Wednesday, July 13, 2011

Paying for Infrastructure: At the National Level

So, since the Democrats dawdled their way out of a supermajority that could have easily allowed them to pass a good urban-oriented national transportation bill, the now Republican-controlled House has (finally!) produced a new national transportation bill*. This bill controls Federal expenditure on transportation for the amount of time it takes until the bill expires; historically it's been treated as a sort of Five-Year Plan for the Interstates.

While others have done a better job pointing out the bill's many obvious shortcomings, I'd like to focus on how we need to reorient and refocus our transportation bill. Since Mica's orientation paradigm is entirely reactionary--stripping out all of the most important features the bill has and retaining precisely what needs to be stripped out--understanding this new orientation is absolutely necessary, especially in terms of a public transportation policy shifting along with the changing transportation demands of the public.

What is happening is the beginning of a generational modal shift away from cars to walking, bikes, and mass transit. This shift is currently happening as a choice, as recent college graduates, more aware than ever of problems with the status quo, deliberately eschew the freedoms offered by the automobile (the ability to go anywhere, anytime) in favor of the freedoms offered by other modes (the ability to do your work, or snooze, or read while commuting). Hence, since the popular zeitgeist is a refutation of autocentrism, it should be expected public policy is shaped by it.

Mica's policy is reactionary in that it follows a caricature of 1950s transportation policy--namely, the stereotype of the era as being highway-centric--and thus seems like an attempt to force perception to bend to the will of policy, rather than the other way around. Instead, passage of this bill would just further pen up demand for alternative, walkable, urban, urbane places and lifestyles. It would grossly subsidize status quo exurban construction, even as demand for those types of places collapsed in the wake of the Great Recession--and not subsidize enough to artificially create any demand, either. In other words, it would be a boondoggle on a truly colossal scale, a scale at the same level as the 1950s' urban renewal. And unlike the 1950s, we don't have the liquidity to invest poorly anymore. We need to force a high ROI out of any investment we making this claim, the conservatives are ideologically correct, regardless of how when it plays out in practice, conservatives seem attracted, like mosquitoes, to projects with the lowest public ROI (but the highest subsidies, visible or otherwise, for corporatist interests).

This logic of forcing the highest ROI out of transportation leads to me calling for a tripod scheme of Federal-level transportation investment. This scheme calls for:
  • Leveraging current public transportation assets to provide new liquidity into the system;
  • Leveraging new liquidity to (a) maintain public assets and (b) provide a national-level network in what is currently the most undercapitalized section of the transportation sector; and
  • Providing planning and implementation monies to ensure transportation security at the national, state, and metropolitan levels.

Translated into plain(er) language, this means:
  • Leasing and/or selling limited-access divided highways, particularly the Interstates;
  • Investing capital gained in aforesaid process into endowing an infrastructure bank (focused on road maintenance and new rail infrastructure); and
  • Ensuring that monies disbursed from aforesaid infrastructure bank are equitably divided between (a) national-level freight and passenger rail, (b) state-level freight and passenger rail, and (c) mass transit for interconnecting cities and urbanizing suburbs.

This is the broad framework the bill needs to operate in. Notice how diametrically different this framework is from the current framework, which focuses on highways and strips away all other funding--blindingly stupid when highways currently have the lowest ROI of any public infrastructure investment. Since we are overcapitalized on highway investment, with a handful of exceptions, and undercapitalized on rail investment, with almost no exception, eliminating excess capital from the highway network and plowing it into rail--as the only network able to operate with the same efficiency as highways--makes eminent sense.

