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Reason Foundation

Surface Transportation Innovations # 49

Topics include: broader support for PPPs; universal farecards for transit; market pricing of parking; toll truckways and LCVs; reducing congestion in Seattle; follow-up on eliminating toll booths; and other news.

Robert Poole
November 1, 2007

In this issue:


Support for PPPs, Tolling Increases

You would expect officials of the American Road & Transportation Builders Association (ARTBA) to support tolling and public-private partnerships (PPPs), especially at the annual conference of their Public-Private Ventures division (on whose board I serve). So it was no surprise when ARTBA president Pete Ruane kicked off this year's PPV conference by declaring that PPPs are a vital key to solving the country's infrastructure problems. ARTBA is on record supporting the full spectrum of tolling and PPP options, including congestion pricing, HOT lanes, and TOT (truck only toll) lanes. But what I find encouraging is the growing range of other transportation organizations that are getting comfortable with these approaches.

Two of the biggest also had senior people speaking at the ARTBA conference. John Horsley of AASHTO (representing state DOTs), while supporting an increase in the federal fuel tax, also declared that "every state should be given all options possible in the areas of tolling and public-private ventures, so those states can determine for themselves what is in the best interests of their citizens." That echoed the strong response issued by the National Governors Association last June to the threat, in a letter from the Democratic leaders of the House Transportation & Infrastructure Committee, that Congress might seek to undo some PPP deals if they don't meet the leaders' definition of being in the public interest.

Joining the pro-PPP chorus, though in a slightly more qualified way, was Robert Darbelnet, head of the American Automobile Association. "I am here to say that AAA believes that these partnerships have a role to play," he declared, referring to the qualified support for tolling and PPPs in AAA's recently promulgated Motorists' Bill of Rights. That statement supports PPPs for new capacity and even PPPs for the leasing of existing toll roads, provided that the proceeds are used for transportation, that public oversight is maintained, and that the roads provide high levels of service—points with which I certainly agree.

Recent weeks have seen more and more organizations acknowledge that private capital and increased use of tolling will be essential in closing the funding gap between what we need to build (for both congestion relief and increased goods-movement) and what the existing fuel-tax system is likely to yield in coming decades. The Coalition for America's Gateways and Trade Corridors—representing major cities, ports, railroads, and engineering companies—has just issued its guidelines for using PPPs for goods-movement projects. Its position paper, authored by former DOT Secretary Mort Downey and Ray Chambers, was published in the Nov. 5, 2007 issue of Traffic World. Echoing AASHTO's Horsley, they wrote that transportation planners "should have access to the largest possible toolbox of financing mechanisms, strategies, and options. Accordingly, there is an important—indeed a necessary—role for PPPs as part of an overall infrastructure program." And like AAA, they argued that proceeds from sale or lease of existing transportation facilities "should be reinvested in transportation projects, not diverted to other areas."

And there's more. The week before, Engineering News-Record sponsored a Construction Business Forum, at which the U.S. DOT's Tyler Duvall said, "The time is right to introduce reform concepts harnessing private capital; it's out there." Federal Highway Administrator Rick Capka and FedEx Freight's Douglas Duncan weighed in, in support.

Public sector officials are also speaking up. Last month saw a submission from the California Association of Councils of Government, representing 36 MPOs in California, to the two federal commissions looking into the future federal role in transportation infrastructure and its financing. Their letter called for "broad federal enabling authority for states and their political subdivisions to be able to expand their transportation system through user-based financing, including but not limited to (1) new toll roads, bridges, and lanes on the Interstate System, and (2) Imposition of broadly based container or other port fees. We also urge inclusion of broad authority for public private partnerships, whereby revenue from these new fees together with fare box revenue . . . may be utilized to attract private investment." These themes were also in evidence at the first annual PATH/University of California Transportation Center conference in Berkeley, Oct. 29-31.

When Reps. Oberstar and DeFazio sent their anti-PPP broadside to all 50 governors and state DOTs last May, they probably thought they would be tapping into a broad, Lou Dobbs-like backlash against tolling and PPPs. I'm sure they never expected such a groundswell of support for these vitally important approaches to addressing our huge transportation infrastructure needs.

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Universal Transit Farecards?

