Cascadia Prospectus

The National Journal's transportation blog asks what's the proper role, if any, for public-private partnerships? Among the replies from their expert panel, two stand out. Steve Heminger, executive director of the nine-county (Bay Area) Metropolitan Transportation Commission, writes:

The debate about the wisdom of greater private investment in our surface transportation system is almost always contested on theoretical or ideological grounds, and that may be enjoyable for the debaters but it is completely unenlightening for the rest of us. I suggest instead that we try to answer the following practical question: what part of our investment shortfall are PPPs most likely to address? It is probably not deferred maintenance (about 50% of our total shortfall), because there's not much money to be made in that unglamorous activity. It is also probably not many public transit extensions, which tend to require operating subsidy, not generate operating profit. Nor is it new road capacity that may be needed for overall national system connectivity, but may be located in areas with slower population growth (and less income potential).

So, that probably leaves the sweet spot for "greenfield" PPP's in extremely congested, high growth areas, where new highway or freight capacity can not only pay for itself but generate additional income through tolls or other fees to pay back investors. This category of investments is critical to the nation's future economic well-being, but it probably represents less than 20% of our total investment shortfall.

We do not face an "either/or" choice between PPP's and traditional forms of public funding such as gas taxes and municipal debt. We need both of these tools (plus others) if we are to climb out of the huge investment hole we've dug for ourselves. And we need to deploy these funding tools in the right proportions to address the functional and modal investment needs we face.

Another noteworthy response comes from Robert Poole, Director of Transportation Studies for The Reason Foundation. Poole is a leading advocate of transportation P3s, and automated variable-rate tolling to control metro-region traffic congestion. Poole rebuts a new study by the Public Interest Research Group critical of transportation P3s, to make a few essential points about how P3s should be structured to protect the public interest and draw participation from private investors so important metro-region projects that states and regions cannot fully fund on their own can actually get built.

....their report blurs the distinction between leasing existing toll roads ("brownfields") and creating new toll roads via PPP mechanisms ("greenfields"). Reporting the total amount committed to various PPP projects (including relatively uncontroversial design-build projects), the report says that $21 billion was "paid for 43 highway facilities" between 1994 and 2006. The context and the wording make it appear that 43 existing highways have been long-term leased during this period. In fact, a grand total of four toll roads have been leased in the United States. All the rest of the PPP activity has involved the financing of much-needed new capacity.

PIRG's report also makes it sound as if most of these projects involved 75 to 99-year leases, such as those involved in the four brownfield projects. In fact, most new PPP toll roads are being developed under 35 to 50-year concessions. And large up-front payments, another PIRG target, are relatively uncommon on the growing number of greenfield projects. Why? Because these projects are challenging to finance solely based on their projected toll revenues. In the event that traffic and revenues turn out to be more than originally forecast, the trend now is to include revenue-sharing provisions in the concession agreements.

....the public-interest recommendations of the PIRG report are either platitudes ("the public should retain control over decisions about transportation planning and management") or unrealistic. Two examples of the latter: 1) No deal should last longer than 30 years. 2) The legislature must approve each negotiated PPP agreement.

The first would rule out many projects that would pencil out at 40 or 50 years, thereby reducing the scope for the private sector to help close the funding gap. And the second is a proven deal-killer. The few states that have included such a provision in their enabling legislation have received exactly zero proposals. Why? Because the cost and time involved in winning a competition for a billion-dollar project and then negotiating a 300-page concession agreement are too large to be risked on the whim of a legislative vote. The workable approach, which both California and Florida figured out after trying the PIRG way, is to enact legislation spelling out the parameters within which deals can be negotiated, and leaving the details to their state DOT or transportation commission.

Reuters reports that U.S. Transportation Secretary Ray LaHood told a senate committee the administration of President Barack Obama will not sign off on any hike in the increasingly ineffective federal gas tax, though Congress may propose that.

LaHood's declaration signaled that the Obama administration will take the same stance as former President George W. Bush. Revenue generated by the tax of 18.4 cents on each gallon of gas sold in the country goes into the Highway Trust Fund to fix U.S. roads and public transit. That fund has already been depleted once and Congress had to pass emergency measures last summer to replenish it. The tax has not been raised since the early 1990s...

