Surface Transportation Newsletter #188

Surface Transportation Innovations Newsletter

Surface Transportation Newsletter #188

What if there is no infrastructure bill?

In this issue:

 What If There Is No Federal Infrastructure Bill?

President Trump’s walkout from the White House meeting with Sen. Schumer (D, NY) and House Speaker Rep. Nancy Pelosi (D, CA) has led a number of observers to conclude that a 2019 infrastructure bill—let alone a $2 trillion one—is not going to happen. That was the initial reaction of House Transportation & Infrastructure Committee Chair Peter DeFazio (D, OR), who announced that he and his colleagues will focus their attention on reauthorizing the surface transportation program, which expires on Sept. 30, 2020.

A $2 trillion (over 10 years) bill was always something of a pipedream, in part because of the huge price tag. The only two ways to pay for it would be (1) some kind of massive tax increases, or (2) increasing the national debt by another $2 trillion, at a time when the federal budget is already on a fast track to insolvency.

For the tax increases alternative, Jeff Davis of Eno Transportation Weekly (Week of May 6th) ran some numbers for raising $2 trillion over 10 years, as follows:

  • Increasing federal gasoline and diesel taxes: increase each by $1.50 per gallon immediately.
  • Tax only the rich: increase the two top rates, respectively, from 35% to 51% and from 37% to 53%.
  • Eliminate all itemized deductions: would raise only $1.3 trillion over 10 years.
  • Increase everyone’s income taxes: a 2.2% increase in every tax bracket would do this.

That’s a lot more specificity than I’ve seen in any of the various infrastructure proposals offered by presidential candidates or various congressional groups. But I don’t see any of those as realistic possibilities.

Another reason why a major infrastructure bill is questionable is one of timing. Many advocates of such a bill keep citing the need to create jobs, as if this were the Great Depression or the Great Recession. But the United States is at full employment these days, and the kinds of companies that build or rebuild infrastructure are having trouble finding qualified people.  Pumping hundreds of billions of dollars into a full-employment economy is unlikely to expand employment, but would likely increase wages significantly, thereby increasing the cost of infrastructure projects and creating shortages of workers in many other industries.

There is also a federalism case involved here. Nearly all the infrastructure we are talking about—roads and bridges, seaports, electric power, water and wastewater systems, etc.—is owned and operated by state and local governments or the private sector. Historically, those owners have had the responsibility to build, operate, maintain, and improve/modernize those important facilities. The relatively poor condition of much of this infrastructure is a failure of stewardship by those owners. Large-scale windfall funding from Uncle Sam would, in effect, reward those stewardship failures.

If there is no overall infrastructure bill, Congress could still help out, but in ways that do not require major new federal expenditures. Regulatory reform, better financing tools, and incentives for greater use of long-term P3 concessions would all be constructive measures enabling state and local infrastructure owners to deliver more bang for the buck, and improve their stewardship of these assets. For example:

  • Expanding tax-exempt private-activity bonds (PABs) to include brownfield reconstruction rather than just new (greenfield) transportation projects would greatly expand the scope for long-term P3 concessions to “rebuild crumbling infrastructure.”
  • Federal incentives for infrastructure asset recycling (as used successfully in Australia) would leverage federal dollars significantly, leading to rebuilding aging assets as long-term P3s while freeing up state/local funds for new infrastructure.
  • Adding taxpayer safeguards to the RRIF loan program (such as those in TIFIA requiring investment-grade ratings and limiting such loans to 33% of the project cost) would make that program more viable and less risky to taxpayers.
  • Allowing states to use toll financing to rebuild and modernize aging Interstate highways and bridges would accelerate the needed reconstruction of these vital corridors—but that permission must be conditioned on provisions that ensure the tolling is customer-friendly.

These are just a few examples. Last year’s White House infrastructure plan included quite a few other policy changes that could pay big dividends. Many of these could be included in the upcoming surface transportation reauthorization, and others in mode-specific bills (seaports, waterways, water and wastewater).

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Should Transportation P3s Be Regulated Like Electric Utilities?
By R. Richard Geddes

Last year the International Transport Forum (ITF), which is part of the OECD, produced an important report entitled, “Private Investment in Transport Infrastructure Dealing with Uncertainty in Contracts.” At 125 dense, single-spaced pages, the report represents an important contribution to the growing literature on private investment in infrastructure via public-private partnerships (P3s). Indeed, it should be required reading in university classes on that topic.

The report misfires, however, when in Chapter 5 (“Dealing with Uncertainty in Long-Term Contracts”) it promotes a regulatory asset-base (RAB) model for regulating private investment in infrastructure. The authors suggest that the RAB model can be usefully applied in network industries that possess natural monopoly characteristics and face little competition.  It appears to take its inspiration from standard commission-based models of utility regulation, such as those applied to electricity or water. The authors argue that the RAB model would be a “comprehensive solution” to several challenges associated with private infrastructure investment, and would create incentives to pursue life-cycle efficiency, among other benefits.