When I first heard about this idea, at a Chicago Fed conference on transportation finance back in June, it struck me as one of those things that seem obvious once someone suggests it. Now that Visa, MasterCard, and American Express are issuing contact-less credit and debit cards, why should transit agencies remain in the business of developing and operating their own, unique transit farecards?

A number of transit agencies—including New York's MTA, Chicago's CTA, and Washington, DC's WMATA—have introduced their own contact-less fare cards over the past decade. But at least two agencies have spent the past year experimenting with commercial cards issued by the major credit/debit card companies. So far, the results have been quite positive.

In New York, the MTA has done its trial using contact-less Citibank MasterCards, on the Lexington Ave. subway line. It will soon be expanded to 275 buses, on which use of the MTA's own MetroCard has been an obstacle to rapid boarding. Across the country, Salt Lake City's Utah Transit Authority—which had never gone to a contact-less card of its own—has run a successful pilot project using contact-less bank cards on buses serving four nearby ski resorts. The pilot has gone so well that UTA issued an RFP for a much larger contact-less system, for which it hopes to award a contract by early next year.

In both pilots, customers liked not having to carry (and refill) a separate transit card, using instead the same contact-less credit or debit card that they use for numerous other purchases. And the transit agencies are coming to realize that they are in the transit business, not the payments-processing business. There are economies of scale in obtaining that service from companies that do it on a massively larger scale. Plus, when a customer loses the card or has some other account problem, they already know to contact the bank—not the transit agency.

There has been a fair degree of weeping and gnashing of teeth in the transit world about the difficulty of developing interoperability among various agencies' contact-less cards. This is especially important in large metro areas (New York, Chicago, San Francisco, etc.) where there are multiple transit providers. If the transit world shifts to outsourcing this function, as MTA and UTA seem to be doing, that whole problem would be solved. Using their contact-less Visa card, transit customers could transfer seamlessly from one system to another, since the banking industry has already solved the interoperability problem.

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Market Pricing for Parking

UCLA professor Don Shoup is the guru of parking policy, an often neglected corner of transportation policy. For decades, he's been calling our attention to the side effects of conventional planning mandates that developers provide X number of parking spaces per thousand square feet, and to the way that employer-provided "free" parking may distort commuters' choice of mode. I was pleased a couple of years ago to see the American Planning Association publish his magnum opus, The High Cost of Free Parking (2005), described by Martin Wachs as "destined to become a planning classic."

One of the points that's well-explained in the book is how free or below-market-priced street parking leads to people spending time cruising about, looking for an empty parking space. Shoup and his grad students studied this behavior in Westwood, the small downtown adjacent to the UCLA campus, where parking meter rates are about half the per-hour cost of parking in off-street parking structures. The average search time for an empty parking space turned out to be 3.3 minutes, during which the car traversed half a mile. Given the number of metered spaces in Westwood and the turnover rate, Shoup calculated that this sort of cruising equates to 4,000 vehicle miles traveled (VMT) each weekday, or 950,000 extra VMT per year, wasting 47,000 gallons of gasoline. "Underpriced curb spaces are like rent-controlled apartments," says Shoup. "They are hard to find, and once you find a space you'd be crazy to give it up. . . . Like rent-controlled apartments, curb spaces go to the lucky more than to the deserving."

So what Shoup has been advocating for years is that cities charge the lowest price that will produce a few vacant spaces at all times (in practice, about 85% occupancy). That should eliminate wasteful cruising and ensure that people can find a space when they need one. And as he points out, only trial and error will reveal the right price for curb parking in particular locations.

Fine and dandy, but would any city actually do this? One that has recently followed Shoup's advice is Redwood City, California. As Katherine Mieszkowski reported at salon.com last month, the city increased meter rates downtown during the day, and raised the price of evening street parking from zero to 75 cents/hour on the main street, and 50 cents and 25 cents on surrounding streets. The goal is to achieve the 85% occupancy rate recommended by Shoup. Following another of his recommendations, the city spends the extra revenue on improvements to the downtown business district, which has led downtown businesses to support the market-pricing policy. Mieszkowski reports that Glendale and Ventura, California, are also moving to adopt market-based street parking pricing.