The Bush administration also opposed a tax hike and last summer suggested looking beyond taxes to privately run electronic tolling systems and tax incentives for transportation investments. LaHood told the hearing that there are "a number of other things that will help us raise the revenue to satisfy the needs that we want to meet here."

True, the Obama administration's current position on the gas tax does not rule out a modest hike when the economy recovers, but even then and even if indexed to inflation, by-the-gallon fuel levies by the federal government and the states will provide only marginal cash compared to growing system needs fueled by dramatic increases in road usage over the past 50 years, and ongoing U.S. population growth. Additionally, today's vehicles are much more fuel-efficient, depressing revenue growth, and the "price signal" sent by the gas tax is weak.

Even if the federal gas tax were raised another 10 cents a gallon (about the limit politically), and a state's gas tax raised another five cents or so, what conclusions would the average motorist draw given that pump prices fluctuated more than two dollars per gallon in recent years and are headed toward settling at far higher levels than in decades past? The motorist's obvious quick take is correct: there are a number of factors more influential than how often and how far they drive - including geo-politics, oil supply and demand, and oil company prerogatives - that influence price at the gas pump.

If what we're looking for is to is allocate scarce roadway capacity, use it more efficiently, and broaden adoption of alternatives to peak-hour solo driving, the connection between choices and costs must be far more direct. We need something which unites the choice of driving on roads and highways and bridges, with the hefty costs of operating, maintaining and in some cases, replacing them.

An alternative set of options includes politically-charged strategies such as raising state gas taxes, county sales taxes, or regional vehicle excise taxes. Another, better type of approach is sometimes called "the user pays," and it's more direct than a fuel tax can ever be. This menu includes:

The latter would likely involve mandatory GPS tracking devices on all vehicles by a year certain (either built-in or retrofitted), though other technologies are also being discussed. Strict privacy protections are understood to be crucial.

Lanes managed under electronic time-variable tolling are already in use in a variety of locales, with some eyeing full-on regional systems of these "managed lanes" encompassing a number of major highways and state routes. They typically involve overhead gantries and windshield transponders keyed to prepaid or billed user accounts, although currently, automated cameras snapping pictures of license plates can replace or augment that approach.

Then there is the conversation about so-called "public-private partnerships" in surface transportation, which will surely continue to advance in the U.S. as atomic rhetoric is supplanted by calm and accurate analysis, of their variety and applicability.

In its final, February 2009 report "Paying Our Way," the congressionally-created National Surface Transportation Infrastructure Financing Commission concluded motor fuel taxes won't get us from here to there. (End of Chapter 4, "Paying By The Gallon: Motor Fuel Taxes".)

...a variety of factors are converging to challenge the preeminence of (motor fuel taxes) as the primary source of surface transportation funding. Due to a combination of travel growth, system deterioration, increasing construction costs, and lack of indexing, fuel tax revenues are becoming increasingly inadequate to meet investment needs. This inadequacy will likely be exacerbated as improved fuel efficiency and alternative fuel vehicles reduce fuel consumption. Moreover, the public's willingness to pay for the required investments through an increase in motor fuel taxes appears to be weak and may be declining...In urban congested areas, it is possible that charging users of the system more directly will not only raise revenues, but also influence driver behavior and lead to reductions in both congestion levels and the investment that is needed.

The real take-away from the nation's capital is not that we should start laying odds on when the federal gas tax will finally be raised, and by how much, but that "user pays" is the road map to the future.

In an op-ed in the Sunday Yakima Herald Republic, the Yakima Valley Fruit Growers-Shippers Association explains why it supports the recommendation by Governor Chris Gregoire, Seattle Mayor Greg Nickels and King County to replace the Alaskan Way Viaduct on State Route 99 with an inland deep-bored tunnel. The state senate has already passed a bill securing $2.4 billion in funding for the project, and the state house last week passed a transportation budget bill providing some of that amount for the tunnel. A house bill specific to the tunnel must still be passed and may be voted on as soon as this week. (The tunnel itself is estimated by the Washington Department of Transportation to cost between $1.2 and $2.2 billion, with about $1.9 billion the most likely amount - see last page here. On top of the $2.4 billion being sought from the state, Seattle, King County and Port of Seattle are to provide the balance for related mobility projects, which coupled with the state funds would bring total project cost to $4.2 billion).

