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Financing ITS and the Transport Infrastructure:

Policy for Mobility

Financing ITS and the Transport Infrastructure:

Policy for Mobility

15th World Congress on ITS

November 2008, New York City

Steve Heminger

Executive Director

Metropolitan Transportation Commission

San Francisco Bay Area

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Statutory MandateStatutory Mandate

• Study current condition and future needs Study current condition and future needs of surface transportation systemof surface transportation system

• Evaluate short-tem sources for Highway Evaluate short-tem sources for Highway Trust Fund revenues and long-term Trust Fund revenues and long-term alternatives to replace or supplement fuel alternatives to replace or supplement fuel taxtax

• Frame policy and funding Frame policy and funding recommendations for 15-, 30-, and 50-year recommendations for 15-, 30-, and 50-year time horizons time horizons

• Report to Congress by January 1,2008Report to Congress by January 1,2008

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Rebuilding America

Rebuilding America

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Minnesota I-35 WMinnesota I-35 W

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Texas 1-20 West of PecosTexas 1-20 West of Pecos

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Louisiana Hurricane Katrina U.S. 90 Ocean Louisiana Hurricane Katrina U.S. 90 Ocean SpringsSprings

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2005 Report Card for America’s Infrastructure

2005 Report Card for America’s Infrastructure

Aviation D+

Bridges C

Dams D

Drinking Water D-

Energy D

Hazardous Waste D

Navigable Waterways D-

Public Parks and Recreation C-

Rail C-

Roads D

Schools D

Security I

Solid Waste C+

Transit D+

Wastewater D-

America’s Infrastructure GPA D

Sources: American Society of Civil Engineers, 2005

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FreightFreight

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China was 33% of US imports in 2000 and will be 50% by

2010

China was 33% of US imports in 2000 and will be 50% by

2010

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1,4371,437

6,1656,165

(TEUs in thousands)

20202020

20042004

HoustonHouston

13,10113,101

LA/LBLA/LB1,0101,0102,15

22,152

MiamiMiami

2,0432,0433,3823,382

OaklandOakland

4,4784,478

15,83515,835

NY/NJNY/NJ

1,8091,809

5,5665,566

VirginiaVirginia

1,8601,860

6,6396,639

CharlestonCharleston

1,6621,662

9,4209,420

SavannahSavannah

1,7981,7984,3964,396

TacomaTacoma

1,7761,776 2,5572,557

SeattleSeattle

59,42059,420

Forecast figures based on 10-year linear regression

Dramatic Increase in U.S. Maritime Trade

Dramatic Increase in U.S. Maritime Trade

Volume of trade: 2004 and 2020

Source: U.S. DOT

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Truck Rail Water Air Total

More trade means more domesticfreight movements

More trade means more domesticfreight movements

West region +65%

South region +71%

Central

region +71%

Northeast region +58%

U.S. domestic freight tonnage growth forecast, U.S. domestic freight tonnage growth forecast, 2000-20202000-2020

U.S. domestic freight tonnage forecasts by mode, 2000-2020U.S. domestic freight tonnage forecasts by mode, 2000-2020

20202020

20002000

% change 2000-2020% change 2000-2020

62% 44% 39% 181% 57%

10,70010,700

17,29617,296

2,0092,009

2,8912,891

1,0541,054

1,4701,470

13,77213,772

21,68221,682

992525

(tons in millions)

Source: U.S. DOT

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Freight Tons, Value, and Ton-Miles, 2002

Freight Tons, Value, and Ton-Miles, 2002

0

10

20

30

40

50

60

70

80

4%1%

9%

3% 2% 0%

7%3% 1%

40%

74%

67%

16%

40%

6%<1%<1%

6%2%

13%

3%

Tons Value Ton-Miles

Perc

en

t

TruckRailWaterAirPipeline

Multiple ModesOther/Unknown Modes

Source: Bureau of Transportation Statistics and U.S. Census Bureau, “2002 Economic Census, Transportation, 2002 Commodity Flow Survey,” Table 1b.

