1. Utility, Quality and Mobility: The Trans-Texas Corridor Plan Aakash Bhatt Chi Wang Jason Yeh Prepared for Prof. Robert Strauss Public Expenditure Analysis Spring 2005 Innertrode Consultants:

2. Today’s Agenda 1. Overview of the Trans-Texas Corridor Plan 2. Costs 3. Benefits 4. Financing 5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts

3. 1. Overview of the Trans-Texas Corridor Plan 2. Costs 3. Benefits 4. Financing 5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts

4. Texas Facts Texas is a center for international trade activities, located at the crossroads of North America. 79% of all U.S. – Mexico trade flows through Texas ports of entry. The population of Texas (22 million) has increased 65% since 1988 Source: http://www.corridorwatch.org/ttc/cw-where.htm

5. 1. Overloaded highway system due to population and passing traffic growth 2. Existing transportation infrastructure inadequate for future needs 3. Over-capacity leads to accidents 4. Expanding existing highways is not cost- effective 5. Hazardous material transporting is a concern Texas Transportation Issues

6. Population Predicted to Grow Rapidly in Next 25 Years 2000 Total Population: 20,900,000 2030 Projected Total Population: 33,000,000 Source: http://www.keeptexasmoving.com/pdfs/Texas_ Population.pdf

7. Increasing Truck Traffic a Threat to Transportation Safety Source: http://www.keeptexasmoving.com/pdfs/Truck_Rail_Freight_Texas.pdf Freight Volume By Route (1998)Truck and Rail Border Traffic by Year

8. The TTC: 4,000 Miles of New Roads to Criss-cross the State Priority Corridors Other Proposed Corridors Source: http://www.corridorwatch.org/ttc/cw-where.htm Dallas Centerville Houston

9. Refined Study Area for Our Cost- Benefit Analysis TTC-35 – Parallel to I-35 – Oklahoma Border to the Gulf Coast or Mexico – 800 Miles in Length Source: http://www.corridorwatch.org/ttc/cw- ttc35f2004map-start.htm

10. TTC-35 Structure Source: http://www.cintra.es/

11. TTC Design Concepts Source: http://www.cintra.es/

12. TTC: A Long-Term Solution for Traffic Problems Relieves congestion Reduces pollution Re-routes of hazardous material transportation Increases safety Saves time Enhances development of economy

13. 1. Overview of the Trans-Texas Corridor Plan 2. Costs 3. Benefits 4. Financing 5. Synthesis- Sensitivity Analysis 6. Concluding Thoughts

14. Cost Quantifiable cost - Construction cost - Operation cost - Unquantifiable cost - Environmental cost: Air pollution and noise - Aesthetic Impact - Barrier to non-car owners - Cost of Sprawl - Dead weight loss (DWL) from taxes and tolls

15. Official Construction Cost Breakdown Cost Table ItemCost/centerline mile Roadway trucks/passenger vehicles6997000 Grade-separation bridge structures5175000 Interchanges3195000 Commuter and freight rail7357000 High-speed passenger rail5000000 Utilities3650000 Total31374000

16. Low Official Cost Per Mile TTC costs 31.37 million per centerline mile AVG 4 lane freeway costs 20 million Estimated real cost = 40 - 60 million

17. Operating Cost Maintenance costCost Maintenance cost per mile per lane465 6 lanes2790 800 miles2232000

18. Unquantifiable cost – Dead weight loss – Environmental cost – Aesthetic impact – Barrier to non-car owners – Cost of sprawl

19. Cost Official estimateWorst Case 800 mile corridor (billion)25.148 right of way (billion)2.347.6 miscellaneous costs (billion)1.64 Real-estate tax loss for 50 yrs (billion)1.175.36 Financing Cost19.629.41 Maintenance Cost 0.06 Deadweight LossNA Environmental CostNA Other Unquantifiable costNA Total50.3694.44

20. 1. Overview of the Trans-Texas Corridor Plan 2. Costs 3. Benefits 4. Financing 5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts

21. The Benefits that Matter Toll Revenues Congestion Relief Faster transport Safety Economic Growth $60.7 Billion of Benefits Over 50 Years

22. Toll Revenue Benefit Assume Dallas-San Antonio corridor operational by 2010 Toll expected to be about $0.15/mile for cars and $0.48/mile for trucks 3.5% growth in traffic per year along I-35 TTC-35 is a partial substitute for I-35 $30 Billion Over 50 Years

