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Reason Foundation

Surface Transportation Innovations # 85

High-Speed Rail's Obstacles, HOT Network in DC, New Urban Tunnels Proposed

Robert Poole
November 15, 2010

In this issue:

High-Speed Rail Hitting Obstacles

The anti-Washington, DC “wave” that shifted control of the House to the GOP and elected a whole raft of Republican governors is only one factor in an emerging backlash against the Administration’s high-speed rail agenda. A number of governors and state DOTs are concerned about the 20% match requirement on the second round of ARRA (“stimulus”) rail grants, as well as the prospect of ongoing state operating subsidies. And Rep. John Mica (R, FL), incoming chair of House Transportation & Infrastructure Committee, has his own ideas about what kind of HSR projects might be warranted for federal funding.

Most of the post-election attention has focused on the rejection of planned higher-speed rail projects by governors-elect in Ohio and Wisconsin. On Nov. 8th, DOT Secretary Ray LaHood send them both letters saying that the ARRA grant money previously awarded to them cannot be reprogrammed for anything else and must be returned for distribution to projects in other states. Transportation Weekly’s article on the subject (Nov. 10th) estimated that neither state would actually have to give back any money, since neither had actually spent any of it (as opposed to simply “obligating” $14.9 million in Ohio and $102.3 million in Wisconsin). Gov.-elect Rick Scott in Florida, who was critical of that state’s HSR project during his campaign, has said he could only support it if it required no state funds, either for capital or operating costs. And Rep. Jerry Lewis (R, CA) has announced a bill that would rescind all unobligated ARRA discretionary appropriation balances, estimated at $12 billion, of which over $8 billion is transportation, the majority of which is for HSR projects.

Widely divergent views are circulating on the future of federal HSR support. At this week’s U.S. HSR Association conference in New York City, that group’s president called for a 17,000 mile 220 mph network, which he said would cost $600 billion over 20 years. That works out to just $35 million per mile, but the GAO’s 2009 report on HSR found that the average cost of recent European projects was $51 million/mile. At that rate, a 17,000-mile system would cost $867 billion—and with a 20% state match, the fiscally stressed states would have to come up with $173 billion. At the conference, American Public Transit Association president Bill Millar said the federal government should pay 90%, “using funding for the Interstate highway system as a model,” according to the Washington Post’s account.  But of course, the Interstate system was paid for 100% by its users, with 90% coming from their paying federal fuel taxes and the other 10% from state fuel taxes. Does Millar think a passenger rail ticket tax to support a HSR Trust Fund would be a viable option?

Rep. Mica set forth his views on HSR’s future in an Oct. 15th article in The Hill, “U.S. Mustn’t Squander High-Speed Rail Funds.” Showing some familiarity with the global experience, he said HSR should only be considered for corridors linking major metro areas, longer than 100 miles and shorter than 500 miles, with high concentrations of business travel, and congested highways and airports. He has criticized the 84-mile Florida project (which meets few, of any, of these criteria) and suggested that the main focus of federal policy should be the high-density Northeast Corridor. He also favors only true HSR, on separate rights of way, and believes that careful project selection can attract private-sector investment.

The latter question is very much at issue in the California HSR project. While its sketchy financing plan assumes significant private investment, the conditions written into the ballot measure authorizing $9 billion of general obligation bonds for HSR prohibit any taxpayer operating subsidy. Yet the project’s financial advisors have been telling the California High Speed Rail Authority for several years that the only way they can attract private investment is with a revenue guarantee (aka operating subsidies). This problem has been spotlighted by recent reports from both the California Legislative Analyst and the State Auditor, and is one of the focal points of a new, independent assessment, released October 12, 2010. The nearly 100-page report, “The Financial Risks of California’s Proposed High-Speed Rail Project,” was written by former RAND Corporation economist Alain Enthoven, SRI International’s William Grindley, and Silicon Valley financier William Warren. It carries the endorsement of 70 prominent Silicon Valley executives as peer reviewers. Its overall conclusion, backed up by substantial analysis and modeling, is that “there is little if any chance the system will pay for itself,” as required by the bond measure legislation. (http://cc-hsr.org)

I’m aware of only one U.S. HSR proposal that claims it can be self-supporting: DesertXpress between Las Vegas and Southern California. It is apparently not asking for any federal grants, but does plan to apply for a Railroad Rehabilitation and Improvement Financing (RRIF) loan as part of its financing package. It plans electric-powered 150 mph operations on its own double-tracked line. It will be interesting to see if this project gets off the ground.

Will DC Region Build a HOT Network?

