new york volume xi no. 2 spring 2008 transportation …

The Crisis in TransportationFinance — The Reason forThis Special Issue

By Allison L. C. de Cerreño

2008 Annual Leadership inTransportation Awards

The Next Authorization:Interview With Anne Canby

By Rachel Weinberger

Transportation Authorization:Time for a Change?

By Mortimer Downey

A Dollar and a Dream: WillNew York Be Able to Fund ItsCritical Infrastructure?

By Kevin Corbett

Financing Transportation: TheRoad Programmed Toll Increases

By Rena Barta

Public Private Partnerships:National and InternationalExperiences, Local Possibilities

Letter from the Editor Springtime always brings with itthe thought of rebirth and renew-al. Everything feels refreshed.Baseball fans forget their suffer-ings of the previous season andlook forward with hope to theoncoming one (especially Metsfans, who desire to forget theirteam’s collapse last September).It is appropriate that the Springedition of the Journal dedicatesitself entirely to the need torefresh this country’s approach tofinancing our transportation pro-grams. The transportation industryis approaching one of those seminalmoments that occur every fewdecades, in which grand, landmarklegislation is produced to providefunding programs that address theevolving transportation require-ments of the current generation.oVVision and political fortitude willbe required to address the financ-ing crisis currently faced by theindustry. Our publisher, Allison L.C. de Cerreño, initiates the discus-sion citing the necessity for those

For the first time in its history, theNew York Transportation Journal is devot-ing an entire issue to a specific topicof interest to the transportation communi-ty — transportation finance. As this editionof the Journal goes to press, we are facinga looming crisis in transportation financ-ing; indeed, some would argue we arealready in the midst of it. It is a crisis char-acterized by needs that are outpacingdemand, limited resources even asconstruction materials and labor pricesare rising, and above all, the lack of visionand political will to find sustainable andlong-term solutions.

I say lack of political will because it is notthat we lack means for raising funds.Among the possibilities are increased andindexed fuel taxes, various types of userfees (including vehicle miles traveled(VMT) which is now possible with currenttechnologies and vehicle registration fees,for example), pricing initiatives (variabletolling, congestion pricing, etc.), dedicat-ed local taxes, and public private partner-ships, to name a few. However, for each ofthese methods, there are associatedtrade-offs related to costs and benefitsand who bears the risk, raising the specta-cle of politics each time one is pursued.We hear repeatedly “we must do some-thing” but when the time comes, nobodywants to be responsible for helping paythe bill.

I also say lack of vision because whileimmediate concerns must be addressed,they should not become so all encompass-ing that we forget the greatest long-termneed. The United States needs a vision ofwhat we want our transportation systemto do and the most rational way to do it,so that we can prioritize our strategicinvestments. Without this vision we con-tinue to fund project by project within our

modal and geographic silos, and we fall fur-ther and further behind our European andAsian counterparts who are planning trans-portation on regional, national, and evensupranational scales (in the case of Europe’shigh-speed rail plans).

Perhaps more worrisome, it is unclear thatthe pending change in the Administrationwill have much impact. Transportation haslargely been missing as an issue during thepresidential campaigns. Indeed, if onesearches most of the news sites devoted tothe campaigns (e.g., CNN), neither trans-portation nor infrastructure rank among thesearchable topics. Throughout theDemocratic and Republican debates, theissue was rarely mentioned, and when itshowed up, it was in passing. John McCainhas yet to issue any formal statements onthe topic and, while Hillary Clinton andBarack Obama have issued statements, theyare rather vague. Both candidates talkabout more funding for transportation,more funding for intercity rail and forbridges, but neither speaks to how theywould fund these programs. Worse, bothbasically tow the line, continuing our cur-rent modal silos rather than stepping outand trying to create a broader vision for ourtransportation system.

Closer to home, Mayor Bloomberg’s conges-tion pricing plan just failed. There weremany reasons for this outcome that politicalpundits will be describing and discussing forsome time. Some have already pointed tothe Mayor’s inability (or unwillingness) toeffectively woo the Albany policymakers;some have pointed to several shortcomingsin the plan itself; and some have pointed tothe lack of political will in Albany at takingsuch a drastic step — indeed, within thesame week, our Albany leaders alsoapproved a budget that cuts funding for MTA

(Continued on page 3)

N E W Y O R K

TRANSPORTATIONJOURNAL

www.wagner.nyu.edu/rudincenter

Volume XI No. 2 Spring 2008

1

Inside NYTJ

THE CRISIS IN TRANSPORTATION FINANCE— THE REASON FOR THIS SPECIAL ISSUE


BY ALLISON L. C. DE CERREÑO, PH.D.

The New York Transportation Journal is published by the NYU Wagner RudinCenter for Transportation Policy & Management.

The Rudin Center gratefully acknowledges the foundation, corporate, and individ-ual sponsors that make possible our efforts to promote progressive transportationpolicy, including the New York Transportation Journal.

The views expressed in the New York Transportation Journal are those of theauthors and not necessarily those of New York University, the Rudin Center, or anyof its affiliated organizations and funders.

Letters to the Editor and other inquiries may be addressed to Marta Panero at:

Rudin Center for Transportation Policy & ManagementNYU Robert F. Wagner Graduate School of Public Service295 Lafayette Street, 2nd FloorNew York, NY 10012Phone: (212) 998-7545; Fax: (212) 995-4611Email: [email protected]: www.wagner.nyu.edu/rudincenter

2NEW YORK TRANSPORTATION JOURNAL

On February 7, 2008, and following its tradi-tion, the NY Wagner Rudin Center forTransportation Policy and Managementand its Council on Transportation recognized

the outstanding work of individuals andagencies that have advanced the quality andefficiency of the region’s transportation sys-tems. This year, the Public Leader awardwas conferred to the Honorable MayorMichael R. Bloomberg, for his ambitiousPlaNYC program. MTA New York City Transitreceived the Public Agency award for itsSmart Card Pilot Project. Accepting thisaward on behalf of MTA NYC Transit wereagency President Howard Roberts, Jr., ChiefOfficer Steve Frazzini, and Project DirectorPaul Korczak. James Clifford Greller of the

Hudson County Improvement Authority received the Public Serviceaward; and the Civic Leadership award was given to Jon Orcutt from theNew York City Department of Transportation, for his previous work at theTri-State Transportation Campaign.

In addition, during this ceremony the University Transportation ResearchConsortium (Region II), of which the NYU Wagner Rudin Center is a mem-ber, presented an award for the best faculty paper of 2007: “AnInvestigation on the Effectiveness of Joint Receiver-Carrier Policies toIncrease Truck Traffic in the Off-peak Hours” by Professor José Holguín-Veras, Michael Silas, John Polimeni, and Brenda Cruz.

Samuel Schwartz, from Sam Schwartz Engineering, was the Master ofCeremonies for the evening’s festivities, with last year’s Mistress ofCeremonies, Janette Sadik-Khan, now Commissioner of the New YorkCity Department of Transportation, passing a figurative sword — as wellas a literal one — to him during the event’s opening remarks.

New York Transportation Journal

Allison L. C. de Cerreño, PublisherBrian P. Sterman, EditorMarta A. Panero, Associate Editor

Editorial Board

John Falcocchio Gene RussianoffJosé Holguín-Veras Sam SchwartzRogan Kersh Hyeon-Shic ShinRobert Paaswell Rachel Weinberger Henry Peyrebrune Robert Yaro

2008 ANNUAL LEADERSHIP IN TRANSPORTATION AWARDS

The Honorable Michael Bloomberg, New York CityMayor, accepting the award for Public Leader.

Left to Right: Steve Frazzini, Paul Korczak and Howard Roberts, Jr. (MTA, NYC Transit);James Clifford Greller (Hudson County Improvement Authority); Allison L. C. de Cerreño(NYU Wagner Rudin Center); Samuel Schwartz (Sam Schwartz Engineering); Jon Orcutt(NYC Department of Transportation); and, José Holguín-Veras (Rensselaer PolytechnicInstitute)

Study (MAROpS) that need to beaddressed in order to facilitate more effi-cient freight (and in some cases, passen-ger) movement along portions of theNortheast Corridor. Similarly, there is theneed to address deferred maintenance onthe Northeast Corridor’s passenger railsystem and bring it up to a state of goodrepair. Three years ago, in 2005, the costof doing this was estimated at roughly $5billion — and this still will not make it a21st-century system.

