- Global growth in private infrastructure finance
- Surface transportation P3s’ worldwide progress
- U.S. contractors and long-term P3 projects
- Automated transit shows progress
- Rethinking U.S. electrification strategy
- Equity tolling policies proliferate
- News notes
- Quotable quotes
Global Growth in Private Infrastructure Finance
Reason Foundation’s 2023 annual report on private finance and long-term transportation public-private partnerships was recently published. For the second year in a row, global infrastructure investment funds raised a record amount: $149 billion in 2022. Those funds invested just under $150 billion, 48% into brand new (greenfield) facilities, 23% into infrastructure mergers & acquisitions, 15% into refinancing, 9% into taking publicly traded entities private, and 4% on ‘other.’ Overall, these funds had $820 billion in assets under management at year-end and another $380 billion worth of dry powder—funds raised but not yet invested in any kind of project.
For the second year in a row, transportation was the largest infrastructure sector these funds invested in, at 72% of the total (despite all kinds of rhetoric about alternative energy, environmental infrastructure, etc.). Transportation accounted for 72% of the funds’ infrastructure investment in 2022, and 64% of the projects they financed. For the first time, in 2022, the largest share of transportation megaproject public-private partnerships (P3s) that were financed were U.S. projects, specifically John F. Kennedy International Airport New Terminal One ($8.4 billion), JFK Terminal 6 ($4.7 billion), Maryland Purple Line refinancing ($2.7 billion), and Pennsylvania Major Bridges Program ($2.3 billion).
Other U.S. projects slated for design-build-finance-operate-maintain (DBFOM) public-private partnerships include the Georgia Department of Transportation’s (DOT) pipeline of revenue-risk P3 projects to add express toll lanes to congested freeways in Atlanta, the Louisiana Department of Transportation and Development’s two bridge megaprojects (the first currently in procurement), North Carolina’s second express toll lanes P3 (on I-77 between Charlotte and the South Carolina border), Puerto Rico’s long-term P3 lease of four state-run toll roads, Tennessee’s expansive plans to add P3 express toll lanes to congested freeways in Nashville and other metro areas, and the last pre-approved Texas P3 project, expanding the North Tarrant Express toll lanes.
Reason Foundation publishes the Annual Privatization Report: Transportation Finance each year to help legislators, commentators, and journalists better understand and follow developments and trends in long-term design-build-finance-operate-maintain public-private partnership projects. There are profound differences between DBFOM projects and traditional design-bid-build and design-build projects. DBFOMs are financed mainly via private-sector equity investment and non-recourse revenue bonds, based on project-derived revenues. Where does that equity come from? From infrastructure investment funds, such as those listed and discussed in this report.
The Annual Privatization Report: Transportation Finance also explains the growing role of public employee pension systems in infrastructure investments. During 2022, with the stock market down, the median state pension system return on investment was minus 5.2%, compared with their targeted long-term return on investment of 7%. The majority of U.S. state and local public employee pension systems have significant unfunded liabilities. In sharp contrast, large Australian and Canadian public pension funds are fully funded. One of the keys to that status is several decades of careful investment in revenue-generating infrastructure, as summarized in the report. The good news on this front is the slow but steady increase in U.S. pension systems allocating sums to infrastructure investment funds which enables them to invest in a portfolio of projects anywhere in the world. (There are still too few U.S. P3 infrastructure projects to provide a balanced portfolio, alas.)
This report’s publication in late May appeared several weeks after an attack on private capital infrastructure investment by a Swedish professor from Uppsala University, Brett Christophers, who penned a New York Times op-ed headlined, “Why Are We Allowing the Private Sector to Take Over Our Public Works?”
It is based on his recent book, Our Lives in Their Portfolios, which makes this attack at greater length. There are many answers to his critique, including deferred maintenance on numerous state and municipal public works facilities, pork-barrel projects whose costs far exceed their benefits, chronic traffic congestion on freeways, low utilization of new technology, and poor oversight and accountability for performance.
Surface Transportation P3s Make Worldwide Progress
By Baruch Feigenbaum
Reason Foundation’s Annual Privatization Report: Surface Transportation chapter, which Reason has produced for the last 30 years, details the latest developments and trends in public-private partnerships, contracting, and privatization in highways and transit.
