Surface Transportation News: Infrastructure Stimulus Bill, Highway Investment and COVID-19
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Surface Transportation Innovations Newsletter

Surface Transportation News: Infrastructure Stimulus Bill, Highway Investment and COVID-19

Plus: How COVID-19 could change transportation, how Congress could foster productive investment in highways, priced managed lanes for Chicago, and more.

In this issue:

Why a Massive Infrastructure Stimulus Bill Is a Bad Idea

Pressure from state departments of transportation (DOTs) and construction interests is encouraging many in Congress to enact yet another massive coronavirus stimulus bill, this one focused largely on infrastructure. The idea that there is as much as $2 trillion (President Trump’s figure) in worthwhile infrastructure improvements that could be carried out in the next year or two (to put people back to work) is fanciful. History tells us that another massive stimulus, already being pitched by the president as a jobs bill, is far more likely to waste taxpayers’ money on pet projects than actually fix and modernize America’s infrastructure.

Many advocates of infrastructure-as-stimulus point to the Great Depression and Franklin Delano Roosevelt’s (FDR’s) massive public works program that built highways, bridges, irrigation projects, Hoover Dam, and numerous public buildings. But there are major differences between the 1930s and today.

First, construction in those days employed huge numbers of unskilled laborers, rather than today’s skilled trades using high-tech machinery. Second, mega-projects back then did not have to go through five-to-10 years of environmental studies before construction could start. Hoover Dam, for example, was designed and built in just five years. Nothing like that could happen today.

How much new construction or rebuilding of crumbling infrastructure was accomplished by the American Recovery and Reinvestment Act of 2009 (ARRA)? It doled out $26.7 billion to states for highway projects. Jeff Davis of the Eno Center for Transportation analyzed this and earlier efforts in an excellent overview piece published in March. He shows that “ARRA spending largely replaced—not supplemented—regular Highway Trust Fund spending.”

Moreover, there were very few shovel-ready projects able to begin on short notice, so much of the ARRA highway money was spent on resurfacing existing roads—hardly “rebuilding America’s crumbling infrastructure.” Davis also notes that, “There are only so many highway contractors in each state, and only so many state DOT engineers to supervise the projects,” which is likewise the case today. A study by the St. Louis Fed in 2017 found that the ARRA highway money had no significant impact on highway or bridge conditions or jobs.

In 2018, the Congressional Budget Office released a working paper that reviewed economic literature on how federal grants affect state DOT spending. It found that “in most of the literature, researchers studying federal grants for highways have found that state and local governments reduce highway spending from their own funds as federal grants increase.” The range of this impact is wide, however; each $1 increase in federal grants reduced state own-funds spending from 20 cents to 80 cents. In his Eno article, Davis also reviews previous examples of federal highway stimulus in 1958, 1975, 1983, and 1991.

Davis makes a larger point that is worth repeating here: “The slowness of capital spending makes it a poor fit to counter any short-term downturn in the business cycle…But increasing capital spending in general, and infrastructure spending in particular, is something that all levels of government should probably need to be doing anyway (if well-targeted to the projects that provide the greatest long-term benefits).” (emphasis added) And that is the subject of the next article.

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How Congress Could Foster Productive Investment in Highways

Congress parcels out federal highway dollars mostly by formula, with some allocated to certain subsets of the highway system. Nowhere in the program is there any requirement for rigorous (or any) demonstration that the benefits of a project exceed its cost. Likewise, although the states own nearly all the nation’s highways (including the Interstates), I know of no state highway program with a rigorous benefit/cost requirement.

But one portion of the highway system does have that kind of built-in screening for money-wasting projects: the toll roads sector (which includes public-sector toll agencies and the small but growing fraction of projects developed and managed under long-term revenue-risk public-private partnership agreements).

Those who invest the capital to finance these facilities—toll revenue bonds and private equity—insist on credible models showing that each will yield a meaningful return on investment. Bond buyers get first call on the toll revenues and require debt-service coverage ratios (projected annual revenue that can cover well over each year’s debt service). And equity investors, who assume greater risks than the bondholders, require even more rigorous documentation of the project’s soundness. Again, nothing like this exists to ensure wise investment in the vast majority of our highway system.

Any serious infrastructure bill should make a real start on changing this dire situation. It must avoid dumping massive new sums into the status quo system, large fractions of which will end up being spent on projects whose benefits are far less than their costs (what post-Soviet economists called “value-subtracting enterprises”).

Though few people in 2020 remember this, the 2018 White House infrastructure proposal aimed to start this kind of reform. While leaving the existing transportation programs and their funding methods intact, it called for additional investment to be made in ways that would stimulate additional funding either from state/local infrastructure owners or from private investors, via long-term public-private partnerships (P3s). That proposal was made in the context of a booming economy, not today’s looming recession, so counting on increased state/local revenue-generation is not realistic at this point.

