Surface Transportation Innovations #76

In this issue:

• It’s a Fund, Not a Bank
• Vegas Monorail-Who Pays Now?
• Newcomer Shakes Up Congestion Reporting
• Managed Lanes Get Their Own Signage
• Distracted Driver Problem Will Get Worse
• First Toll Truck Lanes, in Tampa
• Upcoming Conferences
• News Notes
• Quotable Quotes

President Proposes National Infrastructure Fund

After years of debate and discussion about a National Infrastructure Bank, President Obama has put forth a specific proposal in his FY2011 budget. Instead of a National Infrastructure Bank, he’s proposed a National Infrastructure Innovation and Finance Fund. And instead of being devoted to every imaginable sort of public works, the NIIAFF would be limited to transportation infrastructure.

As such, this proposal falls somewhere in between the extremes of previous proposals. The most ambitious, such as that proposed by financier Felix Rohatyn, would have been an actual bank, whose capitalization would come from the existing federal transportation user tax proceeds (in aviation, highways, waterways, etc.). Instead of being allocated politically, by Congress, it would be allocated based on national significance by a staff of experts (like those at the World Bank or the European Investment Bank). And instead of making grants, it would make loans to viable projects which it would expect to be repaid over time, providing an ongoing source of revenue (much like state infrastructure banks).

By contrast, the various bills introduced in Congress over the last several years called for the NIB to be capitalized by new, presumably general-fund money, leaving all current user-tax proceeds to be allocated, business as usual, by politicians. Most of those bills would have funded schools, public housing, intercity rail, transit, and other non-revenue-producing projects, in addition to ports, roads and bridges, etc. And most also envisioned grants as well as loans, making no pretense of being a bank, in the traditional sense.

Obama’s proposal has the virtue of honesty, by calling the proposed entity a fund, not a bank. While the details are vague, it presumably would involve project selection not by Congress (which would defeat the whole purpose of a separate fund), but almost certainly not by neutral experts, either. Which leaves us with . . . the U.S. DOT. And for a preview of how the DOT may carry out this awesome responsibility to fund projects of truly national significance, including multi-state corridors, we have the 51 TIGER grants, just announced by the Office of the Secretary on Feb. 17th. According to the news release, these grants (totaling $1.5 billion) “will tackle the kind of transportation projects that have been difficult to build under other funding programs.” They will “create jobs and spur lasting economic growth, reduce gridlock for the traveling public, and provide Americans with more safe, affordable, and environmentally sustainable transportation choices.” The 51 projects are said to have been selected on merit, “based on their contribution to economic competitiveness of the nation, improving safety and the condition of the existing transportation system, increasing the quality of life, reducing greenhouse gas emissions, and demonstrating strong collaboration among a broad range of participants.” I guess that about covers it.

I urge you to take a look at the actual winning projects and see what you think. Transit projects account for 19 of them, highways 17, and goods movement 12. And 42 of the 50 states garnered at least one grant, with California landing four, and Illinois and Massachusetts three each. There were quite a few transit stations/multimodal transportation hubs, streetcar projects, and even a multistate Philadelphia Area Pedestrian and Bicycle Network. I find it telling that the local news release on the two Texas projects credited them “to the hard work of Congresswoman Eddie Bernice Johnson.”

If this is how a national competition based on merit ends up, I don’t see any particular improvement over formulas and congressional earmarking.

Vegas Monorail Bankruptcy Raises Risk Transfer Question

Back in 1999, I reluctantly endorsed a public-private partnership (P3) plan for the Las Vegas monorail project, to shuttle tourists among hotels and the Convention Center on the east side of the Strip. Unlike most proposed urban transit projects, this one was projected to more than break even, based on a combination of farebox and advertising revenues. And it was backed by the hotels along the east side of the Strip, which planned package deals including prepaid monorail trips. Critics like Wendell Cox published analyses questioning the projected costs, ridership, and revenue, predicting the thing would turn out to be a boondoggle.

Despite sharing some of these reservations, I wrote an op-ed supportive of the project, for two reasons. First, several people I respected were advisors to the project and kept pointing out ways in which it differed from all other urban rail projects. Second, the structure of the P3 deal shifted the risk from taxpayers to the investors in the project. Consequently, if the project tanked, it’s those investors who would be tough out of luck, not Nevada taxpayers. The monorail project was approved and built, opening in 2004.

