From: bobp@xxxxxxxxxxxx
To: dpolhill@xxxxxxx
Sent: 8/10/2021 8:33:32 AM Mountain Standard Time
Subject: Surface Transportation Newsletter #214
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| Surface Transportation Innovations |
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| By Robert W. Poole, Jr.
Searle Freedom Trust Transportation Fellow and Director of Transportation Policy
August 2021 |
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This issue of Surface Transportation News is also available online here.
In this issue:
- Bipartisan infrastructure bill: the good, the bad, and the ugly
- Private activity bonds and P3s in the infrastructure bill
- Why “Buy America” harms urban transit
- Equity for electronic tolling customers
- Response to DOT query on transportation equity metrics
- Correction re: new high-speed rail article
- News notes
- Quotable quotes
Bipartisan Infrastructure Bill: The Good, the Bad, and the Ugly
As I write, the United States Senate is finalizing and seems poised to pass,
what is now called the Infrastructure Investment and Jobs Act (IIJA). A few of
the final details may change, but this 2,700-page infrastructure bill (as
introduced) incorporates much of what Senate committees dealing with
transportation and public works had already agreed upon in the context of
reauthorizing the surface transportation program—the Fixing America’s Surface
Transportation Act (FAST Act), which expires Sept. 30. To those transportation
provisions, the infrastructure bill adds a number of other categories of
infrastructure (broadband, water utility service, electrification, and other
energy topics). The infrastructure bill was introduced as an amendment that
replaces the House surface transportation reauthorization bill. Thus, the
intent here is to wrap up into one bill both a one-time infrastructure program
and the upcoming five-year FAST Act reauthorization.
From my perspective, there are some good things in the bill, many more bad
things, and a truly ugly thing. Let’s take them in that order.
The Good
The bipartisan Senate drafters took to heart the urging of groups including
Reason Foundation, the Bipartisan Policy Center, Business Roundtable, House
Problem Solvers Caucus, and many business groups that private capital
investment should be encouraged as part of addressing the country’s
infrastructure needs. The infrastructure bill includes three key provisions
regarding private investment. The bill:
- Increases the federal cap on tax-exempt surface transportation private
activity bonds (PABs) from $15 billion to $30 billion. This is not enough, but
it is a step in the right direction. It should have also clarified the law to
make clear that PABs can be used not only for new facilities but also to
rebuild existing highways, bridges, etc. This would be consistent with the
president’s “build back better” goals.
- Provides for $100 million in grants to help state and local governments
develop public-private partenrship (P3) procurement processes, which should
help expand the P3 market.
- Requires projects larger than $750 million that apply for Transportation
Infrastructure Finance and Innovation Act (TIFIA) or Railroad Rehabilitation
and Improvement Financing (RRIF) loans to engage in value for money (VfM)
analysis (to see if P3 procurement provides greater benefits than conventional
procurement).
There were no such provisions in the House bill.
Second, it provides modest procurement reforms, including making permanent the
Title 41 reforms from the FAST Act, but does not reinstate the previous
administration’s One Federal Decision policy that President Joe Biden rescinded
soon after taking office.
Third, it did not include the House bill’s short-sighted repeal of the pilot
program that permits toll-financed reconstruction and modernization of three
individual Interstate highways (Interstate System Reconstruction and
Rehabilitation Pilot, ISRRPP). What the bill should have done is liberalized
that program to permit all states that want to use this approach to do so—and
for all their aging Interstates. This would cost the federal government zero;
it would simply repeal an obsolete ban on tolling.
Fourth, thanks to a nearly unanimous amendment on Aug. 3, the infrastructure
bill requires the Department of Transportation (DOT) to finally do a highway
cost allocation study, the first one since 1997, as a basis for evaluating who
pays how much in highway user taxes compared with how they use the highways.
Finally, in terms of focusing more on “hard” infrastructure, the infrastructure
bill is better, or far less bad, than the House bill that it’s intended to
replace.
That’s all I’ve found thus far to celebrate, though I haven’t read all 2,700
pages (and, unfortunately, neither most have the Senate members).
The Bad
The list of bad things in the bill is somewhat longer, but I will focus on just
four primary problems.
First, I was pleased to see a provision in the infrastructure bill calling for
a national mileage-based user fee pilot program. We’ve learned a lot from
federally-assisted state and multi-state pilot projects over the past decade,
but there are greater complexities in a potential national mileage-based user
fee system that have not been seriously researched yet. Much of what the
program in the bill calls for makes sense. It was only when I got near the end
that I found a huge problem. All the MBUF pilot programs thus far have charged
only hypothetical per-mile charges, and compared each user’s MBUF “bill” with
the amount of state fuel tax paid for driving the same miles. But this national
pilot program, as currently written, seems intended to actually collect a
federal mileage-based user fee and deposit the revenues in the federal Highway
Trust Fund. This violates the basic premise—stressed to participants in the
state pilot projects—that a federal or state mileage-based user fee is supposed
to be a replacement for fuel taxes, not charged in addition to gas taxes. I’m
told that there will be an attempt to fix this provision, but if it remains
part of the program, it could undercut the progress made in state MBUF pilots
whose participants came to see the mileage fee, correctly, as a replacement
funding source. By contrast, if incorrectly tested and implemented, the new
federal program could easily be termed “yet another tax increase” by many,
including opponents looking to prevent an eventual shift from gas taxes to
mileage-based user fees.
