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Posts from the "VMT" Category

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The Great Traffic Projection Swindle

This is the final piece in a three-part series about privately-financed roads. In the first two parts of this series, we looked at the Indiana Toll Road as an example of the growth in privately financed highways, and how financial firms can turn these assets into profits, even if the road itself is a big money loser. In this piece, we examine the shaky assumptions that toll road investments are based on, and how that is putting the public at risk.

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A consultant predicted traffic on the Indiana Toll Road would rise 22 percent in seven years. Instead, traffic fell 11 percent in eight years. Photo: Jimmy Emerson/Flickr

For privately financed toll road deals, traffic projections are critical. These forecasts tell investors how much revenue a road will generate, and thus whether they should buy a stake in it, and what price to pay. While traffic projections have underpinned the rapid growth in privately financed highways, the forecasts have a dismal track record, consistently overstating the number of drivers who will pay to use a road.

Private toll roads have been sold to the public as a surefire something-for-nothing bargain — new infrastructure with no taxes — but it turns out that the risk for taxpayers is actually substantial. The firms performing traffic projections have strong incentives to inflate the numbers. And the new breed of private finance deals are structured so that when the forecasts turn out wrong, the public incurs major losses.

Given the large sums of money involved, even small errors in traffic projections can result in huge problems down the line — and, as Streetsblog has reported, traffic projections everywhere have tended to be wildly off-target. A whole financing scheme, meant to last for generations, can easily be sunk in just a few years by exaggerated traffic projections. The Indiana Toll Road, purchased in 2006 for $3.8 billion, is a great example. The firm that owned it, ITR Concession Co. LLC, declared bankruptcy in September.

Wilbur Smith Associates had predicted that traffic volumes on the Indiana Toll Road would increase at a rate of 22 percent over the first seven years. Instead, traffic volumes shrank 11 percent in the first eight. The result was financial disaster for the concession company, owned jointly by Australian firm Macquarie and Spanish firm Ferrovial. By the time they filed for Chapter 11, debt on the road had ballooned to $5.8 billion.

The company blamed the recession for putting a damper on truck traffic. The same story was offered on another bankrupt Macquarie-owned project, San Diego’s South Bay Expressway. But is that explanation sufficient?

UK-based consultant Robert Bain literally wrote the book on traffic projections, warning in 2009 against forecasters who blamed faulty predictions on the economy [PDF]. Commenting on the flurry of global toll highway bankruptcies that was just starting then, Bain said they had “less to do with the present economic climate, and more to do with a market readiness to be seduced by hopelessly optimistic traffic and revenue projections.”

Bain went on to list 21 ways in which forecasters systematically overestimate future traffic. Each one may tilt the forecast by a tiny amount, but cumulatively they result in significant errors. Some of the typical mistakes indicate that forecasters have not yet acknowledged the broader decline in driving and sprawl underway, while others “underestimate the reluctance of some to paying tolls.” Bain argued for a paradigm shift in the use of traffic projections, recognizing that many of them “resemble statements of advocacy rather than unbiased predictions.”

Phineas Baxandall, a senior researcher with the U.S. Public Interest Research Group who’s written extensively for Streetsblog on trends in driving, says the engineering firms that provide the figures know how things work. “Companies seeking investment for privatized toll roads shop for the forecasting they want,” he said. “[There's] no incentive to tell bad news. And if the deal appears promising, then the forecasting company gets other opportunities to sell further analysis, legal advice, raising debt, selling equity, etc.”

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Not Just a Phase: Young Americans Won’t Start Motoring Like Their Parents

Image: U.S. Public Interest Research Group

Young adults in 2009 were driving less and walking, biking, and riding transit more than young adults in 2001, according to the National Household Travel Survey. Chart: U.S. Public Interest Research Group

A raft of recent research indicates that young adults just aren’t as into driving as their parents were. Young people today are walking, biking, and riding transit more while driving less than previous generations did at the same age. But the vast majority of state DOTs have been loathe to respond by changing their highway-centric ways. 

A new report by the U.S. Public Interest Research Group points out the folly of their inaction: If transportation officials are waiting for Americans born after 1983 to start motoring like their parents did, they are likely to be sorely disappointed.

Though some factors underlying the shift in driving habits are likely temporary — caused by the recession, for instance — just as many appear to be permanent, the authors found. That means American transportation agencies should get busy preparing for a far different future than their traffic models predict.