However, tapping private capital is still quite feasible. In the past five years, the 50 largest global infrastructure investment funds have raised $500 billion in equity to invest in revenue-generating projects of all kinds, including highways. Via long-term P3s, they have been upgrading two-lane highways into modern tolled motorways all over Latin America, in Eastern Europe, and much of Asia (including India, Malaysia, and the Philippines). They’ve also been investing in additions to the tolled motorway systems in Europe, Australia, and (to a very small extent) here in the United States.

When I speak at infrastructure investment conferences, the lament I continue to hear is, “Where is the pipeline of U.S. P3 projects?”

It’s the exact opposite at U.S. transportation conferences, where the lament is, “Where can we find the investment dollars needed for our huge backlog of projects?”

And it’s not just Wall Street and London-based infrastructure funds that pine for a U.S. pipeline of P3 projects, so do a growing number of U.S. public pension funds. The largest of these, the California Public Employees’ Retirement System (CalPERS), devotes 1.3 percent of its $370 billion portfolio to infrastructure, as do dozens of other U.S. public pension funds. CalPERS now owns a sizeable piece of privatized Gatwick Airport and part of the privatized Port of Melbourne, but only one major U.S. facility: the P3 concession company of the Indiana Toll Road.

U.S. pension funds desperately need to increase their overall return on their investment portfolios, and well-run revenue-generating P3 infrastructure is an excellent diversification. But there are hardly any U.S. projects for them to invest in.

Fewer than a dozen states have done P3 highway projects to date, in part because most states have not enacted workable P3 enabling acts. But that is gradually changing, with such projects recently being contemplated in new states, including Alabama, Illinois, and Louisiana. Another barrier today is limited federal financing assistance. The two primary programs, tax-exempt Private Activity Bonds (PABs) and low-interest-rate Transportation Infrastructure Finance and Innovation Act (TIFIA) loans, both need improvement.

Congress enacted PABs in 2005, to let P3 project companies use tax-exempt revenue bonds, as state toll agencies already do. But Congress only authorized $15 billion, and that total has nearly all been used. Now that PABs have been proven popular and well-used, they are no longer experimental. Congress should eliminate the cap and allow as many PAB issues as can gain investment-grade ratings.

Since rebuilding aging infrastructure (rather than adding new highways) is our primary need, Congress needs to clarify that PABs can be used to finance “brownfield” as well as “greenfield” P3 projects. And it would be desirable to end the current requirement that any outstanding municipal bonds be paid off if an existing facility is leased under a long-term public-private partnership agreement. (All this was in the 2018 White House plan.)

TIFIA was enacted in 1998 to provide gap-filling finance for public-private partnership projects via low-cost loans that could be no more than one-third of a project’s budget. Over the years, Congress has imprudently broadened the program to add small non-P3 rural projects and to permit financing up to 49 percent of a project’s budget. And instead of granting approval to TIFIA loan requests that check all the required boxes, U.S. DOT has created time-consuming bureaucratic procedures to evaluate the merits of each application, rather than trusting investors that have already (as required) given investment-grade ratings to applicants’ projects. Congress needs to expand TIFIA and restore its original modus operandi.

These changes would open the doors to a pipeline of projects, not only for highways but for other revenue-generating facilities such as airports and seaports. In the highway sector, the largest opportunity is the $1 trillion needed to rebuild and modernize nearly all the non-tolled 90 percent of the Interstate highway system. The other thing Congress needs to do is to give permission, by repealing the 1956 ban on using tolls on Interstate highways. The trucking industry and some other highway user groups have legitimate concerns about being exploited by new Interstate tolls. So Congress should make this permission contingent on each state that chooses to participate agreeing, by statute, to make the new tolls a genuine value proposition: a true user fee (no double taxation), not a cash cow for non-Interstate purposes, no discrimination against out-of-state drivers, and fully interoperable electronic tolling across state borders. My conservative guess is that half a dozen states would sign up for such a deal, and they would be followed by many others once they saw the billions of dollars of improvements being financed.

If there are any fiscal conservatives left in Congress, they should insist that provisions like the above be included in any bipartisan infrastructure bill (or in the upcoming reauthorization of the surface transportation program). They do not entail any new expenditures, and they simply offer new opportunities to investors and state DOTs to do projects that are inherently productive. How could this not be worth doing?

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The Transportation World After COVID-19

As with the 9/11 terror attacks, one’s first reaction to a disaster like the COVID-19 pandemic is often, “This changes everything,” or less apocalyptically, “The world will never be the same.” The latter is closer to the truth, but I will amend it by saying that many things will likely change at the margin.

For example, there has been a lot written in recent weeks about a reversal of the emphasis on increasing urban density, which has been urged for ostensibly environmental reasons. Urban geographer Joel Kotkin has written a number of pieces on this, noting that coronavirus hot spots worldwide and in this country tend to be major cities like New York City and Milan. To be clear, we should not expect New York City, London, Paris, and Tokyo to be abandoned, but recent years have seen outmigration from New York and San Francisco for less-dense and more-suburban metro areas. As people realize the correlation between very high density and even the ordinary flu, there may be more outmigration, at the margin.

