In this issue:
- Getting more bang for highway investment bucks
- Emerging consensus on autonomous vehicles and VMT
- Taking the teeth out of HOV/HOT performance requirements
- Barge operators want improvements without paying for them
- Millennials are buying cars-what a surprise!
- Congestion’s getting worse, and not just here.
- Upcoming Transportation Events
- News Notes
- Quotable Quotes
Getting More Bang for Highway Investment Bucks
A lot of the resistance to increased federal fuel taxes comes from conservatives and others who believe government wastes a lot of what it already spends (illustrated by citing boondoggles like the cancelled “bridge to nowhere” in Alaska). Most highway advocacy groups ignore those concerns and simply argue for “more” spending. But what if we could actually get a lot more real value from current levels of highway spending?
The Congressional Budget Office has produced a provocative analysis of this question. Released in February, its title is “Approaches to Making Federal Highway Spending More Productive.” The report’s limited media coverage mostly dealt with one of CBO’s three possible means toward the end of greater bang for the buck: shifting from indirect taxes (mostly on fuel) to direct payment per mile driven. But the report also goes into detail on two other possibilities: allocating federal funds based on states achieving various highway performance goals, or allocating highway funds (both federal and state) based on serious benefit/cost analysis. My focus here is on the latter.
Pages 14-19 provide a very informative summary of how sensible highway spending can increase the economic productivity of our economy. The focus here is explicitly not on short-term benefits from construction projects-as economists have pointed out, those benefits could be obtained by hiring firms to build pyramids or to dig holes in the ground and fill them in again. Meaningful highway investment can increase the productivity of businesses by reducing freight costs, speeding up deliveries, and improving reliability. For households, sensible highway investments may reduce commuting time and cost, as well as giving people access to a wider range of a region’s jobs and entertainment and recreational opportunities. The discussion also recognizes that some additions to the highway system may have costs greater than benefits, and that on average, returns on highway investment today are lower than when the Interstate system was being built.
This point leads into an eye-opening discussion of the results of extensive benefit/cost analysis by the Federal Highway Administration in recent years. CBO begins this discussion as follows:
“Although the economic returns from highway investment may, on average, be lower today than they were in the past, economically advantageous highway projects are not lacking. . . . In its most recent analysis, FHWA estimated that if only the economically advantageous projects were funded, future spending on highways in an amount at least 25 percent greater than what it was in 2010 (in inflation-adjusted terms) could yield benefits that outweighed its costs.” (This is a reference to FHWA’s “2013 Status of the Nation’s Highways, Bridges, and Transit: Conditions and Performance,” often referred to as the C&P report.)
Where it really gets interesting is when CBO summarizes the full implications of FHWA’s benefit/cost analysis, as applied to the major categories of current federal highway spending. They summarize this as follows: public spending on highways would generate greater benefits relative to costs if:
- A larger share went to expanding roads in urban areas, particularly Interstates;
- A somewhat larger share was allocated to performing major repairs of urban highways-in particular rehabilitating roads other than Interstates in urban areas; and,
- A larger share went to improving bridges in rural areas on the Interstate system.
But in keeping with this being a reallocation of existing spending, increases in high B/C projects means decreases in low B/C projects. The proposed reallocation of total highway spending would be as follows:
| Category | Percent Change | ||
| Rural Interstates | |||
| System expansion | -38% | ||
| Major repairs | -65% | ||
| Bridge rehabilitation | +30% | ||
| Rural, other federal-aid highways | |||
| System expansion | -86% | ||
| Major repairs | -31% | ||
| Bridge rehabilitation | -1% | ||
| Urban Interstates | |||
| System expansion | +140% | ||
| Major repairs | +12% | ||
| Bridge rehabilitation | -13% | ||
| Urban, other federal-aid highways | |||
| System expansion | + 6% | ||
| Major repairs | +51% | ||
| Bridge rehabilitation | +5% |
Looking at the urban Interstate numbers in particular, I think back to the report I wrote about last month by the Public Interest Research Group (PIRG), which denounced a raft of urban Interstate express toll lane projects as “boondoggles.” There is actually a sound economic case that such projects will increase the economic productivity of metropolitan areas, for both businesses and households. A lot more could be invested in such projects if we could get Congress and state legislators to take benefit/cost analysis seriously in deciding on highway priorities. Clearly the pattern of current highway spending is vastly under-performing, which gives some credence to those claiming that current highway spending is wasteful.