A Call to Arms…So, what is the solution? Several steps arealready being taken. Around the country,various groups — AASHTO, APTA, and theNational Academy of Public Administra-tion among them — have been research-ing the issue and issuing reports, bothurging more attention and reviewing thepotential options and trade-offs. TheBuilding America’s Future non-partisancoalition was announced to work with thepresidential candidates on infrastructurefinance, of which transportation will bean important part. New York’s GovernorPatterson has just announced a blue rib-bon panel to examine how to find thenecessary financing for MTA.

However, more is required. First and fore-most, we still need a vision that incorpo-rates all modes, and both passengers andfreight at the national, regional, andlocal levels. The next round of trans-portation funding bills presents an oppor-tunity for the federal vision. One wouldhope that whoever becomes our 44thPresident will not miss this window sincetaking a step in this direction at the fed-eral level would aid all the levels of gov-ernment in doing so.

With that vision, however, it is alsoincumbent upon us as transportation pro-fessionals to do a better job of reachingout to the general public (as well as ourelected officials) to foster a betterunderstanding of our transportation sys-tems, particularly in the New York metro-politan region. We need to help foster thecoalitions that will support transportationoperations and infrastructure by makingmore explicit to people the importance oftransportation in meeting their dailyneeds and desires as well as in supportingour entire economic framework. We needto help increase the visibility of trans-portation in the public dialogue and gen-erate public and political buy-in. Onlywith these steps can we hope to begin togenerate the political will to make ourtransportation systems a priority.

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by over $50 million. (Needless to say,there is a lot of finger pointing going on,and plenty of blame to go around!)Whatever the reasons, letting $354 millionin federal funding slip away to other citiesas we head toward reauthorization of thefederal surface transportation bill wasshort-sighted. Arguing for a greater shareof the federal bill after turning moniesdown is not likely to be well-received, tosay the least.

The ProblemThe nature of the crisis has beendescribed in a variety of journals, associa-tion and non-profit reports, governmentdocuments, and news articles. In a nut-shell, our transportation infrastructure isantiquated, outdated, deteriorating, andin many cases no longer has the capacityto serve current or projected traveldemand. All of this at a time when theprices of basic infrastructure necessities —concrete, steel, petroleum — are rising,and the Federal Highway Trust Fund isapparently running out of money.

In the New York metropolitan regionalone, the list of projects is daunting. EastSide Access, Access to the Region’s Core(THE Tunnel), Second Avenue Subway,Extension of the Number 7 Subway Line,Restoration/Replacement of the TappanZee Bridge — these are but a few of themuch needed infrastructure projects, andindeed, necessities in the region. And,while each of these is a megaproject initself, they are in many ways just the tipof the iceberg. There are also much need-ed improvements at our marine and airports. Moreover, many of these projectsare needed to “catch up,” but even as weembark on building them, demand keepsgrowing. In fact, according to the FederalAviation Administration’s Terminal AreaForecast Summary: Fiscal Years 2006-2025, even if all the currently plannedimprovements are made at John F.Kennedy and Newark InternationalAirports, each of them will still run out ofthe capacity to meet demand by 2025.

Looking just a bit further beyond the NewYork metropolitan region, the list quicklygrows of projects that, while located inother areas, have tremendous implica-tions for the New York region. Amongthese, for example, are the variousprojects identified by the I-95 CorridorCoalition’s Mid-Atlantic Rail Operations

NEW YORK TRANSPORTATION JOURNAL

VOLUME XI NO. 2 SPRING 2008

Letter from the Editor (Cont. from p. 1)The Crisis in Transportation Finance (Cont. from page 1)

in the transportation community tohave these attributes. She furtherchallenges transportation profession-als to reach out to foster the public’sunderstanding of the issues and toform coalitions that will supporttransportation infrastructure andoperations.

The “vision thing” is furtheradvanced by Anne Canby in an inter-view with Rachel Weinberger. Canbyfocuses on the 2009 Federal trans-portation “authorization” (asopposed to “re-authorization”) bill,and the need for a clear statementof purpose, as well as a program,that ties into climate, energy, andeconomic issues.

In a following article, former U.S.Deputy Transportation SecretaryMortimer Downey discusses previoustransformational Federal legislationand the extensive time-frames andefforts leading up to their passage.With this as a backdrop, Downeycites the work of the two FederalCommissions which could set theframework for a new landmark“authorization.”

Kevin Corbett focuses closer to home,as he discusses the financing needs formaintaining and expanding the NewYork Metropolitan Region’s currenttransportation infrastructure, thefunding gaps of the MetropolitanTransportation Authority and NewJersey Transit, and the need for newstate-level dedicated financing pro-grams to close them. He raises PublicPrivate Partnerships (PPPs) as a meansfor helping to close the financingbreach.

Many agencies are using “pay-as-you-go” tolling on their roads or consider-ing it to pay off bonds to keep theroads in a state of good repair or toexpand them. Rena Barta writesabout the advantages of programmedtoll increases.

Funding alternatives, and particularlyPPPs, have become intriguing tomany states and municipalities as asource of revenue and a way torecapitalize and maintain their trans-portation facilities. The topic wasdiscussed by national and interna-tional professionals at a March 2008Rudin Center forum, “Public PrivatePartnerships: National andInternational Experience, LocalPossibilities,” which is summarized inthis edition of the Journal.

As always, we hope you enjoy read-ing this issue of the Journal and findit informative. More importantly, wehope that it inspires you to activelyparticipate in the efforts to producetruly landmark legislation at theFederal and State levels that willprovide transformational transporta-tion financing programs with newvision and purpose.

Allison L. C. de Cerreño, Ph.D., isDirector of the NYU Wagner RudinCenter for Transportation Policy andManagement, and NYTJ Publisher.

TRANSPORTATION FINANCING ISSUES

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RW: Anne, thanks for taking the time to talk to theJournal. Let’s start with your work to get the right trans-portation bill introduced and passed next year. Everyoneis talking about re-authorization of the federal trans-portation bill and you are talking about “authorization.”Is that because you see this bill as being as big a depar-ture from the Intermodal Surface TransportationEfficiency Act (ISTEA) family of legislation as ISTEA wasfrom the Federal Aid Highway Acts?

AC: Well, it needs to be about something different,whether it will be or not is another matter.

When the Interstate program was underway, demographicswere very different, energy cost was low, nobody knew whatclimate change was. That ran its course, and we cameup with ISTEA. Everybody thought it would be a sea change.It has caused some change, but we have lost ground inthe subsequent legislation. I would have to say the gamehas stayed pretty much the same. How it gets played is a lit-tle different; there are more funds for transit and in theoryyou can build a whole lot of bike paths and pedestrianamenities.

Today’s challenges are different. We have a mature roadnetwork. We have very incomplete and unsatisfactory net-works for everything else. To be relying on the one part ofthe network that is the most energy intensive and environ-mentally damaging of all our options is not in our nationalinterest. We need to invest in a way that moves us off thedependence on that network for so much of the travel thathappens today.

RW: What does that mean in real terms?

AC: That means taking a different approach. It means hav-ing a clear statement of national purpose, with a programstructure that mirrors the purpose. It means decision mak-ing in a way that reinforces accomplishment of the out-comes that are tied to the national interest, a fundingstructure that supports the national purpose and reinforcesit, and accountability for delivering outcomes that meet thegoals and objectives of the national purpose.

RW: Can you start to unpack that? I don’t think there isany national purpose defined.

AC: There was a declaration of policy in ISTEA. It was movedto the planning section of subsequent authorizations andgreatly watered down.

Without that kind of policy guidance we forget that trans-portation is a derived demand; it is not “the goal” buta means to an end. We forget that transportation existsto deliver goods and people to places, to foster economicactivity, social activity and social well-being. It has tobe provided in a context that recognizes both its roleand that there is a responsibility to do it in a way that doesnot endanger the future of the planet via climate change,and does not endanger our future economic competitive-ness. Those two things have got to become part of whatis viewed as inherent in the transportation mission. We mustcreate good access for both people and goods, but in a waythat diminishes our emissions, our overall demand, and ourenergy consumption.

RW: With such a long history of the transportation Actsbeing about building infrastructure, which, in fairness,was seen as the national interest when we started, isthere a path to get to this kind of transportation thinking?

AC: I think so. And I think it is very much in the new nation-al interest [reducing energy demand and carbon emissions],plus another area of national interest is addressing the needsreflected in the changing demographics of this nation. Weare aging. We have created metro regions where 2/3 of thepeople in this country live today. When we started planningthe Interstate System we were not a metro nation; theseregions have grown up in the auto age.