And the next place to do so may well be San Francisco. Inspired by Redwood City's success, the Port of San Francisco tested the idea with the 1,000 parking meters it owns along the waterfront. The results were positive enough that the city's Municipal Transportation Agency is developing plans to adopt these ideas citywide, on its 24,000 parking meters. They will probably begin with experiments in several areas—downtown, at a neighborhood commercial site, and at a city-owned lot with meters, according to an Oct. 12 story in the San Francisco Chronicle.

So it looks as if one of the keys to a more "livable city" is market-based parking pricing. Thank you, Prof. Shoup.

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Toll Truck Lanes Gaining Traction

Back in 2002, Peter Samuel, Jose Holguin-Veras, and I released a Reason policy study on the potential economic feasibility of barrier-separated toll truckways, built along the right of way of selected Interstate corridors (www.reason.org/ps294.pdf). Our core concept was that despite the trucking industry's historical aversion to tolls, if the highway system offered them greater economic value, many trucking companies (and their customers) might find that it made sense to pay tolls to gain those benefits. What such truckways could offer is (1) heavier weight limits and the ability to operate longer combination vehicles (LCVs), and (2) elimination of congestion, especially on the urban-area portions of Interstate routes. Given the assumptions we made, it looked as if there was a case for the concept being feasible. It was endorsed, when we released it, by both the American Trucking Associations and the National Safety Council, two groups normally at odds over the issue of expanded use of LCVs.

Fast-forward five years to 2007. In the recently announced set of winners of the U.S. DOT's Corridors of the Future competition, one of the six was based on this concept. Indiana DOT joined forces with the DOTs of Missouri, Illinois, and Ohio to propose truck-only lanes along I-70 across all four states, from Kansas City on the west to the Ohio/West Virginia border on the east. The proposal notes the potential of extending the reach of turnpike double LCVs from the Kansas Turnpike (where their operation is legal today) and the burgeoning intermodal hub at Kansas City to the key eastern freight hub of Columbus. A partner on the project is the ATA's research arm, the American Transportation Research Institute. The 800-mile project would provide two barrier-separated truck-only lanes in each direction, and would almost certainly be funded by tolls (given the lack of other funding for such a large project, and the economic benefits it would offer to truckers and shippers). The project would include staging areas at key locations, where multi-trailer rigs could be assembled and disassembled.

This is one of the types of projects that could be facilitated with increased federal encouragement in the next reauthorization bill, in 2009 or later. That is what's envisioned by the American Road & Transportation Builders Association's "Critical Commerce Corridors" proposal. ARTBA is proposing this as separate from the existing fuel-tax funded federal-aid highway program. Such corridors, specifically for goods-movement, would be financed by dedicated user fees on freight shipments, with the U.S. DOT playing a coordinating and facilitating role, to ensure that international trade and interstate commerce is fostered by adding enough capacity in strategic corridors (i.e., not on bridges to nowhere).

Meanwhile, useful research on toll truck lanes continues. Georgia DOT and the State Road and Tollway Authority are assessing the feasibility of such lanes in Atlanta and Savannah. The Southern California Association of Governments is continuing to pursue a very ambitious $6.5 billion toll truckway from the ports of Los Angeles and Long Beach to the Inland Empire 59 miles away. And in Chicago, researchers from PATH at UC Berkeley recently studied a truck-only lanes project for Chicago. The initial project, with one lane in each direction, produced significant travel-time and congestion-relief benefits, with a benefit/cost ratio of 3.6. When modeled truck traffic grew to the maximum uncongested capacity of the lanes, the researchers simulated the introduction of platooning technology, which would double the capacity of the lanes without needing to add right of way or pavement. Although the technology costs were high, they were less than the cost of adding new lanes, resulting in a benefit/cost ratio of 5.15. (The article on this project is by Stephen Shladover, "Improving Freight Movement by Using Automated Trucks on Dedicated Truck Lanes: A Chicago Case Study," and is on the PATH website, www.path.berkeley.edu) ITS researchers, like those at PATH, are realizing that innovations like truck automation would most realistically be introduced on dedicated lanes, such as toll truckways.