This proposal would provide for, in general terms:

1. Decreased overall road spending. Road spending focus on repair. Sale or leasing of limited-access highways (primarily Interstates) to private transportation providers to provide capital for funding most of the rest of the bill, primarily through national- and state-level infrastructure banks.
2. Massively increased rail spending. Freight rail mainline electrification mandate; passenger rail mandate to provide daily service to all cities of 50,000 people or more; high-speed rail mandate to provide high-speed service to all metropolitan areas of 500,000 people or more, with 600 overland miles or less to the nearest similarly-sized metropolitan area. Reform of FRA and FTA to meet European and Japanese standards. Elimination of Buy America on small orders. Tax breaks for domestic railroad equipment manufacture and for shipping by rail.
3. Massively increased mass transportation spending. Mandates to provide transit access to 80% of all addresses in metropolitan areas and potential capacity enough to move half of the metropolitan area's population; mandate to provide a comprehensive implementation plan to that effect by the end of the decade. Increase of Small Starts and New Starts funding; enaction of America Fast Forward proposals.
4. Provision for planning of port and maritime facilities on a national scale. Ensurance that all large metropolitan areas (500,000+) with maritime access has national-level port. Planning and implementation of Maritime Interstates, following the coastlines, Great Lakes, and major navigable rivers.
5. Monies to maintain airports. Effort to reduce short- and medium-haul flights to increase long-haul capacity. Make airports profitable, and do not publicly fund profitable ones. Privatize airports in the same manner as the Interstates.
6. Pedestrians, bicyclists, and streets (as opposed to roads). Maintain a complete streets/shared space policy. Provide sidewalk access on all streets that are not to be shared space. Provide separate bicycle access parallel to arterial traffic roads, usually via a complete street. Finally, create national-, state-, and metropolitan-level "bicycle highway" multi-use trails, to be funded in cooperation between transportation and parks departments.
7. The infrastructure bank. Privatization of limited-access highways (primarily Interstates) and airports offers an excellent opportunity to fund an infrastructure bank. Land value of these holdings is in the many hundreds of billions, and transportation value in the trillions. Getting fair value for these holdings consequently offers enough liquidity to fund new public infrastructure projects for a decade or more. By providing infrastructure banks at the Federal and state levels, this liquidity is managed, and with a strong vetting infrastructure, poured into projects offering the biggest bang for the buck.

No transportation bill option currently on the table offers the value, stability, liquidity, and security of an infrastructure bank system financed via the privatization of currently-public infrastructure.
If you want to read the more specific proposals:

Roads: Leasing or sale of Interstate or Interstate-grade highways (privatization) will enable user fees to be bought to bear on an overutilized socialist commons; as a mature technology, the time is ripe to undertake this endeavor.

Public road maintenance will be funded through the infrastructure bank.

Roads will be maintained according to how much access they offer; rural (primarily access) roads will be funded at an appropriate level, as will urban roads.

Since funding transportation also entails eliminating overcapacity, funds will also be disbursed for the elimination of excessive roadway capacity implemented two or three generations ago (i.e. removal of urban freeways) in favor of the higher ROI generated via land development.

Preferentially fund roadway projects which (a) do not increase capacity (that is: repairs first) and (b) have strong state and local financial support. No project with less than 25% state financial support and 10% local financial support should be Federally funded (in essence, this caps Federal funding at 65%).

Rail: Current funding for Amtrak would stay intact. Future funding for Amtrak improvements would be folded into the infrastructure bank.

High-speed network proposals and funding would be folded into the infrastructure bank.

A new mandate for electrification of all freight mainlines by 2040. National standard would be 25kV 50 Hz catenary able to handle double-stack container trains. Funding for this mandate would be accomplished through infrastructure bank disbursals to freight line owners.

Special committee for the total rewriting of FRA and FTA regulation to make them internationally-compliant. Repeal of Buy America for smaller orders (sub-100 units) balanced with a rail manufacture-and-utilization tax break to better balance transportation modal shares and promote a domestic rail manufacturing industry.