The challenge is to reinvent our metro areas in ways thatfoster travel options including transit, walking and bicyclingfor a much greater share of trips. You can’t do it with carsalone, it has to be mode agnostic. You can’t do it with trans-portation alone, it takes a compatible and integrated landuse plan because transportation demand is derived from theland use and development pattern.


When it comes to transportation systems and infrastructure, we are in a crisis. Demand continues to grow, but so do needsand costs. And, even as we seek new cost-cutting procurement strategies and alternative financing mechanisms, challengesrelated to energy, our carbon footprint, and security are moving to the forefront. The next federal surface transportationfunding bill will be coming at a particulary important time. With this in mind, Rachel Weinberger, Assistant Professor ofCity and Regional Planning at the University of Pennsylvania and a member of the Journal’s Editorial Board, inter-viewed Anne Canby, President, Surface Transportation Policy Partnership, on her perspective on the next bill and whywe need an "Authorization", not just a "Re-authorization" for federal funding.

THE NEXT “AUTHORIZATION”:

INTERVIEW WITH ANNE CANBY

Rachel Weinberger, Ph.D., is Assistant Professor ofCity and Regional Planning at the University ofPennsylvania, and a member of the Journal’s EditorialBoard.

RW: That is the holy grail of ISTEA. Howdoes it become reality?

AC: It becomes reality by having a clearstatement of purpose; one that ties intoclimate, energy and economic competi-tiveness. Then you make sure the pro-gram structure lines up with these issues.The Commission’s report [NationalSurface Transportation Policy andRevenue Commission] has a number ofkey features in it, proposals that move usin that direction. They also say ‘yes weneed more spending but we should nothave more money unless there is arestructuring of this program.’ Thecaveat is very important.

Then you identify the critical issues.Metro areas are critical, they drive oureconomy, they are where most peoplelive, where most of the congestion is,where most air pollution is and so on.This is where the issues are that affectthe majority of the population. You needto connect these metro areas. You needto recognize the gateways around thecountry through which goods pass. Andyou need to connect the gateways to thepeople. Then you have the non-metro, orout state areas, which have to beaddressed, you have a lot of people therewho need transportation, you cannotignore them.

RW: That raises a third big issue. Youcan define a national purpose thatinvolves environmental change, andpromotes energy independence, youcan see where the matchups are, asyou said, but the politics of it, what isthe political path?AC: It’s not clear that we know wherethat is yet. But we can’t get there with-out a program that has a purpose andinternal consistency.

We need to have a purpose and identifi-cation of the critical issues; of course, wehave the political question as well. Thenyou look at the program structure interms of what we ought to be doing, and



you see quite quickly what we’re doingnow doesn’t fit. Then you start to seewhat you have to create that makessense, so you look functionally across thekinds of investments, for example, as theCommission pointed out we have to worryabout safety; it cuts across all of theareas. The American AutomobileAssociation estimates the cost of crashesin this country as more than double thecost of congestion. Then you move toasset management and making sure thesystem is in a state of good repair. Thisprogram needs to be grounded in a set ofoutcomes that address the national inter-est. Whether the political system can getthere remains a big question. In recentmemory attention has been focused onfunding. We have to shift that focus tooutcomes.

RW: Do we need to commit to preserv-ing the entire system or can we de-emphasize certain elements?AC: Well, we need to have that discus-sion, but clearly some pieces are moreimportant than others. At DelawareDepartment of Transportation we had afocused preservation program and webased it on how much the system ele-ments were used. Some roads and bridgeswere more important than others.

RW: You had to tell somebody in somecommunity somewhere that they werenot so important… AC: What we told them is “here is thestandard.” Here is the standard at whichwe will maintain the roads in your area,and here is the standard we are going tomaintain the roads in this area and thestandard for the roads in another area.They are different standards, and theymade sense to people in the state and theimportant question was “how are wedoing against those standards?”

You have a clear sense of what each ofthe measures of performance is, and thenwork to get there. It’s the same on thetransit side. We cannot let those assetsfall apart.

So you have safety and asset manage-ment, then you have operations: how doyou make what you have function to itsmaximum efficiency? There is a lot thatcan be done with this, keeping traffic sig-nals timed properly, getting rid of acci-dents in order to manage traffic better,and to divert people, and let them knowwhat is going on, that is all coming along.

RW: Is most of that technology?AC: Some of it is. It is also management.

Anne Canby serves as President ofthe Surface Transportation PolicyPartnership (STPP), a national advo-cacy coalition for transportationreform. STPP’s goals are to strength-en federal transportation programsthat provide options to motor vehi-cles; enhance the livability of ourcommunities; improve safety forpedestrians and bicyclists as well asdrivers; provide access to economicopportunity for people of all agesand incomes, reduce demand forenergy and output of greenhousegases; and protect our cultural, his-toric and community assets.She served as Delaware’s transporta-tion secretary from 1993 to 2001.She is recognized nationally as a pro-gressive leader in the transportationfield for transforming a traditionalhighway agency into a multimodalmobility provider, and as an advo-cate for integrating land-use andtransportation planning. Prior to serving in this post, Ms.Canby led a consulting practicefocused on institutional and manage-ment issues, with particular empha-sis on implementation of the federalsurface transportation legislationenacted in 1991 (ISTEA).She has served as the Commissionerof the New Jersey Department ofTransportation, Treasurer of theMassachusetts Bay TransportationAuthority, and Deputy AssistantSecretary of the U. S. Department ofTransportation. She sits on the exec-utive committee of the Transport-ation Research Board and is on theBoard of the Mineta TransportationInstitute. She is a member of theUrban Land Institute, the Institute ofTransportation Engineers, and theWomen’s Transportation Seminar. She has been recognized for herleadership by the American PublicTransportation Association, theAssociation of Metropolitan PlanningOrganizations, the DE Chapter of theAmerican Planning Association, andthe Women’s Transportation Seminar.Ms. Canby received the 2006 CareyDistinguished Service Award for out-standing leadership and service totransportation research and to theTransportation Research Board.


“We need to invest in a waythat moves us off the depend-

ence on that [road]network.... It means having

a clear statement ofnational purpose, with aprogram structure thatmirrors the purpose.”


As the curtain comes down on the SAFETEA-LU era with theBush budget request for 2009, the last year of that author-ization, attention in Washington has already turned to thenext round of legislation. In theory, a new bill should be inplace by September 30, 2009 to continue funding for tran-sit and highway programs. Given the fact that there will bea new face in the White House and a substantial turnover inthe Congress, getting the measure done in short order willbe difficult. While Chairman Jim Oberstar (D-MN) expectsto get started on a bill shortly after the 111th Congress con-venes, most observers expect some delay in passage — pos-sibly to late in 2009 or into 2010. The example of SAFETEA-LU and the twelve extensions it required is always fresh inpeople’s minds.

However long the legislative process takes, the real test iswhat is produced, and hopes are strong that this bill will notonly be better than its pork-laden predecessor, but may seta new course for surface transportation. Opportunities fortransformational legislation occur infrequently and oftenthey take a long time to implement. While there was a his-tory of governmental support of transportation throughoutthe 19th Century, highlighted by such investments as theNational Road, the state-funded Erie Canal and the landgrants for transcontinental railroads, consideration of anongoing federal role began only in the 1890s, with the cre-ation of an Office of Road Inquiry in the Department ofAgriculture. More than 20 years of debate ensued before thepassage of a Federal Highway Act in 1916, establishing anongoing program to aid states in “getting the farmers out ofthe mud.”

This program of general road support continued on fordecades, growing in size during the Great Depression andcontracting in World War II, but basically the model of sup-port for locally oriented roads remained in place. Thoughtabout national investment in the form of a major highwaynetwork began in the 1930s under President Roosevelt whopersonally sketched out a network of superhighways, butreal legislative support did not come along until the passageof the Interstate Highway Act and the creation of theHighway Trust Fund under President Eisenhower in 1956.Responding to some of the negative implications of theInterstate System, President Kennedy recommended sup-port for mass transit, which occurred in the form of ademonstration program in 1962 and the passage of the firstUrban Mass Transportation Act in 1964.