With 2020 and 2021 transportation activity heavily impacted by the COVID-19 pandemic, this year’s report provides the most accurate picture since 2019 of worldwide transportation P3 activity.
There are few privatized U.S. highways, but as of 2022, there are 18 private toll bridges across the country. Clustered in Alabama and along both the Canadian and Mexican borders, private bridges can typically be constructed more quickly than government-run facilities, and use tolls to offer a quicker, less-congested alternative. As traffic congestion grows in many regions, more governments should examine the potential of private bridges.
Last year, five of the 10 largest international public-private partnerships used availability payments (APs). While fewer than in past years, the use of APs allows the construction of projects that do not generate their own revenue as well as projects in which toll revenue supplements another source.
Rail lines and roadway refinancings dominated the list of the 10 largest international surface transportation public-private partnerships (P3s). Led by the $4.4 billion Bogota Metro Line 1, a 24-kilometer rail line in the Colombian capital, and the sale of two-thirds of the $3.4 billion Chicago Skyway concession to Atlas Arteria, the 10 largest projects have a combined value of $23 billion.
Overall, industry source Inframation counted 179 new surface transportation P3 projects spread across every inhabited continent. Asia had the most projects with 74. The region with the most per capita activity was Latin America, with 53 projects.
While growing, the number of U.S. public-private partnerships is still paltry by international standards. Late to the party, most U.S. P3 surface transportation projects are concentrated in about a dozen states. Over the last 35 years, 37 highway P3s and three transit P3s valued at $100,000 or more have reached financial close. The projects have used a mix of delivery methods. Twenty-six are financed based on toll revenues; five are financed on a pure availability basis, with six hybrids.
However, P3 activity in the U.S. may finally be kicking into a higher gear. There were eight financial closings and refinancings in 2022, far higher than the long-term annual average of 1.5. Further, while constructing greenfield projects is challenging in some areas, there is growing interest in brownfield refinancings and asset recycling projects. Further, while P3 pioneer Virginia continues to develop new projects, newcomers Georgia and Tennessee both have a number of P3 projects in their (and their metro areas’) transportation improvement and long-range transportation plans.
Public-private partnerships have many advantages over traditional design-bid-build including risk transfer and innovation. But data in Reason Foundation’s Annual Highway Report suggests a lesser-known benefit: better pavement quality (measured as the International Roughness Index). This better pavement condition is likely due to both performance requirements in the long-term agreement and the handback provisions that require P3 concessionaires to return the highway to the government in good condition.
While there was little federal P3 news last year, there was one problematic policy change. Traditionally, projects were not able to receive a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan, which provides low-interest loans to projects with dedicated revenue sources and investment-grade ratings, for more than 33% of a project’s value. But last year, Secretary of Transportation Pete Buttigieg announced that transit and transit-oriented development projects can now receive TIFIA loans for up to 49% of their cost. This also includes ferry systems. It is unclear how many projects will be eligible to receive this higher funding match, but the change counters the law’s original intent that TIFIA provide gap financing. Transit projects should not be receiving a higher TIFIA loan than other types of projects.
In 2022, six states debated bills establishing or expanding public-private partnership authority. On the plus side, Nebraska enacted P3 enabling legislation; Louisiana approved new P3 projects, and Pennsylvania redefined the duties of its P3 board. In addition, a Colorado bill that would have required a commission to review procurements failed. On the negative side, bills to authorize P3s in both Illinois and New Mexico failed (though a revived P3 bill was passed in May 2023 in Illinois). Of these states, both Louisiana and Pennsylvania have ongoing P3 activity. Louisiana entered into a P3 to rebuild the Judge Perez Bridge and adjacent tunnel in Belle Chasse, and it has a P3 procurement under way for the replacement of the Calcasieu River Bridge in Lake Charles. Pennsylvania agreed to an availability payment concession to rebuild nine Interstate bridges.
Two states and Puerto Rico had new major highway concession activity. Georgia DOT released a request for qualifications and a request for proposals for the Georgia State Route 400 express toll lanes. The state is also planning on three separate P3s to add express toll lanes to the northern half (known as the top-end) of I-285. Three teams have been shortlisted for SR 400 ahead of a decision expected in mid-late 2023. The Charlotte metropolitan planning organization is examining an unsolicited proposal to expand the I-77 managed lanes south from downtown to the South Carolina state line. Finally, Puerto Rico launched a request for qualifications and shortlisted a consortium for the P3 lease of several existing toll roads.
