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Posts from the "Tolls" Category

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Georgia Removes Tolls, Invites 11,000 More Drivers to Clog GA 400 Each Day

Why raise desperately needed transportation funds for a broke region when you could let people drive for free? In Georgia, the state has made up its mind: The DOT will pay $4.5 million to tear down tolls on GA 400 — and forfeit the $21 million a year the tolls brought in.

It's going to cost $4.5 million to tear down these toll booths, not to mention another $21 million a year in forfeited toll revenue. Photo: Creative Loafing

It costs just 50 cents to drive 54 miles north and east from the city of Atlanta on GA 400. But last July — just before voters in the region rejected an effort to fund a multi-modal transportation package — Gov. Nathan Deal announced that the bond debt was paid off and tolls would be removed this fall.

According to David Emory, president of Atlanta’s Citizens for Progressive Transit, the state decided to announce the toll repeal in the run-up to the T-SPLOST ballot initiative in hopes that it would appeal to voters and encourage them to vote for the transportation tax. “It ended up being a losing strategy,” Emory said, “because we’re losing the toll and the tax didn’t pass.”

It’s extraordinarily difficult to implement tolling on a road that had been free. On roads that receive federal funds, federal law prohibits tolling except for new construction. And politicians never want to ask drivers to pay for what they’re used to getting for free. So Georgia is for all intents and purposes foreclosing the possibility of having GA 400 users pay for the maintenance and upkeep of the road they drive on.

The state could also use those toll revenues for other projects that could take traffic off GA 400 and other roads, and reduce the pressure to build new highways in the future. The tolls have paid for express bus service along GA 400 and for a pedestrian bridge, among other projects, but there’s so much more that money could do.

MARTA’s red line runs right down the middle of GA 400 in places — and although the charge to drive on GA 400 is disappearing, “the fare on the MARTA line is definitely not going away,” Emory said.

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TIFIA-Backed, Privately-Operated Texas Toll Road Flirts With Default

It’s been nothing but headaches for Texas State Highway 130. The road — or rather, SH 130 Concession Company LLC, which operates the road — got a credit downgrade to junk bond status in April, and now it’s been deemed even junkier with another downgrade from Moody’s last week. Traffic projections for the road failed to materialize, and so did the expected revenue. Now, the road could end up defaulting on its debts — including a $430 million federal loan.

The Austin area's SH 130 is at risk of defaulting on its loans next year. Photo: My SH 130

Traffic has been light on the road since it opened a year ago, causing TxDOT to reduce toll rates. Revenues dropped even lower. The operator also convinced the state to give the road the country’s highest speed limit — 85 miles per hour — to lure daredevils onto the road. No dice.

SH 130 is the only part of Texas Gov. Rick Perry’s outlandish Trans-Texas Corridor fantasy that ever got built. The misguided scheme sought to facilitate NAFTA commerce by building a corridor up to a quarter of a mile wide with separate rights-of-way for trucks, passenger cars, freight rail, oil and gas pipelines, and high-speed rail. Luckily, public opposition killed the project.

The 41-mile southern section of the 91-mile SH 130 was largely built, maintained and operated by Madrid-based Cintra Concessiones de Infraestructuras de Transporte. Cintra owns 65 percent of the Concession Company, while San Antonio-based Zachry Construction owns the rest.

It’s the first privately built and operated road in Texas. But the money backing it isn’t all private. The road was financed by a federally-subsidized TIFIA loan.

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Moody’s Warns of Rising Debt Load for Toll Roads

Despite increased toll rates, toll roads saw their debt per roadway mile increase by a third last year, from $14.3 million in fiscal 2011 to $18.9 million in 2012.

Photo: Wikipedia

The average toll per transaction rose from $1.82 to $1.96 over the course of the last year. Moody’s warned in a press release last week that they expect toll roads to continue seeking higher rates, but that politics could get in the way:

Steady toll rate increases will be necessary to support a growing debt burden, says Moody’s, although the unfettered ability to increase toll rates could face mounting political pressure in an economy that is growing slowly. One reason Moody’s continues to have a negative outlook for the US toll road sector is the weak and uneven pace of the economic recovery. Moody’s expects a rise in the number of toll roads and toll-supported projects.

The inability on Capitol Hill to make the Highway Trust Fund solvent will lead more states to embrace tolling. But as the Moody’s report indicates, there will still be political battles over paying for individual roads.

