1 Financing ITS and the Transport Infrastructure: Policy for Mobility 15 th World Congress on ITS November 2008, New York City Steve Heminger Executive Director Metropolitan Transportation Commission San Francisco Bay Area

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3 Statutory Mandate Study current condition and future needs of surface transportation systemStudy current condition and future needs of surface transportation system Evaluate short-tem sources for Highway Trust Fund revenues and long-term alternatives to replace or supplement fuel taxEvaluate short-tem sources for Highway Trust Fund revenues and long-term alternatives to replace or supplement fuel tax Frame policy and funding recommendations for 15-, 30-, and 50-year time horizonsFrame policy and funding recommendations for 15-, 30-, and 50-year time horizons Report to Congress by January 1,2008Report to Congress by January 1,2008

4 Rebuilding America

5 Minnesota I-35 W

6 Texas 1-20 West of Pecos

7 Louisiana Hurricane Katrina U.S. 90 Ocean Springs

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

9 Freight

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

11 1,437 6,165 (TEUs in thousands) Houston 13,101 LA/LB 1,010 2,152 Miami 2,043 3,382 Oakland 4,478 15,835 NY/NJ 1,809 5,566 Virginia 1,860 6,639 Charleston 1,662 9,420 Savannah 1,798 4,396 Tacoma 1,776 2,557 Seattle 59,420 Forecast figures based on 10-year linear regression Dramatic Increase in U.S. Maritime Trade Volume of trade: 2004 and 2020 Source: U.S. DOT

12 More trade means more domestic freight 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 forecasts by mode, % change %44%39%181%57% 10,700 17,296 2,009 2,891 1,054 1,470 13,772 21, (tons in millions) Source: U.S. DOT

13 Freight Tons, Value, and Ton-Miles, % 1% 9% 3% 2% 0% 7% 3% 1% 40% 74% 67% 16% 40% 6% <1% 6% 2% 13% 3% TonsValueTon-Miles Percent Truck Rail Water Air Pipeline Multiple Modes Other/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; rail is critical to the movement of bulky, lower-value commodities and for heavy shipments moving long distances

, , , , , , , , Class I Railroads Track-Miles Owned Sources: L. Thompson/World Bank and American Association of Railroads Rail Network Today Today’s rail network has been rationalized and downsized to a core network that is descended directly from the 19th Century design

15 Metro Mobility

16 In Congestion for At Least 40 Hours Annually Source: Texas Transportation Institute

17 Metro Areas Greater Than 1 Million Source: U.S. Census

18 Metros Capture Huge Market Share 10 Megaregions Metro Areas >1 Million 1 Share of U.S. Population 68%58% 2 Share of GDP 78%61% 3 Share of Traffic Congestion 92%97% 4 Share of Transit Ridership 93%92% 5 Share of Population Exposure to Criteria Pollutants 94%88% Sources: U.S. Census, Texas Transportation Institute, U.S. Conference of Mayors, EPA

19 U.S. Population Change, 2000 – Source: U.S. Census

20 Safety

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23 U.S. and G.B. Traffic Fatalities Per 100 Million VMT Source: Leonard Evans, Traffic Safety, 2004

24 U.S. Traffic Deaths Far Exceed Casualties of War Source: Leonard Evans, Traffic Safety, 2004

25 What’s Broken?

26 Environmental Impact Statement Processing Time (FY 1998 – 2006) Source: FHWA

Length of Time to Complete the New Starts Process Source: Holland & Knight 27

28 Street and Highway Construction Costs Have Increased Dramatically Over the Past Few Years Source: Bureau of Labor Statistics Highway and street construction costs,

29 Finance

30 Projected Highway and Transit Account Balances Through 2012 Source: U.S. Department of the Treasury projections

31 Annual National Funding Gap Current Spending (2006) Cost to Maintain (2055) Cost to Improve with Pricing (2055) Source: Section 1909 Commission Cost to Improve without Pricing (2055)

32 Cost to Improve by Category Source: Section 1909 Commission

33 Major Finance Recommendations 1.The federal surface transportation program should not be reauthorized in its current form. 2.A new beginning: performance-driven performance-driven outcome-based outcome-based generally mode-neutral generally mode-neutral refocused on genuine national interest refocused on genuine national interest

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

Fuel Tax vs. Fuel Price Major Finance Recommendations 4.To address this investment shortfall by providing the traditional federal share of 40% of total transportation capital funding, the federal fuel tax needs to be raised by cents per gallon. 5.This rate increase should be indexed to the construction cost index and phased in over a period of years. 35 Source: AAA

6.Fuel tax remains viable revenue at least through Thereafter, the most promising alternative revenue measure appears to be a vehicle miles traveled (VMT) fee, provided that substantial privacy and collection cost issues can be addressed. 7.The deployment of peak-hour “congestion pricing” on Interstate highways in major metropolitan areas should be permitted, with revenues restricted to transportation purposes in the travel corridors where the fees are imposed. Major Finance Recommendations 36

8.Public-Private Partnerships should be encouraged as a means of attracting additional private investment to the surface transportation system, provided that conditions are included to protect the public interest and the movement of interstate commerce. Major Finance Recommendations States with PPP Authority 37

1.Not simply about supplying revenues; can also: Prioritize projects that generate highest returns Prioritize projects that generate highest returns Improve life cycle investing Improve life cycle investing Provide incentives for more efficient operations/maintenance Provide incentives for more efficient operations/maintenance 2.Widely used in Europe, South America, Australia 3.Increasing interest by some States Construction of new highways or additional capacity to existing highways Construction of new highways or additional capacity to existing highways Long term leasing of existing toll facilities Long term leasing of existing toll facilities Potential applications for goods movement Potential applications for goods movement Public-Private Partnerships 38

1.Transparency in negotiation, adequate public input, no conflicts of interest 2.Meet all applicable planning and environmental requirements 3.Agreement should require Maintenance of facility condition and performance Maintenance of facility condition and performance Facility returned to the State in good condition Facility returned to the State in good condition No non-compete clauses affecting adjacent facilities No non-compete clauses affecting adjacent facilities Facility returned to the State if private partner enters bankruptcy Facility returned to the State if private partner enters bankruptcy Customers’ interests protected Customers’ interests protected Revenue-sharing provisions Revenue-sharing provisions Reasonable term Reasonable term 4.Payments used to improve/expand toll facilities and capacity on transportation alternatives within the same corridor 5.Private sector financing provides better value than public financing Public-Private Partnerships under Certain Conditions… 39

40 “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: 41