Networks of priced lanes are now official policy in six metro areas: Atlanta, Dallas, Houston, San Diego, San Francisco, and Seattle. Could the Washington, DC metro area be next? The DC region ranks 2nd in the nation on annual hours of delay per traveler and has the 4th –highest travel time index. That’s the context within which the region’s Transportation Planning Board released a pricing-oriented alternative to its fiscally constrained long-range transportation plan in September. It calls for creating a network of 1,650 priced lane-miles, at a cost of $52 billion. In contrast to the fiscally constrained plan, which would not reduce congestion, the managed lanes network is projected to reduce vehicle hours of delay by 12.5%.

Peter Samuel of Tollroadsnews.com calls this “the most fiscally responsible and realistic metro area transport plan concept from anywhere in the U.S,” and I’m inclined to agree. (www.tollroadsnews.com/node/4900) It

It’s the latter that is unprecedented, but in this case reflects the strong policy preference of officials in both the District of Columbia and the National Park Service (operator of the various parkways in the region).

Integral to the proposal is the integration of region-wide bus rapid transit (BRT) service into the network, taking advantage of what is proposed as a seamless network of uncongested lanes—the virtual equivalent (from a performance standpoint) of exclusive bus lanes. As the report says:

Pairing the priced (toll) lanes with BRT service provides the potential for great synergy: variably priced toll lanes provide free-flowing running way for bus rapid transit vehicles, and toll revenue offsets the cost of BRT facilities and service. BRT services reduce the demand for the priced lanes, allowing them to operate more smoothly and preventing congestion. Both the BRT and priced lanes should provide mode-shift incentives, providing congestion relief to the existing general purpose lanes.

Toll rates would range between 20 cents/mile and $2.00/mile, depending on location and time of day. The system was modeled with HOV-3+ vehicles (including vanpools and buses) being exempt from tolls, with all others paying. The modeling estimated that toll revenues would recover 96% of the network’s $52 billion cost. Samuel points out that the cost could be reduced significantly by replacing some of the direct access ramps with “slip ramp” access from adjacent general purpose lanes, which is a cost versus performance and safety trade-off that might make sense in the less-congested portions of the network. He also suggests building the most revenue-positive corridors first, in order to make the overall revenues vs. costs equations work out more favorably.

In addition to the under-construction Beltway HOT lanes in Virginia and the tolled Intercounty Connector in Maryland, nine other priced corridor studies are currently under way in the region, including a VDOT study of HOT lanes on badly congested I-66. Though that study concerns only I-66 west of the Beltway, such congestion-relief lanes would be even more valuable inside the Beltway, where currently only HOV-2s are allowed on I-66 during peak periods. Under a seamless, region-wide HOT network, a uniform HOV policy would apply region-wide, and it would have to be HOV-3+ or higher, for financing and pricing-effectiveness reasons. The sooner the region comes to grips with that reality the better.

Tunnels on the Agenda in Six Metro Areas

The Washington State DOT has received two bids from consortia seeking a design-build contract to build the SR 99 tunnel replacement for the aging Alaskan Way Viaduct in Seattle. Overall project is estimated at $2 billion, including right of way acquisition, design, construction management, and a contingency. The contract for the two-mile-long tunnel is expected to be awarded in January.

But that is just one of at least six possible urban congestion-relief tunnels under consideration in North American cities. Others are under study in Los Angeles and Orange Counties, Hartford (CT), Brooklyn, and Toronto.

Tunnels could provide much-needed congestion relief in a number of locations in congestion-choked greater Los Angeles. But furthest advanced are plans for tunnels in South Pasadena and Costa Mesa. The former would complete the long-missing link in the I-710 freeway, held up for more than 40 years by local opposition to a surface freeway plan that would have cut South Pasadena in two. Advances in tunneling technology, plus the growing acceptability of electronic tolling as a revenue source, have made a bored tunnel beneath the city the preferred alternative of both Caltrans and the Los Angeles County Metropolitan Transportation Authority. Further south, the much-needed southward extension of the congested SR 55 freeway is now being studied as a cut-and-cover tunnel beneath Newport Blvd.

In Hartford, the problem is the aging ¾-mile viaduct that carries I-84 through downtown. Studied options include a tunnel, an even higher “skyway” that would permit development underneath, a tree-lined boulevard, and a surface-level freeway. In October the Capital Region Council of Governments released an assessment of the alternatives. While finding that the full-length tunnel would provide the greatest benefits, it would also be by far the most expensive. The best compromise appears to be a combination of surface-level and depressed freeway (Alternative 2), which the study found offers nearly as many benefits as the full tunnel but at far lower cost.

