sometimes wonder where populist legislators and columnist get their unfounded ideas about tolling and public-private partnerships. The piece I’m discussing here is a potential case in point.
Marc Scribner Joins Reason Transportation Staff
This month we are pleased to welcome Marc Scribner as a senior transportation policy analyst here at Reason Foundation. A graduate of George Washington University in economics and philosophy, Marc spent more than a decade at the Competitive Enterprise Institute in Washington, DC. His work has included infrastructure investment, transportation safety and security, private finance, urban land use and transportation, and emerging transportation technologies, such as autonomous vehicles. Marc will be writing policy studies and contributing articles to this newsletter and the Aviation Policy News email newsletter. If this email has been forwarded to you, you can subscribe here.
28 States Now Charge Electric Vehicle Fees
The National Conference of State Legislatures has a new study that finds 28 states now charge electric vehicle owners an annual road use fee, to make up for their not paying any fuel taxes. The Wall Street Journal story about this quoted a two-Tesla householder in Atlanta who was outraged to be paying $213 a year. Most households have two cars, and as I pointed out in the February issue of this newsletter, as of several years ago the average household paid $552 per year in federal plus state fuel taxes, so $213 per EV is still below what most people pay for the highways they use. Alas, most states charge EVs a lot less than Georgia.
MPO Fails to Include Replacement I-10 Bridge in Alabama
On April 22, the Mobile (AL) Metropolitan Planning Organization voted not to include the replacement of the aging I-10 bridge across the Mobile River in its long-range transportation plan. The rationale was, “There is not a current funding scenario for us to put it into a fiscally constrained plan.” By contrast, the MPO on the other side of the river—Eastern Shore MPO—recently endorsed a less-costly bridge plan that would require tolls of about half the level proposed by Alabama DOT last year. The Mobile MPO planning director did say that if a proposal is presented with an approved funding plan, it can be added to the MPO’s long-range plan. The original Alabama DOT plan was based on partial toll financing and procurement as a long-term public-private partnership (P3).
Truck Automation Pioneer Starsky Robotics Shuts Down
A pioneer in trucking automation that many people (including your editor) thought had the best chance of succeeding threw in the towel in March. In contrast to many others in this space, Starsky’s model envisioned human drivers in remote (stationary) locations, similar to Air Force drone pilots. It had working arrangements in place with a small number of trucking companies and drove one of its trucks that way on a Florida highway last year. But as founder Stefan Seltz-Axmacher explains in “The End of Starsky Robotics,” their venture capital funders were not prepared for the difficult safety challenges in real-world truck autonomy so the now under-funded company decided to fold.
New Motorway P3s in France and Germany
Germany’s largest highway P3 procurement reached financial close in early April. The $1.6 billion A3 motorway project involves widening this (non-tolled) motorway from four lanes to six and maintaining it for 30 years. Like other German highway P3s, it is funded by availability payments. The winning team is a 50/50 consortium of Eiffage and Johan Bunte. In France, the government in March issued a tender for a new four-lane toll road between the outskirts of Toulouse and Castres. The 54-kilometer motorway will include 10 km of existing roadway and 44 km of new construction, at an estimated cost of $500 million.
Due Date for Maryland Express Lanes Proposals Extended
In response to the COVID-19 pandemic, Maryland DOT extended the due date for responses to its request for qualifications on the multi-billion-dollar project to rebuild the American Legion Bridge and add express toll lanes to it, portions of the I-495 Beltway, and portions of I-270. The new due date is May 20, 2020. The schedule calls for the RFQ shortlist to be released on June 5 and a draft request for proposal (RFP) sometime in July. Incidentally, the International Bridge, Tunnel & Turnpike Association (IBTTA) TollMiner database lists 53 priced managed lane facilities in operation in 11 states, totaling 766 center-line miles.
Oklahoma Rejects Highway Agency Merger
Early in this year’s legislative session, a key state senator proposed legislation to merge the Oklahoma DOT and the Oklahoma Turnpike Authority. But concerns about federal funding and toll agency bondholders have led to the merger being deleted from Senate Bill 1775. It now only calls for some shared functions between the two agencies. The counterpart House bill has been similarly amended. The revised bill passed the Senate in March.
Congress Permits Full Harbor Maintenance Trust Fund Spending
The user tax money accounted for in the Harbor Maintenance Trust Fund will no longer be subject to spending restrictions from the White House Office of Management & Budget. The 800-page coronavirus bill passed in March included a provision from Sen. Richard Shelby (R, AL) and Rep. Peter DeFazio (D, OR) that exempts such spending from discretionary funding caps, which have long been opposed by port owners as contrary to the users-pay/users-benefit principle. The status quo has been supported by some fiscal conservatives on grounds that spending far less than port users contribute each year “holds down the deficit.”
Bay City Commission OKs Bridge P3 Deal
A $100 million plan under which United Bridge Partners will replace the aging Independence Bridge and repair and upgrade the Liberty Bridge, both of which cross the Saginaw River, has been approved by the Bay City, Michigan, Commission. Still to be negotiated is whether the deal will be a long-term lease or a perpetual franchise. The project will be financed based on tolls that will start being collected after all the construction and upgrades have been completed. UBP’s equity partner for the project is American Infrastructure Funds. The schedule calls for all construction to be completed, and toll collection to begin, in 2023.