Second, although the Senate bill included a provision similar to the House bill
allowing electric vehicle charging facilities to be located at rest areas on
Interstate highways, it was removed at the last minute over what has been
described to me as one Republican senator having thrown a fit to get it removed
from the bill. This provision for charging stations at rest areas has support
not only in the electric vehicle community but also among a growing number of
state transportation departments and even some trucking organizations. Its
removal is especially ironic since one of the key architects of the bill, Sen.
Rob Portman (R-OH), in 2012 cosponsored a bill to repeal the federal ban on
commercial services at rest areas.
Third, the infrastructure bill largely accepts the basics of the Biden
administration’s approach to expanding broadband internet service to rural
areas. The plan insists on costly, uneconomical fiber optics for broadband in
low-density rural areas and would provide federal funding only to government or
co-op providers (modeled on Franklin Delano Roosevelt’s rural electrification
program). Unfortunately, the bill would lavish $65 billion more on this foolish
approach even as three private companies (Amazon, Oneweb, and SpaceX) are
investing their own billions to provide global satellite broadband service to
rural areas. For some perspective on this, see this recent post by Reason
magazine reporter Eric Boehm.
Fourth, at a time when the future of urban mass transit is very much in
question due to the long-term effects of the COVID-19 pandemic on workplaces
and residential changes, the prudent course is to restore previous transit
service (and address very large deferred maintenance backlogs) before making
any commitments to expanding, in particular, costly rail transit lines. Yet,
the infrastructure bill dramatically expands funding for New Starts capital
projects, while making only a modest commitment to “state of good repair.”
Whatever happened to the “fix-it-first” mantra of groups like Transportation
for America? And the same can be said for the huge increase in funding for
Amtrak, which handles far less than 1% of all inter-city passenger miles of
travel and serves only a fraction of the routes served by generally
self-supporting inter-city bus companies.
The Ugly
The infrastructure bill continues Congress’ accelerating retreat from the
principle of users-pay/users-benefit. First, it adds another $118 billion
bailout of the Highway Trust Fund using (borrowed) general fund money. Added to
previous bailouts of the Highway Trust Fund since 2008, the bailouts to the
fund now total $271.8 billion. In my April 2021 testimony before the U.S.
Senate Committee on Environment and Public Works, I pointed out that if
Congress used all the highway user tax revenues to fund only federal highway
programs, there would be no looming trust fund “insolvency.” Since mass
transit, sidewalks, bike paths, and a variety of other things that Congress
funds out of highway user taxes don’t generate any meaningful federal revenue,
they are appropriate candidates for subsidy. But that’s no reason to make
highway users pay for them.
Far beyond that problem, is the generally pathetic set of “pay-fors” cobbled
together to allegedly cover the large fraction of new spending in this massive
bill. And for highways and water utilities, where users-pay/users-benefit has
been the funding framework for at least the past century, there is really no
excuse for making businesses and upper-income taxpayers pay for needed
investments in better highways and water supply. To be sure, the IIJA is being
billed as a one-time effort to improve U.S. infrastructure, while also helping
an already-booming economy to “recover” from the impact of the COVID-19
pandemic. But the bill’s funding gimmicks, much of which will likely not
materialize (meaning even more deficit spending) sets a very bad precedent for
the future of infrastructure funding and federal spending. It also appears to
violate the federal “PAYGO” law, which is still in effect (see more on this in
quotable quotes below). As this newsletter was being written, the Congressional
Budget Office released its finding that the infrastructure bill is likely to
increase the federal budget deficit by $256 billion over 10 years. That’s not
exactly “paid for.”
» return to top
PABs and P3s Retained in Bipartisan Infrastructure Bill, Despite
Misunderstandings
By Marc Scribner
In the days leading up to the agreement on the bipartisan infrastructure deal,
it became known in Washington, DC, that infrastructure financing—and
specifically, private activity bonds (PABs)—remained a sticking point with
negotiators. Some senators were apparently alarmed to learn that private
activity bonds and public-private partnerships (P3s) could not be counted as
“pay-fors” or offsets to the infrastructure bill’s spending provisions and
would in fact count against the Treasury due to budget scoring rules.
Supporters of P3s and PABs quickly responded, attempting to explain what PABs
are and what they are not, and why they are critical to modernizing America’s
infrastructure.