Fast forward to Jan. 13, 2010. The Las Vegas Monorail Company filed for Chapter 11 bankruptcy, unable to pay debt service on the $650 million in tax-exempt revenue bonds (private activity bonds) used to pay for the bulk of the capital costs. Ridership, fare revenue, and advertising revenue were far below projections, even before the 2009 recession’s devastating impact on Las Vegas tourism. But now a question has arisen over whether the investors will actually be the ones to take the loss.

Under the rules governing tax-exempt private activity bonds, although they are used to enable a private entity to build public-purpose infrastructure, they must be issued by a tax-exempt entity, usually a government. In the monorail case, the bonds were issued by the Nevada Business & Industry Department. But now along comes Ambac Assurance Corp., which insured $450 million of the bonds, arguing that thanks to the bonds having been issued by the state (and various exemptions granted to the monorail company by the Clark County government), it is actually a “municipality” and must therefore file under Chapter 9 instead. This would apparently give the bondholders “additional rights and protections,” wording widely believed to mean a hope that the state and its taxpayers could be left holding the bag.

If the bankruptcy judge rules that way, that ruling will call into question the basic risk-transfer premise involved in the whole array of long-term infrastructure concession projects, many billions of dollars of which have already been financed with many others in planning and development. Private activity bonds were introduced to transportation infrastructure in order to create a level financial playing field between government-run infrastructure (which can borrow at tax-exempt rates) and P3 infrastructure (which previously had to borrow at taxable rates, thereby incurring higher debt-service costs). One of the most important advantages of P3 concessions is the transfer of construction risks, traffic risks, and revenue risks to investors, shielding taxpayers from these risks inherent to large infrastructure projects.

Thus, far more is at stake in Las Vegas than just the fate of a 3.9-mile long monorail.

INRIX Shakes Up Congestion Reporting

For the past two years, a new source has been offering rankings of congestion in urban areas, in addition to the Texas Transportation Institute’s well-known Urban Mobility Reports. The newcomer is INRIX, a Seattle-area spinoff from Microsoft. Instead of relying on data from state DOTs and MPOs, INRIX has outfitted a large number of motor vehicles around the country with GPS units, creating a national network of probe vehicles. The on-board units report data on traffic flow to INRIX on a real-time basis, during both night (off-peak) and daytime peak periods. Thus, whereas the latest report from TTI, its 2009 Urban Mobility Report (July 2009) reports on congestion as of 2007, the INRIX National Traffic Scorecard released last month covers the first half of 2009.

I decided to compare INRIX’s top-20 most-congested urban areas ranking with the most-recent Texas Transportation Institute top-20. INRIX uses a version of the travel-time index as its ranking measure, so I selected that measure from the TTI report. While most of the top 10 were pretty close in the two reports (with Los Angeles, of course, ranked #1 in both), there were some striking disparities. Dallas/Ft. Worth ranked #5 by INRIX was ranked #12 by TTI. Here are several other striking differences:

INRIX Rank TTI Rank

Boston 8 25
Seattle 9 20
Philadelphia 10 24
Miami 11 5
Minneapolis 13 28
San Diego 17 5
Riverside 18 8
San Jose 20 8

Differences in methodology probably account for some of these disparities. Another factor is very likely changes from 2007 to 2009 in the economies of various urban areas, with a number of formerly highly congested areas (e.g., in California and Florida) suffering from greater job losses and more-serious real-estate market collapses-and hence less traffic. Still, it’s surprising to see older, northeastern areas such as Boston and Philadelphia ranking so high in the INRIX congestion tally.

The Urban Transportation Monitor reported last week that TTI and INRIX have agreed to collaborate in producing the 2010 Urban Mobility Report; TTI has selected INRIX as its exclusive provider of traffic information. Under the deal, the number of urban areas will be increased from TTI’s previous 90 to a new total of 100. Thanks to the speed with which INRIX collects and processes traffic data, the 2010 report will be based on 2009 traffic data, rather than 2008-a definite plus for transportation planners and researchers. In addition, TTI’s David Schrank told UTM that TTI “re-compute[s] our historical information annually with any changes to methodology,” so comparability with prior reports will be maintained. The 2010 report is expected to be out by Labor Day.

Managed Lanes Get Unique Signage

It has a boring name, but the Manual on Uniform Traffic Control Devices (MUTCD) plays an important role in all aspects of highway transportation. Thanks to MUTCD being the national standard, you see green directional signs on all Interstates nationwide, for example, and numerous other traffic signs we all take for granted are familiar, wherever we go.