The same personal calculations may increase the desire of (especially) families with children to move to less-dense suburbia, where they and their children are less-exposed to contagions of whatever source. This may reduce market demand for infill housing and increase demand for suburban and exurban housing. It might even reduce political support for policy measures that increase density, such as bans on single-family zoning.

Turning more to transportation, the large increase in online shopping, boosted considerably by recent lockdowns and required closures of retail stores, will likely accelerate the pre-existing trend in that direction, which is not good news for investors in malls. As more shopping shifts online, it is good news for the trucking industry (and possibly for railroads providing intermodal service hauling containers from seaports to major distribution centers). But all of the increase in merchandise ordered online will be delivered by trucks (drone delivery is a side-show). Already, U.S. DOT projections of truck vehicle miles traveled (VMT) were running at about twice the rate of growth in personal-vehicle VMT. That makes rebuilding and modernizing the Interstate highways all the more important, including the addition of dedicated truck lanes in key long-distance Interstate corridors like I-10, I-40, I-65, I-70, and I-81.

Another important change concerns all-electronic tolling. Across the country, numerous toll systems have announced “temporary” conversions to only electronic tolling, to shield customers and toll collectors from contagion. This is true statewide on Florida, Maryland, and Illinois tollways (although the Ohio Turnpike has shifted to exact change only!), the Harris County (Houston) toll road system, the Dulles Toll Road in Virginia, and many smaller systems such as the Delaware River toll bridges in Pennsylvania, the Mackinac Bridge in Michigan, the Lake Ponchartrain Causeway in Louisiana, and others. If this pandemic goes on for many months as predicted, I expect many of these providers will scrap manual toll collection permanently.

Speaking of tolling, with traffic down significantly everywhere, rating agency Moody’s released an outlook report on US toll roads on March 20. Obviously, its near-term outlook is negative, with reductions in traffic and revenue for an unpredictable period. But the report’s summary pointed out that “statewide or regional toll systems have significant scale and entrenched market positions with strong liquidity that enable them to absorb both short and prolonged traffic shocks.” Moody’s also said, “[Debt] coverage will decline in 2020 compared with 2019 for nearly all toll roads, but liquidity will remain strong.” Additionally, Fitch has just reaffirmed its investment-grade ratings on nine major long-distance toll road systems.

The sharp reduction in driving is reducing gasoline sales, and hence gas-tax revenue. IHS Markit estimates that U.S. demand for gasoline could fall by as much as 50 percent during the response period to the coronavirus. This will accelerate the decline that was already under way in many states, and that could increase political interest in making the needed transition from per-gallon gas taxes to per-mile charges.

One change I think will be mostly temporary is online conferences. Of necessity, many events that were scheduled for this year will be either cancelled, postponed, or done in some kind of virtual fashion. We will likely see improvements in online meeting technology, as companies and organizations figure out ways to do this for larger groups of people, perhaps even up to the scale of the 14,000-participant Transportation Research Board annual meeting. But a major drawback of virtual conferences is the lack of unplanned get-togethers in the corridors, impromptu lunch meetings, and the idea-hatching that later turns into a project or a serious policy proposal. I don’t see how that can be duplicated online, so I think business air travel will bounce back, as it did in the years after 9/11.

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Mass Transit After COVID-19
By Baruch Feigenbaum

COVID-19 has caused most transit agencies to enter crisis mode. Ridership, understandably, has declined between 50 and 95 percent in most major cities during the shutdown. Transit agencies are also spending more resources sanitizing buses and trains. And to protect drivers many transit operators are boarding bus passengers through the back door, foregoing the farebox revenue that is typically collected at the front door.

Transit ridership has been declining since 2014, long before COVID-19, however. Every major transit agency in the country lost ridership between 2018 and 2019—with the exception of Seattle, which has been building new light rail at a frantic pace. Per capita transit ridership has declined even faster, falling from 287 trips per urban resident in 1920 to 38 trips per resident in 2017.

The current problems provide transit agencies an opportunity to rethink how they fit into the mobility landscape. Many agencies cling to 20th-century operations in a 21st-century world. Transit managers are focused on short-term day-to-day operations as opposed to long-term strategies. And their short-term approach focuses on operating as much service as possible, sometimes at the expense of their employees’ health and agencies’ bottom lines.

Despite an 87 percent drop in ridership, New York’s Metropolitan Transportation Authority (MTA) has cut service by only 25-to-35 percent. The Chicago Transit Authority saw ridership drop 82 percent recently but does not plan to cut any service. The Metropolitan Atlanta Rapid Transportation Authority (MARTA) reduced bus service 20 percent after ridership fell 55 percent. Among large transit agencies, only the Washington Metropolitan Area Transit Authority (WMATA) has made drastic reductions. It is now operating on its modified Sunday schedule on weekdays and operating only 27 “lifeline” bus routes on weekends.

Transit systems are going to need to make reforms to remain viable over the long-term. And this is the time to start making changes. First, transit agencies need to understand their mission. Transit’s number one purpose is to provide service to low-income transit-dependent riders. The only rationale for subsidizing transit services is to provide these residents with an affordable and reliable trip to work. Political actors may see value in subsidizing trips of upper-middle-class commuters, but most researchers and transit industry staff think it is bad policy.