First and foremost, a public-private partnership and private activity bonds
potentially used in that P3 are not funding sources. Rather, a public-private
partnership is a project procurement method for states and a private activity
bond is an important financing component in those procurements. Private
activity bonds, especially a tax-exempt category called exempt facility bonds,
typically provide financing for 20-30% of a P3 project’s total cost. Exempt
facility PABs have been used successfully in a variety of projects, and for
megaprojects, $12 billion has been leveraged to support $45 billion in project
activity, a ratio of $1 leveraging to $3.75.
Unfortunately, the most important infrastructure exempt facility bond
category—highways and surface freight transfer facilities—is subject to a
lifetime national volume cap of $15 billion. As of May, the U.S. Department of
Transportation reported that 99.93% of that volume had been exhausted, meaning
the cap would need to be significantly raised or eliminated to allow states to
finance needed highway projects through P3s. Absent reform, states would be
unable to transfer infrastructure financing and construction risks away from
taxpayers to private investors, which is what makes this model so appealing to
good-government advocates.
After learning that P3s are not funding sources, the double-whammy for some
senators was that longstanding budget scoring practices show PABs reducing
federal tax revenue and, if the bill is to be paid for, requiring additional
funding offsets to break even. The core issues here lie with the Joint
Committee on Taxation (JCT), which assumes that projects financed by exempt
facility PABs would have otherwise been completed with taxable commercial
bonds. Thus, the JCT scoring logic goes, the use of tax-exempt PABs would
deprive the Treasury of the taxes paid on interest income from those
hypothetical taxable bonds. In reality, it is far more likely that if
tax-exempt exempt facility PABs were unavailable, most of the projects in
question would have eventually been financed by tax-exempt municipal
bonds—which are not subject to any volume cap.
Despite the dubious assumptions used in the JCT scoring of PABs, it is
important to understand that the estimated tax revenue reductions are extremely
small when compared to the size of the larger bill. Based on previous JCT
scores, a $10 billion increase in the highway or surface freight transfer
facility PAB cap might score in the vicinity of $300 million over a five-year
bill. But that additional $10 billion in bonding capacity could be leveraged to
support nearly $40 billion in project activity, a very good bargain when
compared to the $550 billion in new federal spending contained in the bill.
Even eliminating the cap altogether to support a much more ambitious P3
infrastructure scenario—such as one that would allow for reconstruction of the
aging Interstate system at an estimated minimum cost of $1 trillion—would not
break the bank per the scoring rules. When the Obama administration suggested a
massive expansion of exempt facility PABs with its Qualified Public
Infrastructure Bond proposal, it scored at less than $5 billion over JCT’s
required 10-year window.
To be sure, tens or hundreds of millions of dollars each year isn’t pocket
change, but these largely illusory on-the-book costs are vanishingly small when
weighed against the hundreds of billions of dollars in new government spending
contained in the infrastructure bill. Whether more modest or more ambitious, no
proposal to expand PAB capacity for surface transportation infrastructure ought
to alarm congressional fiscal hawks—especially when the large project financing
and fiscal risk transfer benefits to taxpayers are considered.
» return to top
Why “Buy America” Harms Urban Mass Transit
By Baruch Feigenbaum
Like President Donald Trump before him, President Joe Biden supports economic
protectionism that is increasing the cost of transportation projects amd
limiting mass transit options for working-class Americans. In January,
President Biden signed an executive order strengthening “Buy American”
provisions. This longstanding policy mandates that federal infrastructure
projects use American construction materials.
A separate Buy America Act, passed in the 1980s, imposes those requirements on
all mass transit projects that receive federal funding. While this law has been
in effect for the past six presidents, President Biden seems somewhat more
committed than most to these “America First” policies—even opening a Made in
America office to enforce the regulations.
These laws can be waived if the cost of using American materials is 25% higher
than international materials. But in that case, companies have to apply for a
waiver, which they never received during the Trump administration and show no
signs of receiving during the Biden administration.
The rationale for these policies is twofold. First, limiting international
competition creates American jobs and increases manufacturing wages. Second,
the U.S. needs a robust manufacturing sector for the middle class. The problem
is that Buy America does not accomplish either of these goals.
Even when it was subject to competition, American subway manufacturing was far
from state of the art. For example, as Alon Levy points out in “Why Buy America
is Bad Law,” the New York City subway ordered two new railcars in the 1970s,
the R44 made by the St. Louis Car Company and the R46 made by the Pullman
Company. The R44 had three times the failure rate of other train cars leading
the New York State comptroller to recommend suing the company. The R46 had
defective brakes, which also led to a lawsuit. Both companies exited the
railcar business.
Today, any railcar company wanting to do business in the U.S. needs to open a
factory in this country. Given that the overall U.S. market is small, and
companies often make cars for one specific agency, there has been little
innovation. Step on a heavy rail car built in 2020 and the main difference
between it and one built in 1980 is vinyl flooring instead of carpeting.
And using 1980s technology in 2021 increases costs. New York’s next round of
subway cars cost $130,000 per linear meter, while Los Angeles’ light rail cars
cost $140,000 per meter and San Francisco’s Muni cars cost $170,000 per meter.