The 2009 edition, released in December, for the first time includes a section on “Signs for Priced Managed Lanes.” The correct term for them will henceforth be Express Lanes, and this term will apply to both HOT lanes and pure Express Toll Lanes. Section 2G.16 provides 14 pages illustrating the various types of signs to be used for these lanes, in a large variety of settings. To distinguish Express Lane signs from others, they are to be purple, the first time this color has been used for U.S. highway signs.

The MUTCD has been administered by the FHWA on behalf of the state DOTs since 1971. FHWA published its final rule adopting the 2009 edition in the Federal Register last October. States must adopt it as their legal state standard within two years.

This is an important milestone for priced managed lanes. (http://mutcd.fhwa.dot.gov/kno_2009.htm)

Distracted Driver Problem Will Get Worse

I was as surprised as you probably were by the January study on the impact of cell-phone bans on highway accidents. The Highway Loss Data Institute study collected before-and- after crash rates in California, Connecticut, New York, and the District of Columbia, all of which ban the use of cell phones while driving. It also compared crash rates in nearby states without such bans. The data showed no significant changes after the bans were in effect, and no significant changes in states without the bans.

There are several possible explanations for these results, besides the obvious possibility that there is no connection between talking on a phone and driver attentiveness to driving. First, the bans may not be enforced very well, or at all. Second, there may be a ramp-up period before the word gets around that you can be penalized for using a phone while driving. But the study does raise concerns about the broader issue of driver distractions-and more of those are on the way.

Far more likely to cause accidents is texting while driving, given that most people need to look at their device while doing so. Nineteen states plus the District of Columbia and Guam now ban texting while driving-but those bans may show equally little effect if it turns out that enforcement is so difficult or spotty as to have practically no impact (as may well be he case for the cell phone use study).

Beyond texting is the growing proliferation of in-car devices to further distract drivers from keeping their cars in safe operation. Bill Snyder, in Computerworld (Jan. 25th) reported from the Consumer Electronics Show about “a new generation of devices that bring email, the Internet, and digital entertainment into our cars.” There were 380 exhibitors showing items such as mobile TV and high-speed Internet access for cars, some pitched to eager car manufacturers and others aimed at individuals, as after-market add-ons to their cars. In his article, “Dear Silicon Valley: Stay Out of My Car,” Snyder quotes University of Utah psychology professor David Strayer, as follows: “Listening to a short text message is probably okay. But trying to pay attention to a complex email is a bad idea; it overloads the driver.” Strayer’s research has found that only 2.5% of us are the kind of “super-taskers” who can carry out multiple complex tasks at the same time.

I don’t have any easy answers for this distracted-driver problem. But we clearly need more research, of two kinds. First, what really is the relationship between this whole array of non-driving tasks and accidents? And second, if there are (as I strongly suspect) significant relationships, what measures will actually be effective in dealing with the problem?

First Toll Truck Lanes Under Development in Tampa

The nation’s first truck-only toll (TOT) lanes are part of a $650 million project to link the parallel east-west I-4 freeway and Selmon Crosstown Expressway (a toll road) in the Ybor City area of Tampa, Florida. The problem to be solved is heavy traffic congesting surface streets through this historic neighborhood, 20% of which is truck traffic. Most of the trucks are going to and from the Port, and they need to get from I-4 to the Selmon in order to do that. The same problem faces numerous motorists needing to get from one expressway to the other every day.

The Connector, a joint project between the Tampa-Hillsborough County Expressway Authority and the Florida DOT, will build what is essentially a linear, elevated interchange between the two roadways, eight blocks to the east of the currently impacted north-south surface streets. But instead of mixing all the traffic together, the design calls for separate roadways for the several different principal movements between the two expressways, including separate truck lanes. All traffic will pay electronic tolls to use the Connector, making the truck lanes into TOT lanes. The Florida Turnpike Enterprise will handle the tolling, using its statewide Sunpass system. The project funding involves both toll revenues and fuel-tax funds.

Details, including a complete layout and several illustrations, are available in the article “Tampa I-4/Crosstown Exwy Interchange with AET-Construction Under Way,” at www.tollroadsnews.com/node/4555.

Upcoming Conferences

Note: I don’t have space to list all the transportation conferences going on; below are only those that I or a Reason colleague are speaking at.

51st Annual Transportation Research Forum, March 11-13, Arlington, VA, Westin Arlington Gateway Hotel. Details at:

www.trforum.org/forum/2010/?PHPSESSID=266c1af0df9ceb7f6b66fdfe8919cb75.

Infrastructure Investment World Americas, April 26-29, New York, NY, Bridgewaters. Details at: www.terrapin.com/2010/IIWA.