The surface transportation, finance, and aviation sections of the Annual Privatization Report are available here.
U.S. Contractors and Long-Term P3 Projects
Design-build-finance-operate-maintain (DBFOM) projects in the United States have often been led by a public-private partnership (P3) consortium consisting of an experienced toll road operator, a design-build contractor, and one or more infrastructure investors. Since the United States has no home-grown toll road companies, that role has usually been performed by a global toll company. And in some cases, that company has a sister company that specializes in design-build (DB) contracting. This combination has generated U.S. contractor opposition to public-private partnership megaprojects, especially in Texas. And at some P3 conferences I’ve attended in recent years, I heard about contractor opposition to the passage of P3-enabling legislation in other states.
This situation led me to conduct a research project to obtain details on (1) contractor participation in U.S. DBFOM projects, and (2) arguments used by U.S. construction contractors who lobby against DBFOM P3s. I began with a list of highway and transit DBFOM projects financed since 2007 and contacted the P3 developer or its current successor. I asked who the DB contractor was and the extent to which local subcontractors were involved. After eliminating projects for which no subcontractor data were still retrievable, I ended up with a data set of 18 such projects in 10 states. Their average engineering, procurement, and construction (EPC) cost was just over $1 billion., with a range from $120 million to $2.23 billion.
All 18 used subcontractors extensively, nearly all of them local or regional U.S. firms. The average amount spent on subs was $593 million, averaging 54% of the EPC cost. And the average number of subs on a project was 230 companies.
When it came to design-build contractors, the results were mixed. Of the 18 projects, six used an American DB contractor, and two others used a team of one U.S. and one overseas design-build contractor. The other 10 projects used a French or Spanish DB contractor. Interestingly, the very first U.S. DBFOM highway P3—the SR 91 express toll lanes in Orange County, California—used a U.S. DB contractor (though that project was too old to have subcontractor data and was therefore not included in the data set).
In the new Reason Foundation policy brief summarizing this research, I also looked into construction industry literature on DBFOM P3s. The main national trade association—Associated General Contractors of America (AGC)—has had a white paper on public-private partnerships on its website for more than a decade. It is generally positive about this approach, based in part on the ability of revenue-financed P3s to expand the amount of a state’s highway construction. It also includes points that a DB contractor or subcontractor should consider if it intends to be part of the P3 developer consortium itself (such as the possibility of being expected to invest some equity in the project and/or to take on risks that differ from those of a traditional DB contract). It also points out the opportunity for many subcontractors to participate.
I contrasted that with talking points prepared for member companies of the AGC of Texas, to use in lobbying legislators against approving further P3 projects in that state. It seemed clear that whoever wrote the proposed scripts either did not understand DBFOMs or deliberately misrepresented them. That made me suspect that legislators being given these claims may also misunderstand how very different DBFOM procurement is from conventional design-build (DB) and design-bid-build (DBB) procurement.
So my new Reason Foundation policy brief includes a basic primer on what design-build-finance-operate-maintain (DBFOM) is and how different it really is. For example:
- You don’t select the best team based on the lowest proposed construction cost because the focus is on the overall best value, including risk transfers to the P3 developer and the lowest life-cycle cost over the long term of the DBFOM agreement. The long term guarantees proper long-term stewardship of the asset, addressing the deferred maintenance problem plaguing many states.
- Long-term financing means that a needed megaproject can be procured now, rather than 10 or 20 years in the future, or building it in bits and pieces over several decades, based on annual appropriations. This is especially relevant to fast-growing states like Texas, Tennessee, Virginia, North Carolina, Georgia, and Florida.
- Projects financed based on user-fee revenue expand the total amount of highway investment in a state. That’s because most such projects need little or no state DOT funding in order to be financeable. For example, if a project that would require $2 billion of state DOT funding is done instead via DBFOM requiring only 10% state support, the DOT gets a $2 billion project by spending only $200 million. That frees up $1.8 billion that can be spent on smaller projects statewide.