“The Millennial generation is not only less car-focused than older Americans by virtue of being young, but they also drive less than previous generations of young people,” write authors Tony Dutzik, Jeff Inglis, and Phineas Baxandall.

There’s a good deal of evidence that the recession cannot fully explain the trend away from driving among young people. Notably, driving declined even among millennials who stayed employed, and “between the recession years of 2001 and 2009, per-capita driving declined by 16 percent among 16 to 34 year-olds with jobs,” the authors write.

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Census Data Shows How Much Less Millennials and Gen-Xers Commute by Car

Change in share of Generation X Commuters (aged 25-54) driving to work, 2007 to 2013. Image: Brookings, from analysis of American Community Survey data

Change in share of Generation X Commuters (aged 25-54) driving to work, 2007 to 2013. Image: Brookings, from analysis of American Community Survey data

Cross-posted from Brookings’ The Avenue blog. This article is the second in a short series examining new Census data on transportation trends.

Nationally, most commuters are still revving up their cars to get to work every morning, but the picture is more complicated when you look across different age groups.

Based on the latest Census data from the 2013 American Community Survey, changes are underway for younger and older commuters alike, especially in the country’s largest metropolitan areas.* By and large, Millennials and Generation X are leading the charge toward a range of alternate modes, including public transportation and walking, while Baby Boomers continue to use their cars at even higher levels.

Indeed, while 82.4 percent of workers ages 16 to 24 — the youngest working Millennials — commute to work by car, that share has fallen by nearly 1.3 percentage points in large metros since 2007 and nearly 4 percentage points less than they did in 1983.

Young Millennials also represent the commuters who most frequently take public transportation (5.8 percent of them commute that way) and walk to work (6.6 percent). They’re not only ditching the car in traditional multimodal hubs like San Francisco but in several smaller metros as well. For example, Tucson ranked first nationally in its transit growth among these workers, seeing their share rise 5.5 percentage points since 2007. Meanwhile, more young workers are walking in other university-centric metros like Syracuse (+3.6 percent since 2007), New Haven (+2.4), and Austin (+1.7).

Still, driving dips aren’t limited to Millennials; Generation X commuters are shifting away from private vehicles in nearly equal numbers. Overall, workers aged 25 to 54 saw their driving rate fall by 0.9 percentage points between 2007 and 2013. That drop equates to roughly 750,000 drivers — about the total number of commuters in Milwaukee — switching to other modes. That might help explain the stalling amount of miles driven across the country.

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Car Commuting Still Rules, But New Census Data Reveals Important Shifts

Metropolitan Share of Non-Car Commuters, 2007 to 2013

Source: Brookings analysis of American Community Survey data

Cross-posted from Brookings’ The Avenue blog.

Driving to work has been a staple in the American commute for decades, but it appears the country’s love affair with cars is stalling in many places. After years of sustained growth, driving levels are flat-lining, while more young people are opting for alternative transportation modes.

Newly released Census data from the 2013 American Community Survey offers additional insight into the shifting nature of our daily commutes.

To be sure, the car is still king for the United States as a whole. Based on the new Census estimates, over 85 percent of all workers still get to their jobs by private automobile. That amounts to over 122 million commuters, the vast majority of whom travel alone rather than in a carpool. It’s also relatively consistent with our commuting patterns from 1980, when nearly the same percentage of workers commuted by car.

But those long-term trends mask real changes over the past few years. The share of national commuters traveling by private vehicle is edging down for the first time in decades — from 86.5 percent in 2007 to 85.8 percent in 2013. Meanwhile, other transportation modes have grown in relative importance. Public transportation, which just recorded the most passenger trips since 1956, saw its share jump to over 5 percent, reaching levels not seen since 1990. The share of those bicycling and walking to work also continued to rise, now representing nearly 4 percent of all commuters. The biggest gain, however, came from those workers who didn’t technically commute at all. With the help of burgeoning broadband coverage, nearly as many people now work from home as ride public transportation to their jobs.

Leading these national trends are the nation’s largest metropolitan areas.* Over two-thirds of these places experienced driving declines between 2007 and 2013, while also simultaneously seeing a rise in commuters walking, bicycling or working at home.