The Emerging Consensus on Automated Vehicles and VMT
In the initial rush of enthusiasm for the potential benefits from a transition to mostly autonomous vehicles, reduced congestion and vehicle miles of travel (VMT) came in as a close second to reduced deaths and injuries from traffic accidents. But a growing array of studies suggests that a majority of researchers now think VMT will increase in an AV world, possibly by a great deal.
In the January issue of this newsletter, I noted a report from KPMG (“The Clockspeed Dilemma: What Does It Mean for Automotive Innovation”) that used extensive focus group data to project large increases in VMT primarily due to increased personal vehicle travel by those unable or unwilling to drive today: teenagers and children, elderly people, and disabled people. But that’s just the tip of the iceberg.
A paper published in February in Transportation Research Part A, by Zia Wadud and several academic colleagues, analyzed potential U.S. car and truck energy demand by 2050, assuming significant AV market penetration. They estimated percentage ranges for a variety of energy-saving factors (including platooning) and reduced congestion, but did likewise for an array of possible energy-increasing impacts. These included people shifting from rail and airlines to AV travel, people living farther from work since they can be productive while commuting in an AV, and net new car travel by the kinds of people noted by the KPMG study (though their estimates on this were far lower than KPMG’s). Overall, they concluded that the net impact of these factors could be increased or decreased energy use (and correspondingly increased or decreased VMT). A major factor in the outcome will be the extent to which people do or don’t shift from vehicle ownership to vehicle sharing.
A 2015 OECD International Transport Forum project simulated a possible AV fleet serving Lisbon, Portugal. It found that if shared-use AVs reached 50% of total vehicles, with the rest being human driven, total VMT would increase between 30 and 90 percent.
A panel discussion at an Eno Center for Transportation conference last month again identified the ride-sharing question as the largest factor in the extent of VMT change. Eno Transportation Weekly summarized the discussion on the question this way:
“With regard to the VMT question, the underlying assumptions about ridesharing versus single-use vehicles make an enormous difference in the outcome. . . . [A]utonomous vehicles could eventually result in a lot of people owning and operating cars that would be unable or unwilling to operate a conventional auto. Alternatively, the assumptions about AVs leading to lower overall VMT involve a mass migration from personal car ownership to shared-ownership or for-hire fleets.”
A new overview report, “Driving Towards Driverless: A Guide for Government Agencies,” by WSP Parsons Brinckerhoff, concludes that, “No matter the scenario, there are a few impacts that are likely in a future driverless vehicle society, including increased safety, increased VMT, and reduced GHG emissions. . . . VMT will likely increase as the cost of travel decreases and more people choose to drive.”
Researchers with a planners’ mentality are unhappy with that likely outcome. The author of the WSP Parsons Brinckerhoff report presents it as the “Driverless Nightmare” scenario, in which the demand for highways increases and the dreaded “urban sprawl” gets even sprawlier. She contrasts this with a “Driverless Utopia” scenario in which shared use of non-individually owned AVs plus expanded mass transit lead to more-compact, “smart growth” metro areas. In the Policy Activities section, the author writes, “This guide assumes that local, regional, and state governments will want to take actions that encourage moving toward the ‘driverless utopia’ scenario,” via such policies as disincentives for driving, enforcement of urban growth boundaries, increasing taxes on personally owned vehicles, and enacting legal limits on parking capacity. The Transportation Research Part A authors agree, saying that it may be necessary to financially intervene in [people’s] transport decisions.
Don’t say you weren’t warned.