- And for legislators opposed to state bond issues for transportation, revenue-based DBFOM revenue bonds are “non-recourse”—meaning that only the P3 developer is responsible for debt service, not the state and its taxpayers.
Properly communicating and explaining these terms, concepts, and their benefits could open the doors to more DBFOM public-private partnership projects, especially in fast-growing states.
Automated Transit Shows Promise, But Faces Political Challenges
By Marc Scribner
In April, the San Jose City Council voted to authorize a predevelopment agreement (PDA) for a proposed 3.5-mile airport connector project between Mineta International Airport and the Diridon Station rail hub in downtown San Jose. What makes this project unique is its planned use of automated shuttles developed by Glydways, which would operate on elevated guideways with a footprint width of a bicycle lane. The pairing of novel automated vehicle (AV) technology from Glydways with established infrastructure developer Plenary Americas suggests a path forward for public transportation applications of AVs. However, a 60-year-old federal law restricts legacy transit agencies from considering new AV solutions and should be re-examined.
The consortium led by Plenary Americas was selected by the San Jose City Council following city staff’s endorsement of the proposal. Under the terms of the agreement, the project is to be designed, built, financed, operated, and maintained under a long-term public-private partnership (P3) for no more than $500 million, including private investment. This is less than a quarter of the cost of typical automated people movers the city examined. The concessionaire would then operate and maintain the system without any public subsidy in exchange for the fare revenue.
According to Glydways, its capital and operating costs are a fraction of conventional rail and bus transit costs. The purpose-built electric vehicles, which it calls Glydcars, can hold a maximum of four seated passengers and are fully compliant with the Americans with Disabilities Act’s wheelchair accessibility standards. One of Glydways’ principal selling points is that it claims the system can be built and operated profitably by charging passengers no more than prevailing transit fares. Glydways describes its niche as personal rapid transit (PRT), which has long been promoted by passionate advocates albeit rarely implemented, but its approach is far more flexible and much less infrastructure-intensive than the only operating U.S. PRT system in Morgantown, West Virginia.
Assuming the agreement between San Jose and Plenary proceeds as planned, construction will not begin until 2027, so it will take some time to put these assertions to the test. However, if the project opens successfully, low-speed, low-mass, geographically restricted AVs are likely to be viewed as viable options for airport connectors and other transit applications. Another AV shuttle company worth watching is Beep, which is focusing on PRT-style deployments as part of two Florida master-planned communities at Lake Nona in Orlando and Tradition in Port Saint Lucie.
These ventures indicate AV shuttles may have a future when paired with experienced infrastructure and real estate developers, but what about transit agencies that provide most public transportation in the United States? After all, transit agencies are suffering a severe ridership downturn, and roughly three-quarters of their operating budgets are dedicated to employee compensation and benefits, which automation can significantly reduce. Here things get trickier because of a provision of a 1964 federal law that makes it very difficult to reduce transit labor costs in the U.S.
Until the 1960s, most mass transit systems in the U.S. were privately owned and operated. Rising automobile ownership and suburbanization following World War II led to a sharp decline in ridership and a wave of transit company bankruptcies. Congress responded with the Urban Mass Transportation Act of 1964, which created the Urban Mass Transportation Administration (now the Federal Transit Administration) and provided funding for local governments to take over bankrupt transit companies.
Section 13(c) of the Urban Mass Transportation Act requires that local agencies accepting federal transit grants must implement protections for existing employees. The reasoning at the time was that governments tended to be much more hostile to organized labor than the private sector. Union backing was critical for passage, and Congress created Section 13(c) to gain their support. As a result, in exchange for federal funding, transit agencies are required to adopt “protective arrangements” for existing employees to be certified by the Department of Labor.
This historical rationale no longer reflects reality. One-third of government employees are now unionized, while only 6% of private-sector workers are union members. Public-sector unions are among the most politically powerful groups in the U.S. and exert outsized influence in dense urban areas where the vast majority of mass transit ridership occurs.
But Section 13(c) remains in place, freezing transit systems and the law’s assumption about labor relations in the 1960s. It primarily serves as a deterrent to innovation in transit operations but is occasionally wielded as a political cudgel, such as when the Biden administration’s Department of Labor attempted to block $12 billion in transit grants to union-friendly California in 2021 as punishment for modest public employee pension reforms several years before. The courts ultimately sided with California, but the message was clear: cross public-sector unions and risk losing federal transit funding in the future.