The way the Metropolitan Transit Authority of Harris County in Houston redesigned its bus service to focus on transit-dependent riders should be a model for other systems. These days, such riders are more likely to travel from suburb to suburb. Therefore, the agency changed its service network from a radial design to a grid design that more effectively serves dispersed housing and employment locations. The agency eliminated stops that had proliferated over 50 years, even if they no longer served any riders. Finally, since transit-dependent residents don’t all work 9-5 jobs, the agency increased transit service on Saturday and Sunday up to 40 percent and decreased service slightly on weekdays. Many agencies including L.A. Metro are following Houston’s lead. But some of the redesigns fall short because agencies are spending limited resources building light-rail lines instead of operating better bus service.

Second, transit agencies are an integral part of the new mobility universe, but they are only one part of it. Providing mobility is not about expanding the agency; it is about serving the customer. Transit agencies need to transition into mobility agencies, overseeing and coordinating service rather than operating it.

The Regional Transit District (RTD) of Denver, for example, functions as a partial service coordinator. It coordinates service across the metro area, eliminating duplication. RTD oversees special services such as the ride-home program for folks who use transit to commute to work and have an emergency and need a vehicle to commute home.

Third, transit agencies need to issue requests for proposals to the private sector for building and operating service, maintaining vehicles, developing IT services, writing transit grant applications, and entering into transit-oriented development. Often times the private sector can operate better service. Sometimes the transit agency will have the advantage. But transit agencies that don’t examine private contracting will never know.

Few large transit agencies contract out most of their services. Denver’s RTD entered into the design-build-operate-maintain Eagle P3 to build its A Line, Gold Line, Northwest Rail Line, and a commuter rail maintenance facility. But RTD is not interested in contracting with private providers to operate its existing service despite the potential for improved performance and cost savings.

Fourth, agencies can partner with Uber and Lyft and private transit providers to operate services. Many transit agencies contracts with Uber and Lyft for first-mile/last-mile service in areas with low population and employment densities where fixed-route bus service is not practical. The Massachusetts Bay Transportation Authority (MBTA) pilot program, in which Uber and Lyft provided paratransit service, was more popular with riders than any paratransit service in the country.

Unfortunately, most agencies have typically been hostile towards private transit operators. In San Francisco, Leap provided supplementary private bus service on certain routes. Yet the city shut the service down for operating without a permit. Leap had applied for the permit, but the city refused to provide it. And private bus service is a developing model; Kansas City’s partnership with Bridj ended and the company dissolved. But it would be more helpful for parties to work with each other instead of protecting their own turf.

Finally, transit subsidies are not endless. The transit industry was fortunate to receive $25 billion in bailout funding. Yet, even that may not be enough for many transit agencies. And as the COVID-19 crisis plays out, policymakers focused primarily on health care and the economy. In a post-COVID world, nothing is guaranteed, including state and local subsidies. Mass transit agencies need to make reforms today in an effort to become less dependent on subsidies in the future.

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Is Traffic Congestion a Con?

Last month, INRIX issued a new report on urban traffic congestion worldwide, with new rankings for U.S. metro areas. Based on a revised method of assessing commuter traffic (counting trips to more than just the central business district of each metro area—finally) it identified Boston, Chicago, and Philadelphia as having the highest amount of delay hours per driver, worse than Washington, DC, Los Angeles, and San Francisco. Due to their much greater size, the New York, Los Angeles, and Chicago metro areas are ranked as first, second, and third in the total cost of congestion, which is quite plausible.

These numbers are based on 2019 INRIX traffic data, whereas the well-known data in the most recent 2019 Urban Mobility Report (UMR) from the Texas A&M Transportation Institute are from 2017. Despite INRIX having worked with TTI on that report, its delay and cost numbers are very different, with INRIX now reporting an average delay per driver nationwide of 99 hours per year compared with 54 hours per year in the 2019 UMR. Even more startling, the UMR estimated total U.S. congestion cost as $179 billion a year, while the new INRIX report’s number is a mere $88 billion. Due to TTI’s more sophisticated methodology, I’m inclined to accept their congestion numbers.

Meanwhile, about the same time as the INRIX report reached my inbox, Transportation for America (T4A) released a new report called “The Congestion Con.” Its thesis is that our main national strategy for dealing with congestion is expanding freeway capacity—and that this has utterly failed. The report uses data from the 2019 Urban Mobility Report together with Federal Highway Administration (FHWA) highway statistics and census bureau data in an attempt to demonstrate its case—and utterly fails. An excellent rebuttal, well informed with data and reasoning, is Randal O’Toole’s response, “The Induced-Demand Con.

The T4A authors use some odd measurements to make their case. First, they compare the percentage growth in freeway lane-miles with the percentage growth in population between 1993 and 2017, finding that the lane-mile increase was generally higher than the population increase. O’Toole points out a major problem with this. FHWA highway statistics reveal that large amounts of exurban freeway mileage that already existed in 1993 were outside the 1993 definition of urbanized areas, but are included in their 2017 boundaries. He plausibly estimates that “well over a third of the 30,511 [lane-miles] that T4A implies were built in that time period already existed in 1993.”