Another aging freeway—the Brooklyn Queens Expressway (BQE)—is also the subject of tunnel discussions. Earlier this year the state DOT set forth three tunnel alternatives to create a bypass route while a major section of the freeway in Brooklyn Heights is rebuilt. After the BQE reconstruction, the tunnel would remain as an alternative for through traffic. Given the huge cost of constructing a tunnel in New York City, this project is only likely to be feasible if toll-financed.

A toll tunnel was also proposed earlier this year in Toronto. Mayoral candidate Rocco Rossi proposed extending the Allen Expressway as a five-mile tolled tunnel linking it to the Gardiner Expressway. Rossi was criticized for significantly under-estimating the tunnel’s cost, and as polls in October showed him in a distant third place, he dropped out of the race. Whether his tunnel idea will live on remains to be seen.

License Plate Tolling Clearinghouse

I’ve reported previously on the growing moves by toll road operators to shift to all-electronic (cashless) tolling. Within a decade, it’s quite possible that nearly all conventional toll plazas will be scrapped, replaced with open-road tolling. But a key ingredient in this transition is the ability of toll road operators to read the license plates of vehicles without transponders, identify the registered owner, and send an appropriate bill. That’s relatively straightforward within a single state, but becomes more problematic when multiple states are involved, each with its own motor vehicle registry. An additional problem is that transponders are not interoperable across state lines, except in the large E-ZPass region of the Northeast. So until we have interoperable transponders nationwide, the backup for tolling many out-of-state transponder-equipped vehicles will also be license-plate billing.

To address these problems, a number of toll operators got together several years ago to form the Alliance for Toll Interoperability. After several years of discussions and study, ATI is moving forward to develop a License Plate Interoperability Hub—a national clearinghouse for out-of-area toll collection. At least 37 toll operators—including major players such as Florida Turnpike Enterprise, New York State Thruway, Pennsylvania Turnpike, Ohio Turnpike, Illinois Tollway, and Toronto’s 407ETR—have signed on.

Last month ATI issued an RFP seeking up to three qualified vendors to create and operate pilot programs with a few of the member agencies. After six months, ATI will select the best one and negotiate a three-year contract, available to all operators that wish to sign up. Selection of the pilot program firms is expected in January, with start-ups as early as March.

You can get a lot more detail in the article in Tollroadsnews, on which this short article is based. (www.tollroadsnews.com/node/4948)
 
Good Reasons for Rail Tunnel Cancellation

There has been much weeping, wailing, and gnashing of teeth over New Jersey Gov. Chris Christi’s cancellation of the ARC rail tunnel to Manhattan. While I agree that rail transit is needed in the high-density New York metro area, this project was a turkey that deserved to be killed.

First of all, it’s not clear why New Jersey motorists and taxpayers should have been paying the majority of the costs, so as to facilitate more jobs in Manhattan. Not one dime of investment was coming from either New York City or New York State, but New Jersey motorists were on the hook for $1.3 billion in “flexed” federal highway funds, $1.25 billion of New Jersey Turnpike toll money, and $3 billion of Port Authority toll money. The Federal Transit Administration was prepared to put in just $3 billion of the nominal $8.7 billion project cost as New Starts grant funding. And the coup de grace for Gov. Christie was that 100% of any and all cost overruns were to be paid by New Jersey. Other major transit projects in the area are showing cost overruns of 25 to 30%, so the governor’s concerns on that score were realistic.

Second, as even the National Association of Railroad Passengers and the Sierra Club agreed, the ARC tunnel in its approved form was essentially a tunnel to nowhere—not to Penn Station, not to Grand Central station, and not directly connected to the New York subway system. Proponents said ARC would double passenger rail capacity into New York City from New Jersey, but there are already six tracks (two Amtrak and four PATH), so ARC’s two tracks would have added only 33%. The original design would have served both Amtrak and NJ Transit, but the final design was transit-only.

Critics have also lambasted the governor for giving up “all those federal dollars,” but there is far less “giving up” than meets the eye. First of all, the $1.3 billion in federal highway funds actually belong to New Jersey and can be re-flexed back to its nearly empty Transportation Trust Fund; likewise the Turnpike Authority $1.25 billion. That should give New Jersey some much-needed breathing room in a Trust Fund that was set to spend all its 2011 money on debt service. Second, of the FTA’s $3 billion, the agency has sent New Jersey a bill for just $271 million, the total of ARRA, New Starts, and CMAQ money that has actually been spent thus far. As of this writing, New Jersey is disputing even this total.