The average cost in Europe is less than $100,000 per meter. Caltrain and New
Jersey Transit Vehicles cost 35% and 60% more, respectively, than their
European counterparts.
Buy America affects more than just rail lines. As Scott Beyer and Ethan Finlan
point out in “The High Cost of Protectionism”, the Mike Bloomberg New York City
mayoral administration wanted to convert one Staten Island Ferry boat to run on
liquefied natural gas (LNG), which would have cut the boat’s fuel costs in half
and reduced greenhouse gas emissions by 25%. But there were no LNG engine
manufacturers in the U.S and the city was unable to receive a waiver, killing
the project.
Even Amtrak, already an inefficient operation with bewildering accounting
practices, has been affected by Buy America. In 2008, the agency wanted to buy
additional double-decker rail cars. Without Buy America the agency would have
purchased cars from the Japanese firm Nippon Sharyo, and that would be the end
of the story. But with Buy America, the Japanese firm had to build a $100
million plant in the U.S., increasing the costs of the cars and delaying the
project’s timeline.
But, perhaps the worst part of Buy America is that it fails at its primary
mission of creating jobs and increasing wages. Creating light rail car
construction jobs in Los Angeles cost $1 million per job, yet they pay only
$40,000 per employee. And the jobs are temporary, lasting only a few years. A
contract for the Massachusetts Bay Transportation Authority in Springfield
created 200 jobs at a cost of $6.5 million per job, with the majority of the
salary money going to management jobs.
Despite 40 years of Buy America policy, we haven’t seen a domestic rail car
industry develop. Why? The answer, in part, is that federal regulations don’t
alter the laws of economics. Even though taxpayers have spent billions and
billions of dollars on new heavy-rail, light-rail, and commuter-rail track and
rolling stock, there aren’t enough rail systems in the U.S. to make domestic
production cost-effective.
Buy America doesn’t help middle-class industrial workers and it harms
working-class commuters. Many working-class commuters are transit-dependent,
relying on buses or trains to get to work. But increased transit capital costs
often result in fewer trains and bus lines operating. And those that do operate
often have longer headways, making commuting more challenging for workers. The
primary goal of U.S. mass transit policy should be to make accessing jobs for
transit-dependent workers easier, not more difficult.
Policy analysts across the political spectrum, from Kyle Pomerleau of the
American Enterprise Institute to Jason Furman, who chaired President Barack
Obama’s council of economic advisers, want to get rid of Buy America policies.
Advocates for all modes of transportation, ranging from Angie Schmitt at
Streetsblog, who believes in government subsidies for bicycling and walking
projects, to Randal O’Toole at the Cato Institute, who supports only projects
that pay for themselves, recognize the problems created by these policies and
want to kill Buy America regulations. Unfortunately, many politicians foolishly
think they can “protect” American manufacturing jobs and build cost-effective
transportation projects at the same time. In reality, they do neither. The time
to end Buy America is now.
» return to top
Equity for Electronic Tolling Customers
The COVID-19 pandemic accelerated an ongoing transition to cashless tolling
across the country. Most customers appreciate the lack of long lines at toll
booths and the convenience of all-electronic tolling, usually with a
transponder on the windshield. But these programs almost always require a
pre-paid account with access to either a credit card or a bank account. That’s
fine for most of us, but what about customers who lack a credit card or bank
account?
In 2019, at least 5.4% of U.S. households were “unbanked,” lacking either a
credit card or a bank account. Several times that many were “underbanked,”
meaning that while they have an account, they conduct most transactions in
cash. These people could pay tolls based on their license plate number, but
that requires billing and collection, which almost always means service charges
and/or higher toll rates. Since most unbanked and underbanked households have
low incomes, having them pay more than most others to use toll roads is clearly
inequitable.
Fortunately, several toll road operators have come up with ways for the
unbanked and underbanked to have cash-based toll accounts that use the same
transponders as everyone else. As documented in a new Reason Foundation policy
brief, the urban toll road system in Puerto Rico pioneered this change. In
1999, more than 50% of the licensed drivers in Puerto Rico did not have a bank
account, and close to 75% did not have a credit or debit card. But most people
had cell phones, and there were prepaid cell phone programs in operation, with
people replenishing their accounts in cash at point-of-sale (POS) terminals in
retail outlets.
Puerto Rico’s new AutoExpreso cashless electronic toll program adapted this POS
cash replenishment concept. Initially, the toll agency signed up Texaco, with
over 250 gas stations on the island, as the initial host for new POS terminals.
Other retailers soon joined the program, making it easy for potential customers
to find a convenient place to sign up, and to replenish their accounts with
cash. Besides getting a transponder, each AutoExpreso customer received a
magnetic stripe card, to use when their account needed to be replenished with
cash. These accounts are anonymous, linked only to the account number on the
magnetic stripe card.