A second problem is that the percentage increase in congestion is a poor basis for comparing metro areas. O’Toole notes that low-congestion metro areas (like Bakersfield, CA) still have low 2017 congestion but may have had a high percentage increase since 1993. By contrast, a highly congested area like Los Angeles typically has relatively small percentage increases in its already enormous traffic congestion. He suggests a better metric would be to compare freeway vehicle miles of travel (VMT) per lane-mile over time. That metric allows us to discern differences among metro areas that did and didn’t add a lot of freeway lane-miles.  For example, neither Portland nor Seattle added many lane-miles between 1993 and 2018, but their freeways got increasingly clogged: VMT/ln-mi. up 84 percent in Portland and 44 percent in San Francisco. By contrast, the increases in metro areas that added a lot of capacity are much lower: VMT/ln-mi. up only 21 percent in Houston and 14 percent in Phoenix.

T4A’s assertion that adding capacity has failed to reduce congestion is also falsified by data that used to be included in TTI’s Urban Mobility Reports but has been omitted since their 2012 report. With TTI’s permission, I reproduced a graph from that report in my book, Rethinking America’s Highways (page 258). It shows that 17 metro areas that had capacity growth within 10 percent of traffic growth actually had a declining trend in congestion increases between 1998 and 2010, compared with strong and ongoing congestion increases from 1982 through 2010 for 84 metro areas that added far less capacity.

Another major problem is that T4A continues to put forth the “induced-demand” thesis: that it is futile to add freeway capacity because new lanes will simply fill up, and congestion will soon get back to what it was before. If that were literally true, as O’Toole and others have pointed out, every freeway would have high levels of congestion, yet, for example, Los Angeles freeways are overloaded with 23,000 VMT per lane-mile per day, while Pittsburgh freeways (for example) breeze along with just 9,000. In my book, I devoted several pages to a critique of the most-cited source on induced demand, the 2011 paper in American Economic Review titled “The Fundamental Law of Road Congestion: Evidence from U.S. Cities.” If you don’t have my book, you can read a condensed version of this sidebar here.

The bottom line of T4A’s report is that America should stop expanding freeways and radically reform land-use policy to discourage or prohibit outward expansion of metro areas (which they deride as “sprawl”). National policy, they urge, should reorient the federal surface transportation program away from reducing delay to encouraging better “access.” By that, they mean the densification of urban areas, on the premise that people could, therefore, walk, bike, or use transit to get to “jobs” and other destinations. The fallacy in all of that “access” research is that it treats jobs as generic—as long as you can get to some kind of a job, problem solved. But as researchers like Alain Bertaud of NYU (Order Without Design, MIT Press) and others have shown, this is a recipe for reducing the productivity of urban areas. Urban agglomeration effects only come about when people and companies are able to find each other and engage in positive-sum transactions—individuals finding the best jobs and companies finding the best people. This is what happens in urban areas that enable fast commutes over long distances—exactly the opposite of what “smart-growthers” like T4A recommend. A growing body of research finds that metro areas with fast, region-wide transportation infrastructure have significantly higher economic productivity.

P.S: I will give T4A credit for two good points in their 2020 policy agenda (and included in this new report). I agree that federal and state political considerations have led to a serious underfunding of highway maintenance. Also, I agree that road pricing is underused, and could make a real difference as part of reducing traffic congestion. But a lot of that requires new construction, such as adding priced managed lanes to congested freeways, which T4America does not support.

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Priced Managed Lanes for Chicago
By Baruch Feigenbaum

First envisioned by Daniel Burnham and Edward Bennett in the 1909 Plan of Chicago as a scenic drive, Lake Shore Drive has become a major arterial in the city of Chicago. The 7.1-mile eight-lane-wide outer (express) section of North Lake Shore Drive from Grand Ave to Hollywood Ave is in particularly bad shape and needs to be rebuilt.

But there is disagreement on how to rebuild the busy arterial. Since 2013, task forces appointed by the Illinois Department of Transportation (IDOT), Chicago Department of Transportation (CDOT), and the Chicago Metropolitan Agency for Planning (CMAP) have been studying alternatives. Last month, these task forces had their tenth meeting. A full description of the project is available here.

The best alternative would add two priced managed lanes in each direction to the corridor. Two managed lanes can carry more than 2.2 times as many people in each direction as one managed lane. This design would allow buses and cars to travel at different speeds and allow bus stops in the center part of the highway, which if designed correctly would be more rider-friendly than stops on the right side. In addition, adding managed lanes would not require taking away any general purpose (GP) lanes. Tolling existing capacity is always less popular than tolling new capacity.

Unfortunately, adding lanes does not seem to be an option. Parts of the roadway are next to the Sydney Marovitz Memorial Golf Course; adding any lanes would require taking parts of the golf course. With over 200 golf courses in the city proper, it’s silly to restrict the size of Lake Shore Drive because it requires narrowing some of the greens. But some environmental groups have become a lot more supportive of golf course preservations that eliminate roadway expansions.