As it happens, the central Seattle waterfront, where the seismically vulnerable Viaduct now stands, is our state's gateway to the world. Association Executive Director Keith Mathews explains why apple growers in Central Washington care about the tunnel proposal.

Consistent, efficient and uninterrupted access to the Port of Seattle (not only for export markets, but other, coastal domestic markets) is absolutely critical to our industry as well as others located on this side of the Cascade Mountains. And SR 99 is a critical link to the port. Since 1959, the Alaskan Way Viaduct has served traffic going to and from the port. In 2001, the 6.8-magnitude Nisqually earthquake shook it and severely damaged it. Though temporary repairs have allowed the viaduct to be reopened, state leaders are now seeking a way to replace it.

Several proposals have been considered, including the use of surface streets and transit only (surface option), replacement with another elevated structure, and the deep-bore tunnel and transit option now under consideration by the Legislature. There are several significant flaws to both the surface-only and elevated options. The surface-only option would eliminate one of only three north-south transportation corridors in the Puget Sound area (i.e. the gateway to the port), thus paving the way for gridlock on those streets, as well as Interstate 5 and I-405. The elevated option would involve tearing down the Alaskan Way Viaduct and gridlock for up to six years while the replacement structure is built.

On the other hand, the deep-bore tunnel could be built while the reinforced Alaskan Way Viaduct continues to function. This will keep our truckers going to the port and the economic benefits flowing to Central and Eastern Washington. For these reasons, our association believes that the proposed Seattle deep-bore tunnel is the optimal solution in providing a clear access to and from the port via Interstate 90 and other routes. This proposal provides a reconstruction plan that minimizes traffic congestion during construction and provides an efficient travel path to and across SR 99 for years to come.

The association's primary membership is composed of 42 packer-growers who supply half the apples consumed in the United States each year, pumping nearly $2 billlion annually into the state economy and $15 million a week in paychecks for Central Washington workers.

UPDATE: KOMO-AM 1000 and the Seattle P-I.com have picked up on the story.

Editor's Note: Cascadia Prospectus is pleased to welcome as a contributor Bern Grush, chief scientist and founder of SkyMeter Corp., who in periodic posts will share insights on road user charging technology and other aspects of surface transportation and system pricing.

Worldwide, the need to toll roads is increasing, whether for sustainable funding, transportation demand management, or emissions management. While this includes the usual toll by segment approach using radio frequency identification (RFID) or dedicated short-wave radio communication (DSRC) many transportation planners are looking to wide-area methods such as Vehicle Miles Traveled (VMT) in the United States and Time, Distance and Place (TDP) in the EU. This trend will almost inevitably continue, with the end result approaching universal tolling and presumably the abandonment of fuel taxes.

The technology to provide "one road-use meter/one bill" is ready now, and tax policy is now being considered by many transport thought leaders. But methods to migrate from fuel tax with free access to "pay for use" over wide jurisdictions such as states, provinces or countries are less well understood.

This paper will look at the new enabling technology and propose a four-stage approach that can help us migrate from fuel tax plus segment tolling, to uniform network-wide pricing.

Read full paper here. (First presented as "Moving From Road Road Pricing To Network Pricing," at ITS Asia 2009.)

Slight decreases in traffic congestion due to the economic downturn are no reason to curtail aggressive transportation planning for looming population and employment growth in major metro regions. Despite the most fervent wishes of some planners, metro region growth in coming years will continue to be more away from, than to, high-density urban neighborhoods. This is due to due to several factors. For one, first- and second-ring suburbs have become regional employment centers, and cities in their own right. They are where people increasingly work, shop, play - and if finances permit, live. Examples in Central Puget Sound include Bellevue and Redmond to the east of Seattle, and (more affordable) Kent and Federal Way to the city's south. Second, there are still better housing values in mid- and outer-ring suburbs that lie beyond these locales. Value for money in housing has always been a big factor - even more so now. Third, suburban public schools are in a number of important ways less problematic compared to their urban counterparts.

For these and other reasons, central cities are no longer economically and culturally dominant. They will become even less so as population continues to move outward. One result is that daily travel patterns for the majority of a region's residents are - if not already a complex mosaic, or multi-stop "trip chain" - at least a far cry from the old school "hub and spoke" commuter routes going from suburbs to central city and back five days a week.

