Innovative Financing Schemes Steve Heminger Executive Director, MTC Sonoma Transportation Summit June 21, 2006

Vaudeville definition of “Innovative Finance” I Don’t Have Any Money. Do You?

1.Is the Gas Tax a Goner?

“Read my Lips: No New Taxes” — George H. W. Bush, 1998

State Gas Tax Hasn’t Kept Pace The state’s gas tax has lost one-third of its value since 1964, adjusted for inflation.

Feds to the Rescue? Not Likely Purchasing power of federal gas tax has also eroded due to inflation

The Gas Tax Vanishing Act No federal rate increase since 1993 Less than 1 / 3 of states have raised the state gas tax since of 15 states with tax hikes were due to automatic indexing

Far Higher Gasoline Prices Abroad Source: International Energy Agency, April 2005 Gasoline Prices for Selected Countries, 2005

2.You Say You Want a Devolution?

“It’s our money, and we’re free to spend it any way we please… If you have money you spend it and win.” — Rose Kennedy

Local Sales Tax Revenues Dwarf STIP  All Bay Area counties except Napa and Solano  $23 billion over 30 years

Bay Area vs. State Voting Results on Transportation Funding Ballot Measures:

Devolution Losers Rural counties with small tax base and anti-tax ethos Large “lumpy” projects that don’t neatly fit within county shares Modes that lack electoral appeal: bikes vs. freight

3.Son, Can I Borrow the Charge Card?

Proposition 1B — Transportation Bond CategoryAmount Highway Improvements$ 4.5 Transit Capital$ 4.0 Goods Movement$ 2.0 Local Roads$ 2.0 State Transportation Improvement Program $ 2.0 Air Quality$ 1.2 State-Local Partnership$ 1.0 State Route 99$ 1.0 Transit Security$ 1.0 Highway Repairs$ 0.5 Other$ 0.7 Total$ 19.9 Dollars in billions

Bay Area’s Share of Local Streets and Roads Funding Dollars in millions CountyAllocation Alameda$ 75.0 Contra Costa$ 52.1 Marin$ 14.5 Napa$ 9.1 San Francisco$ 40.0 San Mateo$ 40.8 Santa Clara$ 91.7 Solano$ 24.3 Sonoma$ 27.9 Regional Total$375.4

Bay Area’s Share of STIP Funding CountyAmount Alameda$ 54.5 Contra Costa$ 35.2 Marin$ 10.3 Napa$ 6.4 San Francisco$ 27.8 San Mateo$ 28.7 Santa Clara$ 63.8 Solano$ 16.7 Sonoma$ 20.4 Subtotal$ Interregional (Est.)$ 84.1 Regional Total$ Dollars in millions

AgencyAmount AC Transit$ 107 BART$ 246 Caltrain$ 40 Golden Gate$ 40 SF Muni$ 336 SamTrans$ 47 VTA$ 144 Regional$ 347 Other$ 27 Total$ 1,334 Dollars in millions Public Transit Funding — Bay Area Share

Bay Area Funding Shortfall: $18 Billion  80 percent of the region’s funds will go to maintain our existing road and transit system.  Even with passage of November 2006 bond, large shortfalls remain.

Growing Reliance on Non-User Fees Source: Surface Transportation Policy Project, 2002 Type of Revenue Change Percent Change State Borrowing ($ in millions) 92 $4,316$ 8,298 $3,982 Other Local Taxes Includes Sales Taxes$ 4,487$ 7,079 $ 2,59258 Other State Taxes$ 6,565$ 8,560 $ 1,99530 Local General Funds$ 12,326$ 15,857 $ 3,53129 Local Property Taxes$ 5220$ 6384 $ State User Fees$36,200$42,730 $6,53018

4.Does the Road Toll for Thee?

Original Toll Concept — River Chains

Congestion Tolls ProjectTypeStatus SingaporeCordonOperational 1975 NorwayCordonOperational 1986 LondonCordonOperational 2003 StockholmCordonOperational 2006 Orange County, SR 91HOTOperational 1995 San Diego I-15HOTOperational 1996 Houston Katy FreewayHOTOperational 1998 Minneapolis I-394HOTOperational 2005 Denver I-25HOTOperational 2006 Seattle Route 167HOTPlanned 2007 Alameda County I-680HOTPlanned 2009

Orange County SR 91 Express Lanes

San Diego I-15 Express Lanes

Proposed Alameda I-680 Concept  Limited access  Double-yellow stripe separation with intermediate access (access design under study)  Toll varies by time of day, day of week  Early polling: 60% to 70% support (project area)

Conceptual Regional HOT Network

Federal Legislation — SAFETEA  Value Pricing Pilot Program 15 demonstration projects $11 to $12 million/year  Broad permission to convert HOV to HOT Must maintain service levels (45 mph minimum) Encourages directing excess revenue to ridesharing and highway safety programs

5.Have I Got a Bridge to Sell You?

Current U.S. Toll Road Privatizations — A Brief History

Current Privatized U.S. Toll Roads — Investment and Operating Profile

Ownership Structure of Current Privatized U.S. Toll Roads Concession structure rather than outright sale of the asset Concession terms range from 35 to 99 years Concession agreement determines toll pricing, operational and maintenance requirements Comment SR 125 Chicago Skyway Pocahontas Parkway Indiana Toll Road Dulles Greenway Gov’t. Body Macquarie Infrastructure Corp. (MIG) ASX listed (MIG) $9bn market cap. Managed by Macquarie Bank 99 year concession $300mm VDOT, VA State MIG ASX listed (MIG) $9bn market cap. 51 year concession $533mm VDOT, VA State Transurban ASK listed (TCL) $4bn market cap. 99 year concession $600mm City of Chicago Skyway Vehicle Spain listed $ market cap. 99 year concession $1.83bn CintraMIG ASX listed $9bn market cap. 55% 45% State of Indiana ITR Vehicle Spain listed $ market cap. 99 year concession $3.85bn CintraMIG ASX listed $9bn market ca p. 50%

Projects Under Agreement Or In Progress Project Overviews

Key Policy Questions 1.How high could tolls really get? 2.Why doesn’t the public agency just raise tolls itself? 3.Where does the lease revenue go? 4.What if the asset needs to be replaced during the term of lease?

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