The authors themselves point out some serious problems with the RAB approach. For example, rather than advocating traditional rate-of-return regulation (which effectively sets prices to allow the firm to realize a pre-set return on invested capital), they suggest the more-flexible price-cap approach. They also note that “Capex bias” (called the “Averch-Johnson effect” in regulatory economics), arises when the regulator sets the allowed rate of return above the opportunity cost of capital. That causes the firm to overcapitalize (or undercapitalize if the allowed rate of return is too low).

Moreover, they stress that utility-style regulation often incorporates conservative estimates of funds required to ensure the regulated firm can pay back debt. That may distort the firm’s capital structure, resulting in excessive leverage.  They refer to this as “financial engineering.”

I have more-vital critiques of this approach, however. Several stem from the different P3 experiences in the United States versus European jurisdictions. In Europe, nearly all P3s utilize availability payments rather than financing based on user-generated revenues. Revenue risk is one of the most important risks in any infrastructure project. Since this risk is not part of most European concessions, there appears to be no possibility of a European concession going bankrupt. Revenue risk is a standard feature of any market. The absence of this risk in European concessions blunts the firm’s incentive to deliver best value for its actual customers.

There are several added (unaddressed) reasons to reject an RAB model for infrastructure. Such concerns are based on decades-long U.S. experience with RAB-type models regulating traditional U.S. utilities.  In recent decades, our country has moved away from such models in favor of approaches making greater use of market forces.

Perhaps most fundamentally, RAB-style regulation requires a regulatory body, such as the typical U.S. public utility (or “public service”) commission. Thus, all major regulatory decisions, even under price-cap regulation, must pass through that body. This creates substantial administrative costs and more opportunity for rent-seeking compared with the contract-based oversight incorporated in typical U.S. long-term P3 concession agreements.  In addition to direct administrative costs, regulatory decisions would occur only slowly relative to contractual provisions, introducing the problem of “regulatory lag.” Also, it is hard to reconcile focused incentives to pursue life-cycle cost efficiency with any type of commission regulation.

Although a full discussion is beyond this article’s scope, a commission is unlikely to allow the private investor to face bankruptcy and default on debt.  Thus, one of the strongest disciplinary forces active in most markets is effectively removed. This is not an idle point, as some revenue-risk DBFOM concessions in both the United States and Australia have in fact gone bankrupt. Examples include the Lane Cove Tunnel in Australia and the SR 125 toll road in San Diego.  Although sometimes portrayed as “P3 failures” in the media, those examples prove that risk was actually transferred from taxpayers to private investors. That is a good thing: one cannot then accuse the P3 structure of “privatizing the gains while socializing the losses.” Less appreciated is that the threat of bankruptcy generates strong cost-efficiency incentives for the provider compared with commission-style regulation.

Another concern is how commission-style regulation would interfere with key policy tools to address one of the most formidable challenges facing humanity today: rising traffic congestion. As Peter Cramton, Axel Ockenfels and I showed in recent research published in Nature, real-time, network-wide road pricing is the only proven way to reduce congestion. The use of variable road pricing, or tolling, is rising in the United States. There are now 42 variably priced express toll lanes projects around the country that are using pricing to maintain free flow during peak periods. About a dozen of those are long-term revenue-risk P3 concessions. It is critical that P3 policies not interfere with such efforts.

RAB-style price regulation, with its cumbersome administrative procedures, inhibits price movement in the name of controlling market power. In transportation, that means variable tolls. To my knowledge, there are no compelling academic studies that reconcile utility-commission regulation with the price flexibility required for effective congestion pricing.

Both the Virginia and Texas Departments of Transportation (DOTs) have developed a relatively simple solution to this problem within the context of P3 concessions: pre-negotiated revenue-sharing. Under this approach, a baseline expectation of gross revenue over the term of the concession is included in a detailed P3 agreement. In any year where gross revenue exceeds that projection, the overage is shared between the private company and the state’s DOT. That is important because gross revenues are typically more transparent than net revenues. Moreover, revenue sharing occurs on a sliding scale: the greater gross revenue is above the projection, the higher the share that goes to the DOT. The private company absorbs any revenue shortfalls, however.

The above critiques of a regulatory asset-base, commission-style approach to private investment in infrastructure are cursory treatments of a very complex topic. They nevertheless suggest an old adage to any policy analyst considering commission-style regulation in transportation: proceed with caution!

Prof. Geddes teaches policy analysis and management at Cornell University and is founding director of the Cornell Program in Infrastructure Policy.