Advanced forms of ride-sharing aided by networked information systems are gradually coming into play, and telecommuting, one hopes, will become more widespread. But the future of highways and arterial roads in growing metro regions looks very busy. It could be said that ultimately the question is how best to modify behavior enough at the margins to stretch finite road capacity further. Because it is ultimately impossible, not to mention unthinkable, to enforce old-regime Soviet-style authority directing where people will live and work, and how and when and by what means they will travel, we are left instead with free-market incentives.

For signs of an enlightened modern approach beginning to emerge, look no further than the San Francisco Bay Area. It seems to get that while road capacity is not an unlimited resource, the region still must robustly address increased pressure on highway systems in years to come.

A related, and sweeping legislative proposal has been introduced in the current session of the California General Assembly. It stems from the earlier adoption by a regional agency of principles for a wide network of booth-less, cash-less electronically tolled express highway lanes. These would be free to transit and ride-share vehicles and available to solo drivers for an account-billed variable fee, based on real-time congestion levels.

An important marker on the pathway to implementing this system of "High Occupancy (and) Toll" lanes (HOT lanes) was adoption by The Metropolitan Transportation Commission, the nine-county Bay Area regional transportation planning organization, in July 2008 of its HOT network principles. (See p. 3 for map).

The principles answer the question of why a region would consider such a plan, which involves converting existing carpool/transit-only or "HOV" lanes to more flexible HOT lanes, plus building new HOT lanes, while drawing upon the revenue raised by time-variable tolling of solo drivers. The MTC's stated principles are:

Those principles gave rise to legislation, now pending. The MTC provides this important analysis of AB 744 to "authorize a Bay Area express lane network to deliver congestion relief and public transit funding with no new taxes," introduced by Assembly Majority Leader Alberto Torrico, D-Fremont (pictured, right). The bill would authorize the MTC's corollary agency, the Bay Area Toll Authority, to finance, construct and operate a complete, seamless regionally-managed express lane networks on major highways. The system would:

According to the MTC analysis, AB 744 has some additional safeguards. It requires that 95 percent of the net revenue raised in each corridor be spent in that corridor for transit or emission reduction projects, and that the decisions about what such projects to implement be based on a bottom-up planning process giving ample voice to local input.

The MTC analysis also takes aim at a common canard that priced express lanes are "Lexus Lanes" mainly for the well-off. Nationally, the MTC reports, only 25 percent of priced express lane users are classified as high-income; and a Cal Poly San Luis Obispo study of SR 91 express lane users in Orange County found usage more closely tied to travel conditions and trip needs than income.

The San Francisco Chronicle editorial board writes of the AB 744 plan:

Bay Area transit planners have relatively limited options in trying to keep traffic moving in a region where growth continues to outpace the ability to build freeways or expand mass transit. Their challenge is to find ways to make better use of the transit and roadways we have. One such alternative is to create a seamless regional network of lanes for buses, carpoolers - and drivers willing to pay a toll.

We can certainly understand the instinctive groans at the concept of what transit planners call "high-occupancy toll" (or HOT) lanes - and critics deride as "Lexus lanes" that allow drivers with the means to pay a fee to glide past traffic. However, on closer review, the congestion relief produced by an enhanced network of express lanes would offer benefits to bus riders as well as drivers in the free lanes.

Marin County's elected board of supervisors has voiced opposition to the regional approach embodied in AB 744; they want local say-so on turning Route 101's HOV lanes, in Marin, into HOT lanes. The Marin Independent Journal in an editorial, disagrees, saying HOT lane policy is a regional matter. They are right. If every municipality or county that would be affected by tolled express lanes were given veto power, a piecemeal and politicized approach would result within contiguous, vital regional corridors and throughout the regional highway system. In the long run, traffic congestion would only spiral. The greater good requires a comprehensive plan, building upon the HOT lane projects already planned or underway. In the Bay Area, these include I-680 over the Sunol Grade, and I-580 in Alameda County plus SR 85 and US 101 in Santa Clara County.

Torrico's AB 744 is wending its way through the state legislature. It is too early to say how it will fare. It would not be shocking if such a comprehensive and bracing approach failed to gain full traction early on.