As a result, task force members are considering options that constrain the roadway to its current footprint only. The three final options are three general purpose (GP) lanes in each direction and one bus-only lane, three GP lanes in each direction and one priced managed lane (ML), and two GP lanes in each direction and two priced MLs.

The priced ML options have many advantages. First, they offer commuters a choice. Drivers can use the GP lanes for free or pay a variable toll for faster and more reliable travel in the ML. Second, since MLs are open to cars as well as buses, they transport more people through the corridor than bus-only lanes. (An important goal of this project is to increase person throughput.) Finally, the toll revenue paid by drivers will help pay for the reconstruction of the highway. A bus only-lane would not generate any revenue, making construction reliant on dwindling gas tax revenue.

It’s important to remember that priced MLs have the same advantage for buses as bus-only lanes: a faster and more reliable trip time. Those features will encourage more commuters to use the bus service. And if bus service demand increases, the Chicago Transit Authority can add more buses. The variable-pricing in the managed lane will still keep traffic free-flowing.

My preference for managed lanes is not based on ideology. It is based on simulation and modeling conducted by IDOT and CMAP. The agencies used a “macro” Travel Demand Model and a “micro” VISSIM Model. Each model was run 20 times for both “average” (good weather, moderate traffic) and “poor” (bad weather, heavy traffic) conditions using historical data.

The modeling found that the three GP and one priced ML in each direction was the best alternative. Bus travel times average 15 minutes in average conditions and 20 minutes in bad conditions. GP travel times average less than 10 minutes in average conditions and slightly more than 10 minutes in bad conditions. And ML travel times are 10 minutes for average conditions and slightly more than 10 minutes in bad conditions. Further, this configuration diverts the least traffic to local streets.

The three GP and one bus-only lane option did not perform nearly as well. While the bus travel time was the same, the car travel time was significantly worse since cars cannot use the bus lane. Less capacity for cars leads to slower travel speeds and diversion of car traffic to parallel roads. But these slower travel speeds don’t improve bus travel times at all. The managed lane option is a win-win-win. The bus-only lane option is a win-lose-lose.

But some groups don’t care what the modeling shows or don’t believe it. And, in some cases, they are not looking for wins for all parties. Rather, they want drivers to lose. Streetsblog prefers the bus-only lane, describing the other options as car-centric. Despite lacking data, Streetsblog throws all kinds of shade on priced managed lanes in its analysis of the different options.  First, the group asserts that it would be politically difficult to raise tolls on the managed lanes. Yet, that is a policy decision of elected officials. Assuming DOTs prioritize throughput, agencies would adopt a policy of variable toll rates. Variable toll rates are not some type of unicorn. They are in action every day on 53 ML facilities in California, Colorado, Florida, Georgia, Maryland, Minnesota, North Carolina, Texas, and Virginia.

Streetsblog has another managed lane concern that is just as applicable to bus lanes. The group is worried that the design has no physical barriers preventing cars from entering the MLs. But we want cars to use the priced lanes because they are providing revenue to rebuild the highway.

Streetsblog also questions how drivers can be tolled. But 21st-century all-electronic tolling is used on all 53 priced MLs and on many toll roads, including the large Illinois Tollway system. Drivers attach a toll-tag sticker to their windshield. Gantries that read toll stickers are relatively cheap and easy for DOTs to install and are commonplace on freeways and MLs nationwide.

Streetsblog also dismisses the real concern that the bus-only lane option would divert traffic to neighborhood streets. We’ve seen across the country that converting general lanes to bus lanes increases traffic congestion. And Streetsblog’s wish that most of the solo commuting trips will switch to the commuter buses is not realistic. Some commuters don’t live near an express bus terminus. Others need their car during the day to make trips or commute when the express buses are not operating.

Overall, the multi-modal priced managed lane option is the best way to improve Lake Shore Drive, benefitting all its users.

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News Notes

Maryland Express Toll Lanes Survive Legislative Challenges
The Maryland legislature adjourned for the year in mid-March, which means 13 bills in the General Assembly that sought to obstruct the $9 billion plan to replace the aging American Legion Bridge and add express toll lanes to it, I-270, and the I-495 Beltway can proceed. The General Assembly did pass several bills to strengthen the plan, which will be the largest set of P3 express lane projects done by any state DOT to date.

More Companies Pursue U.S. Transportation P3 Market
Despite concerns in some quarters that there are not enough firms willing to bid on large-scale public-private partnership transportation projects, several major companies have indicated increased interest. Inframation News reports that “Balfour Beatty Senses Opportunity in Challenged US P3 Market.” The U.K. infrastructure developer sees potential in the expanding number of P3 managed lanes projects. Engineering consultants HNTB recently hired two senior executives for their strategic infrastructure practice, noting their P3 project experience. And giant Canadian pension fund CDPQ, which invests in infrastructure, reached a deal last month to acquire transportation developer Plenary Americas, including its existing P3 portfolio.