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FHWA Gleefully Declares That Driving Is Up, Calls for More Highway Spending

Despite the rhetoric, FHWA's own charts show that driving is hardly bouncing back to peak levels. Image: ##http://www.fhwa.dot.gov/policyinformation/travel_monitoring/14juntvt/figure1.cfm##FHWA##

Despite the rhetoric, FHWA’s own charts show that driving is hardly bouncing back to peak levels — even if you’re just looking at total miles-driven. Chart: FHWA

Well, so much for the predictions that changing preferences and new technologies will lead to a car-free utopia. The Federal Highway Administration announced last week that after nine years of steady decline, vehicle-miles-traveled in the U.S. was 1.4 percent higher this June than last June. Apparently, red-blooded Americans everywhere are finally getting back to their Hummer habit after a few years of diminished driving and rising transit ridership and bike commuting.

Except one thing: Driving is still way down from peak levels. While the FHWA’s press release trumpets that “American driving between July 2013 and June 2014 is at levels not seen since 2008″ — adding, alarmingly, a call for “greater investment in highways” — that’s not the whole story. Yes, the total driving rate now approximates where it stood in 2008, when VMT was in freefall. But it’s still way down from the peak — 3.05 trillion miles — in 2007.

Since the end of the recession, total VMT has fluctuated within a fairly constrained range, remaining well below the 2007 peak. And that’s just total driving. If you look at the per capita driving rate, it’s still dropping. In fact, it’s as low as it’s been in nearly 17 years.

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California Has Officially Ditched Car-Centric ‘Level of Service’

Vehicle Miles Traveled in California has been on the decline for a couple of years. Changes in how the state manages transportation changes promise to drive it even lower. Photo: ##http://www.peaktraffic.org/graphics/vmt-california.jpg##Peak Traffic##

Vehicle Miles Traveled in California has been on the decline for a couple of years. Changes in how the state manages transportation changes promise to drive it even lower. Photo: Peak Traffic

Ding, dong…LOS is dead.

At least as far as the state of California is concerned.

California will no longer consider vehicle delay an "environmental impact." ##http://www.flickr.com/photos/pbo31/122200686/##pbo31##.

California will no longer consider vehicle delay an “environmental impact.” pbo31.

Level of Service (LOS) has been the standard by which the state measures the transportation impacts of major developments and changes to roads. Level of Service is basically a measurement of how many cars can be pushed through an intersection in a given time. If a project reduced a road’s Level of Service it was considered bad — no matter how many other benefits the project might create.

Now, thanks to legislation passed last year and a yearlong effort by the Governor’s Office of Planning and Research (OPR), California will no longer consider “bad” LOS a problem that needs fixing under the California Environmental Quality Act (CEQA) . This won’t just lead to good projects being approved more quickly and easily, but also to better mitigation measures for transportation impacts.

OPR today released a draft of its revised guidelines [PDF], proposing to substitute Vehicle Miles Traveled (VMT) for LOS.

In short, instead of measuring whether or not a project makes it less convenient to drive, it will now measure whether or not a project contributes to other state goals, like reducing greenhouse gas emissions, developing multimodal transportation, preserving open spaces, and promoting diverse land uses and infill development.

“This is exciting,” said Jeffrey Tumlin, principal and director of strategy at Nelson\Nygaard. “Changing from LOS to VMT does away with a  contradiction that applicants currently face under CEQA. The contradiction between the state’s greenhouse gas reduction requirements and the transportation analysis requirements is no more.”

This revision in state law promises many positive changes. Read more…

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Arizonans Driving Like It’s 1994

Image: Arizona Public Interest Research Group

As in the rest of America, per capita driving in Arizona started to drop years before the Great Recession hit. Graph: Arizona Public Interest Research Group

Here’s more evidence that there’s a shift underway in how Americans get around: The Arizona Public Interest Research Group has released a new report [PDF] showing that residents of this sprawling Sun Belt state are driving less and taking transit more.

Between 2005 and 2012, the average number of miles driven by each Arizona resident declined 10.5 percent, according to PIRG. They are now driving fewer miles per capita than they did in 1994. These trends closely track national driving declines, and show the phenomenon isn’t limited to compact coastal metro areas.

In notoriously sprawling Phoenix, people are starting to ditch their cars. Between 2006 and 2011, the share of households with two or more vehicles decreased 2.9 percent, PIRG reports. And the total number of cars and trucks on the state’s roads is dropping, even as the population grows. Between 2007 and 2012, the number of registered vehicles in Arizona declined 4 percent.

The authors attribute these trends to a combination of factors, including the economic downturn, the retirement of Baby Boomers, rising gas prices, increases in telecommuting, and the changing preferences of Millennials.