Automation of subway systems has been possible since the early 1960s. However, as a 1976 report from the Office of Technology Assessment noted, Section 13(c) “allows the elimination of jobs, but only as workers presently holding those jobs retire or vacate the positions for other reasons. Thus, the economic benefits of workforce reduction through automation of an existing transit system may be deferred for a number of years until retraining, transfer, or attrition can account for the displaced workers. Alternatively, direct compensation can be paid to affected workers, eliminating the jobs earlier but at an earlier cost.”
Given that deploying automation requires transit agencies to either incur substantial upfront costs to pay off affected employees or delay the realization of labor-saving benefits, transit agencies largely dependent on annual government appropriations face a high barrier to investing in automation that would improve service and reduce growing operating subsidies. For this dynamic to change, Congress will need to revisit Section 13(c), presently codified at 49 U.S.C. § 5333(b).
Rethinking U.S. Electrification Strategy
Under the Biden administration’s energy plans, the United States is supposed to attain “net zero” greenhouse gas (GHG) emissions by 2050, just 27 years from now. Motor vehicle electrification is a key element of this plan, as is the elimination of all fossil-fuel energy generation. Accomplishing this would require replacing 61% of all current electricity generation and adding another 40% to account for population growth and vehicle electrification. Current plans call for massive investments in solar and wind generation, and that in turn will require very large investments in high-voltage, long-distance transmission lines. Experts on the electricity grid are raising serious questions about the ability to accomplish this, especially as soon as 2050, and at a cost that no one appears to have seriously estimated. (Note: this is a transportation newsletter, but because vehicle electrification is a front-burner transportation topic, everyone in this field should be paying attention to this feasibility question.)
On May 4, commissioners of the Federal Energy Regulatory Commission (FERC) testified before the Senate Energy and Natural Resources Committee. Individual FERC commissioners used terms such as “crisis” and “catastrophic” when referring to the future reliability of the grid as this transition moves forward. One of the near-term problems is that fossil fuel and nuclear power plants are being shut down at a faster pace than they are being replaced by renewable electricity. A second problem is that plants being shut down provide reliable baseload power, compared with the unreliable power generated from solar (only when the sun shines) and wind (only when the wind blows). Part of the rationale for vast amounts of long-distance high-voltage transmission lines is the hope of getting power from places with sun and wind to places without them—a very challenging grid management problem even with huge increases in transmission capability.
Without major reform of environmental permitting (nowhere in sight politically), getting thousands of miles of new transmission lines built by 2050 is problematic. There is also considerable grass-roots/environmental opposition to ever-larger land requirements for solar fields and windmill plantations.
The above is the backdrop against which a very important research paper should be read. A Dec. 2022 study in Scientific Reports analyzes the Net Zero by 2050 roadmap devised by the International Energy Agency in 2021, a larger-scale version of the Biden administration’s Net Zero plan. As Ronald Bailey summarized the paper’s findings at Reason.com, “Implementing the IEA’s roadmap requires that much of the world’s agriculture and wild lands be sacrificed to produce energy.”
The researchers calculated what percentage of land would be needed to meet the 2050 net zero goal via various forms of primary energy production. As we should have realized, solar, wind, and biomass are very, very land-intensive. Adding up the land requirements from these sources would have the following impact:
“A sixfold increase will occur in the spatial extent of power generation, from 0.5% of global land area in 2020 to 3.0% of land area in 2050 (i.e., 430 million hectares—1.66 million sq. mi). The world will be electrified by requiring an area roughly equal to the entire European Union (EU) which is one and a half times the size of India.”
By contrast, the researchers estimate that greatly expanding nuclear power would require only 0.016% of the world’s land area by 2050 (317 square miles), compared with 1.66 million square miles. And of course, nuclear produces baseload power needed to stabilize the electric grid.
I’m persuaded that we are not going to replace more than 100% of all U.S. electric power generation by 2050, nor is it politically possible to allocate 3% of total U.S. land area to biomass, wind, and solar. And this has serious implications for an all-EV future by 2050. Nuclear power will be needed to provide a very large increase in U.S. electricity generation in any realistic plan aiming for Net Zero by a more realistic due date.