Finally, it’s interesting to see that cancelling a federal boondoggle and giving up some federal funding is not necessarily the kiss of death for an elected official. A statewide Rutgers-Eagleton poll released October 29th found that 51% of New Jerseyans agreed with the governor’s decision, with 39% opposed and 10% unsure. Asked to prioritize transportation spending, 58% put roads and bridges first, with 32% in favor of trains and buses as top priority.

Upcoming Conferences

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

ITS California Annual Meeting, Nov. 16, Berkeley, CA, Doubletree Conference Center. Details at www.caats.org. (Adrian Moore speaking)

Public-Private Financing and Investment Strategies, Dec. 13-15, San Francisco, CA, Grand Hyatt. Details at www.iirusa.com/public-privatefinancing/home.xml.
(Shirley Ybarra speaking)

Transportation Research Board 90th Annual Meeting, Washington, DC, multiple hotels. Details at: www.trb.org/AnnualMeeting2011/Public/AnnualMeeting2011.aspx. (Robert Poole and Adrian Moore speaking)
 
News Notes

More Value Pricing Applications Sought by FHWA
The Federal Highway Administration posted a detailed Federal Register notice on Oct. 19th inviting proposals for FY2010/2011 Value Pricing Pilot Program projects. At least $10.5 million is available, and proposals are due January 18, 2011. The notice clarifies that although all 15 “slots” in the program had been filled in prior years, states not previously designated as “project partners” may now apply, since FHWA will consider bumping states without currently active projects. In keeping with the Administration’s policy priorities, selection criteria include, in addition to congestion reduction, the following: livability, sustainability, equity, safety, and state of good repair. Questions may be submitted to angela.jacobs@dot.gov.

Deficit Reduction Commission Supports Users-Pay Gas Tax
Despite lobbying by some transportation groups supporting a 25-cents/gallon increase in the federal fuel tax, of which 15 cents would be for highways and the other 10 cents for deficit reduction, the National Commission on Fiscal Responsibility and Reform has proposed a 15-cents/gallon increase solely for the Highway Trust Fund. The explicit aim would be to eliminate future general-fund bailouts of the Trust Fund, a fiscally responsible position.

Report Tracks Global P3 Deals

The newsletter Public Works Financing has released its 2010 International Major Projects Survey of public-private partnership (P3) deals worldwide. It reports on P3 infrastructure projects in roads, rail, water, and buildings. Worldwide, since 1985, nearly 3,000 such projects have been planned, of which 1,867 have thus far been funded, valued at $712 billion. In the highway sector, the totals are 1,061 projects, of which 623 worth $350 billion have been funded. The United States accounts for a small fraction of the funded projects: just 43, worth $23 billion. The summary in the October issue of the newsletter also provides tables of the world’s top transportation developers (by number of concessions); only one U.S. firm makes the top 35 (Fluor, in 33rd place). (www.pwfinance.net)

Second-Generation Biofuels Look Promising
Corn-based ethanol has a well-deserved reputation as a failed greenhouse-gas reduction policy, which continues to expand only due to pork-barrel funding. But many next-generation approaches to biofuels are under way, using other biological sources (algae, sugars, switchgrass, etc.) to develop liquid fuels for both surface and air transportation. Most involve sophisticated bioengineering (which may pose a conflict for some environmentalists whose opposition to genetic engineering is as strong as their demand for aggressive action to reduce greenhouse gases). The Economist published an excellent three-page overview of this subject in its Oct. 30th issue, “The Post-Alcohol World.” Highly recommended.

Do Streetcars Foster Urban Development?
Local officials seeking federal funding for streetcars emphasize economic development rather than transportation benefits from these projects. But do these projects actually lead to increased economic activity in cities that implement them? The TRB Transit Cooperative Research program has released a report that assesses what is known about this question—and the answer is, not much. Researchers Ron Golem and Janet Smith-Heimer provide a literature review, specifics on 13 recent U.S. streetcar projects, and five detailed case studies. “The literature regarding empirical measurement of actual changes in economic activity, such as changes in retail sales, visitors, or job growth, is almost nonexistent for streetcars,” they report. And few of the systems they studied “had identified measurable objectives that were documented, and almost no objective has been evaluated or benchmarked, other than ridership projections in some cases.” The report is: “Relationships Between Streetcars and the Built Environment,” BAE Urban Economics, TCRP Synthesis 86, 2010. (http://onlinepus.trb.org/onlinepubs/tcrp/tcrp_syn_86.pdf)

