Surface Transportation News: Dealing with ‘double taxation’ on tolled Interstates, the supply chain mess, and more
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Surface Transportation Innovations Newsletter

Surface Transportation News: Dealing with ‘double taxation’ on tolled Interstates, the supply chain mess, and more

Plus: Trucking study urges EVs to pay by the kilowatt-hour, assessing the future of urban-area parking, and more.

In this issue:

Dealing with “Double Taxation” Objections to Tolling

Highway user groups, especially in the trucking sector, have generally opposed any expansion of tolling in the United States. One reason for this is that just about all our legacy toll roads are being fully paid for by their toll revenues. But their customers also pay the usual federal and state fuel taxes, so they are actually paying twice to use the same highway. A second concern is that in some states—New York, New Jersey, and Pennsylvania, in particular—legislatures have required toll agencies to divert significant fractions of their toll revenues to non-toll-road and often non-highway uses. This amounts to yet another tax, just on toll road customers, instead of those other projects being funded out of general taxes paid by all taxpayers.

Over many years of talking with and giving presentations to trucking groups and other highway user groups (e.g., AAA), I developed a set of customer-friendly tolling provisions, aimed initially at new instances of tolling, such as toll-financed reconstruction and modernization of aging Interstate highways. One of the most important of these provisions is to eliminate “double taxation,” by giving rebates of fuel taxes incurred by customers of the new tolled corridors. 

In conversations with state transportation departments (DOTs), I’ve seen coolness, if not opposition, to this idea. State DOTs are becoming concerned about the projected decline of fuel tax revenues in coming decades (due to ever-tougher federal Corporate Average Fuel Economy, CAFE, standards regulations and the effort to replace petroleum-fueled vehicles with electric vehicles). They are not keen on giving up a portion of this shrinking fuel-tax pie. My response has always been, “But look at the benefits. If fuel-tax rebates remove a major obstacle to toll-financing your second-generation Interstates, won’t you be better off than if you tried to use dwindling fuel tax revenue for this important infrastructure renewal?”

Like most of them, I was educated as an engineer, so I finally concluded that only a realistic quantitative demonstration could persuade them. Over the past year I have constructed a quantitative model of a hypothetical mid-sized state using toll financing—with fuel tax rebates—to rebuild and modernize its long-distance Interstates. It’s been just posted online here.

This was a pretty complicated exercise. Since every state is different, the first task was to create a composite mid-size state, using federal highway data on 10 states in the middle of the population distribution. On average, they each had four long-distance Interstates, totaling 2,595 lane miles. I modeled this as four identical corridors, two of which needed only reconstruction and the other two also needing one additional lane in each direction.

The next step was estimating the cost of both reconstruction and lane additions. For the data needed to do this, I relied on the most recent unit cost data for both types of Interstate construction from the Federal Highway Administration (FHWA’s) Highway Economic Requirement System (HERS) database. The most recent figures, alas, are from 2016, which I updated to 2019 using FHWA’s National Highway Construction Cost Index. Realistically speaking, a state would not oversee four multi-billion-dollar megaprojects all at once, so I spaced them out to begin construction (after environmental clearance) in 2025, 2028, 2031, and 2034. Assuming (another customer-friendly tolling principle) that toll collection started after each corridor was completed, the toll revenue would begin five years after the start of construction.

To verify that the toll rates would be enough to cover the construction costs plus the operating and maintenance (O&M) costs, I carried out a sketch-level traffic & revenue analysis. I used data from existing tolled Interstates to get average toll rates in today’s dollars of 7 cents per mile for light vehicles and 28 cents per mile for heavy trucks. The average projected annual vehicle miles traveled (VMT) growth rate for the 10 mid-size states was 0.91% for light vehicles and 2.0% for heavy vehicles. But since we know that a tolled highway will attract less VMT than a non-tolled highway, I used estimated diversion rates (for cars and for heavy trucks) to get net (i.e., tolled) VMT in each year from 2030 to 2060 during which the tolling would start and continue. And to cover O&M costs, I assumed 15% of gross toll revenue would be reserved for that, with 85% for debt service on the toll revenue bonds. The good news is that the net present value (NPV) of net toll revenue was within a few percent of the NPV of construction costs, showing that the toll rates are in the right ballpark for these projects to be toll-feasible.

Still with me? The final step was to estimate the fuel tax rebates needed each year for the light-vehicle and heavy-vehicle customers on the rebuilt corridors. For this I received valuable assistance from Ed Regan, recently retired from CDM Smith, who has been working with me on several projects dealing with the transition from per-gallon fuel taxes to per-mile charges. We drew on data from the Energy Information Administration on projected vehicle fuel economy and also data from Bloomberg New Energy Finance on projected electric vehicle market penetration. Those projections extend only to 2050, so I extended them conservatively to 2060. The result was a plausible estimate of the amount the generic state would spend on fuel-tax rebates from 2030 through 2060.