Taking the Teeth Out of Federal HOV/HOT Performance Requirements
In the MAP-21 surface transportation reauthorization bill enacted in 2012, Congress required FHWA to actually start enforcing its standard for the performance of federally assisted HOV and HOT lanes. Specifically, that the average speed in such lanes during peak periods must exceed 45 mph at least 90% of the time during any 180-day period. State DOTs would thenceforth be required to take action within 180 days to remedy the failing status of such lanes by either: (1) increasing the HOV occupancy requirement, (2) increasing the toll rate (if it’s a HOT lane), or (3) adding lane capacity. In the December 2012 issue of this newsletter, I commended the new provision as “a gift from Congress for HOV and HOT lanes,” because the threat of sanctions would give state DOTs a defensible reason to do what they were reluctant to do on their own: increase the HOV occupancy requirement “because the feds made us do it.” This, I expected, would lead to a lot more HOV to HOT conversions.
Alas, political pressures from California politicians led to this sensible reform being watered down in last year’s FAST Act. Rep Grace Napolitano (D, Norwalk) argued for relief because 60% of the state’s HOV lanes were failing to meet the standard. To the best of my knowledge, FHWA had not actually imposed sanctions on any of them, but Caltrans was having to submit reports acknowledging the failures. Napolitano recruited two conservative Republicans, Reps. Ed Royce (R, Fullerton) and Ken Calvert (R, Corona), for an amendment last November to permit FHWA to waive enforcement of the standard. I’m told that earlier Napolitano proposals had called for removing the sanctions.
In the end, Congress did include a waiver of the compliance requirements. This may be done, on appeal by a state, if the DOT Secretary determines that “the waiver is in the best interest of the public, the public authority is meeting the conditions under subparagraph (D) [submitting a plan], and the public authority has made a good faith effort to improve the performance of the facility.”
Given that Congress sets the tone and calls the shots, I cannot imagine that FHWA will now feel free to impose sanctions that would lead to a state DOT increasing the HOV occupancy requirement, or pressing its legislature to limit or eliminate regulations that allow low-emission and energy-efficient vehicles to clog HOV and HOT lanes. This increases my pessimism that any of California’s three major metro areas will be able to achieve effective express toll lane networks. There’s not much point in converting overcrowded HOV-2 lanes to HOT if there is little or no room for toll-paying customers. Fortunately, most other state DOTs are proceeding far more sensibly on these questions.
Barge Operators Want Improvements without Paying for Them
Around the world, public-private partnerships are attracting significant private-sector investment to refurbish or replace aging transportation infrastructure. In the 2014 Water Resources Development Act (WRDA), Congress authorized at least 15 P3 projects across the U.S. Army Corps of Engineers lines of business, which includes all the locks and dams on the inland waterways system. One proposed P3 project would replace or refurbish obsolete locks on the Illinois Waterway. To attract private investment, the project would be financed based on tolls to be charged to those who use the new locks.
Last week 75 groups representing inland waterway users sent a letter to the Senate Environment & Public Works (EPW) Committee and the House Transportation & Infrastructure Committee (T&I) opposing the plan. Charging to use the new locks would make waterways commerce “uneconomical” and would be “fundamentally unfair,” since the barge industry itself had lobbied for an increase in the barge fuel tax. Furthermore, the letters said, “Businesses rely upon efficient and cost-competitive waterways transportation when making locational decisions. If the federal government enables private entities to charge waterways tolls, businesses, farmers, producers, and shippers on those waterways would find themselves at a serious competitive disadvantage.”
This is an example of the worst kind of special pleading for a subsidized existence. Historically, locks and dams on the inland waterways were paid for out of general federal tax revenues, appropriated to the Army Corps by Congress, often on a pork-barrel basis (leading to many project that would never pass a benefit/cost test). Finally, with rising concerns about the deteriorating conditions of locks and dams, Congress in 1978 created the Inland Waterways Trust Fund (IWTF), based on revenue from a new fuel tax on barge operators. Although the tax rate has been increased a number of times since then, spending from the IWTF by law can cover no more than 50% of the cost of any waterways infrastructure project and none of the annual costs of dredging or lock and dam operations and maintenance.