Welfare Tolling Proposals Are Proliferating
We are living in strange times. When I first read about a new rule from the Federal Housing Finance Agency (FHFA) that will increase mortgage fees for borrowers with high credit scores and reduce them for borrowers with low scores, I thought it was some kind of parody. But no, it is the latest federal government attempt to increase “equity.” Alas, talk of increasing equity also keeps seeping into transportation policy, especially where tolling is concerned. Here are several recent examples.
- New York’s Metropolitan Transportation Authority (MTA) announced that its forthcoming congestion pricing system for New York City “will reduce congestion pricing tolls for low-income drivers who travel frequently into the Manhattan congestion zone.” (Streetsblog, May 9, 2022)
- In the San Francisco Bay Area, the new express toll lanes on I-880 are running a pilot program offering lower toll rates for low-income families. (San Francisco Examiner, April 12, 2023)
- The planned conversion of State Route 17 in Marin, Sonoma, and Napa counties to a widened toll road will provide a 50% discount on the toll for California commuters whose household income is less than 200% of the federal poverty rate—but the added high-occupancy vehicle lane will be free. (Marinij.com, May 17, 2023)
- A proposed congestion pricing plan for Los Angeles highways from the Los Angeles County Metropolitan Transportation Authority “will include subsidies for low-income drivers and carpoolers.” (Los Angeles Times, May 30, 2023)
For the past hundred years, drivers paid the same rate of fuel tax, regardless of income. Historically, toll rates on toll roads and toll bridges were the same for everyone. Government service providers charge different rates for different levels of service (express mail vs. first-class mail, Amtrak first-class vs. coach, etc.). And the whole idea of express toll lanes is to use variably priced tolls to keep the amount of traffic in those lanes free-flowing and below the level that will lead to unstable, stop-and-go congestion. Studies show drivers of all income groups use toll lanes and that lower-income people receive higher net benefits (the value of time pulse the value of reliability compared with the price of the variable toll) from using toll lanes, so where is the equity problem?
These concerns for the poor may be well-intentioned but are misplaced. The proposed recipients of discounts in these transportation equity plans are drivers or owners of cars, not the workers or families who cannot afford vehicles at all and rely on transit. Federal, state, and local taxpayers already provide large amounts of tax money to provide subsidized transit services, justified largely because transit offers car-less individuals better mobility. It’s true that in the largest 50 U.S. metro areas, it may take twice as long to get from home to work via transit than via driving. But the single best way to improve transit performance in most metro areas would be to operate regionwide express bus service on variably-priced express toll lanes.
Highways are costly to build and costly to operate and maintain. The gas tax is losing its effectiveness as the U.S. highway funding source. It will be replaced by new forms of toll, these days designated as road user charges (RUC) or mileage-based user fees (MBUFs). In making this transition over the next several decades, we should preserve the users-pay/users-benefit principle on which the gas tax was founded. All drivers should pay their share of the cost of building and maintaining these vital transportation arteries.
Illinois to Add Express Toll Lanes
The Illinois legislature passed a landmark bill to allow the state transportation department to add express toll lanes (ETL) to congested I-55, dubbed a “top priority” several years ago by Gov. J. B. Pritzker. The measure also allows IDOT to use a public-private partnership to procure the project. Preliminary engineering and environmental studies for the project were completed in late 2018. The plan is to add two ETLs each way from I-90/94 to I-294 and one ETL each way from there to I-355. With the passage of this measure, Illinois joins Tennessee as two states recently embracing both variably-priced express lanes and long-term public-private partnerships.
Congress Seeks Additional Truck Parking
Both major trucking organizations, the American Trucking Associations (ATA) and the Owner-Operator Independent Drivers Association (OOIDA) strongly support the Truck Parking Safety Improvement Act, which received a unanimous vote in the House Transportation & Infrastructure Committee in March. If enacted into law, the measure would provide competitive grants to construct new commercial truck parking facilities and convert existing weigh stations and rest areas into functional parking spaces for truck drivers. Not explicitly addressed in the bill is the long-standing federal ban on commercial services at Interstate highway rest areas, which would prevent truck stops from locating there, let alone electric vehicle charging stations or food and beverage sales from service plazas, as are now offered on most Interstates operated as toll roads. “Expanding truck parking at public rest areas” is one of the top 2023 research priorities of the trucking industry think tank ATRI.