Now here’s the bottom line. The net present value of fuel tax rebates ($505 million) over this period is a mere 6.8% of the NPV of gross toll revenue ($7.45 billion) over the same period. To be sure, those $505 million are real dollars. But look at what the state gets in exchange. Per the assumptions and numbers in the study, it would not have to use any of its limited fuel tax revenues to either (a) rebuild all its aging rural Interstates, or (b) to operate and maintain them. All its remaining state and federal fuel tax monies would be available for all the other highways that are the state DOT’s responsibilities.

Note also that the way the study was done reflects all four of the customer-friendly state tolling principles:

  1. Toll roads not used as cash cows: all toll revenue used for reconstruction plus O&M;
  2. Reduced cost of toll collection: all-electronic tolling with incentives for prepaid transponder accounts;
  3. Real value-added for customers: no tolls collected until a rebuilt corridor opens to traffic; and,
  4. No double taxation: state fuel tax rebates.

There is no guarantee that a state’s adoption of these four principles would remove all opposition to toll-financed Interstate modernization. But they would remove the primary arguments typically made by opponents. And that could be worth a great deal.

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Politicians Can’t Fix Logistics Congestion, But They Can Make It Worse
By Marc Scribner

Snarled supply chains are causing anxiety for both producers and consumers and no relief is yet in sight. Most experts believe logistics congestion and input shortages are likely to continue through 2022. This reality has been slow to set in among the political class, which tends to view every problem as something to be fixed through public policy. President Joe Biden has appointed “czars” and held summits with business and labor leaders. Florida Gov. Ron DeSantis suggested that Florida’s ports could offer meaningful relief for California-bound container ships from Asia even though Florida’s ports have less than one-tenth the container capacity of California’s. But policy interventions could at best provide imperceptible relief in the near term while strengthening long-term supply chain resilience. Far more likely is that a dangerous combination of impatience and ignorance results in policies that prolong the congestion and reduce supply chain resilience.

The root cause of logistics congestion that has garnered so much public attention is the behavior of the public—specifically, the unprecedented surge in consumer goods demand during the COVID-19 pandemic. People stayed home and avoided activities involving strangers. Thanks in part to generous government assistance that kept personal incomes high, American consumers were able to maintain their personal consumption expenditures during the pandemic by substituting durable and nondurable goods for services (which were largely closed down).

E-commerce, in particular, exploded, with sales increasing by 32% between the first and second quarters of 2020 even though total retail sales declined by 4% during that period. While e-commerce sales had been rapidly rising in recent years, this demand shock dwarfed the previous e-commerce sales growth trend of roughly 2% per quarter. E-commerce retail sales today remain around 25% above the pre-pandemic trend and the nature of e-commerce plays an outsized role in our current logistics congestion.

Here’s a simplified story illustrating the cascading impacts of pandemic-induced changes in household consumption:

  • The rapid flows demanded of e-commerce from production to distribution to end consumer caused warehouses already stocked with goods meant for pre-pandemic consumers to become congested as they attempted to adjust to pandemic-caused changes in goods demand.
  • Because there was no space in the warehouses, goods were delayed in unloading from shipping containers on truck chassis in parking lots and loading docks outside the warehouses.
  • Because warehouse parking lots and loading docks were overflowing with full containers and truck chassis, commercial customers were not picking up their containers and chassis from freight rail terminals and ports.
  • Because those customers weren’t picking up their goods from rail and port terminals, carriers could not return empty containers and chassis to seaports and ocean carriers.
  • Because seaports lacked the chassis to move containers out of ports to inland distribution centers, overflow storage quickly reached capacity at ports.
  • And because there was no space in ports to unload containers from massive container ships, container ships waited for weeks offshore to unload their cargo.

Every hub and spoke of the logistics chain is strained due to this shift in consumption and spike in goods demand. Attempting to address one link, perhaps by moving to 24-hour schedules at ports as supported by President Biden, will not address problems in other parts of the chain and could possibly exacerbate them.

And it is understandably tempting for politicians to believe they can fix this problem with public policy because certain government policies made this situation worse than it otherwise would be. These policies include the failure to adopt international best practices and technologies at U.S. ports due to intransigent labor unions and their allied politicians, the duties on Chinese intermodal truck chassis that have tripled their price since 2018 under both the Trump and Biden administrations, and unprecedented “stimulus” and unemployment cash to households that kept Americans spending at record levels, among others.