Mandate daily passenger rail to all cities with a population greater than 50,000 and high-speed rail between all metropolitan areas with a population greater than 500,000, 600 overland miles or less from the nearest equivalent population center, both by 2050. Passenger rail is an Amtrak mandate, funded through the infrastructure bank, while HSR would likely utilize PPPs. Note also that the HSR mandate just applies to linking individual cities into a network. Note also that 600 miles is just a tad longer than optimal corridor viability, but connects nearly every middle-to-large city in the U.S. to one another via multiple transportation modes. Assume that HSR will utilize new rights-of-way while slower-speed trains will utilize existing rights-of-way outside of urban centers.

Mass Transit: Match Federal and state funding for all mass transit systems, nationwide.

Establish and fund planning-and-implementation programs for mass transit systems to eliminate gaps and optimize service, nationwide. Different local mandates will of course create different conditions, but when oil is expensive the need for greater mass transit service will be more pressing. All metros of 500,000+ must be capable of reaching 80% and moving 50% of their population via mass transit by 2060.

Plans to reach this mandate must be complete by 2020.

Implement funding strategies as suggested in America Fast Forward (L.A. 30/10).

Tie reception of all federal urban development monies (for 500,000+ cities) to the successful planning and implementation of mass transit. Mass transit is the key competitive advantage of the 21st century; cities which understand this are those best poised for long-term growth. Cities which choose not to implement mass transit are thus those least able to maximize returns on Federal investment.

Increase New Starts and Small Starts funding by at least 100%. Fund projects with maximal people-movement potential first, maximal non-people-movement-based environmental impact potential second, and maximal developmental potential third. Vet and penalize projects with inefficient expenditures (for example, overdesigned stations relative to service levels, overpriced equipment, new equipment when used equipment can suffice) and projects with low returns on investment viz. station-side development (reward TODs and penalize the overuse of park-and-rides). Preferentially fund projects with strong state and local financial support.

Provide Federal matching monies to rail agencies which sell, lease, or develop upon excessive park-and-ride capacity.

Preferentially fund projects with strong state and local financial support. No project should be funded with less than 25% state and 10% local financial support. (That, in essence, implies a 65% Federal spending cap.)

Maritime: Establish a ports policy at a national level. Port capacity should be greatest where port needs are greatest. Plan and implement a policy of national-level alpha, beta, and gamma ports, and fund repairs and improvements at those ports in kind.

Plan and implement a network of maritime Interstates following major waterways. Interstate maritime traffic is relatively underrepresented in the United States, and much more freight can, and should, be moved along the coasts and Gulf, on the Great Lakes, and down the major navigable river systems (Mississippi, Columbia, Hudson, etc.) than current levels. Traffic along these maritime routes would run between ports of four classifications: alpha, beta, gamma, and delta (non-nationally-important ports, particularly along the rivers). Most of the physical infrastructure for this network is already built-out; repair and expand were needed, and promote maritime freight operations with a minor tax break.

Ensure that all large metropolitan areas (500,000+) with maritime access (along a coast or navigable river) have access to a national-level port.

Airports: Maintain funding for airport repair.

Work to shift short- and medium-length trips from the air network into other modes in order to free up greater long-haul capacity without physical airport expansion.

Work to make airport facilities independently profitable for sale or lease (à la the Interstates).

Pedestrians/Bicyclists/Streets: Fund and improve pedestrian links.

Mandate that all non-local road projects have pedestrian infrastructure. This would be absorbed into larger-scale road funding.

Plan and implement national-, state-, and metropolitan-level bike highways (multi-use trails). Funding for this network would come from a combination of DOT and Parks Department monies.

Prioritize funding for complete streets and shared spaces projects.

Infrastructure Bank: The financing centerpiece of this policy is the establishment of a Federal-level and state-level infrastructure bank. This bank will be initially funded by the sale or lease of limited-access divided highways, Interstates and otherwise, as well as the sale or lease of airports. Money from this sale (land value of these properties is likely in excess of $500 billion, and transportation value greater still) will be divided 60-40 between Federal-level and state-level infrastructure banks.