Innovations in Pricing of Transportation Systems: Workshop and Conference, May 13-14, Orlando, FL, Royal Plaza Hotel in Walt Disney World Resort. Details at:

http://conferences.dce.ufl.edu/pricing.

Fourth International Conference on Financing Surface Transportation, May 19-21, New Orleans, LA, Roosevelt Hotel. Details at:

http://onlinepubs.trb.org/onlinepubs/dva/ConferenceFinance2010Call.pdf.

National Road Pricing Conference, June 2-4, Houston, TX, Westin Galleria Hotel. Details at: http://tti.tamu.edu/conferences/nrp10/.

News Notes

Pension Fund Investment in Infrastructure

A new model to facilitate significant pension fund investment in U.S. infrastructure has been proposed by public-private partnership (P3) consultant Brian Chase. Partnerships USA would be a membership organization for interested pension funds. With a core staff of experts, it would assist mayors and governors in developing workable public-private partnership projects in exchange for access to a percentage share of the investment opportunities thus created. Brian’s article fleshing this out appears in the February issue of Institutional Investing in Infrastructure. You can download it from: www.castalia-advisors.com/files/Institutional_Investing_in_Infrastructure_100210_(2)_12.pdf.

Provocative Guide to Reauthorization

At a time when nearly everyone agrees the federal surface transportation program needs to be rethought, the always-provocative Randal O’Toole has produced “The Citizens’ Guide to Transportation Reauthorization.” The graphs alone are worth the price of admission, providing a concise overview of major trends and alternatives, all based on reliable data sources. His recommendations are brief, and my own proposals differ, but I highly recommend this paper as context for the eventual debate on reauthorization.

(www.cato.org/pub_display.php?pub_id=11039)

Noise Barriers Deflect Pollutants

A recent study by the National Oceanic and Atmospheric Administration (NOAA) and EPA has found that roadway noise barriers channel airflow (and hence vehicular emissions) away from adjacent neighborhoods. Previous studies have suggested that this effect is real, but the NOAA study claims to be the most rigorous to date. It was published in the January 2010 issue of Atmospheric Environment, a peer-reviewed journal. (www.noaa.gov/2009_newsarchive.html)

Electronic Toll Payments by Phone

A start-up company in Austin, Texas last month launched PToll, a service that permits non-transponder holders to pay tolls electronically via their mobile phones. This “customer video toll payment application” can be implemented by any toll facility operator equipped with cameras and license plate recognition-which these days means just about every significant U.S. toll facility operator. The company, BancPass, has signed up the Central Texas Regional Mobility Authority, which is likely to be the first to toll operator to offer the service. (www.tollroadsnews.com/node/4567)

Update on Permeable Pavement

A reader commented on last month’s article on permeable friction course (PFC) pavement, noting that toll road operators in Europe have been using PFC pavement since the 1980s, citing as examples Abertis and Cofiroute in France. The results, he tells me, have been “generally very good” in terms of pavement performance and improved driver safety. PFC pavements require “tighter formulas, enhanced bitumen, and higher paving temperatures,” and also require special treatment (a mixture of dry salt and brine) during winter snow and ice conditions, since PFCs are colder than ordinary pavements. And cleaning “has also been a challenge, particularly in low-traffic environments.”

Free Transponders in Orlando

The Orlando Orange County Expressway Authority (OOCEA) in January decided to give away 100,000 or more transponders, in order to speed up the phase-out of cash toll collections on their toll roads. The transponders in question are sticker tags, which cost a lot less than traditional hard-shell transponders. OOCEA has over 500,000 transponders in service, and estimates that up to 80% of peak-period tolls are being paid electronically. (Orlando Sentinel, Jan. 27, 2010)

People Aren’t Migrating to “Cool Cities”

Demographers and urban planners during the past decade made much of the supposedly superior attractions of “hip and cool” cities such as Seattle, Portland, Washington, New York, and Austin. But what do the data show? A recent analysis by urban geographer Joel Kotkin finds that even for educated professionals, the fastest-growing urban areas are what he terms “unhip” places such as Charlotte, Jacksonville, Kansas City, Memphis, Salt Lake City, and Tampa. His fascinating article includes graphs for about 30 metro areas on employment growth and net domestic migration during the past decade.

(www.newgeography.com/content/001153-numbers-dont-support-migration-exodus-cool-cities)

Follow-up on Cash and All-Electronic Tolling

A reader in Asia wrote in response to last month’s article on Puerto Rico’s effort to provide non-bank/non-credit-card users with electronic tolling, that “this kind of arrangement has been in use here in Asia for years,” citing Singapore, Malaysia, and Australia as examples. The Malaysian program, handy also for visitors, is called Auto Top Up.