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Getting Someone Else to Pay for Bridge Replacements

Three likely P3 bridge replacement projects are being debated in Alabama and Louisiana. Since a toll revenue stream is planned in each case, political debate has been escalating in all three cases—over whether tolls should be used, as well as over how high the rates should be and who should pay what.

The smallest of the three is replacing the obsolete Belle Chasse Bridge in Plaquemines Parish southeast of New Orleans—a $165 million project. No one has proposed that tolls be the sole funding source. A $45 million Rebuilding America grant has already been obtained, and the current funding plan calls for only $70 million (42% of the cost) to be covered by tolls. And the toll would be only 50 cents for passenger cars with a transponder, but with annual CPI inflation adjustment as is becoming fairly common on tolled facilities. Yet the argument that tolls are unfair continues to rage.

A much bigger project is replacement of the existing I-10 bridge at Lake Charles, LA, estimated at $600 million and planned as a tolled P3 project. A bill to dedicate to the bridge project whatever amount of compensation money the Parish receives from the 1994 Conoco-Phillips spill recently passed the state legislature with only a single negative vote. Due to debates over tolling, a bill to create a Calcasieu Parish Toll Authority was put on hold as premature.

By far the largest bridge replacement is the I-10 bridge across the Mobile River in Alabama, weighing in at $2.1 billion. It would build a new 2.5-mile bridge and replace the 7.5-mile Bayway with a new elevated route as a hedge against rising water levels. ALDOT Director John Cooper has said that the project cannot be paid for without tolls, and noted that 50 to 60% of those using the existing I-10 bridge are from out of state—and likely paying little or no Alabama fuel taxes.

But that has not stopped elected officials from going all-out to figure out who else might be tapped to pay for a large part of the $2.1 billion. ALDOT itself has proposed a 15% frequent-user discount, and charging separately for the bridge and the Bayway, so people can use one without having to pay for the other. But that’s not enough for the critics. Besides possible oil spill money, legislators are hoping for a $150 million federal INFRA grant, and have drafted a letter to President Trump asking him to include this project in “his” $2 trillion infrastructure bill.

One idea that has not been proposed for any of these bridges, as far as I know, is peak/off-peak toll rates. That would give an additional break to local commuters who are willing to travel outside peak periods. That would also help spread out peak flows, permitting faster and more reliable trips during those peak periods.

Overall, Americans have no idea how much rebuilding aging and obsolete Interstate highways and bridges will cost. Ever since they were begun via 1956 legislation, users of the Interstates have paid for them via federal gasoline and diesel taxes, which are largely invisible to them. The revenues from those sources are far short of what’s needed to rebuild the aging Interstates, the minimum cost of which is around $1 trillion, according to the expert study commissioned by Congress and released by the Transportation Research Board last December. Elected officials should explain these facts to their constituents, rather than continuing to search for somebody else to pay the bills.

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APTA Embraces Bus Rapid Transit
By Baruch Feigenbaum

The recent American Public Transit Association (APTA) Mobility conference in Louisville revealed an organization that is growing more enthusiastic about Bus Rapid Transit (BRT) and bus in general. While the organization has long supported light rail, BRT received less attention. But APTA’s executive changes, federal policy, an increased number of BRT projects, and enthusiastic staff are pushing BRT to greater prominence.

When New York City Metropolitan Transit Authority (MTA) quit APTA in 2016 arguing that it did not find value in membership, APTA needed to make some major changes. Transit-wise, New York City is more of a European city than an American one, and MTA has a sophisticated government affairs team. Therefore, MTA gets less out of membership than a mid-sized region focused on bus and light rail, such as Denver. But MTA was also frustrated that the agency hadn’t done enough to promote cost-effective transit projects instead of many white-elephant projects. APTA’s focus on shiny new light rail and trolley projects instead of bringing existing systems to a state of good repair was not helping New York City. And since the New York region is responsible for more than a third of the transit trips in this country, the loss of MTA was bad for APTA.

New York’s withdrawal led to management changes at APTA. With a new CEO the organization redesigned some of its conferences; it appears to be focusing more on policy. BRT has been one of the beneficiaries. APTA point person Rich Weaver and the entire staff developed an excellent program for Louisville, attended by almost 100 people. Past BRT tracks at APTA events were lucky to have 50.

In addition, APTA has expanded the bus conference from a pure mode-based event to one that includes ride-sharing and automated vehicles. As mobility as a service (MaaS) becomes more widespread, transit agencies don’t want to be left out of the discussion. Like ridesharing and AV companies, transit agencies want to help shape the transition to make it more transit-friendly.  There were at least five sessions on mobility management including managing the curb, impacts of connected and autonomous vehicles, and a special session by bus system re-designer Jarrett Walker.