Again, once established, this pattern continued in place fora significant period. While the 1978 Surface TransportationAct under President Carter set in motion a plan to completethe Interstate system, it was not until 1991 when a new eraopened. Under the leadership of Senator Daniel PatrickMoynihan (D-NY), the Congress passed the IntermodalSurface Transportation Efficiency Act (ISTEA), setting inplace a post-Interstate regime with flexible funding, more

local planning and decision making and a greater concernfor environmental and social impacts of our transportationinvestments. Subsequent bills, including the 1998 “TEA-21”Act and the 2005 “SAFETEA-LU” built on the ISTEA modelwithout necessarily improving it. Congress prevailed inrequiring greater assurance that user taxes would be invest-ed for the purposes raised, but also found themselvesbogged down in the “donor-donee” issues of state balancesbetween taxes paid and funding received. And, particularlyin SAFETEA-LU, the trend towards greater and greater “ear-marking” of individual projects, epitomized by Alaska’s

“Bridge to Nowhere,” left a public impression that all trans-portation spending was wasteful pork.

Concern over the future of the program and reaction to therevenue outlook that constrained the size of the SAFETEA-LU bill well below the hopes of many of its Congressionalpatrons, led to provisions calling for a serious look at thefuture before it was time to enact a new bill. In typicalfashion, the outcome went even beyond what many hadasked for. Congress embedded two separate Commissionswithin the bill, one reflecting the views of the Committeesand members who authorize spending, and one more ori-ented to the Committees whose obligation is to raise therevenues to support spending. After an initial and unsuc-cessful effort by the Bush Administration to gain a mergerof the two Commissions, members were appointed to each,and each has undertaken a program of policy research andevaluation that will help to shape the next round of legisla-tion. Many now believe that this legislation should be trans-formational in the way that the Highway Acts of 1916 and1956 and the ISTEA legislation of 1991 redirected program-matic, organizational and financial thinking.

FEDERAL TRANSPORTATION FINANCING

TRANSPORTATION AUTHORIZATION:TIME FOR A CHANGE?

BY MORTIMER L. DOWNEY, I I I

“Many now believe that [the next

round of] legislation should be

transformational in the way that the

Highway Acts of 1916 and 1956 and

the ISTEA legislation of 1991

redirected programmatic, organiza-

tional and financial thinking.”

Mortimer L. Downey, III serves as chairman of PBConsult, Inc., a Parsons Brinckerhoff subsidiary. He is aNew York University Wagner School alumn.



As the many stakeholders in the trans-portation community debate the future,the work of the two Commissions is help-ing to frame the issues, with some clearand very distinct options emerging. Firstto report was the National SurfaceTransportation Policy and Revenue StudyCommission. This 12-member organizationwas composed of four Presidentialappointees, including the Secretary ofTransportation, and eight membersappointed by the bi-partisan leadership ofthe Congress. Operating with a modestbudget and the support of the U.S.Department of Transportation, the mem-bers held hearings around the country,commissioned studies and involvednumerous transportation experts in theirdeliberations. After two years of effort,the Commission issued a divided reportearly in 2008. Nine members, including allof the congressionally designated individ-uals, supported a future direction withsubstantially increased federal support,based on their vision of how federal inter-vention could support national goals,through investment in freight movement,targeted aid to large metropolitan areas,and a focus on safety, among others.

Their vision was not constrained by avail-able resources, and in fact they supporteda need for much greater investment tomaintain and improve our systems, includ-ing a significant increase in federal sup-port for intercity freight and passengerrail. If these funds were all raised throughtraditional gas taxes, the increase overtheir 50-year planning period would be asmuch as 40 cents at the national level and60 cents at the state and local levels.This, of course, became the lead in allnews stories, overwhelming the discussionof transportation needs or the strongemphasis the Commission placed on anoutcome-based, performance-driven, andmode-neutral approach to transportationdecision making, as well as their findingthat the gas tax would eventually becomeoutmoded in an environment of manyalternative fuels and greater automotiveefficiency.

Countering the view of the nine-membermajority was a dissenting view authoredby the Commission’s chair, Secretary ofTransportation Mary Peters, and two otherAdministration appointees. The minorityreport conceded that there are significantunmet needs in many areas, includinggoods movement, but argued strongly fora future policy that moved away from gastaxes and government support, generallytowards a regime of direct user chargessuch as road and congestion pricing, witha much greater reliance on private sectorinvestors to provide transportation facili-ties. This policy direction has gained cur-rency in recent years, but most observers

view it as supplemental to and support-ive of general investment, not as a starkalternative. In any case, the two campswere unable to reach any consensus, andboth views will move forward into nextyear’s policy debate.

In addition to the major work of thePolicy Commission, the second legislatedbody, known as the National SurfaceTransportation Infrastructure FinancingCommission, is now under way. With 15members, 7 of whom were appointed bythe Bush Administration to match 8(including MTA Executive Director ElliotSander) appointed by the bi-partisanleaders of the Congressional tax commit-tees, this Commission is showing greaterinterest in new funding mechanisms andapproaches, arguing in an interim reportthat there would be benefit from earlier,rather than later, steps to replace the gastax with more direct user fees. A finalreport from this group is not due until2009, although the Administration hasurged that it be completed in 2008.

Paralleling these two federally-sponsoredCommissions, the various associations ofstate and local government such as theNational League of Cities and the Nation-al Governors Association sponsored anIntergovernmental Forum on Transporta-tion Finance. This group, chaired by yourauthor, reviewed issues of funding andprogram design, generally agreeing thatmore investment would be needed(although not all members supported taxincreases) and that future programsshould be much more focused on per-formance. Reflecting the interests of thegroup membership, the Forum reportstressed the importance of intergovern-mental cooperation in designing futureprograms and their means of funding.Without such cooperation, the actions ofany one level of government could easilynegate the steps taken by others.

With the completion of these reports,the stage is set for the debate in 2009.Presidential candidates this year haveoccasionally mentioned our infrastruc-ture needs, but will have to focus moreprecisely on plans as they submit legisla-tion. In the climate left by the Commis-sion reports, the Congress will ultimatelydecide issues of funding levels, programdesign, institutional issues and the basisfor accountability. If done well, their leg-islation should mark a new era in federaltransportation policy. Recognizing theimportance of such a step, most partici-pants in the policy debate have changedtheir line from “time for reauthoriza-tion” to “time for authorization.” Wehope that promise will be realized. Thestakes are high for the New York regionand for the nation.

SUMMARY OF LANDMARK

LEGISLATION IN TRANSPORTION

THE FEDERAL AID ROAD ACT OF 1916• First modern Federal road building

program• 50% federal share, with a pay-

ment limitation of $10,000 per mile

• Authorized $85 million over five years, with $5 million available in its first year

THE INTERSTATE HIGHWAY ACT OF

1956• Created the Interstate Highway

Program, providing for 44,000 miles of interstate highways to be constructed over 13 years

• Established the Federal Highway Trust Fund

• Authorized $25 billion, with a 90% federal share

URBAN MASS TRANSPORTATION ACT OF

1964• Established the first multi-year

authorization of transit capital improvement funding

• Supported up to a two-thirds federal share of projects with a comprehensive plan, or 50% without

FEDERAL-AID HIGHWAY ACT OF 1973• Allowed for Federal Aid Urban

Systems and Interstate Highway Funds to be flexed to Transit

• Raised the federal matching share for most urban mass transportation capital projects from 66.6% to 80%

• Established the Metropolitan Transportation Planning Process

INTERMODAL SURFACE TRANSPORTATIONEFFICIENCY ACT OF 1991

• Restructured the Federal High-way system and funding programs

• Promoted Intermodalism in the transport of goods and people

• Gave State and local officials more flexibility in the use of Federal funds

• Promoted advanced technologies to increase efficiencies

• Allowed Federal funds to be “flexed” across all programs

• Equalized local matching require-ments for federal grants across modes

• Tied transportation programs to State air quality implementation plans

REGIONAL TRANSPORTATION FINANCING

8 NEW YORK TRANSPORTATION JOURNAL

A DOLLAR AND A DREAM: WILL NEW YORK BE ABLE

TO FUND ITS CRITICAL INFRASTRUCTURE?

So far, 2008 has not been an inspirational year for thoselooking forward to New York reasserting its globalprominence in the 21st Century. In fact, it appears thatChina, a country with more rickshaws than automobiles20 years ago, is barely leaving us scraps when it comesto the global concrete and steel markets we need for ourinfrastructure.

Rising construction costs, the burden of post-9/11 securi-ty, tight budgets, and chaos on Wall Street have cast apall over much anticipated projects like the Javits

Center, Moynihan Station, and the Fulton Street TransitCenter. Even the continuation of the projects alreadyunderway, including East Side Access and the SecondAvenue Subway, is now seen as vulnerable.