Smart reforms could improve the long-run resilience of the supply chain, although the damage from past irresponsible policies has already been done and cannot be quickly reversed. Because the main source of our current troubles is unusual short-run consumer demand, public policy is ill-suited to help. What is most concerning is the very real possibility of impatient politicians misdiagnosing the problems and proposing policies that will exacerbate them.

The Ocean Shipping Reform Act of 2021 (H.R. 4996), introduced by Reps. John Garamendi (D-CA) and Dusty Johnson (R-SD), has already garnered the bipartisan support of dozens of members of Congress and provides an example of the combination of impatience and ignorance threatening to prolong the supply chain crisis. Among other misguided regulatory provisions, the bill would crack down on detention and demurrage fees charged to customers who are late in returning or late in picking up containers.

Detention and demurrage charges incentivize customers to keep shipping containers flowing, rather than using them as overflow warehouse storage as many are currently doing. These charges are one of the few tools available to carriers to maintain container velocity. Bizarrely, H.R. 4996 would increase logistics congestion when it is already at its worst. But the bill represents something and politicians are inclined to do, so dozens of cosponsors have signed on even though few if any understand what the key provisions actually mean or would do.

Despite assurances from politicians, there are no quick and painless ways out of this strange supply chain situation, which is largely yet another unpredictable consequence of a 100-year global pandemic. Instead, we must accept these difficulties for the time being, be vigilant about well-meaning but counterproductive policy responses, and work to improve long-run supply chain resilience by jettisoning existing harmful government policies.

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Trucking Study Urges EVs to Pay by the Kilowatt-Hour, Not by Mile

As was made pretty clear by a methodologically challenged report released in March 2021, the trucking industry research arm American Transportation Research Institute (ATRI) does not like the idea of mileage-based user fees as a replacement for fuel taxes. As I pointed out in an article in this newsletter (“How Not to Win Support for Mileage-Based User Fees,” April 2021), the ATRI report downplayed the extent of the forthcoming fuel tax revenue decline and used extremely high cost-of-collection figures to portray mileage-based user fees (which it calls a vehicle miles traveled, VMT tax) as far too costly to be taken seriously.

I’m pleased to report that ATRI’s latest contribution on this subject admits that electric vehicles (at least for personal vehicles) are being sold in larger numbers, encouraged by increasing federal and state subsidies and that it’s important that electric vehicles (EVs) pay their fair share of the costs of building and maintaining highways. So far, so good. But instead of conceding on charging EVs per mile, in this new report ATRI’s Jeffrey Short and Danielle Crownover make a case for charging EVs per kilowatt-hour for the “electric fuel” they use. (“Electric Vehicles and Infrastructure Funding, Technical Memorandum,” September 2021, available on request from Electrified trucks are not mentioned at all.

In a useful table, the report identifies states that charge an annual registration fee of greater than or equal to $100 for EVs (21 states) and those that do not charge anything different for EVs (23 states), plus seven others that charge other annual EV fees. But the authors also point out that a flat annual fee bears no relation to the amount of highway use. After a quick recap of the previous ATRI study rejecting “VMT taxes” as far too costly, the second half of the 30-page report makes their case for charging all EV users for the kilowatt-hours used. This turns out to be not so easy.

They explain the three types of chargers now in use: Level 1 (very slow, 120V), Level 2 (faster, 240 volts), and Level 3 (much faster, 480V). The first is typical in people’s garages, where it plugs into an ordinary electric outlet. Level 2 chargers are currently used mostly at public charging sites. Level 3 (DC fast charging) is far more costly and is not available for residential use. They suggest that it would be relatively easy to collect an electricity tax from public charging stations, which are essentially businesses. But they exaggerate the scale of the problem with residential charging by claiming that 80% of US electricity is consumed at residential locations. It’s actually about 38% (with 36% commercial and 26% industrial). Even so, they admit that collecting an electric fuel tax from residential EV charging is “more challenging.” They laud the growth of smart meters and time-of-use electricity rates, but some way to distinguish kilowatt-hours used to charge the Chevy Bolt from all other electricity uses is going to be a real problem.

Apart from the difficulty of actually charging all EV users, there is also an equity question which the report does not address. Smart meters, time-of-use rates, and the ability to identify when the Level 2 charger is operating (and how much it’s delivering) are likely to be chosen by more-affluent people, leaving others paying household rates for their 120V plug-in Level 1 chargers—which the electric utility will not know they have. The report suggests a Big Brother system of matching the Vehicle Identification Number of each EV with an electric utility’s customer database in order to catch non-payers. The report also assumes that every home Level 2 charger will be installed with a proper electrical permit (which the electric utility could access), but in some parts of the country, lots of electricians are willing to do jobs without permits. Acknowledging some of these difficulties, the report then suggests that a flat fee approach may be needed for those without a smart charger, while admitting that this would be “not purely a user-pays tax.”