In the session focused on community outreach during project development and construction, Amy Cummings of RTC Washoe County discussed the construction of a BRT line extension from downtown Reno to the University of Nevada Reno. Construction required a temporary road closure, and the agency worked with the business coalition to reduce traffic congestion. The agency created temporary parking for businesses. RTC held downtown events during construction to promote downtown business. They partnered with Lyft to provide a 50% discount off trips to downtown. They kept the press informed of changes to the project. And they made sure construction activity was visible. During a previous project, there were gaps in the construction schedule. The public perceived construction as taking too long and lost confidence in the transit agency.

In the session focused on economic development, Justin Stuehrenberg of IndyGo described that agency’s plans for three BRT lines that will increase service by 70% in Indianapolis. The 50 miles of BRT will be in dedicated lanes 75% of the way. Transit oriented development is a key part of the plan. Incorporating lessons from Houston’s bus network redesign that showed bus riders want reliable service seven days a week, the Indianapolis Red Line will operate for 20 hours every day. The Purple Line service replaces an existing local bus route. Finally, the Blue Line will connect downtown with the airport. Marion County is changing the zoning along the route to support transit oriented development. The agency has developed a design guide, steering plan, and shared-use mobility plan to ensure sufficient ridership when the lines open.

APTA offered tabletop presentations (small groups sitting around a table) on BRT Branding, Service Design, Stations/Stops, ITS and Running Ways. I attended the service design discussion that examined the value of fixed guideways (necessary for routes with very frequent service in congested traffic but not in other cases), the seven features of BRT (running ways with priorities and transit signal priority, level boarding, off-board fare collection, unique station design, BRT branding, larger vehicles, and higher quality of service), the difference between BRT in the U.S. context and the international context, and BRT system planning.

During the Federal Transit Administration (FTA) update, Peter Mazurek briefed attendees on FTA’s BRT definitions: Fixed Guideway and Corridor Based. While both require substantial investments in a corridor, Fixed Guideway requires bidirectional service on weekdays and weekends and a dedicated right of way a majority of the time.  While both types of BRT projects are eligible for Small Starts grants, only Fixed Guideway can receive the larger New Starts Grants. During the BRT committee meeting, a board member from Denver’s Regional Transit District (RTD) suggested APTA support ending the fixed guideway requirement for New Starts funding. He discussed how the US 36 freeway BRT project between Denver and Boulder is one of the country’s most-successful BRT projects and yet was unable to qualify for New Starts funding.

While APTA will need to bring this proposed change to its members, the change makes a lot of sense. Corridor-based BRT projects are cheaper; for the same amount of federal funding, many more projects could be built.  The fixed guideway “majority of the time” rule does not guarantee better service. Las Vegas created a BRT system that was in a dedicated corridor more than 50% of the time. The problem is that the dedicated portion is on a non-congested side street while on Las Vegas Blvd the system operates in slow mixed traffic. The agency could not build a fixed guideway on Las Vegas Blvd. Yet, since a fixed guideway was needed for New Starts funding, the agency spent extra money on the part of the system on the side street where the guideway provides no appreciable service improvement. Further, the BRT requirements were written before the creation of freeway BRT service. Freeway BRT operates in a semi-dedicated right of way that cars pay to use (express toll lanes). Buses have the first priority and a guaranteed travel speed and time. Yet, because cars use this right of way, freeway BRT cannot qualify for New Starts funding. This needs to change.

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Should Governments Transfer Infrastructure to Ailing Pension Funds?

In 2017 the New Jersey legislature gave the state lottery to the state’s badly under-funded public employee pension system, amidst cautions expressed by bond rating agencies Moody’s and S&P Global Ratings. Several other state and local governments are looking into doing likewise. And a group called American Public Infrastructure is advocating public-to-public asset transfers as an alternative to a P3 lease of an aging infrastructure asset with the up-front or ongoing proceeds transferred to pension funds. That may sound like a small difference, but there are very profound differences between the two approaches.

Besides promoting the New Jersey Lottery transaction, advocates of public/public asset transfers like to cite the Queensland Motorways case in Australia. I read the detailed case study (from the Global Projects Center at Stanford University) on this 2011 asset transfer. That report makes it very clear that this was a special case, unlikely to be duplicable in the United States.

Several major pension funds in both Australia and Canada have developed considerable expertise in infrastructure, amassing expert staff in order to build investment portfolios in both traditional private-sector infrastructure (railroads, utilities, etc.) and P3 infrastructure. Queensland Investment Corporation is one of those. Following the bankruptcy of several P3 highway mega-projects in the Brisbane metro area, QIC purchased them as potential long-term investments, acquiring them for a fraction of their construction cost. QIC subsequently acquired several more tolled highways in the area, and configured them all into a priced motorway network. In late 2013, QIC’s board decided that this now-very-large investment was no longer consistent with the balanced portfolio it wanted to maintain, and put Queensland Motorways Ltd. (QML) up for a long-term P3 lease. It received $6.6 billion in up-front lease payments from a consortium of a leading toll road company, an Australia-based global infrastructure fund, and a sovereign wealth fund.