The net result is that waterway users cover less than 10% of the capital and operating costs of the inland waterways system-and the waterways continue to deteriorate. That’s in sharp contrast to competing freight transport modes. Railroads cover 100% of their capital and operating costs, and trucks cover a significant fraction of their share of highway capital and operating costs. So when the barge industry claims that water transportation is “more efficient,” that is only because they can charge customers rates that cover only a small fraction of their infrastructure costs-which is grossly unfair to railroads and trucking (as well as taxpayers).
As I see it, the barge operators are fighting an ultimately losing battle. Any transportation sector that stakes its future on increased federal funding-especially general support funding-is setting itself up for failure. The most important macro-economic point for the future of transportation infrastructure is that there will soon be no such thing as federal general funding for such purposes. To ensure a long-term role for waterway transportation, the industry needs to move increasingly toward a fully user-pays model. And a few pilot projects for private-sector investment in replacing obsolete locks, supported by lock tolls, would be an excellent start.
At the Transportation Research Board annual meeting in January, a session on waterways lock replacement via P3s was well-attended-and three of the four panelists supported this kind of change. They included Edward Hecker of the Army Corps, who told attendees that there is no realistic way the status quo can fix the waterways system’s investment problems. He also appeared to be favorable toward an initial P3 lock replacement project on the Illinois River, which also seemed to be viewed favorably by the panel member of the Illinois Chamber of Commerce. We may be witnessing a large crack developing in the old inland waterways paradigm.
Millennials Are Buying Cars: What a Surprise!
Three years ago the Public Interest Research Group (PIRG) released a paper arguing that Millennials were no longer attracted to cars, but were relying on transit, biking, walking, Zipcar, and Uber/Lyft for personal mobility. They cited data on lower drivers’ license acquisition among teenagers and low rates of Millennial car buying in support of the idea that the age of the automobile was doomed (and, of course, that highway user tax money should be re-directed to transit, bikeways, and sidewalks).
Last month saw the release of new data that debunks those claims. As AP reporter Dee Ann Durbin put it, “Millennials-especially the oldest ones-are buying cars in big numbers. They just had a late start.” Exhibit 1 is data from J.D. Power’s Power Information Network, which found that Millennials’ share of new-car sales had increased from 17% in 2010 to a whopping 28% in 2015, second only to the market share of far more-affluent Baby Boomers. In California last year, car purchase by Millennials exceeded those of Baby Boomers for the first time. Durbin reports that Millennials’ unemployment rate was 13% back in 2010, but is now just 8%. Steven Szakaly, chief economist of the National Automobile Dealers Association, expects it will be another four or five years before Millennials’ buying power equals that of Boomers.
Exhibit 2 is a new study from Bankrate.com on consumer intentions regarding auto purchases. As reported by Edmonds.com, Bankrate surveyed 5,000 consumers about their anticipated spending in the coming year. They found that 24% of Millennials plan to buy a car, higher than any other demographic group. Edmonds summed up the finding by saying, “It seems that reports of the demise of automobile ownership among the Millennial generation were greatly exaggerated. Get ready for them to crowd showrooms.”
And what about the generation to come after Millennials? While I’m not aware of any data on teenagers’ car purchasing intentions, a new study by Nielsen explored the views of school-age kids on autonomous vehicles. The headline finding was that more than 60% of American youth would prefer to do the driving, rather than having the vehicle drive itself. That was true of nearly 75% of high school students but only half of elementary school pupils. Asked if they would prefer to buy a self-driving vehicle made by a technology company or a traditional auto company, elementary schoolers were evenly divided, while high schoolers leaned toward auto companies. It appears Nielsen did not ask about the shared-vehicle option.