The Boring Company Gets OK to Expand Las Vegas Tunnel Network
TechCrunch reported that Elon Musk’s Boring Company received approval from the Clark County Commission to proceed with adding 18 stations and 25 miles to the initial 2.2 miles of tunnels already in operation beneath the Las Vegas Convention Center. This project does not include a proposed connection to the airport, but The Boring Company is reportedly in talks with the Federal Aviation Administration about that link. This network would continue to transport customers in Tesla vehicles, as on the original loop beneath the convention center.
Utah DOT Planning to Toll Ski Area Highways
To address increasing congestion on Route 210 ski areas in Little and Big Cottonwood Canyons, the Utah Department of Transportation has announced plans to convert routes to both ski areas into toll roads, as soon as the 2025-26 ski season. Unlike the single express toll lane on I-70 between Denver and its ski areas (where the general-purpose lanes are not tolled), UDOT’s plan would toll all lanes, electronically. The aim is to encourage ride-sharing and bus use, reducing congestion during ski season. The legislation was approved by the legislature and signed by Gov. Spencer Cox in March.
Brightline Florida Trains Increasing Property Values
The Wall Street Journal reported that housing prices and rents near the new passenger rail stations developed by Brightline in Miami, Fort Lauderdale, and West Palm Beach have increased at a faster rate than the average for each of those three market areas. Ridership on the higher-speed rail system in South Florida was up 68% in March 2023 over March 2022. The system’s link to Orlando was completed this spring, and ticket sales have begun in advance of the start of scheduled service this month to and from Orlando. Brightline’s Florida business model includes the development of commercial and residential properties near its urban stations, emulating models long used in Japan and Hong Kong.
Brightline California Closer to Being Financed
With an expanded route and a much higher price tag, the planned Brightline West is closer to raising the needed investment. The route now includes the original link, Las Vegas to Victorville, and an added link from Victorville to Rancho Cucamonga, where passengers will transfer to the Metrolink commuter rail line for a much slower journey to downtown Los Angeles. A May 10 report from Inframation puts the project’s cost at $12 billion, with a financing package including $1.26 billion in private equity, $2.5 billion in tax-exempt private activity bonds (PABs), and $4.5 billion in loans. Engineering News-Record reported in February that the project might also seek funding included in the 2021 bipartisan infrastructure bill.
NEPA Amended by Bipartisan Debt Limit Bill
In one of the very few changes to the National Environmental Policy Act since its passage in 1970, the bipartisan debt limit bill included substantive changes. Most are provisions from Rep. Garret Graves’ (R-LA) Builder Act, House Resolution 1577. This includes a two-year deadline for environmental impact statements but does not include that measure’s provisions on judicial authority regarding the environmental process.
Paris Bans Commercial Electric Scooters
Following a local referendum in which nearly 90% of voters favored banning electric scooters, Paris Mayor Anne Hidalgo announced a ban (but only on commercial scooters), to take effect Sept. 1. Pedestrian injuries and at least one death from collisions with scooters, piles of e-scooters left on sidewalks, etc. were factors leading up to the ban. Mayor Hidalgo has also favored eliminating all cars from Paris, and has supported increased use of bicycles, scooters, and walking to facilitate the idea of a “15-minute city.”
Toll Roads Continue Being Built in Texas
Despite populist anti-toll lobbying that has prevented the Texas Department of Transportation from initiating any new toll projects for the past decade, other agencies continue to finance additions to metro-area toll systems. These include the North Texas Tollway Authority in Dallas/Ft. Worth, the Harris County Toll Road Authority and the Fort Bend Tollway Authority in Houston, and Austin’s Central Texas Regional Mobility Authority (CTRMA). Last month, CTRMA announced that its extension of the 183A toll road had reached the halfway mark by mid-April. That project is aimed at serving the explosive growth in Austin’s suburbs.
Planned Binational EV Corridor Announced
U.S. and Canadian transportation officials last month announced plans for an 870-mile electric vehicle (EV) corridor from Kalamazoo, Michigan, to Quebec City with charging stations every 50 miles. It will traverse I-94 and enter Canada via the Detroit-Windsor Tunnel. The Canadian portion of the route already has 215 EV chargers in operation.