While this sounds like a real win for public-public transfers, the authors of the Stanford study make clear how non-generalizable this case is. “The operational improvements at QML [which greatly increased its value] were possible only due to the rare capability at QIC as a state-level pension fund manager to directly invest in and manage infrastructure assets. This internal capability is rare in public pensions.” Also, “It is unclear whether a similar transaction could be replicated [here] in which the public pension uses some kind of external management contract with a service provider to assess and operate the in-kind asset without losing the competitive advantages that QIC’s internal team enjoyed.”

These issues were discussed in a Bond Buyer webinar in late April, “Leveraging Public Assets for Pension Solvency.” Inframation News quoted presenter Len Gilroy (director of the Pension Integrity Project at Reason Foundation) on the problems with direct asset transfer to pension funds. Among them:

  • Governments often don’t even have a complete inventory of owned assets;
  • Governments struggle with valuing public assets, and tend to over-value relative to the market;
  • Governments may book future revenues before they materialize;
  • Pension funds that are given infrastructure assets will be taking on revenue risk, capex risks, regulatory risks, environmental risks, etc., which they are poorly equipped to manage.

A more detailed discussion of this subject is included in my forthcoming Annual Privatization Report: Transportation Finance, set for publication by Reason Foundation within the next month.

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Highlights from the Princeton Automated Vehicles Conference
By Baruch Feigenbaum

The 3rd Annual Princeton Smart Driving Cars Summit featured innovative speakers and outside-the-box thinking. Here are some highlights of sessions on (1) mobility for disabled commuters, (2) partially automated driving features, and (3) the potential of ride-sharing.

Proponents tout automated vehicles’ (AVs’) ability to provide mobility to seniors, children, and the disabled.  But there has been little research on the potential hurdles to using AVs for these purposes.  Workshop participants compared their current commute to a mobility-challenged commute (such as if they were blind, deaf, physically disabled, etc.). As an able-bodied commuter, I become annoyed when the Washington Metropolitan Area Transit Authority (WMATA) escalators and elevators are not working. For a disabled traveler, non-working elevators could make travel impossible.

Cecilia Feeley of Rutgers discussed the importance of disabled commuters knowing how to travel. For example, a low-vision commuter uses fixed-route bus service but has to know what route to walk to a bus stop and how to request a stop. Most of us can make split-second decisions, but a low-vision commuter has to plan the route ahead of time and know how to find and use the request-a-stop function on the bus.

Feeley noted that some types of disabilities require completely automated (SAE level 5) vehicles that are many years away, so much current research is focusing on other groups such as the autistic who can benefit from lower levels of automation. The dominant travel mode (more than 70%) for autistic adults is by car with a family or friend driving. Walking is the next most popular followed by paratransit service and then taxi/ride-sharing. Almost two-thirds of autistic adults have never use fixed-route transit. Transit’s lack of service from origin to destination is a major concern for the disabled, as it is for the rest of us. Current paratransit service is far from ideal. Vehicles often arrive late or without needed equipment, such as a wheelchair lift.

Partially automated vehicles have great promise for improving mobility for the disabled. Technology such as braille-enabled smart phones can allow disabled passengers to carpool in AVs. Massachusetts Bay Transportation Authority (MBTA) is partnering with Uber and Lyft to offer paratransit service for the disabled. While there are challenges such as ensuring drivers pick up physically disabled passengers, the service is more popular and cheaper to provide than existing paratransit. Automating selected trips on campuses or on freeways could reduce costs further.

What about the partial AV features showing up in some of today’s cars? David Kidd from the Insurance Institute of America (IIA) shared some troubling findings. He and his colleagues tested partially automated vehicles (level 2 automation) and surveyed drivers of the BMW 5-series, Mercedes E-class, Tesla Model S, Volvo S90, and Infiniti QX50. More than 60% of those drivers trusted each of the vehicles’ adaptive cruise control to maintain speed and distance. But the lane-keeping numbers varied. More than 60% trusted the Mercedes and Infiniti to keep them in the center of the lane, but less than a third trusted the other three vehicles. Only in the Mercedes did drivers think the automated vehicle features were an improvement over manual (human) driving. The Tesla’s system performed the worst; it was described negatively by more than 75% of all drivers using words such as squirrely, stressful, erratic, and obstinate.