23. Congestion Benefit Cost savings from congestion relief (37%) – Congestion($)/traveler given by 2002 Urban Mobility Report Benefit for 80 mph speed limit (25%) Benefit for commercial vehicle time (37%) $22.5 Billion Over 50 Years

24. Truck lanes apart from car lanes (93%) – Includes monetary benefits + value of life – Lane designation benefit:cost ratio given by 2002 ATSSA Roadway Safety Program Secure pipes for natural gas (7%) – Pipeline incident info given by Railroad Commission of Texas $1.25 Billion Over 50 Years Safety Benefit Source: HAZMAP website

25. Economic Growth from TTC-35 The Perryman Group forecasts – 2.6 million permanent jobs – $585 million in annual expenditures Using Fed. Highway Administration multipliers, – 259,000 person-years of employment generated – Equal to 5,183 jobs for 50 years $7 Billion Over 50 Years

26. 1. Overview of the Trans-Texas Corridor Plan 2. Costs 3. Benefits 4. Financing 5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts

27. Possible Financing Sources Private Bonds Float Government Bonds Tolling Existing I-35 Federal funding Increase Gas Tax "It is my belief that Texans, if given a choice, would prefer to pay an extra 10 cent per gallon gasoline tax rather than convert an existing highway to a toll road."— Senator Jeff Wentworth (November 7, 2003) Source:http://www.senate.state.tx.us/75r/Senate/member s/dist25/pr03/p110703a.htm

28. Official Legislation about Financing 2001 S.B.4 Texas Mobility Fund 2005 H.B.3588 Art. 5 Conversion of non-toll state high way Art. 7 Issuance of bonds and other securities (<$3 Billions) Art. 9 Motor Vehicle Taxes Fees: Court fees and public safety fees Source: http://www.corridorwatch.org/ttc/cw-hb3588-toc.htm

29. 1. Overview of the Trans-Texas Corridor Plan 2. Costs 3. Benefits 4. Financing 5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts

30. Base case

31. Worst Case

32. Parameters for the NPV prediction

33. Sensitivity Analysis by Crystal Ball Predictor – 2000 Trials We have 95% confidence that there are 20% chance for this project have positive NPV.

34. 1. Overview of the Trans-Texas Corridor Plan 2. Costs 3. Benefits 4. Financing 5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts

35. Problems or constraints The Corridors do not directly connect large cities. Topography will also be very important because of the high-speed rail component of the Corridor. Corridor must be as straight and level as possible (no uphill or downhill grades or sharp turns). Source: http://www.corridorwatch.org/ttc/cw-where.htm

36. Concluding Thoughts Should Texas stop the project? -Yes, because the NPV is negative for 80% of the time. However, Texas already signed the contract, the project will continue. The state government should hold off investments for other sections until TTC- 35 shows promising results.

37. Works Cited Corridor Watch Org, http://www.corridorwatch.org/ttc/cw-where.htmhttp://www.corridorwatch.org/ttc/cw-where.htm Crossroads of the Americas: Trans Texas Corridor Plan, http://www.keeptexasmoving.com/publications/files/ttc_report_full.pdf Question: Gas Tax Increase or Toll Roads? http://www.senate.state.tx.us/75r/Senate/members/dist25/pr03/p110703a.htm Keep Texas moving Web, http://www.keeptexasmoving.com/http://www.keeptexasmoving.com/ Cintra Web, http://www.cintra.es/http://www.cintra.es/ “ATSSA’s Roadway Safety Improvement Program: Economic Impact of $3.0 Billion Annual Safety Initiative”, American Economics Group, Inc., November 2002 Railroad Commission of Texas Website, http://www.rrc.state.tx.ushttp://www.rrc.state.tx.us Perryman, Ray M., “The Net Economic Benefits of the Trans Texas Corridor,” The Perryman Group, January 2002 HAZMAP website, http://www.hazmap.dfwinfo.com/risk_assessment/Chapter4.asphttp://www.hazmap.dfwinfo.com/risk_assessment/Chapter4.asp Schrank, David and Lomax, Tim, “2002 Urban Mobility Report”, Texas Transportation Institute and the Texas A&M University System, June 2002 “Summary: Economic Impacts of Federal-Aid Highway Investment,” Federal Highway Administration, December 1999