In short, while this is an interesting alternative, the ATRI report points out numerous problems with implementation, which belies its optimistic estimates of how soon an overall electricity fee covering all EVs could be implemented.

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Ridehailing Companies: Hype vs. Reality
By Baruch Feigenbaum

Ridehailing companies like Uber and Lyft promised to transform transportation by creating self-driving vehicles, ending private car ownership, reducing congestion, and enhancing public transit. A new opinion piece in The New York Times, titled “For Uber and Lyft the Ridership Bubble Burst” by Greg Bensinger finds that Uber and Lyft have failed to deliver on some of those promises and may soon fail as businesses. Bensinger makes some valid points.

For example, I agree with Bensinger that ridehailing companies promised that by 2021 the majority of rides would be in automated vehicles (AVs). Many believe that ridehailing’s long-term business model requires automated vehicles since there are not enough people willing to moonlight as drivers. Further, paying the drivers is an obstacle to profitability. In reality, ridehailing companies fell victim to the Gartner-Hype cycle, which describes the phases in which technology develops. The companies grew rapidly during the peak of inflated expectations and believed AVs would be widespread by 2021 when that was never realistic. Uber sold its AV business in 2020 amid mounting development costs. Lyft also backed off its AV development, selling much of that business to Toyota earlier this year.

The companies promoted ridehailing as a profitable business model. Yet, without automated vehicles, both companies continue to hemorrhage money. In 2019, Uber lost $8.5 billion; last year by offering food delivery during the COVID-19 pandemic the losses dropped to $6.8 billion. Lyft did better, but still lost $4.4 billion over the two-year period. And the companies are not exactly winning on Wall Street. Some Lyft investors have lost money, while some Uber investors have made a tiny profit, making both companies poor investments at a time when the overall market is offering annual double-digit gains.

Another ridehailing company promise was to end car ownership. Clearly, this is not something that will happen in a few years, if ever. The trend is Americans buying more cars, not fewer. Millennials are buying more cars per capita than other cohorts, largely because they have had far fewer cars per capita than other cohorts. Shared, automated, electric vehicles are a long-term policy possibility but it’s unclear if ridehailing companies will control the market. Today’s high cost of taking a ridehailing service to everyday activities—the grocery store, the health club, the bank, the escape room—makes ditching vehicle ownership very challenging.

Uber and Lyft also claimed that they would increase carpooling via UberPool and LyftLine. Despite 50 years of policy providing incentives such as high occupancy vehicle lanes, developing carpools has been challenging. For ridehailing companies the hope was that customers traveling from the same origin to the same destination would share a ride if the price of a carpool was less than half the price of a solo ride. Carpool numbers were increasing, and then COVID arrived decimating all forms of shared rides. Post-COVID some riders will be willing to carpool for a modest discount, while others won’t be interested at any cost. I’d grade this claim as incomplete.

Some of Bensinger’s other claims may be more ideologically motivated. Supposedly, ridehailing vehicles cause congestion by circling the block looking for passengers. It is possible that traffic congestion worsened in dense cities such as New York and San Francisco. If congestion is really the problem, however, implementing cordon or congestion pricing is a straightforward solution.

Ridehailing companies also promise to reduce greenhouse gas emissions (GHGs) but Bensinger is skeptical, citing a study that shows since deadheading (driving without a passenger) accounts for 40% of all ridehailing mileage, it leads to a 20% overall increase in greenhouse gas emissions compared to driving a personal vehicle. What the study doesn’t do is compare ridehailing services to taxis, which have a higher average age and emit more GHGs per vehicle. If someone uses a ridehailing vehicle instead of a taxi, on average per capita GHG emissions fall.

More importantly, over the long term, the number of electric vehicles is expected to increase rapidly in the ridehailing fleet. And the above study looked at only six cities, none of which were New York City or Los Angeles, the two largest in the country. The evidence that ridehailing increases emissions is mixed at best.

Bensinger also repeats the fashionable claim that ridehailing is a significant drag on public transit. Transit’s usage was declining pre-pandemic, but this was largely due to transit poorly serving suburban destinations and the poor quality of service on many large subway systems. From 2018 to 2019, the Washington Metropolitan Area Transit Authority (WMATA) actually saw an increase of ridership, bucking the long-term trend of a decrease, despite massive growth in ridehailing in the city. WMATA’s increase occurred because the system finally appeared to have reached a state of good repair.

