Monday, April 10, 2006

Poole/Reason on Tx DOT

Sorry for the late kickoff post this week. Just a quick pass-along this morning from Bob Poole's latest Surface Transportation Innovations newsletter at Reason. Oddly, I got this excerpt out of their email newsletter, but it doesn't seem to be up on their web site yet. He has some interesting and favorable things to say about Texas' approach to solving mobility challenges:

Texas Wants Long-Term Concessions

I’ve said before that Texas is far in the lead in defining 21st-century highways—and TxDOT laid down another marker in January. At a half-day workshop attended by over 400 people, senior officials laid out their plans to make use of the Texas version of public-private partnerships, called comprehensive development agreements (CDAs) in Texan. The bottom-line message is that TxDOT is taking a very aggressive approach to using all the tools the legislature gave it in 2003 and 2005. And while all forms of PPP are available (beginning with plain old design-build), TxDOT made clear that its preferred model is the long-term concession. Why? Because it maximizes opportunities for large-scale, self-supporting toll projects and transfers significant risk from taxpayers to investors.

You can get a nicely presented overview of the rationale for the whole program, called the Texas Transportation Challenge, by clicking on: There you will find that while roadway use is projected to grow by 214% over the next 25 years, highway capacity will increase only 6% with a business-as-usual approach. That’s because current transportation revenues (mostly state and federal fuel taxes) can do little more than keep pace with the need to maintain and rebuild the existing highways. To achieve an acceptable level of mobility by 2030, Texas must close a funding gap of $86 billion.

And that’s what they intend to do via tolling and CDAs. The workshop included a detailed Powerpoint presentation (available on the txdotnews/cda_index.htm portion of the TxDOT site) that explains the overall program, lists current projects being considered for, or already moving forward as, CDAs, and gives highlights of high-profile projects like the first two Trans-Texas Corridor projects, TTC-35 and TTC-69. It also explains how TxDOT will assist private partners in making use of the federal TIFIA and PAB programs. And it emphasizes that TxDOT welcomes unsolicited proposals in addition to planning to issue many RFPs for projects it has identified.

There’s no question that states and urban areas are in competition as good places to live and do business. Some, like Texas, are adopting aggressive approaches to reducing congestion and expanding highway infrastructure, while others are taking a different approach. A natural experiment is in the making. We should have some very interesting results in 20 or 25 years.


At 3:59 PM, April 10, 2006, Blogger Brian Herod said...

I wonder if the 214% increase in demand over the next 25 years assumes a fixed source of petroleum? If over the next 25 years, the cost of gas begins to rise exponentially, then this demand may fall precipitously. I wonder if the investment in highways will payoff if auto transportation drops off.

At 5:30 PM, April 10, 2006, Blogger Tory Gattis said...

> I wonder if the 214% increase in demand over the next 25 years assumes a fixed source of petroleum?

With taxes, the cost of gas in Europe is 3-4x the cost here, yet they drive plenty. The experience across countries indicates that gas prices correlate with the types of vehicles purchased and their gas mileage (SUVs vs. economy cars), but doesn't affect their total driving all that much. People just value personal mobility too highly.

At 8:13 PM, April 10, 2006, Anonymous Anonymous said...

"The experience across countries indicates that gas prices... doesn't affect their total driving all that much"

do you have some data related to that? I would be surprised to learn that the average worker in Amsterdam or Geneva drives as much as a Houstonian.

At 10:38 PM, April 10, 2006, Blogger Max Concrete said...

TxDOT is basically the only state pursuing privatization on a large scale. The question is: Is TxDOT right, and are 49 other states wrong?

Here's the score. Only one other state, Virginia, is contemplating large-scale private projects, and as of now it is all preliminary talk. The I-81 project is looking like it will fall apart. There's talk of one project in Georgia. Florida (growing faster than Texas) is sticking to its long-term pattern of gradually adding conventional toll roads. California is doing nearly nothing in terms of toll roads. Arizona is sticking with freeways and funding them. Washington State is sticking with conventional funding but may add a few tolls (such as the Seattle bridge). A private toll road plan paralleling I-25 was stopped in Colorado.

There are a lot of risks and downsides to massive privatization, which is why it isn't being done elsewhere. It is also running into plenty of opposition in Texas but is being pushed through by Governor Perry's iron fist. So to say that Texas is "far ahead" is a matter of opinion. It would be more accurate to say that Texas is on its own, and only time will tell what the policy will bring.


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