New Video on Parking Pricing
My colleagues at Reason TV have produced a lively video in which UCLA Prof. Donald Shoup summarizes the case for market-based pricing of on-street parking in commercial areas. He explains how cruising for a vacant parking meter adds to urban traffic congestion (and fuel use), using data from the Westwood commercial area near UCLA. He also reports the great political and economic results from parking pricing in Old Town Pasadena, one of my favorite haunts when I lived in Los Angeles. (http://reason.tv/video/show/donald-shoups-3-solutions-for)

Congestion is Back, Reports FHWA
In a sign that the recession is ending, the Federal Highway Administration’s Urban Congestion Report for July-September 2010 finds that all three nationwide measures are higher than they were a year ago. The average duration of weekday congestion is 13 minutes more than last year, the travel time index is three points higher (1.21 vs. 1.18), and the planning time index is up seven points (1.59 vs. 1.42). These three national indices are still below pre-recession levels of 2007, but appear to be trending back toward those levels as the economy improves. In addition to national data, the report provides data on these three measures for 23 large urban areas. (http://ops.fhwa.dot.gov/perf_measurement/ucr/reports/fy2010_q4.htm)

Quotable Quotes

“[W]e have seen Congresses led by both sides fritter away much of what money was available on projects with little or no connection to the national highway infrastructure. In the truest spirit of the port barrel, the Trust Fund has supported paving parking lots and local streets, and building museums, sidewalks, bicycle paths, and equestrian trails. There is no need to spend time discussing such projects; regardless of their merit, they are simply not what the Trust Fund was meant to do. Rather than a source of long-term investment capital, it has become a pot of money for local interests, through their congressional delegation, to tap for projects they do not value enough to pay for themselves.”
--Richard G. Little, Keston Institute for Public Policy, guest commentary in Innovation NewsBriefs, Vol. 21, No. 21, Sept. 25, 2010.

“The Department of Energy has decided that it has the expertise to select specific energy projects, such as the electric car that is being developed by Fisker Automotive of California, the recipient of a $500 million loan guarantee. In theory, if the economic prospects for this electric car were good enough, venture capitalists would be willing to risk money on its development. Now, with a loan guarantee, private investors enjoy only the potential gains, while taxpayers bear the risk.”
--Arnold Kling, “The Era of Expert Failure,” Cato Policy Report, Sept./Oct. 2010.

“Let’s suppose that the Obama administration gets its wish to build high-speed rail systems in 13 urban corridors. The administration has already committed $10.5 billion, and that’s just a token down payment. . . . Constructing all 13 corridors could easily approach $200 billion. Most (or all) of that would have to come from government. What would we get for this huge investment? Not much. Here’s what we wouldn’t get: any meaningful reduction in traffic congestion, greenhouse gas emissions, air travel, or oil consumption and imports. Nada, zip. If you can do fourth-grade math, you can understand why. . . . Obama calls high-speed rail essential ‘infrastructure’ when it’s actually old-fashioned ‘pork barrel.’ The interesting question is why it retains its intellectual respectability. The answer, it seems, is willful ignorance. People prefer fashionable make-believe to distasteful realities. They imagine public benefits that don’t exist and ignore costs that do.”
--Robert J. Samuelson, “High-Speed Pork,” Newsweek, Oct. 29, 2010. (www.newsweek.com/2010/10/29/why-high-speed-trains-don-t-make-sense.html)

“LaHood was half right. People hate traffic congestion. But they want to get out of their cars about as much as they want to get stuck behind a bicyclist who rides at a donkey’s pace before running through red lights and stop signs. What people mainly want is to stay in their cars and have LaHood do something to reduce congestion.”
--Fred Barnes, “Coercing People Out of Their Cars,” The Weekly Standard, Nov. 8, 2010. (www.weeklystandard.com/articles/coercing-people-out-their-cars_513335.html)

“[T]he great competitive strength of America lies in access to skilled workers. Employers will be reaching out farther and farther to find the specializations and skills they require. We should expect work trip lengths to grow, not become walking trips. It won’t be inner-city oriented, either. The metropolis of today is of immense size because many employers need a market of hundreds of thousands of potential workers to reach the ones they need. The Atlanta region with 26 counties is not a great economic engine because it is 26 charming adjacent hamlets, but rather because the market reach of employers, suppliers, customers, and job seekers spreads over several million residents. In this environment it takes massive transportation capability to assure that market shed. The questions are how many potential employees can I reach in half an hour; how many suppliers, how many customers? In the future, more of us will be free to live where we want and work where we want. Most will not be willing to trade living floor space for a close-by sidewalk café. Americans will drive to where they want to walk.”
--Alan Pisarski, “Livability and All That,” New Geography, Nov. 12, 2010 (www.newgeography.com/content/001865-livability-and-all-that)


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


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