Truckers Beat Back Proposals for Truck-only VMT Fees
A trial balloon raised by several House and Senate members to begin a national transition to charging per mile by imposing a federal VMT fee only on trucks seems to have died. Sen. Chuck Grassley (R, IA), chair of the Finance Committee, reacted to fierce trucking industry lobbying by saying the concept would not find its way into the funding portion of the Senate reauthorization bill. In the House, the chairman of the Transportation & Infrastructure Committee, Rep. Peter DeFazio (D, OR) told AASHTO in February that he was against singling out one sector to pay more. The idea had been proposed as an additional revenue source to help pay for an expanded surface transportation program.

We Are Not at “Peak Car,” Despite Emphasis on Alternatives to Driving
“European Cities Still Choose Cars Over Public Transport” read the headline on a March article in Cities Today. It summarized a new study, Sustainable Mobility in the EU, which found that 96 cities had not followed EU “guidance” to spend a lot more on non-automobile transportation. And in the USA, Wired reported that “The Death of Cars Was Greatly Exaggerated” by interested parties such as Uber and Lyft. Despite their efforts, former New York City transportation official Bruce Schaller found that the number of personally-owned vehicles has grown faster than the population in some of the cities where ride-hailing is most popular, including Boston, Chicago, and Los Angeles. This may increase post-COVID-19, as more people may seek to avoid crowds or see mass transit as dangerous.

New Jersey Turnpike Installing EV Chargers
Last month, one of America’s busiest toll roads, the New Jersey Turnpike, announced a deal with Tesla to install 56 of its new superchargers at service plazas on the toll road, as several other long-distance toll roads have been doing recently. Having the chargers located right along the right of way contrasts sharply with antiquated federal policy that bans chargers from the “rest areas” on Interstate highways. That 20th-century policy is out of step with 21st-century realities.

Credit Ratings of Some Toll Roads Holding Up, So Far
Investor-owned toll road companies are weathering the current decline in traffic and revenue. Transurban issued $1.1 billion in new bonds on April 2, rated investment-grade (BBB+). DBRS assigned an A rating to a new bond issue from 407 International, the Canadian company with a 99-year concession for the highly successful Highway 407 toll road near Toronto. And Fitch Ratings in early April reaffirmed its investment-grade ratings for nine major toll roads, including the Indiana Toll Road concession company.

Administrative Judge Negative on $1 Billion Miami Toll Road
A Florida administrative law judge, on March 30, responded to pleas from environmental groups by recommending that Gov. Ron DeSantis reject Miami-Dade County’s application for a change in development rules. The 14-mile Kendall Parkway toll road was approved last year by the County Commission, but because its path is just outside the urban development boundary at the edge of the Everglades, it must receive an exemption. The project would offer an alternative to commuters who live in the southern part of the county (West Kendall), who now commute on heavily congested surface streets.

Car Infotainment Systems More Dangerous than Alcohol or Cannabis
Traffic Technology Today reported the results of driving simulator experiments carried out by nonprofit group IAM RoadSmart. In the tests, participants had to “drive” the vehicle while carrying out various tasks using either Android Auto or Apple CarPlay. When compared with driving the same course without interacting with either system, by voice or touch, the participants drove slower and less precisely, similar to the effects of alcohol or marijuana.

The Jones Act Also Has Environmental Costs
A new policy analysis from the Cato Institute finds that in addition to increasing the cost of shipping between U.S. ports, the hundred-year-old Jones Act (which requires vessels used in such trade to be US-built, US-owned, and US-crewed) increases CO2 emissions. That’s because despite being much slower than rail or truck, waterborne shipping uses less fuel per ton-mile. Author Timothy Fitzgerald estimated that the environmental costs (due to cargo hauled by other means than inland waterways) could be as much as $8 billion. But that high estimate appears to assume that current barge rates are market-based. That is not the case, since barge companies don’t pay the costs of the waterways infrastructure they use (dredging and locks). The competing modes—railroads and trucking companies—do pay for the infrastructure they use, and those costs are included in the rates they charge shippers.

Truckers 2, Politicians Zero in the Northeast
Connecticut Gov. Ned Lamont gave up on his last-ditch efforts to persuade legislators to implement tolls on limited-access highways only for trucks. Several years of detailed studies had shown that tolls on all vehicles could finance reconstruction and widening of the state’s aging Interstates and several other major highways. In next-door Rhode Island, the First Circuit Court of Appeals sided with the trucking industry’s position on that state’s truck-only tolls, rejecting the state’s argument that the tolls are a tax that serves “a general public purpose” as opposed to a toll, which is a user fee applied only to those who use a service. The state has to decide what to do next.

Smartphone Tolling App in Virginia
Transurban, which operates nearly all the priced managed lanes in northern Virginia, last month unveiled GoToll, a smartphone app aimed at people without an E-ZPass transponder. It’s available for both Apple and Android phones. The app enables users to check on variable tolls prior to departure and to pay them using the app. The fee to use the service is a charge of 85 cents per trip, in addition to the toll.