Finally, let me alert you that the Transportation Research Board's recent Research Needs Statements include two significant new projects: "Managed Lanes and Heavy-Duty Vehicles" and "Truck Tolling: The Role of Freight Markets and Industry Characteristics in Decision Making." Both are sponsored by the TRB Congestion Pricing Committee, of which I am a member. Go to http://rns.trb.org/dproject.asp?n=14195 for the latter, and the same URL with 14196 for the former.

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Will Washington State Be Next to Target Real Congestion Reduction?

Over the last five years two states—first Texas and then Georgia—have made fundamental changes in how they do transportation planning. In both cases, with leadership from the governor, support from the business community, and buy-in from the key transportation agencies, Texas and Georgia have changed priorities to make reducing congestion from today's unacceptable levels the most important goal in transportation planning. And that means a departure from fiscally constrained long-range transportation plans in favor of setting a long-term goal (e.g., reduce the travel time index to 1.3 by 2030), figuring out what it will take in the way of cost-effective investments to reach that goal, selecting projects accordingly, and developing the additional funding sources to accomplish the revised set of targeted investments.

A lot of groundwork along these lines has been laid over the past several years in Washington State, with a focus on the Puget Sound (Seattle-area) region, one of the most congested in the country. Under Doug MacDonald's leadership, the state DOT did large-scale studies of how congestion could be reduced by greater transportation investments, and the role of tolling and value pricing in both raising the needed funds and managing the traffic flow.

Unfortunately, neither former Gov. Locke nor current Gov. Gregoire has signed on, apparently preferring business as usual. Last month the state's Auditor, Brian Sonntag, released a scathing audit on the state's transportation performance, citing repeated failures of the legislative and executive branches to address congestion in a serious manner. The report notes a 2001 Blue Ribbon Commission finding that reducing congestion should be the primary goal of transportation policy, and notes that such a commitment has still not been made. It notes the potential for coordinated near-term actions that could reduce hours of traffic delay by 15-20%, and the need for large-scale longer-term investment to add needed capacity. The standard for selecting such investments should be how many hours of delay-reduction would be produced for each million dollars of investment.

But both acting DOT director Paula Hammond and Gov. Christine Gregoire rejected these ideas as soon as the audit came out, defending the status quo. That was last month. This month, all eyes were on the Nov. 6 ballot measure, Prop. 1, that would have increased sales taxes and car taxes to raise $18 billion, mostly for light rail but partly for highway expansion. Proponents had packaged highways and transit together, but that appeared to have backfired, attracting opponents of both. The measure went down to a crashing defeat.

So where to now? The research has all been done over the past six years, making the case for a Texas-like, Georgia-like approach. Tolling and value pricing have considerable support among transportation professionals at the DOT and MPO, and Washington has a workable public-private partnership law on the books, not yet used for any projects. It looks as if it will take a different governor, and a different DOT director, to provide the leadership to make aggressive congestion reduction the driving force in transportation policy in the Puget Sound region.

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Reaction to My "Eliminate Toll Booths" Article

Last month my lead article called for phasing out all toll booths and toll plazas, by a date-certain (say, 10 years). Within a few hours of the newsletter going out, the Wall Street Journal emailed, asking if I could do a longer piece for their op-ed page, which I did, and which you may have seen there on Nov. 5th.

My colleague Peter Samuel reprinted that piece, along with a thoughtful commentary (go to www.tollroadsnews.com/node/3232). He provides a far more detailed overview of which systems are well along in moving into open-road tolling, but also which ones still have a lot of old-fashioned, full-stop-to-pay mainline plazas. He chides the private concessionaires on the Dulles Greenway, Indiana Toll Road, and Chicago Skyway for being laggards on going cashless (as opposed to merely offering transponder tolling as an option). But he also notes that the benefits of going cashless would be less on some long-haul toll roads using ticket systems, and on some categories of bridges and tunnels. It's an interesting and thoughtful piece—another illustration of my former colleague Lynn Scarlett's comment that "reality is tricky."

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Conferences

Dec. 3-4, 2007, Washington, DC: IBTTA Transportation Finance Summit. Reason Foundation is co-hosting the International Bridge, Tunnel & Turnpike Association's 4th annual transportation finance summit. I've attended several previous ones, and they've been an excellent source of ideas, information, and contacts on the latest thinking in transportation finance. This year's event includes a Debate on Funding America's Surface Transportation System. For details and registration, go to: www.ibtta.org/Events/eventdetail.cfm?ItemNumber-2398.