Trucking dominates domestic freight movement; Trucking dominates domestic freight movement; rail is critical to the movement of bulky, lower-value rail is critical to the movement of bulky, lower-value

commodities commodities and for heavy shipments moving long distancesand for heavy shipments moving long distances

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00

50,00050,000

100,000100,000

150,000150,000

200,000200,000

250,000250,000

300,000300,000

350,000350,000

400,000400,000

18301830 18501850 18701870 18901890 19101910 19301930 19501950 19701970 19901990 20102010

Class I Railroads Track-Miles Class I Railroads Track-Miles OwnedOwned

Sources: L. Thompson/World Bank and American Association of Railroads

Rail Network TodayRail Network TodayToday’s rail network has been rationalized and downsized to a Today’s rail network has been rationalized and downsized to a

core network that is descended directly from the 19th Century designcore network that is descended directly from the 19th Century design

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Metro MobilityMetro Mobility

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In Congestion for At Least 40 Hours Annually

In Congestion for At Least 40 Hours Annually

Source: Texas Transportation Institute

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Metro Areas Greater Than 1 Million

Metro Areas Greater Than 1 Million

Source: U.S. Census

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Metros Capture Huge Market Share

Metros Capture Huge Market Share

10 Megaregions

Metro Areas>1 Million

11 Share of U.S. PopulationShare of U.S. Population 68%68% 58%58%

22 Share of GDPShare of GDP 78%78% 61%61%

33 Share of Traffic Share of Traffic CongestionCongestion 92%92% 97%97%

44 Share of Transit Share of Transit RidershipRidership 93%93% 92%92%

55 Share of Population Share of Population Exposure to Criteria Exposure to Criteria PollutantsPollutants

94%94% 88%88%

Sources: U.S. Census, Texas Transportation Institute, U.S. Conference of Mayors, EPA

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U.S. Population Change, 2000 –2050

U.S. Population Change, 2000 –2050

19Source: U.S. Census

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SafetySafety

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U.S. and G.B. Traffic Fatalities

Per 100 Million VMT

U.S. and G.B. Traffic Fatalities

Per 100 Million VMT

Source: Leonard Evans, Traffic Safety, 2004

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U.S. Traffic Deaths Far Exceed Casualties of War

U.S. Traffic Deaths Far Exceed Casualties of War

Source: Leonard Evans, Traffic Safety, 2004

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What’s Broken?What’s Broken?

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Environmental Impact StatementEnvironmental Impact StatementProcessing TimeProcessing Time (FY 1998 (FY 1998––2006)2006)

Source: FHWA

Length of Time to Complete the New Starts Process

Length of Time to Complete the New Starts Process

Source: Holland & Knight27

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Street and Highway Construction Costs

Have Increased Dramatically Over the Past Few Years

Street and Highway Construction Costs

Have Increased Dramatically Over the Past Few Years

Source: Bureau of Labor Statistics

Highway and street construction costs, 1997-2007Highway and street construction costs, 1997-2007

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FinanceFinance

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Projected Highway and Transit Account Balances

Through 2012

Projected Highway and Transit Account Balances

Through 2012

Source: U.S. Department of the Treasury projections

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Annual National Funding GapAnnual National Funding Gap

0

50

100

150

200

250

300

350

400

Con

stan

t 20

05 D

olla

rs (

in B

illio

ns)

Current Spending(2006)

Cost to Maintain(2055)

Cost to Improvewith Pricing

(2055)

Source: Section 1909 Commission

Cost to Improvewithout Pricing

(2055)

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Cost to Improve by CategoryCost to Improve by Category

Source: Section 1909 Commission

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Major Finance Recommendations

Major Finance Recommendations

1.1. The federal surface transportation The federal surface transportation program should program should notnot be reauthorized in be reauthorized in its current form. its current form.

2.2. A new beginning:A new beginning:• performance-driven performance-driven • outcome-basedoutcome-based• generally mode-neutralgenerally mode-neutral• refocused on genuine national interestrefocused on genuine national interest

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3.3. The annual investment shortfall to improve The annual investment shortfall to improve the condition and performance of all modes the condition and performance of all modes of surface transportation — highway, of surface transportation — highway, bridge, public transit, freight rail, and bridge, public transit, freight rail, and intercity passenger rail — ranges between intercity passenger rail — ranges between $140–250 billion.$140–250 billion.