Cascadia Center does not endorse or oppose this bill. Our interest is in identifying surface transportation best practices, and ventilating related issues. Generally speaking, regional express lane systems are in our view a smart way forward. Especially considering the cost of failing to implement this approach.

Greater Portland, and Central Puget Sound will want to be considering very closely what's being pursued for the Bay Area.

UPDATE, 4/23/09: It should be noted that although the regional HOT lane plan is a major step in the right direction, some healthy debate is warranted over the spending priorities in the MTC's larger, $218 billion, 25-year "Transportation 2035" plan, approved yesterday by the planning body. It's reported that of the $218 billion in anticipated revenues, some $142 billion would be spent on expansion, operations and maintenance of transit; $66 billion for street, road and highway maintenance; and just $11 billion for expansion of roadways. The "Transportation 2035" plan, including amendments approved yesterday, can be found here. Further analysis of this broader 2035 plan will need to be of the gimlet-eyed variety. It should include comprehensive review of costs and benefits of the transit versus roadway expenditures, plus scrutiny of fiscal assumptions and strategies, versus fiscal best practices.

When I was nine I liked to poke a stick into ant nests I’d find in sidewalk cracks. Ants scattered in every conceivable direction. They ran in circles, they ran over and through each other. They screamed without logic. I was fascinated.

The state of professional transportation opinion in the US today is pretty much the same. The stick poked at the nest in this case was the report released by the National Surface Transportation Infrastructure Finance Commission this February. The opening ant-scream was the spanking Obama’s Press Secretary Gibbs gave to Transportation Secretary Lahood. We professionals cringed in unison. Gibbs was in turn spanked next day by Congressman Oberstar, chair of the Transportation and Infrastructure Committee. We cheered. Of course the press went in every ant-direction imaginable for that and for the release of the NSTIFC’s Paying Our Way report 5 days later. Joe Motorist will have gleaned no real insight, and after fears were supplanted by next days’ tedious economic headlines will have simply forgotten, secure in the fact that opinion was sufficiently variable that no leader could possibly find a coherent position.

It seemed to me that in the weeks following the release of the report, US transportation professionals were – among friends – largely in favor of the key message in the report: “The gas-tax is a clever and simple idea whose time has run out and paying-for-use is the tax-shift to fix it.” We mocked Gibbs, commiserated with LaHood, and delighted in Oberstar’s defense – which had just vindicated all of us. On the whole we nodded in unison at the work of Rob Atkinson’s Congressional commission. Of course we would not all recommend spending the revenue the same way, but we all seemed aligned with the principles: meter all road use and pay according to number of miles traveled weighted by when and where the driving happened and of course by type of vehicle used.

With that in mind, I attended the April 14-15 Symposium on Mileage-Based User Fees (updated web page here) hosted in Austin by the Texas Transportation Institute’s University Transportation Center for Mobility, Hubert H. Humphrey Institute of Public Affairs, University of Minnesota, and Center for Transportation Studies, University of Minnesota. This would be about my 20th symposium dealing with Road Use Charging in five years.

With good cause, many people thought it might never happen. But on Friday, after seemingly endless debate and consideration, the Washington State legislature put its final stamp of approval on the decision to replace the aging Alaskan Way Viaduct with a deep-bored tunnel.

There's a lot to this story, politically and logistically. Ultimately, however, the success of the deep-bored tunnel alternative (agreed to by Washington State Governor Christine Gregoire, Seattle Mayor Greg Nickels, and King County Executive Ron Sims), is a story of persistence, thoughtful analysis tethered to an understanding of advances in tunneling technology, and the triumph of consensus and cautious deliberation amongst a constellation of constituencies.

Cascadia Center was there every step of the way -- especially when the going got tough. Bruce Chapman, President and Founder of Cascadia Center's parent organization, Discovery Institute, wraps up the story nicely in this post.

Without Cascadia, as Friday's article from The Daily Journal of Commerce shows below, it wouldn't have been possible for tunneling experts to be assembled last fall to challenge the pessimistic numbers presented by the Department of Transportation that made a tunnel option seem unfeasible.

For coverage of the issue from tee to green, visit this section of Cascadia's website.