Elderly People Will Increase Autonomous Vehicle VMT
Katherine Freund of ITN America points out that by 2060, 25 percent of the U.S. population (100 million people) will be 65 years or older. These people typically “outlive their decision to stop driving by about 10 years, and three out of four live in rural and suburban communities that lack the density for traditional mass transit.” This is a huge potential market for some form of autonomous vehicle use, noted Princeton AV expert Alain Kornhauser. The result will be considerably more vehicle miles of travel (VMT) than in most forecasts.
Some COVID-19 Transportation Responses
Several recent transportation entities have taken actions in response to the COVID-19 recession. In Pennsylvania, the company finishing up the Rapid Bridge Replacement P3, Plenary Walsh Keystone Partners, invoked the force majeure provision of the agreement in suspending construction until further notice. Only two of the 558 bridges remain to be completed. In Europe, Getlink (operator of the Channel Tunnel) eliminated its 2020 dividend and put many workers on part-time status due to large declines in passenger traffic. Transurban, Australia’s largest toll motorway operator, refinanced its Hills M2 Motorway in Sydney. Fitch Ratings has retained the company’s A- rating.
Recent Thoughts on High-Speed Rail
Reason.com associate editor Scott Shackford questioned presidential candidate Joe Biden’s assertion that a nationwide high-speed rail system would “get millions of cars off the roads.” He cited transportation policy expert Baruch Feigenbaum on the absence of evidence for this, including the fact that, worldwide, most passengers on new HSR systems formerly either flew or rode conventional passenger rail. And Reason Foundation Senior Policy Analyst Marc Joffe suggested that in light of revenue shortfalls and dismal performance, California policymakers should terminate, or at least scale back, the state’s high-speed rail project.
Thoughts on Post-COVID-19 Transportation Resiliency
The always provocative (and thoughtful) Randal O’Toole posted a policy brief titled “Transportation Resiliency in a World of Black Swans.” His examples of such events included terrorist attacks, pandemics, natural disasters, and financial panics. He argues that some current transportation policies actually reduce the resiliency needed especially when such events occur; he offers five somewhat radical proposals to increase resiliency.
Congratulations to Samuel Johnson
Samuel Johnson has been promoted to CEO of the Orange County (CA) Toll Roads. Johnson is a respected toll industry veteran, who is also this year’s president of the International Bridge, Tunnel & Turnpike Association.
“There is zero likelihood that a cornerstone of the Democratic proposal—a 269 percent increase in federal funding for Amtrak and intercity passenger rail—will get bipartisan acceptance. The proposal gives mass transit a 55 percent increase and highways a 22 percent increase, all compared to the Congressional Budget Office 2020-plus-inflation baseline. (Ed. Note: This is only a personal view, not an Eno Center for Transportation view, but the minute that Joe Biden became the presumptive Democratic nominee, I gave up much hope for a major infrastructure bill getting enacted before the 2020 elections, because if you are a Democratic member of Congress for whom Amtrak funding is a top priority, why on earth would you negotiate a deal with Donald Trump and Mitch McConnell, when you could wait for 2021 and maybe have ‘Amtrak Joe’ Biden as POTUS, and possibly have a Democratic Senate as well? Would locking in Trump/McConnell transportation priorities for five years be worth it, even at much higher spending levels across the board?)”
—Jeff Davis, “House Democrats Seek to Move Previously Planned $760 Billion Infrastructure Bill as Next Response to Coronavirus,” Eno Transportation Weekly, April 1, 2020
“The best time to buy toll roads was after the collapse of many that were over-leveraged and over-engineered [following the financial crisis]. We’re preparing for the opportunity to invest in infrastructure to facilitate economic recovery. We’re investing for 40, 50, 60 years, and we still have a lot of belief in the long-term economic ability of cities like Sydney, Brisbane, Melbourne, and Northern Virginia and Quebec. So maybe one of the opportunities is to invest on the other side of this when people are in need of economic support and recovery.”
—Scott Charlton, CEO, Transurban, in Shaun Drummond, “Transurban Flags Positive Signs as Traffic Declines Moderate,” Inframation News, May 4, 2020
“Taxis and chauffeured services are too expensive; therefore [they] always have been and will remain a niche service. TNCs (Lyft/Uber) remain somewhat affordable because they depend on drivers that, at best, barely make the minimum wage, something that is societally not very desirable and can’t scale beyond [the] 1 percent or so of the trips they currently serve. Conventional public transit struggles to be relevant by offering service along fixed routes serving few locations sporadically on a fixed, infrequent schedule. These services are designed to try to force customers to adhere to the transit company’s timetable in order to be able to distribute their high labor costs over as many users as possible (in so doing attracting very few customers). It is not the labor cost that forces conventional transit to offer infrequent service along fixed routes serving few locations. In places where people live in only a few dense places and ‘everything’ they want to go to exists at a few other places, conventional transit works just fine, thank you. Unfortunately, that’s not the way most people live, nor are the places those people wish to go to concentrated in but a few locations.”
—Alain Kornhauser, “Ford Postpones Autonomous Vehicle Service Until 2022,” Smart Driving Cars, April 30, 2020