Congestion’s Getting Worse-And Not Just Here
Two new congestion surveys crossed my screen last month, one from Inrix and the other from TomTom. Both rank major metro areas in the United States and a number of other countries. Since Inrix works with the Texas A&M Transportation Institute, comparisons between the latter’s 2014 data and Inrix’s new 2015 data should be methodologically legitimate; both report estimated hours wasted per commuter in each metro area. TomTom is reporting what appears to be the travel time index as defined by the Texas A&M group-the ratio of the time it takes under congested conditions to the time it takes at free-flow speeds.
The comparison below is for major U.S. metro areas that are ranked by any of the three sources as the 10 most-congested. Inrix reports total U.S. hours wasted in congestion as 8 billion in 2015, compared with the Texas A&M figure of 6.9 billion for 2014. That seems consistent with the increase in vehicle miles of travel in 2015 over 2014. And although TomTom’s travel time index should correlate well with hours wasted per commuter, its 2015 top 10 is rather different from the other two, as you can see. Miami and Portland made TomTom’s top 10 but neither of the others, and Honolulu (which ranked 18th in the Texas A&M ranking for 2014) shot up to #10 in Inrix’s 2015 tally and to #5 in TomTom’s.
| Rank | Texas A&M 2014 | Hours | Inrix 2015 | Hours | TomTom 2015 | Travel time index |
| 1 | Washington | 82 | Los Angeles | 81 | Los Angeles | 1.41 |
| 2 | Los Angeles | 80 | Washington | 75 | San Francisco | 1.33 |
| 3 | San Francisco | 78 | San Francisco | 75 | Seattle | 1.31 |
| 4 | New York | 74 | Houston | 74 | San Jose | 1.30 |
| 5 | San Jose | 67 | New York | 73 | Honolulu | 1.29 |
| 6 | Boston | 64 | Seattle | 66 | Miami | 1.28 |
| 7 | Seattle | 63 | Boston | 64 | Washington | 1.26 |
| 8 | Chicago | 61 | Chicago | 60 | Portland (OR) | 1.26 |
| 9 | Houston | 61 | Atlanta | 59 | Chicago | 1.26 |
| 10 | Riverside (CA) | 59 | Honolulu | 49 | Houston | 1.25 |
There is a lot of congestion overseas, as well, with TomTom providing an overall rank-ordering by travel time index that puts Los Angeles only in 10th place, after Mexico City (1.59), Bangkok (1.57), Istanbul (1.50), Rio de Janeiro (1.47), and five others, with L.A. appearing a piker at just 1.41. Most European metro areas in the top 15 have travel time indices similar to the range we see in U.S. metro areas. The truly awful congestion is in some of Latin America’s and Asia’s largest metro areas.
Comparing the top European cities as measured by Inrix and by TomTom yields strikingly different rankings. Inrix puts London as #1 in annual hours wasted per commuter, at 101, dwarfing an array of German and Benelux metro areas in the 50s and 70s. By contrast, TomTom’s travel-time index rankings put Moscow on top in Europe (1.44), followed by four cities that aren’t even in Inrix’s top 15 most-congested European cities. And nine of Inrix’s top 15 are not in TomTom’s top 15, despite what should be a strong correlation between annual hours wasted and travel-time index. There may be differences between their methodologies or metro area definitions that account for the different rankings, but the overall message is that the United States is far from alone in having highly congested large metro areas. These countries all need to come up with better policies for reducing congestion, in order to take full advantage of economies of agglomeration, which is why we have large metro areas to begin with.
Upcoming Transportation Events
Note: I don’t have the time or the space to list all transportation events that might be of interest to readers of this newsletter. Listed here are events at which a Reason Foundation transportation researcher is speaking or moderating.