IIA examined adaptive cruise control and lane centering of the Tesla Model 3, Tesla Model S, Mercedes E Class, BMW 5 Series and Volvo S90 on its test track near Charlottesville, VA. Vehicles with automatic emergency braking (AEB) were more likely to crash into another vehicle than human-driven vehicles. For lane centering both the Tesla 3 and Mercedes S remained in their lane more than 80% of the time. The Volvo and Tesla Model S did worse staying in their lane: only 50 and 25% respectively. Finally, the BMW stayed in its lane zero percent of the time. Why did the lower-priced Tesla perform better than the high-end model, and why did the BMW fail the test? Tesla updates its automated driving software every year; while the Model 3 had 2018 software the Model S had the 2017 version. BMW designs its cars to be responsive to drivers, which is why they are so enjoyable to drive. Lane centering removes some of the sportiness from the vehicle, which would make a BMW a different type of car. BMW does not want to degrade vehicle performance so its current system is less than perfect.

The takeaway from Kidd’s presentation is that, for most vehicles, even low-level AV technology is still a work in progress. The top-end models have the most AV features, but those features are as much a marketing gimmick as an actual safety improvement. The technology is improving quickly but it’s not something to trust your life with yet.

On ride-sharing, conference attendees were mostly bullish. Many believed that ride-sharing will become widespread almost everywhere, and some floated the idea of banning privately owned automobiles. I asked Alain Kornhauser, the Princeton professor and conference organizer, three questions:

1) Is it realistic to expect everybody to give up car ownership? He replied that was unrealistic. Yet, many AV promoters promote this fantasy.

2) Will there be enough interest and availability of vehicles for most people to ride-share at 5 PM from work to home when those same people will not carpool today? Alain believes this can be solved with technology, but I think that the number of vehicles needed is a large hurdle.

3) Is ridesharing a realistic option in exurban areas? Alain believes it will become realistic over time, and I agree, but that could take a long time.

Technically, widespread ride-sharing could happen. But just because it can happen does not mean it will happen. Errands on the ride home such as picking up a child from day care or stopping at the grocery store complicate ride-sharing and suggest potentially inherent limitations.

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Video Games on In-Car Displays?

The Verge matter-of-factly reported that Tesla has added “another” video game to its in-car displays. While author Andrew Liptak added a parenthetical comment that drivers would play with the games “presumably while parked,” there was no confirmation of that from Tesla. Control of the games is via “the touchscreen, steering wheel buttons, and Xbox/PS controllers.”

Clearly, the driver is intended to be the one playing these games. Given the hot-rodding behavior displayed by some Tesla drivers mis-using the car’s Autopilot function, adding video games strikes me as grossly irresponsible of Tesla. Consumer Reports recently found that the latest Autopilot software “requires significant driver intervention” and “doesn’t work very well and could create potential safety risks for drivers.”

Where is the Society of Automotive Engineers (SAE) on this subject? Where is the National Highway Transportation Safety Administration (NHTSA)?

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Upcoming Transportation Events

Note: We don’t have the time or 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.

NCSL State Transportation Leaders’ Summit, June 12-14, 2019, The Curtis, Denver, CO (Baruch Feigenbaum and Adrian Moore speaking). Details from: http://www.ncsl.org

Automated Vehicles Symposium, July 15-18, 2019, Orlando World Center Marriott, Orlando, FL (Baruch Feigenbaum speaking). Details from: http://www.automatedvehiclessymposium.org/home

ARTBA P3 Conference, July 17-19, 2019, Grand Hyatt, Washington, DC (Robert Poole speaking). Details from: https://artbap3.org/annual-conference

Trucking Association Executive Council Annual Meeting, July 21-25, 2019The Ritz-Carlton, Amelia Island, FL (Robert Poole speaking). Details from: https://business.alabamatrucking.org/events/details/2019-taec-annual-meeting-114

Brookings Autonomous Vehicle Conference, July 25, 2019, Brookings Institution, Washington, DC (Baruch Feigenbaum speaking). Details from: https://www.brookings.edu/events/autonomous-cars-science-technology-and-policy

NCSL Legislative Summit, Aug.5-8, 2019, Music City Center, Nashville, TN (Robert Poole speaking). Details from: http://www.ncsl.org/meetings-training/ncsl-legislative-summit-2019.aspx

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News Notes

South Carolina Considering Toll-Financed Interstate Reconstruction
In April the South Carolina DOT released a study finding that it would be feasible to use toll revenues to finance the reconstruction and widening of I-95 in that state. Most of that aging highway still has only the original two lanes in each direction. Sen. Hugh Leatherman of Florence, SC has announced that he will support tolling legislation for this purpose.

Express Toll Lanes Open in Two States
In recent weeks, express toll lanes opened on I-295 in Jacksonville, Florida—part of Florida DOT’s planned network of such lanes in this metro area. A second phase is expected to open later this year. At almost the same time, the first stretch of privately financed express toll lanes on I-77 in Charlotte, North Carolina opened to traffic; the balance of that project is expected to open by September.