BC Plans $3 Billion Tunnel Replacement P3 Project
Infrastructure BC is getting set to begin procurement of the $3 billion George Massey Tunnel Replacement project this summer. It will provide a new eight-lane tunnel under the Fraser River. It is one of the few P3 projects on the agency’s current agenda. Contracts have already been let for supportive projects, including the Stevens Interchange.
Legislature Mandates Changes in Utah Transportation Funding
Utah Gov. Spencer Cox signed a bill that will reduce gas taxes by two cents per gallon as of July 1, increase vehicle registration fees by $7 a year, and charge a 12.5% tax at EV charging stations. The gas tax had been scheduled to increase by 4.5 cents/gallon in January, so the mandated decrease is intended to offset part of that. Utah DOT plans to install its own EV chargers initially, “until federal law allows for the limited commercialization of Interstate rest areas” to permit commercial operators to install chargers there.
Nikola and Voltera Plan Hydrogen Fueling Stations
Voltera and Nikola’s Hyla brand announced last month that they will jointly develop 50 hydrogen fueling stations in North America over the next five years. Voltera will build, own, and operate the refueling stations, while Nikola Hyla will supply the hydrogen fuel to replenish the trucks’ fuel cells. This project is Voltera’s first venture into hydrogen stations, beyond its current projects on battery-electric vehicle recharging.
Recommended Reading
Two of my Reason magazine colleagues posted interesting commentaries last month, one about passenger rail and the other about electricity supply:
- “As Rail Riders Disappear, the Feds Want to Spend $8.8 Billion Expanding a Rail Station,” by Christian Britschgi
- “EPA’s New Power Plant Rules Would Be Hard to Implement, Possibly Unconstitutional,” by Joe Lancaster
“The Port of New York and New Jersey’s Goethals Bridge long struggled to maintain reliability and safety standards due to a physically and functionally obsolete design. . . . The public-private partnership undertaken by the Port Authority accelerated the funding for a modern facility design, while delivering the new bridge for public use sooner than the publicly financed alternative, and with less construction disruption to travelers who relied on the crossing regularly. . . . Risk transfer is another benefit of public-private partnerships. By working with the private sector, governments can shift risks associated with large-scale projects to those who are best able to manage that risk and provide protections to taxpayers. The 495 Express Lanes in the DC area, a public-private partnership between the Virginia Department of Transportation and Transurban, is a good example of this. The project shifted the risk of construction cost overruns and schedule delays to the private partner and assigned the revenue risk of the new dynamically-priced managed lanes to Transurban.”
—Amanda Baxter of Transurban and Mark Muriello of the International Bridge, Tunnel & Turnpike Association, “Bringing More Public Value through Private Investment in Public Infrastructure,” Tolling Points, May 31, 2023
“The first myth to dispel is that the young are giving up driving for good. In car-mad America, which has around 890 cars per 1,000 people, only 1% of new cars are bought by people under 24. The share of 16-year-olds with a license fell between 1983 and 2018, from 46% to 26%, but the decline for older people was less precipitous. In 1983 95% of 35- to 39-year-olds had a license, compared with 91% in 2017. In Britain, the proportion of over 21s with licenses has hardly budged in 20 years. Just as they are deferring much else, such as settling down or having children, young people are simply getting their driving licenses later. The average age of a buyer of a new car in Europe and America is also well over 50.”
—The Economist, “Special Report on the Car Industry,” April 22, 2023
“Many components of a city are highly desirable, but only two are essential. One is people and the other is transportation. Sometimes the critics need to be reminded that without transportation, the people would not have water to drink or power to light their homes . . . urbanites would choke on some of their own waste products and find themselves buried in others. Transportation makes cities possible. . . . The standard of comfort in the automobile is so seductive to the American citizen that one has about as much chance to lure him away from it into a bus or subway on the grounds of economy as one would have to lure guests from the Waldorf Astoria to the YMCA by telling them how much money they might save.”
—Roger Starr, excerpt from his book The Living End: The City and Its Critics (1966); reprinted from the May 2023 issue of The Dispatcher