New toll roads aren’t what’s spiking the overall debt burden for tolling companies. Of the 42 U.S. toll roads rated by Moody’s, just three are considered “start-ups,” meaning they’re less than 10 years old, and those are examined separately. One of those start-ups, SH-130 outside of Austin, saw its credit rating downgraded to “below investment grade” earlier this year when only half the projected volume of traffic materialized.

A Reuters review shows that most states’ tolls are less than $0.10 per mile.

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Credit Rating Agencies Uneasy About Toll Roads as Americans Drive Less

Toll roads aren’t the cash cows they used to be. The assumption that the roads will “pay for themselves” is no longer a reliable one, and credit rating agencies are taking notice.

A toll road through the San Joaquin Hills is getting half the traffic that was expected. Cases like this are making credit analysts nervous. Photo: David Eppstein/Wikimedia

In Orange County, California, traffic on the San Joaquín Hills toll road is half what was projected. A recent toll road extension outside of Austin, Texas, is also seeing just half the expected traffic volume, leading the company that oversees the road to cut toll prices in hopes of attracting more “customers.” Moody’s Investor Services has downgraded the company’s credit rating. In the DC suburbs, the Inter-County Connector and new high-occupancy toll lanes along the famously congested Capitol Beltway are both getting far less than half the use that was projected. In San Diego County, the private company that built and operated the South Bay Expressway went into bankruptcy when the cars failed to materialize.

The federal loan program for transportation, TIFIA, now looks at only one criterion when choosing projects. Prohibited from considering public benefit, regional significance, or environmental impact, U.S. DOT staff chooses projects on the basis of credit-worthiness alone. The conventional wisdom holds that toll roads are the natural beneficiaries of this approach, since they include a mechanism for paying the loan back — but stories like those above indicate that that assumption should be re-examined.

Fitch Ratings, one of the Big Three credit rating agencies, warned investors in June that it was concerned about the future profitability of toll roads, given that “Americans have driven less each year since 2004 and those ages 16 to 34 have reduced their driving more than any other age group.”

Fitch analysts cited the groundbreaking report, “A New Direction,” by U.S. PIRG and stated their own belief that “the recession and increase in gas prices only partially explain this broad trend.” They think the shift from suburban to urban living and changes in technology and work patterns mean a more lasting reduction in driving. As such, they state, “caution remains warranted when future projections are the basis for investment.”

“In our view, these trends could have an impact given the U.S.’s current dependence on the user-fee infrastructure development model,” Fitch analysts wrote. “If these reductions persist, greater public subsidies would be required to fund still-needed new projects and provide credit stability.”

Of course, road projects have always required subsidies. Nearly 50 percent of road spending is covered by general taxpayer funds.

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What Do Anti-Density NIMBYs and Road-Wideners Have in Common?

Matt Yglesias made an excellent point about NIMBYs over at Slate yesterday. Writing about opposition to multifamily residential construction in the tony neighborhood near Lake Calhoun in Minneapolis, Yglesias wondered how much value residents really place on keeping the area a “single-family residential community.”

The Alaskan Way Viaduct will cost 20 times more than drivers themselves will pay. So everyone else will pay instead.Image: WSDOT

Just because there’s value in something doesn’t mean people are willing to pay for it. Yglesias likens it to his third-generation iPad. “There would undeniably be a value in upgrading it to a fourth-generation iPad,” he says, but “it’s not worth what it would cost.”

So how much do the residents of Lake Calhoun value keeping their neighborhood single-family? Enough to let the entire rest of the city pay for it. But enough to pay for it themselves? Not a chance. Yglesias lays it out:

One thing [the] neighborhood group could do is look at the land they don’t want to see developed and buy it, thus leaving them free to do what they want with it. But they don’t want to do that, presumably because even though there’s “a value” in getting their way it’s less than the value of using the land for higher-density construction. What they want to do instead is get the city government to block the high-density construction, because that way the cost is spread across the entire population of Minneapolis in the form of foregone tax revenue.

The Minneapolis housing example reminds me of debates around the value of congestion-free roads. When roads are congested, many commuters jump to the “let’s build a wider road” approach, meaning all the taxpayers should pick up the tab to make their morning drive to work faster. But would these same commuters pay directly to speed their commute?