“It is unknown whether this increase in carless households is the result of changing preferences or economic hardship, but it does represent a dramatic reversal of the national trend toward increased vehicle ownership since at least the 1960s,” write authors Serena Unrein and Diane E . Brown.

Meanwhile, transit ridership is on the rise in Arizona’s major cities. In Phoenix, between 2005 and 2010, total transit trips increased 16 percent. Part of the increase is certainly due to the opening of Phoenix’s light rail system in 2008. That system has been outpacing ridership projections. In the Tucson area, growth has been more dramatic. During the same period, total transit trips in metro Tucson increased 25 percent, PIRG reports.

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While the Economy Grows, Americans Continue to Drive Less

Americans have driven fewer miles per capita every year since 2005. Image: Doug Short

Americans have driven fewer miles per capita every year since 2005. Image: Doug Short

The last time the average American drove this little, Bill Clinton was president and Seinfeld was the most-watched show in the country. Not since 1994 has per capita driving been as low as it is now, according to new data from the Federal Highway Administration compiled by economist Doug Short.

Per capita driving has been on the wane for nearly nine years and now stands at 9.3 percent below the 2005 peak:

Population adjusted driving is going down, down, down. Image: Doug Short

Population adjusted driving is going down, down, down. Graph: Doug Short

The steady decline in the driving rate means that even as population increases, total motor vehicle travel has inched upward just 0.2 percent between March 2013 and March 2014. For five years, total driving has essentially flatlined, and in the last year Americans drove 2.47 percent fewer miles than in the peak 12-month period:

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Dueling Forecasts: Does the Energy Dept. Know Something U.S. DOT Doesn’t?

Tony Dutzik is a senior policy analyst with the Frontier Group. This article was originally posted on the Frontier Group’s blog.

The U.S. Energy Information Administration (EIA) — the data and analytical wing of the Energy Department — is out today with a fascinating analysis of changing driving trends and their implications for America’s energy future. The analysis, part of the EIA’s annual package of forecasts called the “Annual Energy Outlook,” reviews recent changes in demographic, economic, technological and other factors affecting the number of miles Americans drive.

It also serves as a telling contrast to the U.S. Department of Transportation’s own recent forecast of vehicle travel, presented in the biennial “Conditions and Performance” report.

We’ve criticized the U.S. DOT before for regularly overshooting the mark when it comes to forecasting vehicle travel, exaggerating the need for spending on highway expansion and maintenance. The EIA report, on the other hand, takes a more nuanced and thoughtful approach to forecasting than the DOT’s reliance on untrustworthy state data and straight-line projections. It also gives us some key indications of what slower VMT growth might mean for our energy future.

DOT is from Mars, EIA is from Venus – Diverging Forecasts

The EIA and DOT have very different thoughts about how the future will play out when it comes to trends in driving. The DOT forecasts an immediate resumption of rates of vehicle travel growth that haven’t been seen for a decade, while the EIA assumes that, while driving might pick up again soon, it also might not, and that, to the extent driving does increase in the future, it is likely to grow way more slowly than it did during the post-war Driving Boom. This is the case we made in our 2013 report, A New Direction.

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Fitch Ratings: Failure to Invest in Transit Could Hurt the Whole Economy

One of the country’s leading financial ratings agencies is warning that if America doesn’t change how it invests in transit, the whole economy could suffer.

After decades of steady growth, vehicle miles driven has stagnated in recent years. Americans are driving no more total miles now than in 2004. Image: ##http://www.investing.com/analysis/vehicle-miles-driven:-another-population-adjusted-low-206969##Doug Short/Investing##

After decades of steady growth, vehicle miles driven has stagnated in recent years. Americans are driving no more total miles now than in 2004. Image: Doug Short/Investing

“Public transportation investment strategies will need to transform if trends toward increased multifamily housing, declines in driving, and increasing public transportation usage continue over the long run,” Fitch said.

In an article published March 12, Fitch says there are signs of a major shakeup in U.S. transportation. The ratings group points to trends away from driving among millennials and an uptick in transit use. Fitch also cites record-breaking levels of multi-family housing construction, which represented almost one-third of new housing starts last year.

Fitch writes:

In our view, the transportation needs of the next 50 years will be markedly different from those of the past 50 years. U.S. policymakers must begin adapting their current decisions to these future needs. If these trends persist and meaningful policy changes are not made, the risk to the public transportation system would have negative implications for the entire economy.

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