AutoExpreso proved so popular that large numbers of people with bank accounts
and credit cards also opened cash-based, anonymous accounts. Within two years
of its introduction, more than 50% of rush-hour vehicles on the San Juan toll
roads had enrolled in the program. That very large shift from cash payments at
toll booths to electronic tolling eliminated chronic congestion at the toll
plazas. By 2005, more than 2 million transponders were in use in Puerto Rico.
This success did not go unnoticed. In 2010 Florida’s statewide SunPass
electronic tolling system introduced a similar program for those without credit
cards or bank accounts. Like the Puerto Rico program, it makes use of POS
terminals at over 3,100 retail outlets near Florida toll roads (and at
Florida’s Turnpike service plazas). Replenishing the account with cash is
standard, and the account can be anonymous, like many of those in Puerto Rico.
Several other toll road operators have created similar programs. They include
New Hampshire DOT’s E-ZPass Reload Card, the San Francisco Bay Area FasTrak
cash deposit and replenishment program, and the North Texas Tollway Authority’s
ZipCash program.
These new programs are win-win solutions for unbanked and underbanked
customers, as well as the toll road operators. They give participants a more
convenient way to pay tolls (electronically) and at the lowest toll rates. And
the toll road operator avoids the high costs of billing and collections. All
toll road operators should consider such programs, especially those in states
with high proportions of unbanked and underbanked populations.
The new policy brief is “Providing Electronic Toll Collection to the Unbanked
and Underbanked,” by Daryl S. Fleming.
» return to top
US DOT Should Consider Access Across Modes as an Equity Measure
By Marc Scribner
In May, the U.S. Department of Transportation (USDOT) published a Request for
Information on transportation equity data. This came in response to President
Biden’s Executive Order 13985, signed in January, which directed federal
agencies under his control to “pursue a comprehensive approach to advancing
equity for all, including people of color and others who have been historically
underserved, marginalized, and adversely affected by persistent poverty and
inequality.”
In July, I replied to USDOT with a comment letter on behalf of Reason
Foundation. Those comments discuss the documented relationship between access
to automobiles and labor market outcomes, as well as highlighting the large
disparity in access to jobs between drivers and transit riders in America’s 50
largest metropolitan areas.
During the 1960s, transportation economist John Kain developed what came to be
known as the spatial mismatch hypothesis. Kain and others suspected that
advances in transportation technology and resulting changes in firm and
household location choice affected labor markets in a way that particularly
disadvantaged African Americans. Employment growth that increasingly clustered
in auto-oriented suburbs was leaving behind black metropolitan area workers who
continued to disproportionately reside in carless households located in central
cities.
The impacts on employment outcomes of both spatial mismatch generally and
automobile access specifically are still being debated, but the broad consensus
is that spatial mismatch is real and that disparity in car access explains some
of the diminished labor market outcomes observed in underserved communities.
Notable studies on these questions have found:
- The differences in the number of cars per adult household member account
for 43% of the black-white employment disparity and 19% of the Latino-white
employment disparity.
- The successful job search completion gap between white and black workers
would be reduced by 8% if black workers had the same car ownership rates as
their white counterparts.
- Among single mothers, car ownership often doubles the probability of
employment and results in large increases in the number of hours worked per
week.
- Car ownership is a significant predictor of employment (positive) and
welfare use (negative).
- Auto access significantly reduced poverty exposure among participants in a
Department of Housing and Urban Development housing assistance program.
Fortunately, auto ownership rates have been converging between disadvantaged
communities and the national average for decades. In the case of racial and
ethnic minorities, this trend has been pronounced. For instance, in 1970 the
percent of all households with zero cars available stood at 17.5%, but 43.1% of
African-American households lacked access to a car at that time—a gap of 25.6%.
By 2018, that had fallen to 8.5% carless overall and 18.1% of
African-Americans—a much smaller gap of 9.6%.
For those relatively few Americans who continue to rely on mass transit,
transit system performance in connecting people with places leaves much to be
desired. The University of Minnesota’s Access Across America series shows that
in 2019, those residing in the 50 largest U.S. metro areas could on average
access 47% of metro area jobs by car in 30 minutes of travel (or one hour of
bidirectional daily commuting). By contrast, just 8% of jobs were accessible by
transit in 60 minutes (or two hours of bidirectional daily commuting). Even in
the New York City metro area, by far the most transit-oriented American metro
area, and where more than 40% of total U.S. transit trips take place, drivers
can access 13% of New York metro area jobs in 30 minutes versus just 14% of
jobs accessible in 60 minutes by transit.
The COVID-19 pandemic worsened transit’s already negative outlook, where
transit’s pre-pandemic national market share stood at only 2.6% of total person
trips and 5% of commuting trips. When the pandemic struck and people
understandably feared sharing crowded spaces with strangers, mass transit
ridership collapsed by 95% at its worst.
Today, ridership remains down by more than half of its 2019 level, while
automobile vehicle-miles traveled have basically recovered to the pre-pandemic
baseline. Contrary to frequent claims that transit has been chronically
underfunded in the U.S., transit was already receiving nearly 30% of total
federal, state, and local spending on highways and transit, according to the
Congressional Budget Office. That does not include the roughly five years’
worth of normal annual federal funding that transit agencies have received
since March 2020.