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Five Factors That Will Determine Whether TIFIA Benefits Transit

Phineas Baxandall is a senior analyst at the U.S. Public Interest Research Group.

Is Crenshaw light rail the beginning or the end of TIFIA financing for transit? Image: LA Metro

Last week, Transportation Secretary Ray LaHood touted his department’s $545.9 million TIFIA loan to construct Los Angeles’ 8.5-mile light rail transit line along the Crenshaw corridor as “just one example of how DOT’s TIFIA credit assistance program extends the value of America’s transportation dollar.”

But will public transit financing really be the future of the Transportation Infrastructure Finance Innovation Act (TIFIA) loan program?

TIFIA has been politically popular partly because people see their own hopes reflected in its broad mandate to provide “innovative” financing through low-interest loans and lines of credit for transportation. Both chambers of Congress offered major increases to TIFIA, while virtually every other program in the last transportation bill saw cuts or level funding. From $122 million for the program last year, the new transportation law provides $750 million this year and $1 billion the next. Groups that had urged the elimination of dedicated federal funding for transit cheered TIFIA’s expansion, while Senate EPW Committee Chair Barbara Boxer triumphantly declared that TIFIA would leverage $50 billion in transportation finance and bring salvation for Los Angeles’s larger regional transit plans. Many transit advocates and metropolitan planning organizations point to the new money as evidence that their long-fought efforts to improve the otherwise uninspiring transportation law weren’t in vain.

There’s reason to be skeptical and also reason for hope. Past TIFIA financing went mainly to highways and private toll roads. New first-come-first-serve rules make it even less likely that future TIFIA assistance will reach non-highway projects, but other rule changes expand the kinds of transit projects eligible under TIFIA.

Five questions will determine what kind of program TIFIA becomes, and five recommendations can help build a better TIFIA. First, the questions…

  1. Will the backlog of highway proposals get a head start?

    TIFIA’s old criteria included sustainability and livability, but the new law rewards speedy applications as long as they are complete and eligible. The legislation makes it easier for transit and other multimodal projects to become eligible, but money may not be available once they apply.

    The first letters of interest received by TIFIA this summer lacked even a single transit, bike, or pedestrian proposal — and they “could just about tap out TIFIA’s FY2013 budget authority,” according to the Public Works Financing Newsletter. The first letter received was another “bridge to nowhere” proposal for Alaska, followed mostly by Texas highways that probably couldn’t have cut the mustard under the previous, more stringent TIFIA selection criteria.

    A first-come-first-serve application process favors toll road proposals, like those from Texas, that have been shopped around for years in different forms. It’s not clear how much selection criteria will be imposed between submitting letters of inquiry and being invited to submit an application. But transit projects will face a more complicated and untested process, as well as the need to coordinate with the government entities whose sales, property or other taxes will be used to pay back the loans. TIFIA’s acronym may come to mean Tolling Is Faster In Applications.

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How State DOTs Got Congress to Grant Their Wish List

Bike and pedestrian funding got slashed. Federal assistance for transit operations was rejected. Even the performance measures – arguably the high point of the recently passed federal transportation bill – are too weak to be very meaningful. For Americans who want federal policy to support safe streets, sustainable transportation, and livable neighborhoods, there were few bright spots in the transportation bill Congress passed last month.

AASHTO Director John Horsley is thrilled with the new transportation bill, which gave state DOTs just about everything they wanted. Photo: International Transport Forum

But state transportation departments are celebrating. They scored victory after victory, getting a bigger share of federal funding with fewer rules and regulations attached.

In the Senate, advocates were able to work some reforms into the bill and mobilize grassroots support for amendments like the Cardin-Cochran provision, which put funds for street safety projects in the hands of local governments, not state DOTs. But the House never managed to pass a bill of its own, and the opaque conference committee process was an exercise in horse-trading that advocates found difficult to penetrate.

The final product, which included measures like raising the federal contribution for certain highway expansions, seemed finely tailored to benefit DOTs in several ways. “This is a bill written by and for the benefit of state DOTs at the expense of both federal oversight and regional and community outcomes,” wrote David Burwell, director of the climate change program of the Carnegie Endowment for International Peace, in an email shortly after the bill passed. He said the policy changes “are too elegantly crafted and specific in their effect to have been written, or even conceived, by members of Congress or their staff.”