Belgium to Convert Ring Roads to Non-Tolled Managed Arterials
To reduce congestion on the R4 East and West ring roads around Ghent, the transportation agency is embarking on a DBFM P3 project to add grade separations where there are now signalized intersections—at a cost of $555 million. But no tolls will be charged for the improvements. Instead, the national government will cover the 30-year capital and maintenance costs via availability payments, totaling $1 billion.

GM and Bechtel to Collaborate on EV Charging Stations
On May 28th, Bechtel and General Motors announced that they will partner to develop fast-charging stations nationwide for electric vehicles. So far, only a memorandum of understanding (MOU) has been signed, with the business model still to be worked out.

Polling Data Support Users-Pay Transportation Funding
A nationwide survey found that 55% of Americans prefer that transportation be user-funded, with even larger majorities agreeing that a high-quality transport system is vital (78%) and that highway infrastructure investment is very important (66%). The survey was conducted by Russell Research on behalf of engineering firm HNTB.

New Interstate Highway Moving Forward in Arizona
A new north-south Interstate highway—I-11—has long been simply a line on the map, connecting Tucson, Phoenix, Las Vegas, and Reno. A small section is in operation near Las Vegas, but until recently little progress had been seen in Arizona. That has changed, with studies now under way on a 280-mile stretch from Nogales (on the Mexican border) to Wickenburg, northwest of Phoenix. Arizona DOT has completed a draft environmental impact study, which will lead to hearings and debates over the specifics, including the exact right of way. Currently, Las Vegas and Phoenix are the two largest metro areas that lack an Interstate highway connection.

Virgin Trains Begins Phase 2 of Florida Rail Project
On May 21st, Virgin Trains USA (formerly known as Brightline) formally began construction of its second link, from West Palm Beach to Orlando. The company expects nonstop service between South Florida and Orlando to begin in 2022. The project is privately financed, using tax-exempt revenue bonds (Private Activity Bonds) that were issued this Spring. The Orlando station will be the new intermodal center that is already open at Orlando International Airport.

Two Major Toll Roads Moving to Electronic Toll Collection
Recent announcements by the Ohio and Pennsylvania Turnpikes will be music to the ears of motorists and truckers that use these major east-west toll roads. The Ohio Turnpike announced on June 2nd that it will spend $200 million over the next two years to replace toll plazas with electronic toll collection. A similar announcement was made by the Pennsylvania Turnpike in April. It still has 500 toll collectors on its payroll, and has yet to work out a transition plan for them.

New Paris Rail Lines Will Link Suburbs
Suburbanization of housing and jobs is a reality in France, as it is in the USA. So it’s encouraging to see that RER—the regional rail transit system serving the Paris metro area—is departing from its historic suburb-to-CBD focus by developing several billion dollars’ worth of new lines linking suburban locations (including Saint Denis, La Defense, Versailles, Paliseau, and Orly Airport) to one another.

New Toll Roads Continue in Texas
Although the Texas Legislature completed its 2019 session without ending its previously imposed ban on tolls being used on any project using state funding, local transportation agencies continue to develop needed additions to the highway system funded by tolls. On the first weekend in June, the Central Texas Regional Mobility Authority opened the new SH 45 Southwest toll road in the Austin area. And in April CTRMA announced a 6-mile extension of Toll 183A, with formal approval from Williamson County officials.

Survey Shows Strong Local Support for Maryland Express Toll Lanes
The Washington Post on May 12th reported that a new public opinion poll found that 61% of residents in the DC metro area support Maryland Gov. Larry Hogan’s plan to add express toll lanes to the Maryland half of the I-495 Beltway and also I-270 from the Beltway to Frederick, MD. Looking only at metro-area residents on the Maryland side, support was 55%. Surprisingly, support for expanding the American Legion Bridge—currently a major bottleneck on I-495, was only 46%, suggesting lack of knowledge about how the highway system works. On June 5th, the Maryland Board of Public Works approved going forward with the $10 billion P3 projects.

“Ride-Share Vehicles Are Big Germ Carriers”
That was the headline of an article reporting a study by insurance company Netquote that found bacterial counts on Uber and Lyft vehicles to be 219 times as high as the average taxi. Volunteers rode ride-hail vehicles, taxis and rental cars, swabbing the seats in each and sending the swabs to a lab for analysis. Bacteria commonly found included ones linked to skin infections, blood infections, and food poisoning.

India Enters Third Round of Highway Asset Recycling
The Economic Times of India reported last month that the National Highways Authority will soon offer long-term P3 leases of another 550 km of highways. In exchange for up-front lease payments, the winning bidder(s) will collect tolls and manage the highways for 30 years. The NHAI is hoping for a bid of at least $800 million. In 2018 the winning bid for a larger set of highways was $1.5 billion. NHAI will use the proceeds to develop and upgrade other highways.