TRB 15th International Managed Lanes Conference, May 4-6, 2016, Hyatt Regency Miami, Miami, FL (Baruch Feigenbaum and Robert Poole speaking). Details at: http://www.cvent.com/events/15th-international-conference-on-managed-lanes/event-summary-d40624486a524f089008e8abfb946760.aspx
Mass Transportation in Broward, May 11, 2016, Broward College/Village Square, Ft. Lauderdale, FL (Robert Poole speaking). Details at: www.browardcollege.edu/community/village-square/Pages/events.aspx
2016 Professional Engineers Conference, June 22-26, 2016, Fairmont Hotel, Dallas, TX (Baruch Feigenbaum speaking). Details at: http://nspe.org/resources/2016-professional-engineers-conference
ARTBA P3 Conference, July 13-15, 2016, Washington Court Hotel, Washington, DC (Robert Poole speaking). Details at: www.artbap3.org
Florida Transportation Commission and Floridians for Better Transportation Summit, July 18-20, Loew’s Don Cesar Hotel, St. Pete Beach, FL (Robert Poole speaking). Details at: www.bettertransportation.org/2016Summit.html
Summit on AET, Managed Lanes & Interoperability, July 24-26, 2016, Boston Marriott Copley Plaza, Boston, MA (Robert Poole speaking). Details at: www.ibtta.org/events/summit-aet-managed-lanes-interoperability
Toll Roads Had Record Year in 2015. The International Bridge, Tunnel & Turnpike Association (IBTTA) reports that drivers took 5 billion trips on toll roads and bridges last year, 7% more than in 2014. The results were based on data from 31 major toll facilities around the country. The highest growth rates-25% increases-were reported by the Tampa-Hillsborough Expressway Authority and the North Carolina DOT, with a number of others reporting double-digit gains. IBTTA also projects that this rate of growth “puts tolling usage on pace to double in less than 10 years.”
Texas DOT Estimates $40 Billion Cost to Retire Toll Bonds. Responding to a legislative request urged by anti-tolling members, TxDOT has submitted a report quantifying what it would cost to eliminate most tolling in the state. There are 51 public agency toll roads and bridges, financed by 23 different agencies, with total bonded indebtedness of $21.1 billion. Paying those bonds off on current schedules will take $38 billion. In addition, there are five toll projects financed by P3 companies, with an additional $9.8 billion in debt. Many of the bonds include financial penalties for early payment of principal. Not included in these totals are international bridges across the Rio Grande, most of which are also tolled.
Tesla Considering Economic Liberty Challenge to Direct-Sales Bans. While Tesla has had success in some states in gaining exemptions from typical laws requiring all new-car sales to be made by company-franchised car dealers, the Wall Street Journal reported last month that Tesla’s legal people are considering a litigation strategy. That approach stems from the Institute for Justice’s 2013 victory in the Fifth Circuit Court of Appeals defending the right of monks to sell caskets without having to hold a funeral director’s license. Since the Second Circuit has upheld laws that require a license to sell certain products, Tesla would likely face the prospect of an ultimate appeal to the U.S. Supreme Court.
BATIC Issues Transportation P3 Report on Successful Practices. The U.S. DOT’s relatively new Build America Transportation Investment Center (BATIC) last month issued a report called “Successful Practice for P3s.” Its six chapters introduce transportation public-private partnerships, discuss state legislation and policy, project development lessons learned, competitive procurement, monitoring and oversight, and cross-cutting themes over the entire life-cycle of P3 projects. Go to https://www.transportation.gov/policy-initiatives/build-america/successful-practices-p3s.
Texas Private Rail Project Seeks Different Equipment Standard. Texas Central Partners and its planned train supplier JR Tokai will petition the Federal Railroad Administration for exemption from the regular crashworthiness standards that apply to U.S. passenger rail. Those standards are based on typical U.S. passenger rail service that operates on trackage shared with freight trains and traversed by roadway grade crossings. By contrast, the company’s planned project between Dallas and Houston will use its own passenger-train-only right of way without any grade crossings. That is also the case with high-speed rail in Japan, and the planned equipment would be the same N700 series trains now used on the Tokaido Shinkansen line (which has never had a fatality).