Our leading transportation agencies have ambitious andcoherent capital programs. The Port Authority of NewYork & New Jersey has a $29.5 billion 2007-2016 CapitalInvestment Plan. The Metropolitan TransportationAuthority recently unveiled a similar sized $29.5 billion2008-2013 Capital Plan. Statewide, New York’s

Department of Transportation Commissioner Astrid Glynnhas submitted a $25.7 billion Transportation Plan to thelegislature for 2009-2014, while demonstrating the needfor $175 billion over the next 20 years.

Despite such plans, a look at the sources shows significantchallenges to obtaining the funding required before associ-ated projects can go from plans to actually being bid. Asfor looking to Washington for help, the picture is even lessrosy. While New York did relatively well in the past withrespect to federal funding for transit, help from

Washington is currently seen as being at least ayear away. Worse, given the current climate,the fight for federal dollars in theReauthorization bill that will be cobbledtogether in 2009 is likely to be even more dif-ficult than in the past.

NOT DEAD YET!

The challenge of funding transportation infra-structure critical to meeting the current needs,much less the demand of the next generation,may seem overwhelming, but there are a num-ber of core underlying trends that provide theunderpinning for resolving the crisis. Like mostother developed nations, the United States hasseen a shift from manufacturing to serviceindustries and a concentration of populationfrom rural to urban and suburban areas. Unlikethese nations, however, we are experiencingcontinued population growth. According to theU.S. Census Bureau, America’s population grewfrom 248 million in 1990 to 281 million in 2000,passed the 300 million mark in 2006, and isestimated to hit 420 million by 2050.

Despite the rise of new global competitors in the post ColdWar world, the United States stands to remain one of thelargest and most stable global economic centers fordecades to come. Nationally, New York remains solidly inthe lead as the nation’s commercial heart. According tothe U.S. Conference of Mayors’ March 2006 report, The

BY KEVIN CORBETT

Kevin Corbett is Vice President of DMJM Harris, andCo-chair of the NYU Wagner Rudin Center’s Council onTransportation.

Rendering of the Long Island Railroad "East Side Access" Terminal at Grand Central Station;http://weblogs.amny.com/news/local/tracker/blog/esa_gct1-thumb.jpg



Role of Metro Areas in the U.S. Economy,the Northeast megaregion (with New Yorkat its center) covers only 2 percent of the

total U.S. land area but has some 18% ofthe nation’s population and generatesone-fifth of the nation’s Gross DomesticProduct.

The metropolitan area growth trends areexacerbating the congested conditions ontheir aging, deteriorating and obsoleteregional transportation systems thatwere mostly conceived in the early partof the 20th Century when the country’spopulation was approximately 100 mil-lion. These pressures on the transporta-tion supply system are being felt inAlbany, City Hall, and Trenton in a num-ber of ways. These inadequacies arebeing widely identified as a critical prob-lem and, in some cases, as a potentialopportunity, in ways not taken seriouslyyears ago.

Initiatives like Access to the Region’sCore, Congestion Pricing, Transit Orient-ed Development and certain PublicPrivate Partnerships (PPPs), are all aresponse to the pressures of growth onthe New York Metropolitan Region’stransportation system. While scandalshave affected the political leadershipin some state houses, regional coopera-tion is at a level that has not been seensince the 1920s.

A LITTLE DEDICATION, PLEASE

The traditional method of funding muchof our transportation infrastructure,through fares and state and federalappropriations, was made more complexby the creation of independent authori-ties with the ability to independentlyaccess the capital markets. Unfor-tunately, this has allowed state govern-

ments to place onerous debt burdens onthe transportation agencies. Part of thecurrent crisis is a result of the abandon-ment of sound business principles whenfare and toll increases are deemedundesirable or unfeasible. However, thecrisis is also a result of New York’s andNew Jersey’s state appropriation priori-ties which have neglected the needs oftheir transportation systems and haveallowed both governors to fund projectsthat are not integral to their agencies’core missions, reducing the monies theagencies have for necessary projects.

“Maxed out on their credit cards,” ourtransportation authorities recentlyrevisited their traditional wells.NJ Transit approved a 9.6% fare increasein April 2007, the MTA approved anaverage 3.85% fare increase inDecember 2007, and the Port Authorityraised its tolls 33% and PATH fares 17%in January of this year. Following suit,the New York State Thruway is current-ly seeking up to a 10% increase in tollson its facilities.

The agencies and the governors whocontrol their boards have taken thesesignificant steps; however, these fundslargely cover only the needs of main-taining the existing systems (somethingthat should not go unappreciated). Aperennial funding gap remains for proj-ects critical to expanding system capac-ity. The region’s governments’ inordi-nate dependence on volatile revenuesgenerated by Wall Street in the currenteconomic climate leaves little hope forthe traditional state appropriation tofill the gap. Both advocates and politi-cal leaders are looking for differentways to provide a dedicated fundingstream to fund critical projects.

The use of tax increment financing forfunding projects, like the $2.1 billionextension of the No. 7 subway line, andcapturing revenue from other transitoriented development has helped fundselected projects, but is not widelyseen as a reliable source of revenue forthe broader systems.

Mayor Bloomberg’s 2007 push for con-gestion pricing, which would have pro-vided such a dedicated revenue stream,was widely viewed by the politicalysavvy as dead on arrival at the New YorkState Legislature. The State Traffic

“Rising construction costs,

the burden of post-9/11

security, tight budgets, and

chaos on Wall Street have

cast a pall over much

anticipated projects.”

NEW YORK METROPOLITANREGION CAPITAL PROJECTS

The following is a list of themajor capital improvementprojects currently underwayin the New York metropoli-tan area:

East Side AccessInitially expected to cost$6.3 billion and open in2013, gaps in constructioncosts have delayed the proj-ect to at least 2015.

Second Avenue SubwayIn 2004, the entire projectwas expected to cost $17billion, with Phase I com-pleted by 2011. The $4.1 bil-lion Phase I is now projectedto be completed in 2015.

7 Train ExtensionThe price tag for this projectis $2.1 billion with a comple-tion date of 2013.

Fulton Street TransitCenterIn March 2008, the MTABoard approved a budget of$1.198 billion. The comple-tion date is to be deter-mined, pending resolution ofopen design issues.

South Ferry TerminalOriginally slated for a 2007opening, completion of thisterminal is now projectedfor early 2009.

Other capital improvementprojects are under consider-ation, including:

• Access to the Region’s Core/Trans-Hudson Express Tunnel

• Bayonne Bridge

• Cross-Harbor Freight Tunnel

• Daniel Patrick Moynihan Station

• Long Island RailroadThird

Track

• Tappan Zee Bridge


THE BENEFITS OF PROGRAMMED TOLL INCREASES

10

The Highway Act of 1956 provided for the largest publicworks expenditure in U.S. history. It was conceived as a“pay as you go” system that would relyprimarily on federally imposed userfees on motor fuels. The federal fueltax would provide 90 percent of thecost of construction with the balanceprovided primarily by state user fees.

Fuel tax, the traditional roadwayfinance mechanism, is declining asa result of many factors, resulting in astruggle by the states to fund badlyneeded roadway construction, main-tenance and operations. The standardcombination of fuel tax revenues andfunding from state and local govern-ments is dangerously close to beinginsufficient to construct essentialinfrastructure expansion projects, andmaintain and operate our roadwayssafely and reliably.

Toll roads have long been a staple inthe funding mechanism of road sys-tems. In 1776, economist Adam Smithnoted: “When the carriages whichpass over a highway or bridge paytoll... they pay for the maintenance ofthose public works exactly in proportion to the wear andtear which they occasion of them. It seems scarcely pos-sible to determine a more equitable way of maintainingsuch works.”

As the need to identify funding expands, states that donot currently have “pay as you go” systems are consider-ing these alternatives in the form of toll roads, conges-tion charging projects or high-occupancy toll lanes.States that have “pay as you go” systems are consideringexpanding their systems. While existing toll systems aregenerally accepted, the construction of new toll roads,application of fees to existing untolled roads, and tollincreases are seriously challenged by the public andelected officials.

Toll Funding Alternatives

The U.S. Congressional Budget Office analysis precedingthe current reauthorization of federal highway program-ming indicated that “… given present constraints on pub-lic money available for new highway construction, toll


ROAD FINANCING

BY RENA BARTA

financing can speed the completion of a new road by asmuch as several years. As a result, the economic benefits

of new highways may be realized sooner than under tax-supported financing.”

Toll increases are an obvious method of increasing roadinfrastructure revenue. Often, the agency retains this rev-enue for its operations. However, in cities such as NewYork, a portion of the toll revenue is used to fund masstransit and elsewhere, revenue is used for statewide roadinfrastructure projects.