For state DOTs, access to lawmakers is a given. “We worked very closely with the House and Senate to craft those measures,” AASHTO Director John Horsley confirmed to Streetsblog in an interview yesterday. He said that while AASHTO offered recommendations, no text written by AASHTO made it into the bill verbatim, as far as he knows.

According to Horsley’s account, AASHTO followed a pretty standard script when it came to advocating for their interests on the Hill. Every stakeholder and special interest under the sun had its lobbyists knocking on lawmakers’ doors, offering their two cents – everyone from gravel producers to equipment manufacturers to environmentalists to free market fundamentalists. It’s just that the state DOTs seemed to get everything on their wish list.

Horsley said AASHTO had been laying the groundwork for many, many months before conference started, working with Republican House Transportation Committee staffers as well as aides of both parties in the Senate. (He didn’t mention working with House Democrats, who were shut out of the process from day one.)

The House is where the magic happened for AASHTO. “We’ve been very pleased with where the Senate bill started,” Horsley said. “And we were even more pleased when the House and the Senate in conference agreed to incorporate a lot of the House provisions that were even better for states.”

What were those House provisions? Horsley went through the list:

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A New Bill Passes, But America’s Transpo Policy Stays Stuck in 20th Century

The House of Representatives approved the transportation bill conference report this afternoon by a vote of 373 to 52. [UPDATE 4:00 PM: The Senate has also approved the bill, 74-19.] This is a bill that’s been called “a death blow to mass transit” by the Amalgamated Transit Union, “a step backwards for America’s transportation system” by the Rails-to-Trails Conservancy, “a retreat from the goals of sustainability and economic resiliency” by Reconnecting America, “a substantial capitulation” by Transportation for America, and “bad news for biking and walking” by America Bikes.

Remember the empty highways that symbolized the House Republicans' vision of America's transportation system? The final transpo bill might as well have the same unfortunate cover.

After more than 1,000 days of waiting since the last transportation bill expired, the nation’s new transportation policy is a grave disappointment to people seeking to reform the current highway-centric system.

The fact that the House GOP tried and, for the most part, failed to reverse the progress made under presidents Reagan and Bush the elder offers a small degree of consolation. “Some of the worst ideas pushed initially by House Republicans went nowhere – funding the highway system with new oil drilling revenues, taking transit out of the highway trust fund, de-federalizing transportation funding – to mention some of the most radical proposals that were seriously being put forward,” wrote Deron Lovaas of NRDC this morning. “But… that pretty much exhausts the good news.”

So what does the bill actually do? Overall, it doesn’t change a whole lot, and the most significant changes tend not to benefit livable streets or sustainable transportation. Here’s a breakdown.

Length and funding. The bill lasts a year longer than the Senate bill would have, expiring at the end of September 2014. That gives states, cities, and the construction industry substantially more stability and allows them to move forward on projects that have been delayed for years because of the uncertainty surrounding federal funding. It maintains funding levels at around $54 billion a year, as did the Senate bill, which is roughly current levels plus inflation.

While some have criticized the complex funding mechanisms that prop it up and its departure from a user-pays model, the Congressional Budget Office reported this morning that the bill actually reduces the deficit by $16.3 billion.

Everyone seems to understand that Congress won’t be able to pull this kind of magic for long and will soon have to deal with the long-term insufficiency of current Highway Trust Fund revenues to cover the nation’s transportation needs. However, the gas tax was not raised, and at the same time the House passed this bill, it also approved an appropriations bill that prohibits even studying the possibility of moving toward a VMT fee.

Non-transportation-related items. The Keystone XL pipeline and the EPA’s ability to regulate coal ash as a hazardous substance, introduced into the transportation negotiations by the House Republicans, were stripped out of the bill. The RESTORE Act to spend BP oil spill fines on Gulf Coast restoration is included.

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What Libertarians Talk About When They Talk About Transportation Reform

There’s more than one way to approach transportation reform. One is to believe that an ideal transportation policy promotes the use of modes that are environmentally sustainable and which foster livable cities, while those that perpetuate overdependence on automobiles do neither.

Moderator Anne Korin (center) and participants at Thursday's Mobility Choice Roundtable. (Photo: Johanna Moss/IAGS)

Then there is another camp, which approaches transportation from a micro, rather than macro, perspective. In this camp, America’s transportation choices are seen as a market where providers compete across the various modes for the privilege of meeting each individual’s transportation needs. A good transportation policy, in this view, is one that makes such a market function as efficiently as possible, keeping costs low for travelers and profits high enough for providers to ensure continued service without excessive government subsidy or regulation.