Express Lane to Express Lane Connectors Under Way in Riverside County
The Riverside County (CA) Transportation Commission has projects under way to provide express toll lane customers with seamless flyover connections between the lanes on SR 91 and the new lanes on I-15; that project is estimated to cost $175 million and will start construction in spring 2021, with a projected opening two years later. Part of the funding will come from toll revenue on the highly successful toll lanes on SR 91.

LA Metro Launches I-405 Express Lanes Study
The Metropolitan Transportation Authority has authorized a $27.5 million engineering and environmental study of converting the HOV lanes on highly congested I-405 from I-10 in West Los Angeles to US 101 in the San Fernando Valley (a route I used to commute on daily in the 1990s). Once converted, the lanes would become part of an emerging express lanes network in Los Angeles County.

Globalvia Sells Europe’s Highest Roadway Tunnel
P3 infrastructure developer/operator Globalvia has sold an 80 percent interest in its long-term concession of Tunel dEnvalira in the Andorran Pyrenees, the highest in Europe. The 2.8 km tunnel connects a highway in Andorra with Route 22 in the south of France. The purchaser was Spanish asset manager Net de Gerrers. The concession runs through 2048.

Washington State Transportation Commission Endorses MBUF Transition
The state’s transportation concluded a detailed study on the projected decline in state fuel tax revenue by recommending that the state begin planning a transition to mileage-based user fees. The Commission called for replacing the fuel tax, rather than adding a per-mile charge on top of it. Under current Washington State law, all revenues from fuel taxes are dedicated to highway purposes, and the Commission intends to retain this policy with mileage-based user fees.

Colombia Plans Two Canal P3 Projects
The national infrastructure agency, ANI, is planning a $1.4 billion project to improve navigation on an existing river, making it the 117 km Canal de Dique. The project is planned as a long-term P3 concession and will be partly financed by the World Bank. Whether tolls to use the new locks are included, as on the Panama Canal, is uncertain. ANI is also considering a P3 concession to improve the Magdalena River along similar lines.

Useful New Reports from Congressional Research Service
As interest in infrastructure heats up in Congress, CRS has released updated versions of two overviews of federal transportation programs. “Federal-Aid Highway Program (FAHP): In Brief” is R44332 and “Federal Public Transportation Program: In Brief” is R42706. Both are available here.

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Quotable Quotes

“It is complete ‘watch-bait’ that 60 Minutes is even suggesting that any of these trucks will be going down any Interstate or other public road driverlessly any time soon (no attendant on board anywhere). The risk to the surrounding public will simply be many times greater than the miniscule private benefits derived by saving the cost of the driver. No trucking company CEO is going to risk his job and the value of his stock options on such a stunt. TuSimple isn’t going to bet its ranch on it, either. It’s even doubtful that a ‘Level 3’ operation (the driver is able to sleep while traveling within the Operational Design Domain—ODD) will become operational in any significant way. . . .  Again, systems that improve the driver’s work environment and possibly help him/her get one or maybe even two hours of service are fantastic; removing the driver, not so much.”
—Alain Kornhauser, “Driverless Trucks Being Tested Right Now on Public Roads,” Smart Driving Cars, March 14, 2020

“Here’s the problem with [Rhode Island’s] argument. Every time the government raises money by any mechanism whatsoever, almost by definition it’s for a public purpose. That’s just impossibly broad. That cannot be the test [of whether the truck toll is really a tax]. That is not what Congress said in the Tax Injunction Act.”
—Judge Sandra Lynch, in “Rhode Island Denied Rehearing In Truck-Only Toll Lawsuit,” Landline, March 2, 2020

“The biggest long-term threat to dense cities could prove to be the shift to online working. Even before the coronavirus outbreak, remote work has grown 173 percent over the past 15 years, according to GlobalWorkplaceAnalytics.com. This is occurring when there’s declining transit ridership in most major metro areas per a policy brief on the website I co-run, NewGeography.com. Telecommuting creates the basis for a new kind of dispersed urban experience, what the late urban designer William Mitchell called ‘a city of bits.’ This is a community held together not by physical proximity but cyberspace, connecting university campuses with farmsteads and bustling cities with small towns. Rather than the Radiant City of glass towers looming over copious parks prophesied by Le Corbusier, we are likely to end up with urban centers more like Frank Lloyd Wright’s Broadacre City concept: vast expanses of low-lying private homes connected by both roads and the Internet. We may lose some of the excitement of our unscripted cities, but also create a way of life that is safer and happier.”
—Joel Kotkin, “After Coronavirus, We Need to Rethink Densely Populated Cities,” Fortune.com, April 1, 2020

“Imagine Verizon, AT&T, and T-Mobile discovered that, no matter how much they expanded their cell-phone networks, people kept buying new smartphones and using those networks. Would they decide to stop expanding their services for fear of turning too many people into smart-phone junkies? Of course not; so long as the revenues covered their costs, they would happily expand to meet the demand. Only in the government sector would someone argue that it would be a bad thing if expansion led to increased use.”
—Randal O’Toole, “The Induced-Demand Con,” The Antiplanner, March 17, 2020

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