There are basically two methods for the implementation oftoll increases. Many toll agencies initiate the toll increaseprocess upon determining the need for additional funding.Other agencies project the need for funding over severalyears and determine a series of programmed toll increasesto support the projected funding requirements. To someextent, the programmed toll increase approach is born out

Rena Barta serves as Associate Vice President,National Tolls, at PBS&J and is the DeputyMembership Chair for WTS, GNY Chapter.

Photograph of a New Jersey Toll Facility. http://upload.wikimedia.org/wikipedia/commons/thumbs/b/b0/New_Jersey_Turnpike_toll_gate.jpg/800px-New_Jersey_Turnpike_toll_gate.jpg



needs of our region.” Additionally, anannual rate increase plan was adopted.This increase was only the third suchincrease in the Harris County Toll RoadAuthority’s 20-year history. The schedulethat is currently in place is set for twentyyears and will be re-evaluated every fiveyears to ensure it is maintaining its desig-nated purpose.

For the Harris County Toll Road Authority,the new rate schedule is based ona plan that adjusts toll rates annuallyby either two percent or by the Consu-mer Price Index (CPI) relative to thisregion’s economy. Rate adjustments willbe rounded to the nearest nickel for EZTAG rates and to the nearest quarter forcash rates.

The Pocahontas Parkway in Virginia alsohas a schedule of toll increases; however,they may choose not to increase tollsto the maximum allowable amount ata particular point. For example, thePocahontas Parkway received approvalto raise the tolls by 50% in January 2008but they have decided to do it in a two-stage approach. The agency determinedthat increasing tolls in two stages ratherthan all at once would make it easier forcustomers to adjust to the new toll prices.

Therefore, the Pocahontas Parkway’s tollsincreased by 25% in January 2008, withanother 25% increase expected no earlierthan January 2009.

of the desire to limit repeated requestsfor rate adjustments, but it also helpsagencies with planning since they havea more reliable source of reserves.

Experience with As-Needed TollIncreases

Many toll agencies rely on as-neededtoll increases. The Virginia Departmentof Transportation applies such a policyfor the Dulles Toll Road. In 2005, tolls onthe highway were increased for a spe-cific project. This was the first and onlytime since the road opened in 1984 thattolls were increased. In order to raisetoll rates again, Dulles Toll Road wouldneed to present the need and justifica-tion for the increase to theCommonwealth Transportation Board.

In New Jersey, Turnpike tolls have onlyincreased five times in 51 years. Thelast time was in 2003. Tolls on theGarden State Parkway are currently$0.70 at a mainline toll or $0.35 at ramptolls and have only been increased oncesince its opening in 1989. The July 2005Regional Plan Association report,Putting the Trust Back in the NewJersey Transportation Trust Fund,notes, “(by) June 30, 2006, New Jerseywill have depleted almost all of the rev-enue sources it now uses to pay the costof maintaining and building its road andmass transit system.” The report con-tinues to predict dire conditions forNew Jersey’s transportation infrastruc-ture. The State is currently wrestlingwith this issue.

Experience with Programmed TollIncreases

There are several examples of pro-grammed toll increases across thecountry.

The Harris County Toll Road Authority inHouston, Texas, decided to adopta schedule of toll increases to ensurethat funds for maintenance and orderlyimprovements of the Harris County TollRoad system keep pace with the cost ofinflation and, in turn, the cost of mate-rials, labor, equipment, and contractorsinvolved in their operations. HarrisCounty Commissioners Court approved asystem-wide $0.25 toll rate increase,effective September 3, 2007 “to keepour toll roads in top shape and expandthe system to meet the future mobility


The NYU Wagner Rudin Center forTransportation Policy & Managementacknowledges the following entitiesfor their generous support in 2008.

RUDIN CENTER SUPPORTERS

“The standard combination

of fuel tax revenues and

funding from state and

local governments is

dangerously close to

being insufficient to

construct essential infra-

structure expansion proj-

ects, and maintain and

operate our roadways

safely and reliably.”

BenefactorsEdison PropertiesMetropolitan Transportation

AuthorityThe Open Planning ProjectJack Rudin The Rachel and Lewis Rudin

Family Foundation, Inc.University Transportation

Research Center Region 2

Sponsors and ContributorsBombardier Transportation Con EdisonDMJM HarrisGeneral Contractors

Association of New York, Inc.New York State Laborers’

Employers’ Cooperation and Education Trust Fund

PB

Patrons and FriendsAmerican Council of Engineering

Companies of New YorkAmerican Engineering Alliance ARUPTerence Boyle, Esq.CSX TransportationCubic Transportation SystemsHatch Mott McDonaldKiewit Construction Co.League of American BicyclistsMannat, Phelps & Phillips, LLPMunicipal Art SocietyNew York Building CongressNew York City Economic

Development CorporationConstantine Sidamon-EristoffSTV IncorporatedThornton Tomasetti GroupTransportation Alternatives

Project SponsorsFederal Highway AdministrationMetropolitan Transportation

AuthorityMineta Transportation InstituteNew York City Department of

TransportationNew York Metropolitan

Transportation CouncilNew York State AssemblyNew York State Department of

TransportationPipeline and Hazardous

Materials Safety AdministrationThe Port Authority of

New York & New JerseyVolvo Research and Educational

Foundations

12 NEW YORK TRANSPORTATION JOURNAL

Devolution is often thought of as eliminating the federalrole. But we are suggesting distributing a greater share ofthe decision-making authority to metro regions along witha proportional share of the federal money. The metroregions should be empowered to figure out their trans-portation investment strategies against the federal purpos-es. We are talking about devolving a greater responsibilityfor project selection to local decision-makers, but withaccountability to assure their decisions and the funding areconsistent with the national purpose.

California is the only state that directs a significant shareof money to the metro areas. In my view, the states wouldbe doing themselves a huge favor if they off-loaded someof the responsibility and authority to the metro areas.

Here’s another idea. What if the long-range plans were sub-ject to environmental review? This could greatly simplifythe project level environmental review and it would give usa much better handle on the cumulative impacts and itwould get us thinking much more in terms of moving peo-ple and goods not buses, trucks and cars.

RW: I’d be remiss if I didn’t ask you where the moneyshould come from. Is it still gas tax?AC: Part of it is; I don’t think we can do without it, at leastnot in the near term.

RW: And the Commission’s idea about increasing it 5 to 8cents per year, for five years and then indexing it toinflation? AC: I think it’s a reach. Trying to do an increase in gas taxwith the same program is a non-starter. On the other hand,it has been demonstrated in communities across the coun-try, when people know what they are buying and they likethe product or the prospective product, they are willing topay for it. This has not traditionally been in the gas taxarena, it has been in sales tax, which is very regressive butthat is what referenda at the state and regional levels areshowing. My guess is that it wouldn’t be that different, ifthere were a program that people were willing to buy, theywould favor an increase in funding at the national level. Ahuge political challenge to increasing the gas tax is the ris-ing cost of gas.

RW: And the minimum return guarantee? AC: That is a huge question. Can policies and programmat-ic outcomes be the driver of this program as opposed toprojects and return of contributions to the federal trustfund? Now the program is very much about how much ofwhat a state sends to Washington does it get back and howmany earmarked projects can members of Congress get tosatisfy their constituents. If we can’t get out of that box,we will never get to the policy issues.

RW: So what are the federal options?AC: One opportunity would be to align the revenue sourceswith programmatic outcomes. A carbon tax offers such anopportunity. Public private partnerships may offer someopportunities, but I am very leery of monetizing publicassets and turning them over to the private sector. The pub-lic is also clear in their view — that the roads and bridgesin their community are public assets and should remain

It is acknowledging that you have an asset that you areoperating. The transit people get that they are operatingbecause they do it every day; roads people get it less,because their culture has been about construction. Theyare builders and they don’t think about operating as much.They are learning, but they have been behind the curve.

Another one is new capacity, so you take safety, preser-vation, and operations, then you set up a system to lookat capacity requirements both within the metro areasand for intercity connectivity. New capacity shouldn’t behighway; it needs to be mode agnostic. But the perform-ance thresholds now have to include climate and energy.This requires looking at outcomes that encompass morethan congestion relief and travel time. Efficient, lowenergy, low carbon systems that provide access for peo-ple and goods should be the goal. The performancemeasures have to include balance, system redundancy,access, emissions….