Asset Recycling Proposed in Michigan
House budget language in Michigan calls for the state DOT to solicit proposals from potential buyers of the Blue Water Bridge, a toll bridge across the St. Clair River north of Detroit. If such a sale goes through, the proceeds would be used for other transportation projects in the state, where there is increasing political and public pressure to “fix the damn roads.”

“Does Your Robocar Come Home After It Takes You to Work?”
Another thoughtful piece by robo-taxi thought leader Brad Templeton explores some of the trade-offs facing individuals once fully autonomous vehicles are on the market. What faction of people will choose to own an AV versus relying on Mobility as a Service (MaaS) is highly speculative, and Templeton reviews some of the trade-offs people will face in this piece. https://ideas.4brad.com/does-your-robocar-come-home-after-it-takes-you-work

Another Streetcar Failure, This One in Detroit
A long investigative article by Metro Times in Detroit was accurately subtitled, “A Streetcar Named Disaster.” An early sentence in the lengthy article by Steve Neavling sums up what $187 million has bought: “The sleek, shiny streetcars have been beset by delays, infrequent stops, low ridership, mechanical failures, accidents, and a ballooning budget.” The article goes on to point out that for the money it spent on the 3.3-mile streetcar line, the agency could have bought 68 new buses, which would have provided far greater mobility for those without cars.

Postal Service Testing Autonomous Trucks
On a 1,000-mile mail route between Dallas and Phoenix, the U.S. Postal Service is testing autonomous big-rig trucks provided by start-up TuSimple. Trips will be made over a two-week test period, with a safety driver and an engineer in each cab. The route connects postal distribution centers and takes 22 hours. It is currently operated by outside companies using two-driver teams to comply with federal Hours of Service regulations.

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Quotable Quotes

“Successful and sustainable P3s take a balanced approach, with specific risks assigned to the partner best positioned to manage them. For example, governments protect taxpayers when they shift traffic risk on toll roads to a private partner with the expertise and technology required to predict trends over decades. In contrast, public-sector professionals often have far better experience and leverage than their private counterparts in securing certain regulatory or environmental approvals.”
—Jennifer Aument, “Q&A, Jennifer Aument, Transurban,” Transportation Builder, March/April 2019

“Instead of sending gas tax money to Washington, which keeps some and returns only part of the money to the states, Congress should end the program. Scale back the 18.4 cent-a-gallon federal levy to a few cents a gallon . . . . With the bulk of the tax eliminated, states would be responsible for levying their own taxes to build and maintain their transportation systems. . . . Washington could also help by removing regulations that prohibit state-collected tolls on Interstate highways and keep states from privatizing rest areas.”
—John Kasich, “Road and Bridges Can Bridge the Parties,” The Wall Street Journal, May 8, 2019

“Kick-scooters, like the one I rode that morning, have well-known drawbacks. The passenger-to-vehicle weight ratio makes them inherently unstable. They are well-suited neither for pedestrian-filled sidewalks, where they interfere with foot traffic, nor for automobile-clogged streets. There is no obvious place to park them, and no incentive for users to avoid cluttering pedestrian walkways. Their use on sidewalks annoys and even endangers pedestrians. Helmets are not provided, and therefore rarely worn. Under ideal circumstances, such as a protected bike lane, they can be practical for trips of one or two miles, but are not comfortable to go much further. And while they beat walking, they are still limited to about 15 mph.”
—M. Granoff, “Maniv Is Reveling in Micromobility,” in Smart Driving Cars, June 1, 2019

“The FL legislature recently passed (and the governor may sign) legislation that would strip the Miami-Dade Expressway assets from Miami-Dade County for transfer to a new entity that would operate with thinner debt service coverage targets and diminished toll-setting flexibility. . . . Accordingly, outstanding MDX bonds have already been downgraded, and should the proposed transfer occur, outstanding bond ratings could fall into the BBB category. . . . At least with respect to tolls, FL is demonstrating a growing problem with willingness to pay: a long-term concern for holders of all state and local toll revenue bonds in the state.”
—“MDX Seizure Highlights Rising Risk in FL Toll Revenue Bonds,” Municipal Market Analytics, May 20, 2019

“Most [LA] Metro customers live below the poverty line and can’t afford a car. Though Metro talks about attracting ‘choice’ riders—people who own a car, yet choose to ride transit—a report last year from UCLA shows LA transit riders are increasingly choosing to drive as soon as they can afford to. Fully 79% of former Metro riders now primarily drive alone.  What if—a radical concept here—instead of focusing on new riders, Metro improves the system for those who use it now. If it can entice current riders to stay, former riders might return and new riders might be more inclined to give up their cars.”
—Mehmet Berker, “Metro Is Hemorrhaging Riders. It Needs to Stop Studying Obvious Fixes and Start Acting,” Los Angeles Times, May 17, 2019

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