But the heart of some of the frustration with many on the political left is how ridehailing companies categorize their drivers. The California legislature passed Assembly Bill 5 that defined ridehailing drivers as employees. A ballot amendment overturned the bill, but many in organized labor believe ridehailing companies are skirting labor laws. Yet, most ridehailing drivers are part-time. Driving for Uber or Lyft isn’t their primary job, and they don’t want it to be. They are happy to be paid as contractors. The real aim of bills such as AB 5 is to unionize driver employees, which might have the unintended consequence of driving Uber and Lyft out of business. This would make taxis a monopoly and increase prices for riders.

Ridehailing companies have over-promised and underdelivered in some very important areas. I don’t know if ridehailing companies need automated vehicles to financially survive over the long term, but companies like Uber and Lyft provide a valuable service that should not be regulated out of existence as we continue to learn and see what the future holds.

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New Study: Cars Could Lift Poor Americans Out of Poverty

The headline on a 2019 Bloomberg City Lab article raised many eyebrows: “As the Planet Warms, Who Should Get to Drive?”. The study in question was researched and written by David A. King, Michael J. Smart, and Michael Manville and appears in the Journal of Planning Education and Research as “The Poverty of the Carless: Toward Universal Auto Access.” They find that while the costs of acquiring and using a car are difficult for the lowest-income households, a growing body of evidence suggests that having a car makes a large difference in employment and hence increased income. They conclude that, going forward, “planners should see vehicles, in most of the United States, as essential infrastructure and work to close gaps in vehicle access.”

The evidence on this has been accumulating over the past decade or two. A Brookings study last decade found that in the 10 largest U.S. metro areas, less than 10% of jobs could be reached within 45 minutes by public transit. And 36% of entry-level jobs are completely inaccessible by transit, which is not that surprising given that about two-thirds of new jobs are in suburbia.

A UCLA study several years ago found that between 2006 and 2016 the share of no-vehicle households at the poverty level decreased from 22.02% to 19.96%, driven in part by the availability of more-affordable used cars (unlike today’s market). In addition, record levels of auto loans also helped. But UCLA transportation researcher Evelyn Blumenberg told Daniel Vock of Governing that “Most low-income households are not taking out loans to buy a car. They’ll pick up a car from a friend or get one from Craigslist when they get an influx of money, like a tax refund.”

Blumenberg has been researching the job-access benefits of cars for low-income people for many years. “Research shows there’s a very strong relationship of having a car and likelihood of getting a job. For lower-income households, it’s really beneficial to have access to a car,” she told Vock. She also pointed out that poor families are migrating to the suburbs, and to get around there—to a job or anything else—requires a car. A 2014 study by the Urban Institute found that among families getting federal housing vouchers, those with vehicles were more likely to move to neighborhoods with less poverty, better schools, and more-available jobs.

There are several alternative ways to connect low-income households with vehicles. One is car loans offered without a down payment by entities such as Ways to Work. A number of charities (such as Charity Cars in Florida) encourage people to donate no-longer-essential cars that can be given or leased to low-income households.

The most important policy question going forward is whether the benefits of car access for low-income households outweigh trendy government policies that focus on reducing vehicle miles of travel as a key component of dealing with greenhouse gas reduction. Michael Smart, one of the authors of “The Poverty of the Carless” told Bloomberg that policymakers have to be able to pursue two objectives at the same time. “We don’t want to try to balance our carbon emissions and budget on the backs of the poor. All of these goals can be achieved if overall we drive less, even if we help some people drive more.” While I agree with the sentiment, I think the marginal increase in CO2 emissions from a tiny fraction of the population gaining access to vehicles is trivial, especially in the context of the ongoing trend toward lower-emission conventional vehicles and a rapid increase in zero-emission electric vehicles.

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Assessing the Future of Urban-Area Parking
By Baruch Feigenbaum

Over the last 30 years, developers have been building a declining number of parking spaces. The COVID-19 pandemic disrupted the demand, need, and approach to parking. Two recent articles, “No Parking: Cities Rethink Garages for a World with Fewer Personal Cars,” by Scott Calvert in The Wall Street Journal and, “Parking’s Back As an Office Amenity Post-COVID,” by David Levitt in The Commercial Observer, examined how parking needs may change in a post-COVID world.

Before diving into the articles, I want to provide a brief history of U.S. post-World War II parking policy. In the 1950s and 1960s, almost every new development was surrounded by copious free parking.  Suburbanization was in full swing. Many residents were moving out of cities like New York City and Chicago, places where there was never enough parking, and influenced by those experiences there was no such thing as too much parking to them. 