Reason’s comments encourage USDOT to consider job access by mode as an
important equity measure, as well as contemplate the likelihood that policies
perpetuating transit dependence and limiting auto access may also perpetuate
unemployment and poverty, particularly among disadvantaged communities who
still experience reduced automobile access and resulting benefits relative to
the national average.
The full comment letter of Reason Foundation in response to USDOT’s Request for
Information on transportation equity data is available here. It includes
citations of the studies noted in this article.
» return to top
Correction re: New High-Speed Rail Proposal Article in the July Issue
An alert reader emailed promptly after receiving the July issue of this
newsletter, questioning my assessment of the cost of the high-speed rail (HSR)
portion of the hugely ambitious North Atlantic Rail (NAR) proposal. As you may
recall, the NAR proposal is for true HSR (dedicated right of way, including
major tunnels) between New York and Boston, plus many Amtrak upgrades in New
England and some new regional rail projects. From a map of what the NAR website
designated as priority corridors, I estimated the route miles of each and then
applied recent unit cost numbers for each type of rail project.
The reader questioned one of those unit costs: $1.3 billion per mile for the
high-speed rail portion, which seemed unbelievably high. Turns out he was
correct. I derived that number from Amtrak’s NEC Future Tier 1 EIS, dividing
the total cost of that proposed HSR project by the number of route miles. My
error was to use the HSR route miles from the NAR proposal (New York-Boston)
rather than the route miles from the Amtrak NEC Future study (Washington to
Boston). Correcting this error led to a revised unit cost for NAR’s HSR portion
of $875 million per mile. That revised unit cost number yields an estimated
cost for the HSR portion of NAR of $234 billion. Adding the additional costs of
the priority Amtrak-upgrade and new regional rail lines in the NAR near-term
plan and the revised total cost estimate is $246 billion. That’s more than
double the cost estimate in the NAR material: a mere $105 billion.
And that’s before taking into account typical passenger rail megaproject cost
overruns. The classic study by Bent Flyvbjerg and colleagues using a global
database of 258 highway and rail megaprojects found that the average passenger
rail project exceeded original cost estimates by 45%. Were that to be the case
with the North Atlantic Rail project, assuming it were ever built, the more
likely cost would be $357 billion. That is 3.4 times the rosy-scenario $105
billion estimate from the NAR proponents.
» return to top
News Notes
Maryland Express Toll Lanes Megaproject Back in Plan
In June, the Regional Transportation Planning Board had voted to remove phase 1
of the Maryland express toll lanes project from its long-range transportation
plan in a poorly attended meeting. That decision was reversed by a large
majority at the July meeting. Inclusion in the plan is a prerequisite to the
project later receiving a federal record of decision (ROD) to move into
implementation. Phase 1 of the $9 billion project will replace the bottleneck
American Legion Bridge and extend the express toll lanes on I-495 in Virginia
onto a stretch of I-495 on the Maryland side of the river and will also extend
the toll lanes up I-270. If subsequent phases add such lanes to the rest of the
I-495 Beltway, that will be a major expansion of the regional express lanes
network.
Autonomous Vehicle Tests in Manhattan and Miami
Two new test programs for autonomous vehicles were announced in July. Unlike
Waymo’s testing in low-density suburban Chandler, AZ, the new testing sites
will be very dense urban areas. Mobileye announced that it was already under
way testing camera-only autonomous vehicles in New York City, including
Manhattan. And a day later, Ford, Lyft, and Argo AI announced a plan to test
automated robo-taxies in Miami this coming winter. Lyft will charge regular
rates for the robo-taxi rides. These programs will be much better tests of the
ability of the companies’ automation systems than suburban driving.
Four Teams Short-Listed for Major Bridge Replacement in Louisiana
The aging and inadequate Calcasieu River Bridge on I-10 needs replacing with a
wider, state-of-the-art bridge, a project estimated to cost $800 million.
Having launched its first toll-financed P3 project (the Belle Chasse bridge)
last year, the Louisiana Department of Transportation & Development selected a
similar procurement model for the I-10 bridge. On July 15th, it announced a
shortlist of the best qualified P3 teams. They are headed by AECON/Acciona,
Macquarie/John Laing, Itinera/BCP Infrastructure Fund, and
Cintra/Vinci/Meridiam. The four-lane bridge on a six-lane Interstate has long
been a bottleneck.
Boost for Toll-Financing of I-10 Bridge in Alabama
Alabama DOT has come up with an alternative plan for at least partial toll
financing of the new Mobile River Bridge on I-10. A far more ambitious proposal
was rejected by local transportation planning bodies in 2019 due to an
estimated $6 passenger car toll each way. Earlier this year, the local boards
supported a trucks-only toll bridge, which would have been difficult to finance
and, if restricted to trucks, of questionable value in relieving peak period
congestion. ALDOT’s new proposal would charge $2 for cars and $15 for heavy
trucks, which is far more realistic.