Major Finance Recommendations

Major Finance Recommendations

Fuel Tax vs. Fuel Price

Major Finance Recommendations

Major Finance Recommendations

4.4. To address this To address this investment shortfall by investment shortfall by providing the traditional providing the traditional federal share of 40% of federal share of 40% of total transportation total transportation capital funding, the capital funding, the federal fuel tax needs to federal fuel tax needs to be raised by 25-40 cents be raised by 25-40 cents per gallon. per gallon.

5.5. This rate increase should This rate increase should be indexed to the be indexed to the construction cost index construction cost index and phased in over a and phased in over a period of years. period of years. 35

Source: AAA

6.6. Fuel tax remains viable revenue at least through Fuel tax remains viable revenue at least through 2025. Thereafter, the most promising alternative 2025. Thereafter, the most promising alternative revenue measure appears to be a vehicle miles revenue measure appears to be a vehicle miles traveled (VMT) fee, provided that substantial traveled (VMT) fee, provided that substantial privacy and collection cost issues can be privacy and collection cost issues can be addressed.addressed.

7.7. The deployment of peak-hour “congestion The deployment of peak-hour “congestion pricing” on Interstate highways in major pricing” on Interstate highways in major metropolitan areas should be permitted, with metropolitan areas should be permitted, with revenues restricted to transportation purposes in revenues restricted to transportation purposes in the travel corridors where the fees are imposed.the travel corridors where the fees are imposed.

Major Finance Recommendations

Major Finance Recommendations

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8.8. Public-Private Partnerships should be Public-Private Partnerships should be encouraged as a means of attracting additional encouraged as a means of attracting additional private investment to the surface private investment to the surface transportation system, provided that transportation system, provided that conditions are included to protect the public conditions are included to protect the public interest and the movement of interstate interest and the movement of interstate commerce.commerce.

Major Finance Recommendations

Major Finance Recommendations

States with PPP Authority

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1.1. Not simply about supplying revenues; can also:Not simply about supplying revenues; can also:

• Prioritize projects that generate highest returnsPrioritize projects that generate highest returns

• Improve life cycle investingImprove life cycle investing

• Provide incentives for more efficient Provide incentives for more efficient operations/maintenanceoperations/maintenance

2.2. Widely used in Europe, South America, AustraliaWidely used in Europe, South America, Australia

3.3. Increasing interest by some StatesIncreasing interest by some States

• Construction of new highways or additional capacity to Construction of new highways or additional capacity to existing highwaysexisting highways

• Long term leasing of existing toll facilitiesLong term leasing of existing toll facilities

• Potential applications for goods movementPotential applications for goods movement

Public-Private PartnershipsPublic-Private Partnerships

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1.1. Transparency in negotiation, adequate public input, no Transparency in negotiation, adequate public input, no conflicts of interestconflicts of interest

2.2. Meet all applicable planning and environmental Meet all applicable planning and environmental requirementsrequirements

3.3. Agreement should requireAgreement should require• Maintenance of facility condition and performanceMaintenance of facility condition and performance• Facility returned to the State in good conditionFacility returned to the State in good condition• No non-compete clauses affecting adjacent facilitiesNo non-compete clauses affecting adjacent facilities• Facility returned to the State if private partner enters Facility returned to the State if private partner enters

bankruptcybankruptcy• Customers’ interests protectedCustomers’ interests protected• Revenue-sharing provisionsRevenue-sharing provisions• Reasonable termReasonable term

4.4. Payments used to improve/expand toll facilities and capacity Payments used to improve/expand toll facilities and capacity on transportation alternatives within the same corridoron transportation alternatives within the same corridor

5.5. Private sector financing provides better value than public Private sector financing provides better value than public financingfinancing

Public-Private Partnerships under Certain Conditions…

Public-Private Partnerships under Certain Conditions…

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“Our unity as a nation is sustained by

free communication of thought and

by easy transportation of people

and goods... Together the unifying

forces of our communication and

transportation systems are dynamic

elements in the very name we bear

— United States. Without them, we

would be a mere alliance of many

separate parts.” — Dwight D. Eisenhower, 1955

For More Information:

www.transportationfortomorrow.org

For More Information:

www.transportationfortomorrow.org

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