When most large cities and suburbs created their development codes, they set minimum parking standards based on the Institute of Transportation Engineers (ITE) parking generation manual. The minimum standards often required far more spaces than were necessary. For example, shopping mall parking minimums were calculated based on demand on the fourth busiest shopping day of the year. For the other 361 days of the year, shopping malls try to make use of that extra asphalt by hosting stands that sell products such as fireworks or firewood.

The ITE guide had “standards” for every possible type of residential development. Multiple-family units and single-family dwellings both required two spaces. Commercial developments were more complicated; churches, dry-cleaners, department stores, banks, and grocery stores all had specific rules. There were even different standards for strip clubs with partial- and full-nude dancing. And I wonder who did the research for those establishments!

Further, the standards were not exactly based on sound statistics. Since there were so many categories, a number of the required minimum parking standards were based on fewer than five data points, with one based on only two observations. That recommendation came with the warning, “low r-squared,” which seems like an understatement.

Fast forward to the 2000s when denser development came into vogue. Many potential multi-family apartment buildings did not have sufficient space for the minimum parking standards without building a costly parking garage. On the other hand, industrial brownfield sites that could be redeveloped into mixed-use commercial projects would not be profitable with minimum parking.

In the 2010s, many governments started examining how automated vehicles would affect demand for parking. Since Society of Automotive Engineers (SAE) Level 4 automated vehicles can drop off passengers in the center of developments and then drive themselves to less-valuable real estate, many developers are planning new developments with parking located on the periphery.

With these changes, developers pressed city leaders to eliminate parking minimums, and not require parking in a specific location. In the past 10 years, many cities eliminated parking minimums and some imposed parking maximums.

Over the last 18 months, the COVID-19 pandemic has obviously upended commute modes. Almost all white-collar employees began working from home and only about 50% have returned to offices. Many transit choice riders switched to driving and, due to limited service and other issues, many commuters have not returned to mass transit.

Given post-COVID uncertainties, this is a challenging time to predict the future of mass transit, but both writers take their best guesses. Levitt argues that the demand for parking will increase. And since creating new parking garages is very expensive in most downtowns, the strategy is to better use existing facilities.

Smart parking solutions, which were growing pre-COVID, will be more important in the future. Apps such as SpotHero that allow drivers to pay for and reserve parking ahead of time, typically for a lower price, are an option for drivers. Flash Parking is working on an interactive app that allows drivers to ask their car’s infotainment system for the closest empty parking spot. For drivers apprehensive about human contact due to COVID, Spaces USA provides touchless parking where customers dial a number at the entrance and/or exit to pay.

In contrast, Calvert expects parking demand to decrease. His article cites the use of e-bikes, e-scooters, and lower car ownership as reasons why, over the next 20 years, the demand for parking could drop by one-third. Street parking and underground garages will be eliminated while surface garages will decrease. In order to accommodate the expected decrease in demand, some developers are building parking garages that can be redeveloped as residential properties.

Similar to Levitt, Calvert predicts easier ways to manage and pay for parking. But he also predicts more multimodal garages that house e-scooters, ghost kitchens, fitness centers, and shared automated electric vehicles.

Overall, Levitt is focused on the near future detailing how COVID-19 has changed peak parking demand and made payment technologies more widespread. Calvert is focused more on the longer term. But his prediction of a one-third decrease in parking demand seems unlikely to me. Building parking garages that can be repurposed might be a smart decision for a long-term asset, but all those shared automated vehicles will need to park somewhere. And that somewhere figures to be in garages, especially in dense cities like New York City.

For an industry that changed little over 50 years, parking is undergoing a transformation. In 2000, parking garages were staffed by an attendant and only took cash. Today, customers can prepay for an automated garage using a credit card. Parking garages of the future might not provide ghost kitchens, but they will continue to evolve. 

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News Notes

$8.3 Billion Australian P3 Highway Project Financed
The long-term public-private partnership for the $8.3 billion North-East link project reached financial close in late October. The project will be financed, developed, and operated by the Spark consortium, led by UK company John Laing. The Melbourne metro area project will link two existing motorways via tunnels, while also completing the M80 and upgrading the Eastern Freeway. It will also add 25 km of new and upgraded cycling and pedestrian paths.

Toll Projects Regaining Traffic as COVID Fades
P3 developer-operator Cintra reported late last month major traffic improvements on its toll-financed facilities in North America. In Texas, traffic on both the LBJ and NTE express toll lanes in the Dallas/Ft. Worth metro area are now above 2019 levels. Highway 407 ETR in the Toronto metro area resumed growth after mobility restrictions were partially eased in June. And traffic in the I-77 express toll lanes in the Charlotte, NC metro area was up 39% and had regained pre-COVID levels by the end of June.