RW: Historically, that has been very difficult for our pro-fession. Even the Commission report only mentionsdelay and VMT as exemplar performance measures.Typically we use VMT to justify more highways.AC: Right, so maybe we have an inverse relationship wherelower per capita VMT is at the head of the list for fundingand higher VMT is at the bottom.

RW: So now, with those performance measures, you aregoing to run up against the old school of thought thatsays ‘this is what people want, that this is the choice ofthe people.’AC: People are not choosing it, they are using it becausetheir choices are really very limited.

When we think about the density of the road network wehave to think about the density of the transit service, whatpercent of the population even has an option to use tran-sit? What percent of the area offers safe pedestrian facili-ties? What percent of the region has good bicyclingoptions? People don’t use these modes because the facili-ties are not there. You get into those circular arguments:no one does it so we are not going to build it. When youhave good facilities matched to appropriate developmentpatterns people use them.

RW: What else should we look for in the next authoriza-tion?AC: Devolution. But not giving up the federal role.

Inteview with Anne Canby (Cont. from page 5)

“...we are suggesting distributing agreater share of the decision-makingauthority to metro regions along witha proportional share of the federalmoney. The metro regions should beempowered to figure out their trans-

portation investment strategies againstthe federal purposes.”




Advantages of Programmed TollIncreases

Toll increases are necessary when anagency needs to meet bond covenants

or to fund capital projects. Recom-mending an increase at the timethat the funding is needed limits anagency to a short-term solution thatrepeatedly raises the agency’s reve-nues and budgeting efforts to the publiceye and does not permit an agencyto conduct the long-term planningto keep facilities maintained and in astate of good repair.

The programmed tollincrease approach offersmany substantial bene-fits. From a budgetingand financial pespective,programmed toll increas-es support an agency’slong-term planning ap-proach to capital pro-gramming and majormaintenance require-ments. Agencies oftenhave 5- and 20-year capi-tal programs to addressthe long concept-to-com-pletion cycle necesitatinga long term-planningapproach. Without fund-ing certainties, agenciesoften identify their needsfar in ad-vance of the work scheduleand then hope that the funding will beavailable when needed. Programmedtoll increases provide the agency withreasonable knowledge of availablefunding, and the ability to prepare longterm budgets and then program thework responsibly and efficiently.

Another benefit of programmed tollincreases is the reaction from thefinancial market. Financial analystshave noted that New Jersey’s plan forregularly scheduled toll increasescould improve investor confidence andcredit ratings.

Administrative benefits depend on anindividual agency’s process. Oftenafter programmed toll increases areapproved through the routine process,there may not be a requirement tohold public hearings. Many agencieswill still return to their Boards forapproval. This approach eases anagency’s obligation concerning time,personnel and financial resourcesrelated to the toll increase hearingprocess. However, as with all rateincreases, modifications will berequired to operational details such assignage, applications, printed materi-als, web site and other materials thatcontain the toll amount.

From the customer’s perspective,the anticipation of smaller tollincreases is desirable. The sting tothe pocket book, although felt morefrequently, is generally believed tobe less painful than bigger, harder hit-ting ones that are felt from the “asneeded” increases.

Over time, more existing state andlocal transportation agencies areexpected to adopt an approach of pro-grammed toll increases, while newagencies begin their operations withsuch an approach.

Programmed Toll Increases (Cont. from page 11)

DIRECTOR’S ADVISORYBOARD

The Director’s Advisory Boardprovides general guidance tothe Rudin Center’s Director, Dr.Allison L. C. de Cerreño, as shedevelops programs and re-search initiatives.

Constantine Sidamon-Eristoff, Chair

Mark BoddenTerence BoyleJane ChmielinskiRod DiridonMortimer Downey, IIIEmil FrankelAlan FriedbergJerry GottesmanRobert PaaswellRogan Kersh (ex-officio)

COUNCIL ONTRANSPORTATION

Representing major private andnonprofit sector organizations,the Council on Transpor-tation is a bipartisan groupcreated by the NYU WagnerRudin Center, committed toimproving transportation in thedownstate New York region.

Kevin Corbett, Co-ChairAlan Friedberg, Co-ChairRichard AndersonTerence BoyleAllison L. C. de CerreñoJohn DionisioBeverly Dolinsky Mortimer Downey, IIIPhil DupuisRonald EricssonWilliam GoetzMark GortonJerry GottesmanGregory HodkinsonFrancis McArdleJames MeliusSteven PolanRichard RavitchMaryanne RobertsWilliam RudinGene RussianoffSamuel SchwartzDominic ServedioKate SlevinRichard TomasettiRichard TreneryChris WardRobert YaroJeff Zupan

Texas Turnpike Authority Toll Collection Gantry; photograph by PBS&J.

“From a budgeting andfinancial perspective,

programmed tollincreases support anagency’s long-term

planning approach tocapital programming

and major maintenancerequirements.”

14

region’s marine terminals, constructing the Cross-HarborFreight Tunnel, and building new or upgraded airline ter-minals. The owning agencies may be reluctant to cede con-trol to an external party, but the ability to accelerate proj-ects that would otherwise languish will drive the need tobring in some level of private investment to advance them.

LAST BUT NOT LEAST

Left largely to fend for themselves by the federal govern-ment, states have long given up on a significant increase infederal funding, but as with congestion pricing in New YorkCity, conventional wisdom may prove wrong. The currentdepletion of the federal trust fund has brought increasingpressure in Washington for finding a new paradigm for thenext transportation bill.

America 2050, an initiative of the Regional PlanAssociation, has gathered leading civic, business, and gov-ernment leaders from ten major megaregions around thecountry to discuss the key issues challenging these centersof the nation’s population and economic activity. A bipar-tisan attempt at a national agenda for reinvesting in ournation’s infrastructure has been gathering steam inWashington. Indeed, there was a significant, albeit unsuc-cessful, push to include infrastructure investment in therecent economic stimulus bill. Citing the Gallatin Plan ofthe early 1800s and Theodore Roosevelt’s National Confe-rence in the early 1900s, representatives like CongressmanJerrold Nadler, Congressman Earl Blumenauer, and SpeakerNancy Pelosi are pushing to make transportation infra-structure an issue in the upcoming presidential elections.

Overall, the next year will determine if New York will con-tinue to “live life on the edge” when it comes to fundingits transportation infrastructure. However, the ingredientsand pressures are there for the passage of a more robustand dependable combination of funding mechanisms thatmay well surprise many people.

A Dollar and a Dream (Cont. from page 9)


Congestion Mitigation Commission, working with civic,environmental and business advocates like the EmpireState Transportation Alliance and the Partnership forNew York City, crafted a significantly improved planthat would have addressed nearly half of the MTA’s$9 billion gap for completion of existing expansion proj-ects as well as new expansion projects. Although theplan was not adopted, the fact that it gained such a sig-nificant level of support (it was approved by the NewYork City Council) indicates wide recognition of theneed for reliable multi-year transportation funding.

SPEAKING OF NOT DEAD YET…Americans, and especially New Yorkers, do not like tothink of themselves as being behind the curve, but incomparison to other countries we are definitely behindthe curve when it comes to embracing the private sec-tor for transportation funding.

The PPP market has had its advocates since GreatBritain embraced it in dramatic fashion in the 1980s.Ironically, the private sector is now more accepted incommunist China and other formerly communist coun-tries than in the United States. Due in part to thetraditional and legal framework of federal and statefunding, negative publicity associated with severalpoorly designed PPPs (e.g., State Route 91 inCalifornia), and pure political battling, the metropoli-tan region is still seen as unfertile ground for PPPs.Governor Jon Corzine’s efforts for monetization of theNew Jersey toll roads has been met with significantopposition (though Governor Ed Rendell in Pennsylvaniaseems to be faring better with a similar effort on thePennsylvania Turnpike).

While there are few who see PPPs as a realistic sourceof funding for the bulk of the region’s transportationneeds, there are significant projects whose fundingneeds remain unaddressed in any of the current capitalplans, and which could be attractive to privateinvestors. These include replacement of the Tappan ZeeBridge and Bayonne Bridge (the latter to accommodatelarger vessels bound for Port Newark), expanding the

Photograph of the Governor Malcolm Wilson Tappan Zee Bridge over theHudson River; http://home.fuse.net/ard/jandress/Prod.html

“Citing the Gallatin Plan of the early1800s and Theodore Roosevelt’s

National Conference in the early 1900s,representatives like CongressmanJerrold Nadler, Congressman Earl

Blumenauer, and Speaker Nancy Pelosiare pushing to make transportation

infrastructure an issue in the upcomingpresidential elections.”