Thruway Service Plazas in $450 Million Remake
A 33-year P3 concession will rebuild and upgrade all 27 service plazas on the
New York State Thruway. The agency announced early last month that construction
on the first 10 plazas was expected to begin on July 29, with only their gas
stations remaining open during the construction period. The project will
include a wider array of food-service providers, with national brands including
Shake Shack, Panera, Panda Express, and many more. The service plaza revamp is
entirely privately financed, with Empire State Thruway Partners having financed
the project based on its expected revenues from the various service providers.
Similar service plaza P3 revamps have been completed for toll roads in
Delaware, Florida, Indiana, and Maryland in recent years.
Miami Expressway Authority Fights for Its Life
Despite losing to the state government in court in April, the Miami-Dade
Expressway Authority (MDX) continues operating its five toll roads in Miami,
while the Miami-Dade County government plans a further appeal. The County
contends that the 2019 state law (pushed for by anti-toll populists) abolishing
MDX and replacing it with a severely constrained state-controlled agency
violates the County’s home rule charter. County commissioners have appointed a
new board, and the new appeal will be filed by the county government itself,
rather than MDX. Meanwhile, the erstwhile replacement agency—GMX—still exists
only on paper.
Transportation P3s Better at DBE Use, per New Study
A study by University of Maryland researchers Qingbin Cui and Kinqi Zhang used
data from FHWA’s U.S. Major Projects Database to assess the extent to which
highway construction projects met or exceeded disadvantaged business enterprise
(DBE) goals. Their findings, published in TRB’s Transportation Research Record,
showed that both long-term P3s and Design-Build/Construction Manager at Risk
procurements did significantly better than tradition design-bid-build (DBB)
procurements. They also found higher DBE participation the larger the project
size. The paper is “Public-Private Partnerships and Social Equity: An Empirical
Study of the Disadvantaged Business Enterprise Program,” Transportation
Research Record, 2021.
Minnesota Joins E-ZPass System
The Minnesota DOT announced last month that as of August 2, its electronic
tolling system for HOT lanes will be compatible with E-ZPass. That means
replacement MnPass transponders will now work on express toll lanes and toll
roads in 19 states across the Midwest and the east coast. There are no current
toll roads in Minnesota, but three express toll lane projects are operational
in the Twin Cities and a fourth is under development on I-35W.
Tesla Announces Start of Electric Truck Production
When Tesla first unveiled its prototype Class 8 Tesla Semi in 2017, it was
expected to be on the market by 2019, then 2020, and now 2021. Tesla has been
building a production line for the Semi near its Gigafactory in Nevada, aiming
to produce five Semis per week by the end of the year. The company plans to use
several of the first production models for its own use, but deliveries to
reservation holders are now expected by late this year. Whether the Semi will
deliver its originally announced range of either 300 or 500 miles, and its
price points of $150K and $180K, remain to be seen.
Possible P3 for Miami Causeway Upgrades
A consortium headed by Partners Group has made an unsolicited proposal to
Miami-Dade County to improve the Rickenbacker and Venetian Causeways. The
former opened to traffic in 1947 while the latter dates back to 1927; both are
tolled. The consortium proposed a DBFOM concession, presumably to be financed
via toll revenue, to upgrade and modernize the causeways. Under county
regulations, the project must be offered to potentially competing proposals,
which will be the County’s next step.
Batteries First, Hydrogen Later—Amazon and UPS
At a webinar hosted by the Bipartisan Policy Coalition last month, two of
America’s largest delivery companies both said that while hydrogen propulsion
will have advantages, it is not yet ready for prime time. That’s true despite
Amazon’s expectation that hydrogen fuel cell vehicles will be lighter, refuel
faster, and have longer range than battery electric vehicles, a conclusion
shared by UPS senior VP Tom Jensen. Both companies are moving heavily into
battery-electric delivery vans, but see future prospects for hydrogen fuel cell
power for their long-distance over-the-road transport needs. The discussion was
summarized on Transport Dive, July 6, 2021.
Are EV Makers in Error by Using “Skateboard” Frames?
In a very thought-provoking article in the September 2021 issue of The
Dispatcher, editor Michael Sena explores the question of whether the new
generation of electric vehicle companies is making a mistake by foregoing the
established “unibody” method of vehicle construction and reverting to the older
and less-safe body-on-frame design. It’s a carefully researched and
thought-provoking article that I highly recommend reading.
Possible P3 Bridge Replacement in Wilmington, NC
An unidentified company last November made an unsolicited proposal to North
Carolina DOT (NCDOT) to replace the aging Cape Fear Memorial Bridge. Under the
proposed long-term P3, the company would finance, design, build, operate, and
maintain the new bridge, financed by tolls. In June NCDOT gave a presentation
on the proposed project to the Wilmington Metropolitan Planning Organization
(WMPO). The DOT said the proposal is credible and that a toll-financed bridge
is one of the options it has been researching. After both county governments
reviewed DOT’s assessment, WMPO voted not to support a tolled option. However,
the Brunswick County commissioners on August 2nd voted unanimously to ask WMPO
to look at all funding options, including tolls.