Lawsuit Seeks to Stop Denver I-70 Modernization. The $1.2 billion P3 project to rebuild I-70 between downtown and the Denver International Airport was hit last month by a lawsuit filed by environmental and neighborhood groups, objecting to EPA’s current emission standards that would apply to this project. The project would demolish an aging viaduct, replacing it with a depressed highway section covered by a four-acre landscaped park. It would also add express toll lanes to this congested corridor. Meanwhile, Colorado DOT expects to begin construction this summer on its $320 million project to add express toll lanes on the C-470 beltway.
What Do Weigh Station Stops Cost Truckers? A new survey by Drivewyze, which sells a weigh-station bypass service, analyzed 13 million “site visits” by trucks to state-operated weigh stations on major highways around the country. While visit times ranged from less than a minute to over six minutes (in Massachusetts), the average was 3.5 minutes. And each average stop costs the trucking company $9.20 in lost productive time. That might not sound like much, but for trucks operating in states with many weigh stations or on long-distance routes with many stations, that cost can add up. The company cites one truck in Minnesota that bypassed a weigh scale on I-94 some 14 times a day. That bypass capability saved the company 13 hours and $2,005 per month for that single truck.
San Francisco Tops New York for Transit Hub Taj Mahal. New York media were full of stories earlier this year when the new transit hub at the World Trade Center finally opened, at a way over-budget cost of $4 billion. But Bloomberg News reported last month that San Francisco’s TransBay Transit Center-also designed by a noted architect-is now projected to top out at $6.3 billion, compared with an original budget of $4.6 billion. The first phase alone is 44% over budget, now estimated at $2.3 billion vs. the original $1.6 billion. And the second phase is now put at $4 billion instead of the original $3 billion.
Legislators Reject New York Toll Subsidy. Both houses of the New York state legislature last month rejected Gov. Andrew Cuomo’s proposal to use $340 million in one-time financial settlement money to provide refunds of 50% of the tolls paid by frequent car and truck users of the New York Thruway. Apparently still under consideration is the Governor’s plan to use $700 million of the settlement money to help pay for the $4 billion replacement of the Tappan Zee Bridge, now under construction. The political reason for doing this is to avoid a large toll increase, under which users of the new bridge would be paying for it. The Governor did make one sensible Thruway proposal: relieve the agency of having to subsidize the Erie Canal and other state canals, which costs Thruway toll-payers nearly $100 million a year.
All-Electronic Tolling Coming to Massachusetts Turnpike. The Massachusetts DOT is installing gantries to house the equipment by which all-electronic tolling will replace toll booths and toll plazas starting this summer over the entire length of the system. Overall toll revenue is planned to be the same, but since the gantries will be in locations different from the former toll plazas, rates at various tolling points will be different from what people are used to.
Moody’s Reports U.S. P3 Market is Expanding. In a report dated March 10, 2016, Moody’s Investors Service reports that “U.S. P3 Market Slowly Builds on Four Fronts.” The four trends discussed are (1) progress on the learning curve, (2) starts and stops on the legislative front, (3) more diversification in the types of projects (beyond mostly transportation P3s), and (4) funding innovation and strong demand by investors.
North Tarrant Express Wins Award. The $2.1 billion NTE project in Fort Worth, Texas was the highway/bridge project winner in Engineering News-Record‘s annual Best of the Best awards. The design-build construction team (Ferrovial and Webber) rebuilt 13 miles of I-820 and SH 121/183, adding express toll lanes in the process. The project was completed nine months ahead of schedule. The P3 concession is held by the team of Cintra, Meridiam, and the Dallas Police and Fire Pension System.
Meridiam Sweeps Infrastructure Investor Awards. Infrastructure Investor named Meridiam Infrastructure its Global Transport Investor of the Year for 2015, announced in the magazine’s Annual Review dated March 2016. Not only that, Meridiam was also named Europe Transport Investor of the Year and North America Transport Investor of the Year, where its notable projects include the new Central Terminal at LaGuardia Airport.