California Expands MBUF Program
Under recently approved legislation, California has begun signing up volunteers to pay a mileage-based user fee instead of the state gas tax.  Participants can report their miles driven either via odometer readings or GPS. They will receive refunds for the gas taxes incurred while driving those miles. Despite this revenue-neutral approach, populist opponents denounced the plan. State Senate GOP leader Scott Wilk said “Commuting is a necessity in my district, and a per-mile tax would be a huge blow to middle-class families.” Don’t these guys read the bills they pass?

New Technology Captures CO2 from Heavy Trucks
A start-up company called Remora is testing a device attached to the tailpipes of the tractors of 18-wheel big rigs, aiming to capture up to 80% of their CO2 emissions (which it plans to sell for re-use). The concept was developed as a PhD dissertation by company chief science officer Christina Reynolds. Signed up for the test program are ArcBest Corp., Cargill NFI Industries, Ryder System, and Werner Enterprises. Freight transportation, including trucking, accounts for 12% of all U.S. CO2 emissions, according to a study from the Brookings Institution.

Tax Credits for Union-Made EVs Draws Fire
One of the provisions in the pending federal “reconciliation” bill to subsidize electric vehicles provides for an additional $4,500 tax credit for EVs made in the United States in unionized plants. I critiqued this as contrary to the Biden administration’s climate goals because the vast majority of EVs will be made in non-union plants by both traditional Detroit-based auto companies and all the U.S. plants of non-U.S. companies. Now Reuters reports strong opposition from the European Union and many other countries with large-scale auto industries. A letter from 25 ambassadors sent to the Biden administration on October 29 asserts that “limiting eligibility for the credit to vehicles based on their domestic assembly and local content is inconsistent with U.S. commitments under WTO multilateral commitments.”

Virginia Express Toll Lane Project Moving Forward
Virginia DOT and Transurban have finalized a comprehensive agreement for the $600 million I-495 NEXT project. It will extend the I-495 express toll lanes north by 2.5 miles, with new connections at the Dulles Toll Road and the George Washington Memorial Parkway. Transurban has selected Lane Construction as its design-build contractor, and financial close is expected in December, Inframation News reports. Financing plans include Private Activity Bonds and a TIFIA loan.

Brightline California-Nevada Project Moving Forward
Two new developments move the original Las Vegas to Victorville (CA) project a bit closer to actually serving Los Angeles. Last month the company signed an MOU with three California transportation agencies under which it will be able to use 48 miles of right of way on I-15 between Victorville and Rancho Cucamonga to extend its line southward. And the San Bernardino County Transportation Authority is planning a grandiose Cucamonga Station that will serve commuter rail line Metrolink, the planned Brightline extension, and an underground tunnel to Ontario International Airport. No cost estimate or funding plan for this station has been announced.

New I-49 Now Open for 290 Miles
The long-planned I-49 is to link southern Louisiana, via Arkansas, Kansas City, MO, where it will connect with north-south I-29 to the Canadian border and Winnipeg. Last month saw the opening of what had been a five-mile gap between Arkansas and Missouri. With that gap closed, the corridor is now open for 290 miles. Including the northward section of I-29, the overall I-29/I-49 corridor will be 1,600 miles long.

Insurers Seek Permission for Driver-Performance Rate-Making
The Wall Street Journal reported that Allstate Corp. has become a leading advocate of using measured driver performance as a key factor in setting car insurance rates, reducing or eliminating dependence on credit scores and demographics. Allstate and Progressive have been using telematics data (with drivers’ permission) for many years as a factor in setting rates. Car insurance rates are set by state agencies, so the industry must deal with 50 state governments. The WSJ article reported an estimate that fewer than 4% of the country’s 210 million personal auto insurance policies make use of driver-performance data, according to the National Association of Mutual Insurance Companies.

Deloitte Sees EVs Leading to Mileage-Based User Fees
The chief economist of consulting firm Deloitte, Ian Stewart, laid out his rationale for seeing the transition to electric vehicles as leading to a shift from fuel taxation to mileage charges. The piece appeared in the October 25 issue of Deloitte Monday Briefing. Stewart reasons that economic forces will reinforce governmental pro-EV policies, especially once the ownership cost of EVs becomes lower than that of conventional vehicles: “As goods and services become cheaper, people consume more of them.” And he sees it as obvious that, “Charging drivers for road use would solve [both] the congestion and the revenue problems.”