15

under public control. It seems the gov-ernment would be unwise to cede controlof what is viewed as a public asset to aprivate entity, especially in the after-math of the Indiana Toll road deal whichmade a lot of people unhappy. The chal-lenge and opportunity is to find a way toleverage public and private resources insupport of the national interests.

RW: What does the future look like forbig cities? Really, I’m asking: is thefuture bright for New York? AC: It certainly could be, it certainly shouldbe. In many ways New York is in greatshape. The per capita exposure to higherenergy prices is low because of the richnessof the transportation system, the same istrue for global warming — the greenhousegas emissions are lower. That is a huge ben-efit, or asset, on the energy side.

RW: But you know the MTA justreleased a $20 billion dollar capital planwith a $9 billion dollar hole in it. AC: Well this is where we have the dis-cussions about allocating more responsi-bility to the metro regions to figure outtheir investment strategies. It’s impor-tant to meet the US Mayors’ climate chal-lenge regionally. Coming together with astrategy that does that and keeps theregion competitive is key. Not to saythere is enough money, but figuring outwhat the regions need to stay attractive,to keep passengers and freight moving…this can’t be done entirely at the statelevel. The successful initiatives will be atthe regional level, so we have to figureout how to make the federal program andthe state programs work to get smarterinvestment strategies at the regional andlocal levels. At the end of the day, it is allone transportation system from the localbike path to the interstate highway.

RW: I get from you what the ideal billstarts to look like. What do you thinkwe will actually accomplish?AC: The sign of optimism is that we havea crisis and a crisis creates leverage.Because the Federal Trust Fund is takingin less money than it is spending we haveto do something. There is certainly aneed for tremendous leadership at boththe administration and the congressionallevel for something new to happen butthe opportunity is there.

We need everybody thinking about this,because the challenges are huge, and weneed to speak with a clear, unified voiceif we want to move this bill in a more sus-tainable direction.



Key Elements for Success

Both Schmidt and Narefsky emphasizedthat there are several critical elementsfor success when arranging for PPPtransactions. First and foremost, is theneed for a transparent and competitivebidding process, open to all qualifiedbidders world-wide. Indeed, this ques-tion was raised during the discussionafterwards, with one participant notingher concern regarding the selling of U.S.assets to non-U.S. companies. The pan-elists suggested that while this concernis raised from time to time, it is largelya non-issue. Moreover, in privatizing ourinfrastructure, American jobs remain inthe United States, along with much-needed capital.

Schmidt and Narefsky also stressed theimportance of taking politics out ofdecisions on PPP transactions, in effectrelying solely on price for the final deci-sion. Interestingly, Gourgouillat dis-agreed, suggesting that the French andBritish experiences have shown theimportance of making such decisionsbased not only on price, but also on theexperience and reputation of the com-panies involved.

In addition to transparency, Schmidtnoted that to attract private interest,the assets in question must be revenueproducing; and, ideally, private partnersshould be able to have a monopoly orquasi-monopoly to ensure stability andpredictability. Private operators mustbring added value to realize substantialreturns and increase political support.With respect to this last point,Gourgouillat noted that the private sec-tor tends to be better at managing tech-nical and financial risks, controllingcosts and schedules, providing goodservice quality, and innovating. Hepointed out that PPPs do not alwaysoffer a less expensive approach to proj-ects, but they can often be faster andmore innovative.

Conclusion

PPPs offer one potential solution formeeting our transportation financeneeds in the United States. As such, theyare just one of many possible tools, andGourgouillat cautioned that PPPs do notalways represent the best option. Heexplained that PPPs cannot compensatefor lack of profitability, and bad projectsdo not become good ones just becausethere are private monies involved.Nevertheless, under the right circum-tances, PPPs can be highly successful.

Rudin CenterHighlights

UPCOMING EVENT

WednesdayJune 4, 2008

8:30 am - 1:00 pm*

Closing the Gap:Financing the Region’sTransportation Needs

NYU Kimmel Center Rosenthal Pavilion

RSVP information online at:www.wagner.nyu.edu/rudincen-

ter/conferences/

*(registration and breakfast startingat 8:00am)

UPCOMING PUBLICATION

IntegratingTransportation andLand Use Planning:

FacilitatingCoordination Across and

Among Jurisdictions

A Guidebook

Funded by the NYMTCSeptember 11th Memorial

Program for RegionalTransportation Planning

by Allison L. C. de Cerreño

FEATURED PROJECT

Urban TransportationBenchmarkingPartnership

This benchmarking study isfunded by the New YorkState Assembly through theNew York State Departmentof Transportation. The pur-pose of the project is toestablish relationships withforeign transportation agen-cies and academics, to havea mutually profitable and on-going exchange of ideasabout new technologies, newapproaches to funding trans-portation investments, bestpractices, as well as policyinnovations.

Interview with Anne Canby (Cont. from page 12) Public Private Partnerships (Cont. from page 16)

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Together, the three speakers broadlydescribed U.S. and European experienceswith Public Private Partnerships (PPPs).While their focus was primarily on trans-portation, they also described privatiza-tion efforts aimed at water sanitation,waste management, and energy facilities,as well as recent interest in privatizingstate lotteries. With respect to transporta-tion, they highlighted the fact that whilemany people equate privatization with tollroads, PPPs have been and can be used formany different transportation facilities.Among the examples beyond highwaysthat the panelists described in the UnitedStates and abroad were public transit sys-tems, airport facilities, marine port facili-ties, high-speed rail systems, and off-street parking facilities.

The following paragraphs summarize someof the highlights from the presentationsand discussion that followed.

The Value of PPPsAccording to Schmidt, the value of privati-zation of transportation assets derives pri-marily from two sources. First, the valueof an asset increases over time in privatehands since private operators are moreeasily able to raise tolls, and capital costscan be significantly reduced. Second, thepublic sector can recover the equity in itsassets, both because the asset increases invalue over time and because long-termequity in U.S. infrastructure has tremen-dous value in the world market. Indeed,Schmidt suggested that PPPs make a gooddeal of sense if the public has better usesfor the capital.

Two well-known U.S. examples wereused to illustrate these points. In 2005,the City of Chicago agreed to leasethe Chicago Skyway, for 99 years and $1.85billion, to the Skyway Concession Com-pany, LLC. Similarly, in 2006, the State ofIndiana signed a $3.85 billion, 75-yearlease agreement with the consortiumof Cintra and Macquarie for the IndianaToll Road. Schmidt explained that the ben-efits of these transactions were immediateand far reaching.

PUBLIC PRIVATE PARTNERSHIPS: NATIONAL ANDINTERNATIONAL EXPERIENCE, LOCAL POSSIBILITIESOn March 25, 2008, the NYU Wagner Rudin Center for Transportation Policy &Management held a panel regarding Public Private Partnerships: National andInternational Experience, Local Possibilities. The Center’s Director, Allison C. deCerreño, moderated the panel. Speakers included Sébastien Gourgouillat,Transportation and Construction Attaché from the Embassy of France, and DavidNarefsky and John Schmidt, both Partners at Mayer Brown LLP in Chicago, IL.

For example, the City of Chicago used theproceeds to pay off $400 million in citydebt, which helped raise its bond ratingand significantly reduced its financingcosts. In the case of Indiana, $3.8 billionof the proceeds have been dedicated toits transportation infrastructure program— the only fully funded transportationprogram in the country.

Another less well-known example is theChicago Underground Parking System,owned by the City of Chicago andChicago Park District, which was recent-ly leased to Morgan Stanley Infrastruc-ture Fund for $563 million. The assetvalue of the properties (4 connectedgarages with 9,000 spaces) increasedquickly because the private operatorwas able to more easily raise parkingrates to market values, seize opportu-nities related to special events, substan-tially reduce the cost of major recon-struction on one garage, and improvesignage, the latter leading to new rev-enues from advertising and concessions.As with the Skyway and the Indiana TollRoad, some proceeds were used to par-tially pay off Millennium Park bonds thatwere draining city revenues, but themajority of the proceeds were used forcapital improvements in neighborhoodparks. This funding was particularly wel-come since the Chicago Park District hadnever had sufficient monies for a capitalprogram before. Chicago is now lookingto privatize its on-street parking system,an undervalued asset in every city.


“...PPPs cannotcompensate for lack ofprofitability, and bad

projects do not becomegood ones just because

there are private moniesinvolved.”

new york volume xi no. 2 spring 2008 transportation …

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