Here, the user-pays-user-benefits principle is sacrosanct, and fiscal self-sufficiency is paramount. It’s transportation reform for the libertarian set, who are just as likely as many liberals to categorize current transportation policy as deeply flawed — though they are just as likely to disagree about how.

That’s why the Mobility Choice Coalition — convened by the Institute for the Analysis of Global Security — hosts roundtable discussions about the issue of transportation reform as seen from the second camp. The most recent one was last Thursday. Previous roundtables, which Streetsblog has covered in the past, have covered the viability of private transit, the comparative advantages of bus vs. rail transit, and the idea of incorporating the cost of foreign oil wars into the price of highway travel.

“One of the key issues for us is pricing, really, across the board,” Anne Korin, the roundtable’s moderator, told Streetsblog. “Get the pricing right, and a lot of stuff will follow.” When one mode is priced unnaturally low, the market isn’t operating as efficiently as it could.

But pricing isn’t the whole story. Congress, you may have heard, is working on a new surface transportation bill, and there’s plenty of federal spending that has to happen before changes to pricing can be instituted. Korin can already see her message at work there.

“You definitely saw, in response to transportation language in both chambers, a huge emphasis on the user-pays principle,” Korin said. “First the response to H.R. 7 [which used energy royalties to pay for transportation spending], and the Senate bill which dips into general funds [for everything]. Either way, we think it’s very, very important to maintain the user-pays principle, and that message has gotten a good hearing.”

Last Thursday’s discussion began with a list of priorities for transportation policy reform, but it was clear from the outset that there are still deep divisions among cost-minded transportation thinkers. Those divisions often occur around whether gas tax revenue — or vehicle-miles-traveled fees once they’re implemented — and tolls should be used exclusively for roads or whether they can be used to fund infrastructure for other modes as well, which some see as undermining the user-pays principle.

Former Virginia Secretary of Transportation Shirley Ybarra, now of the Reason Foundation, said, “America needs a large increase in highway investment,” but opined that too much existing roadway revenue is being spent on what she called “other stuff.” Rather than breaking down the funding silos for each mode, Ybarra advocated the complete separation of those silos, and the insistence that each mode be entirely user funded. “Mica was on the right track” when he tried to separate transit from the Highway Trust Fund, she said — that is, until “transit went off the deep end.”

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Lautenberg Brawls With Port Authority Exec Over Tolling

New Jersey Senator Frank Lautenberg has been spoiling for a fight ever since the Port Authority raised tolls to cross into New York. And yesterday, he got it.

The Lincoln Tunnel helix in 1955. It hasn't been rehabbed since then. Photo: Wikipedia

Lautenberg invited Bill Baroni, the deputy director of the Port Authority, to testify at a Commerce Committee hearing that turned into little more than a showdown between the two men.

Lautenberg was commissioner of the Port Authority from 1978 to 1982, and he said that back then, the toll was $2, which would be about $5 in today’s dollars. “When it costs $12 to drive your car across a bridge in America, something is wrong,” Lautenberg said, adding that the decision to raise the rates was made “behind closed doors.”

Baroni countered that the Authority had actually held 10 public hearings on the toll increase, involving more than 1,500 people. He went through a list of crisis-level needs that necessitated the toll increase, from the Bayonne Bridge, which has to be raised to allow larger ships to pass under it, to the Lincoln Tunnel helix, which hadn’t been rehabbed in 70 years, to the George Washington Bridge’s suspender ropes, which need replacing.

But then he mentioned that Lautenberg, as a former commissioner, has a free E-ZPass, and that “it is impossible to argue fairness in tolls if you don’t pay them.” The whole thing spiraled into a war of words from there, with Baroni at one point obliquely comparing Lautenberg to Joe McCarthy.

The shoot-‘em-up nature of the hearing may have been the most entertaining part, but amidst the political theater there were some meaningful comments on the utility of tolling: for example, Baroni’s insistence that more funds from drivers are needed to bring his agency’s infrastructure into a state of good repair. Barring an increase in the gas tax, tolling is the only way to raise that revenue and maintain aging roads and bridges.

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