Dec. 3-5, 2007, Miami, FL: North American Port & Intermodal Finance & Investment Summit. Reason Foundation is co-hosting this Infocast conference, at the Westin Colonnade Hotel in Coral Gables. Speakers will include keynoter former Secretary of Transportation Norm Mineta, nearly a dozen port directors, and experts from shipping, rail, and trucking sectors, as well as infrastructure finance. (I am on the closing panel.) There will also be a pre-conference workshop on innovative financing for port and intermodal projects. Details and registration: www.infocastinc.com/ports.html. You can receive a 15% discount by entering 074635 when registering.

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News Notes

Drew Carey on Gridlock. In case you haven't heard yet, Reason Foundation launched Reason.TV last month, with a series of short videos by Drew Carey on current public issues. The first one is on "Gridlock," suggesting ways in which LA's horrible congestion could actually be reduced. Go to reason.tv/video/show/6.html. I've already received a flood of positive emails about this mini-documentary, so if you haven't seen it yet, you're in for a treat. While on the site, you might also check out Reason colleague Ted Balaker's short clip on a transportation-related urban legend: reason.tv/video/extras/63.html, as well as the other video extras on transportation.

Climate Scientists on Global Warming. The folks at the Heartland Institute in Chicago have produced a useful booklet that summarizes the results of two international surveys of climate researchers, conducted by environmental scientists at the GKSS Institute of Coastal Research in Germany. The heart of the booklet is a set of responses from the 2003 survey on 17 key questions. While the results show the majority of climate scientists do think human-caused temperature increases are occurring, they show a far wider range of views on a number of important aspects of the problem, and of how to deal with it. You can download "Scientific Consensus on Global Warming" from: downloads.heartland.org/2086111.pdf.

LA Port Trucks Plan Revamped. The unholy alliance between the Teamsters union and environmental groups over diesel truck emissions at the Ports of Long Beach and Los Angeles has failed to accomplish its objective. As I noted in issue #44, the package deal these groups thought they had sold to the ports, in the name of removing diesel particulate emissions as a roadblock to port expansion (including improved transportation access), was to allow only trucks with employee-drivers to bring containers to and from the ports. Those favored companies would then get subsidies to replace or retrofit their truck tractors with 2007-era low-emission diesels, said subsidies to come from some kind of new fee on containers. Shippers and trucking associations balked, threatening years of litigation. (As at many ports, most of the drivers in these drayage operations are owner-operators, who would be displaced by Teamsters working for large trucking firms.) But late last month, the ports threw out the employee-driver plan. Instead, they embraced a 5 to 7-year schedule for phasing out pre-2007 diesels. Still unclear is what sort of assistance the ports will provide for diesel replacement or retrofit, and who will pay for this.

Tolling Gains Support in the East. A new survey by AAA Mid-Atlantic adds to the growing evidence that most drivers, if given a choice between gas tax increases or tolling as the way to pay for upgrading the highway system, prefer tolls. The organization posted the survey on its web site Aug. 10th, soon after the collapse of the bridge on I-35 in Minneapolis. It ran until Oct. 5th, generating 772 responses. While 54% opposed increasing gas taxes to pay for increased road and bridge maintenance and repair, 57% would support tolling for this purpose. And 42% would even support leasing toll facilities to the private sector if the revenue was spent solely on maintaining roads and bridges.

Correction re Georgia DOT and I-20. In my September 2007 column in Public Works Financing, I jumped the gun and said that Georgia DOT had issued an RFP for managed lanes on I-20. That is not correct; GDOT held meetings with industry in early October to discuss the project, but has not yet issued even an RFQ, let alone the RFP. Sorry for this mistake.

Feedback on "Four-Laning". In response to my article (Issue #48) on Missouri DOT's innovative approach to providing the near-equivalent of four lanes on two-lane highways, several readers reminded me that this is not a brand new idea. Several states, such as Texas, provide alternating passing lanes on two-lane highways, under the rubric of "Super Two." Missouri may, however, be the first to provide a continuous three-lane section for such upgrades of traditional two-lane highways.

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Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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