2021 Urban Mobility Report Released
How much was traffic congestion reduced in 2020, and how far had urban traffic
recovered by year-end? Everything you might want to know about this, for
several hundred U.S. metro areas, is presented in the Texas A&M Transportation
Institute’s latest congestion report, released last month. It includes the
familiar tables documenting, by individual metro area, the impacts of
congestion on the metro area overall and on the average motorist. You can start
your exploration of this important report here.
New Cato Institute Study Details High-Speed Rail, Here and Abroad
Advocates of large-scale investment in high-speed rail cite France, Japan,
Spain and elsewhere as models; they also claim that U.S. HSR projects would
attract very large numbers of travelers from air and highway travel. The
empirical evidence for these claims is weak, as transportation analyst Randal
O’Toole details in this well-documented (133 end-notes) new study, Policy
Analysis Number 915 from the Cato Institute.
» return to top
Quotable Quotes
“As the House Budget Committee’s Democratic staff director for 20 years, I saw
this nation go from record surpluses to record deficits and debt. That’s why
Democrats passed a simple law in 2010 called ‘pay as you go,’ or ‘paygo,’ which
states that if Congress wants to cut taxes or increase mandatory spending, it
needs to pay for it. That law worked very well until Congress waived it in 2017
after passing the Trump tax cut . . . . Paygo is still on the books and we need
to enforce it. We cannot rely on low interest rates to keep the cost of debt
service low forever. Inflation is at its highest point in 13 years. If interest
rates continue to rise, paying down and servicing debt will eventually become
unmanageable, forcing new large tax hikes or spending cuts. It was smart to
borrow when Congress passed Covid relief to jump-start the economy. But with
strong economic growth projections coming from CBO and most private
forecasters, we should start borrowing less and paying for more.”
—Thomas S. Kahn, “A Democrat Against Deficits,” The Wall Street Journal, July
29, 2021
White-collar workers are trading their expensive lives in the nation’s most
densely populated areas for cheaper, greener pastures. Online real-estate
company Zillow calls it the ‘Great Reshuffle.” . . . The trend toward [more]
car ownership could very well outlast the pandemic as exurbs sprawl. Less
public transportation outside major urban metro areas means that even without a
work commute people will continue to need a personal vehicle for daily
activities like going grocery shopping or to the gym, said Deutsche Bank
analyst Chris Woronka. As new residents settle down with their bigger homes,
cars, and savings accounts, they are bound to cause a shake-up.”
—Laura Forman, “A Mass Migration to the Exurbs Remakes America,” The Wall
Street Journal, June 26, 2021
Q: “What is your opinion on the history of U.S. 69 congestion and the plan to
add express toll lanes?”
A: “We know that U.S. 69 is the most heavily trafficked road that we have in
the state of Kansas. So it was imperative to come up with a solution to that
problem. With Overland Park and KDOT working together, they were able to come
up with a very creative, innovative, first-of-its-kind-in-Kansas solution.
Instead of just adding more and more lanes, one of the [new] lanes [each way]
will be a toll lane, and people have the option of using the toll lane during
really heavily trafficked times or using the two remaining free lanes.”
—Gov. Laura Kelly to Leah Wankum, “Kansas Gov. Laura Kelly talks U.S. 69 toll
lanes, pandemic recovery and vaccines in exclusive SM Post Interview,” Shawnee
Mission Post, July 14, 2021
“King of Prussia light rail is hardly alone in exemplifying two pathologies of
American transit planning: expansion for its own sake (rather than building as
a result of actual demand . . . ), and making expensive concessions to placate
a handful of change-averse residents. American cities are strewn with unused
light rail lines in freeway margins or low-density industrial zones—where there
may be no one to ride the train, planners think, but at least there’s no one to
protest it. Neither pathology can be cured without two key reforms to the
transit planning process. First, streamline public comments and environmental
reviews to reduce the influence of small but vociferous interest groups.
Second, end federal subsidies for transit capital projects, such as the New
Starts program that may provide half of King of Prussia rail’s budget, that
enable transit agencies to spend billions of dollars they don’t have on new
rail lines they don’t need.”
—Connor Harris, “King of Prussia Rail Extension Is an Exemplar of Bad
Planning,” Philadelphia Inquirer, June 7, 2021
» return to top
The post Surface Transportation News: Analysis of the Bipartisan Infrastructure
Bill, How ‘Buy America’ Undermines Transit, and More appeared first on Reason
Foundation.
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This issue of Surface Transportation Innovations is also available online here.
Previous editions of this newsletter are archived here and all of Reason
Foundation's transportation policy research and analysis is here.
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Robert Poole
Searle Freedom Trust Transportation Fellow and Director of Transportation Policy
Reason Foundation
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