Protecting the Public Interest in Toll Concessions

An article on this subject that I wrote for Transportation Management & Engineering‘s October 2009 issue has been placed on the Roads & Bridges website. You can download it from: www.roadsbridges.com:80/What-about-public-service-article11181.

Quotable Quotes

“Raising the average fuel economy of gasoline cars around the world to 36 mpg from 26 mpg will likely save more than six times as much oil in 2030 as rolling out enough plug-in hybrids to constitute 7% of the global auto fleet. . . . For years, the fight to curb fossil-fuel consumption has often involved moon shots. But many of those efforts-such as cars powered by methanol, natural gas, or hydrogen-haven’t exactly taken off. The smarter strategy for reducing energy consumption and pollution more broadly would be decidedly low-tech solutions, a growing number of experts say.”

–Jeffrey Ball, “Small energy-Saving Steps Can Make Big Strides,” Wall Street Journal, Nov. 27, 2009.

“The infrastructure process will never be completely depoliticized, as it is an emotive topic involving large amounts of taxpayers’ money. However, the private sector providers are quite clear on how they believe certain aspects of the political process are slowing or preventing the delivery of much-needed infrastructure investments. I guess the question should be how much credence governments are prepared to give to these concerns. After all, there is an inevitable degree of self-interest from those who stand to benefit from a smoother, more reliable process for infrastructure delivery. However, the unique view they have from working with many governments should afford their views some weight and credibility. If governments are going to sit up and take notice of this, they should do so quickly, though. As with all aspects of this infrastructure debate, the clock is ticking.”

–Steve Beatty, “Infrastructure: Survey Lays Bare the Extent of Private Sector Misgivings,” January 8, 2010 (www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Press-releases/Pages/Press-release-Infrastructure-survey-4)

“Along with advanced telecommunications, the low cost and reliability of freight transportation in the United States have been critical to the country’s economic success. But America’s failure to modernize its overloaded freight transportation infrastructure-chiefly the railroad network and highways used by trucks, but also inland waterways, ports, and airports-is imposing costs on American efficiency. As a result of congestion (highway delays, for instance), the penalty on American growth exacted by logistics costs rose from 8.6 percent of GDP in 2003 to 10.1 percent in 2007, even before the crisis.”

–Michael Lind, “The Right Way to Invest in Infrastructure,” McKinsey Quarterly, December 2009. (www.mckinseyquarterly.com/Public_Sector/Economic_Policy/The_right_way_to_invest_in_infrastructure_2484)

“The state’s increasing use of general obligation bonds has contributed to the habitual under-budgeting for maintenance of parks, prisons, roads, and levees, as bond measures typically authorize spending for construction costs, but leave unsaid how the state will pay to maintain and operate a project afterward. A policy of chronic deferred maintenance results in higher costs for repair and reconstruction; its short term benefits come at the expense of the taxpayer and those who must endure deteriorating highways, schools, and water systems. In developing a strategic plan for infrastructure, the state must not only identify and prioritize infrastructure needs, but calculate as well the true costs of projects to be created to address those needs.”

–“Building California: Infrastructure Choices and Strategy,” Report #199, Little Hoover Commission, January 2010. (www.lhc.ca.gov/studies/199/report199.html)

“In short, we don’t live outside the factory gate anymore, for good reasons. . . . Work is not the major travel factor it once was. If we consider all the other trips householders make, the notion of walking to them does not stand up to inspection. Trip purposes that are growing are social/recreational travel and personal/family business. We see that supermarkets, shopping centers, and schools are all getting larger, indicating larger market sheds for their customers and longer trip distances as a result. This is a natural product of private and public efficiency goals and the growing specialization of goods and services the public desires. Consider the kinds of milk we buy today-50 or 60 years ago there was just milk; now markets will have a dozen kinds of milk, dozens of kinds of lettuce. Absolutely the same applies to doctors. In my childhood, the three generations in our household had the same doctor, who was a few blocks away. Today people don’t have a doctor; they have several-none selected on the basis of how close-by their offices are. Conversely, the situation of being dependent on the single store you can walk to leads to lack of competition and monopoly-like pricing behavior. Research has established that low-income neighborhoods often pay more for basics because of their immobility. Even the threat of being able to leave the neighborhood to reach competitive suppliers helps reduce prices.”

–Alan E. Pisarski, “Research and Development to Support the Department of Transportation’s Strategic Goals,” testimony before House Subcommittee on Technology and Innovation, Nov. 19, 2009.