North American Deal of the Year: Indiana Toll Road Concession Company. The $5.7 billion purchase of the Indiana Toll Road Concession Company, after its former owners had filed for bankruptcy, illustrates the under-appreciated value to pension funds of long-lived infrastructure with a growing long-term revenue stream. IFM Investors, a major Australian pension fund, organized the buy-out in cooperation with a whole raft of U.S. and overseas pension funds. As a trend-setting transaction, it well deserves Infrastructure Investor’s North American Deal of the Year honors.
New App for Variable Tolling. Want to know in advance what your toll is likely to be on your 7 AM trip on the I-495 or I-95 Express Lanes in northern Virginia? P3 concession company Transurban has unveiled an app for this purpose, available for both iPhones and phones using the Android operating system. The app became available earlier this month.
“Over the last several decades and in many corners of America, claims of induced demand have stopped highway projects in their tracks. This is wrong-headed. Highway investment decisions should be based on a full accounting of costs and benefits over the service life of a facility. Induced-demand studies have told us only that some benefits of new or expanded highways get eroded over time. This is important to know, for it gives us a handle on the numerator of the benefit/cost ratio. However, induced-demand studies say nothing about other benefits conferred by highways-e.g., increased economic productivity or satisfaction of one’s preference for suburban living. . . . Although I personally sympathize with the aims of many environmentalists, fighting highway projects, regardless of what benefit/cost numbers say, is misguided. The problems people associate with roads-e.g., congestion and air pollution-are not the fault of road investments per se. These problems stem from the use and mispricing of roads, new and old alike.”
-Robert Cervero, “Are Induced-Travel Studies Inducing Bad Investments?” Access, Spring 2003 (www.accessmagazine.org/articles/spring-2003/induced-travel-studies-inducing-bad-investments)
“On road networks, the transition to more user-pays approaches would allow charging to be linked to funding and supply to be linked to demand. This will be fundamental to securing the required funding and sustainably improving the level of service. That is why the introduction of direct heavy vehicle charging within five years, and direct user charging for all vehicles within 10 years, alongside the removal of existing taxes and charges, should be a priority for Australia’s governments to provide greater fairness and equity in how we pay for roads. . . . Managing and renewing existing infrastructure will also be crucial. Infrastructure is generally characterized by long-dated assets for which the operational costs are often many multiples of the funding required in the planning and building phase. The majority of infrastructure Australians will use in the next 15 years has already been built, but this infrastructure will require substantial additional funding for maintenance, renewal, and upgrade as our population grows.”
-“Executive Summary,” Australian Infrastructure Plan: Priorities and Reforms for Our Nation’s Future, Infrastructure Australia, February 2016
“How quickly can we get [autonomous vehicles] into people’s hands? If you read the papers, you’re going to see that it’s maybe three years, maybe 30 years. And I guess I’m here to tell you that I think honestly, it’s a bit of both. . . . We started really driving on the freeways because it’s the easiest situation to drive in, because all the traffic’s going in the same direction. . . . And then we move to drive on boulevards. . . . And then finally we moved into driving in urban centers . . . the hardest type of driving. So when we think about the technology rolling out over time, we imagine we’re going to find places where the weather is good, where the roads are easy to drive, and the technology might come there first. And then, once we have confidence with that, we’ll move to more and more challenging locations.”
-Chris Urmson, Google Self-Driving Car Project, “Notable & Quotable: Self-Driving Caution,” The Wall Street Journal, March 23, 2016
“Self-driving cars are going to be here soon enough, and if we’re honest about it, as cute as those little Google bugs appear to be, we all know that self-driving is really going to be applied to long distances on freeways first. And if we’ve got self-driving cars, then the opportunity cost of being able to move out of a car onto a faster train pretty much disappears, too. Thus, the basic calculations about the benefits of California’s High Speed Rail look entirely wrong to me. As such, there is no net present value, there is a negative number left over when we add up all the costs and benefits. That is, building the system will end up leaving us all poorer rather than richer.”
-Tim Worstall, “California’s High Speed Rail System Just Isn’t Economic,” Forbes.com, March 18, 2016
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