First Projects Launched for I-69 Toll Bridge
The Kentucky Transportation Cabinet has requested technical and price proposals from companies to design and build some of the roadway structures for the I-69 Ohio River Crossing project. KYTC has narrowed down contenders to three prequalified teams, with proposals due November 15 and selection to be via a best-value approach.

Supreme Court Rejects Truckers’ Appeal on Indiana Toll Road Tolls
The U.S. Supreme Court on October 15 denied an appeal from trucking groups whose argument that a 35% toll increase on trucks using the toll road discriminates against Interstate commerce. The truckers had lost at both the Circuit Court and District Court levels, with those courts arguing that roads are not inherently a state function and there are also alternative routes, so the state could permit the rate increase. The Supreme Court declined to hear the appeal.

BART San Jose Extension Now to Cost Twice Original Estimate
Federal Transit Administration experts now expect the final cost of the four-station, six-mile extension of BART into San Jose to cost $9.1 billion. At the same time, FTA announced it was allocating $2.3 billion in federal aid to the project—or a quarter of the final cost, whichever is less. Only three years ago, the Valley Transportation Authority estimated that the project would cost $4.7 billion and be completed by 2026; the new completion date is 2030.

Average Vehicle Age Now 12.1 Years
Since 2001 the average age of personal vehicles has increased from about 9.6 years to a new high of 12.1 years, according to research by data firm IHS Markit. Today’s vehicles are better built, and have much longer warrantees than previous generations, so they are more likely to go through several owners and last for as many as 200,000 miles. That is negative news for those expecting a speedy shift from internal combustion engine cars to electric and autonomous vehicles.

Hyperloop Test Track Planned in Colorado
Swisspod, in cooperation with a subsidiary of the Association of American Railroads, has announced plans to develop a hyperloop test track at PuebloPlex, a 15,847-acre industrial development site. Swisspod intents to test what it terms a unique propulsion system for its planned hyperloop pods.

Chinese Solar Panels and Coal Use
A majority of solar panels being installed worldwide are made in China. Unfortunately for the environment, most of them are produced using electricity from coal-fired power plants. An August 2 Wall Street Journal article quotes Cornell engineering professor Fengqi You as estimating that a solar panel made in China creates twice as much CO2 as one made in portions of Europe.

Newspeak from Florida DOT
After coming under some degree of criticism for embracing concepts such as “complete streets” and “road diets” which generally reduce traffic lanes in favor of either transit or bike/walking, Florida DOT’s Systems Implementation Office has renamed its former Complete Streets Guidebook. It is now known as the “Lane Repurposing Guidebook.” I guess that is a step toward honesty about what is really involved. An illustration on the cover shows before/after renderings of a three lanes each way arterial converted to two lanes each way. This is an especially telling example, since most six-lane arterials in Florida are key adjuncts to the limited-access highway system whose very being is to serve autos, buses, and trucks, not bicyclists and pedestrians.

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Quotable Quotes

“[U]ser fees can play an important role in financing both new infrastructure projects and in maintaining existing ones. User fees are often ruled out in the policy process because they are claimed to be regressive. More honestly, they are politically difficult. Yet fees for vehicle miles traveled that vary by time of day, for parking in dense urban areas, for the use of airports and ports, and many other user charges can reduce the demands that an infrastructure program places on general revenues. If set to reflect the marginal cost of using infrastructure, they also represent an important step toward its efficient utilization. While there are many justifications for investing in infrastructure, there are few compelling reasons for making such infrastructure free to users, especially since that will lead to utilization above and beyond the efficient, cost-reflective level.”
—Edward Glaeser and James Poterba, “Economic Perspectives on Infrastructure Investment,” Aspen Economic Strategy Group, July 14, 2021

“Jobs are suburbanizing, poverty is suburbanizing, and people are living in very dispersed environments—which makes accessing those jobs by modes other than a car really difficult and time-consuming. . . . It’s a touchy subject in transportation circles, where funds are focused on increasing access to public transit, even though poor people more than anyone need the flexibility and mobility of having a car. Unfortunately, in almost every single neighborhood context, public transit does not provide the same job opportunities as having an automobile.”
—Evelyn Blumenberg (UCLA), in Martine Powers, “Trump’s Welfare Reform Plan Misses a Key Piece: Transportation,” The Washington Post, May 12, 2018

“We need to focus on the most cost-effective methods for reducing climate pollution even as we take on the challenge of moving from a mostly fossil-fuel-powered world to a clean global economy.”
—Fred Krupp (Environmental Defense Fund), “Methane and Other Climate Bargains,” The Wall Street Journal, Nov. 2, 2021