The infrastructure bank will assess, vet, and disburse for projects which maximizes ROI in the following areas: (1) maximal transportation access, across all modes; (2) increased land values and human-scale development patterns nearest transportation access nodes; (3) has high degree of patronization (for rail projects, for example, 100 persons per mile or above); and (4) is economically efficient (a commuter rail example: it uses existing equipment wherever possible, has station engineering in line with ridership projections, places stations in established centers preferentially or else has a land-use plan in place to develop a town center around the station, uses park-and-rides only sparingly, and in places where park-and-ride patronage will be highest, etc.) Highest-impact projects are those with relatively minimized costs, calculated in metrics appropriate to mode, and maximized returns on cost, in terms of the triple bottom line. The national infrastructure bank will contribute between 50% and 65% to public projects, and the state infrastructure bank between 25% and 35%. Remainders--usually in the 10% to 15% range--are to be contributed via local and/or private matching funds.

* Yes, I'm deliberately shying away from calling it a "highway bill" for reasons explained further along in the post.


  1. On the high-speed rail portion of your proposial, definitely a good proposal. I could see a few issues such as the engineering of corridors between Sacramento-Eugene in order to connect to Portland, Las Vegas-Salt Lake City, Salt Lake City-Denver, and other mountain state corridors. Are we talking true HSR the entire way or are we placing it at a minimum of 110 mph? While I think a national network would be great, it definitely needs to be cost effective. Probably the end connections would happen last though and who knows what we will have figured out by then.

    Freeway assets should be sold off. Especially some of the California freeways which have 300k vehicles per day, those would easily profit from a small toll. I would though like to encourage not just repair projects, but also optimization proejcts such as automated traffic management. We already have plenty of road assets, might as well repair them and make them more efficient.

    Hopefully, this would encourage metropolitain areas to redevelop their growth plans to suit the funding given and encourage more people to utilize transit for daily commuting.

  2. The mandate is a long term more difficult terrain, waivers or exceptions may be granted. The first order of business, however, is connecting the biggest metro centers, particularly on the East Coast and in the Midwest, Pacific Northwest, and California.

    To be clear: the 50k passenger service mandate would be for 110mph rail travel. This mandate is technically feasible and is in fact effectively a mandate mandating modern European and Japanese passenger rail travel.

  3. I'm hesitant to sign off on a rigid goal based on city size and distance. The reason is twofold:

    1. It ignores terrain. HSR access from Denver to SLC requires a base tunnel under Front Range; this means that unless it contains a major improvement to freight as well as passenger service, like Gotthard, it shouldn't even be considered.

    2. It ignores the question of intermediate markets. If there's nothing in a few hundred miles except the two cities to be connected, and the cities aren't much larger than 500,000-1,000,000, then it's not worth it. Even Grand Rapids is marginal, and hasn't been on anyone's proposal list, though it would be good to add TGV-style service running through from the Chicago-Detroit trunk line to Grand Rapids at reduced speed.

  4. Agreed that rigidity can be a problem when in operation. The point of the mandate, however, is (1) a selling point (so that people in medium-size and larger U.S. cities can look and say, "Yes, we can get high-speed rail too) and (2) providing a reasonable deadline for an implementation schedule, noting (of course) that the most difficult projects would have lowest priority (e.g. a Denver-Salt Lake HSR link only makes sense with network interconnections on either side).

    Of course, inclusion or exclusion waivers can be provided, but the idea is to have something concrete to point to that doesn't enforce any obvious boondoggles (like Anchorage-Fairbanks HSR, God forbid), that is easily understandable in corridor thinking, and that covers 90%+ of all possible connectivity cases. In other words, the mandate is to sound rigid as a selling point, but is scaled to be as flexible as possible.

  5. Following a link for the PA HSR blog ...

    ... I wonder about the funding of the Infrastructure Bank by sale of Interstate Highways whose commercial value is to be undermined by the investment of the proceeds in interstate passenger rail, metropolitan passenger rail, and interstate freight rail.

    However, note that a portion of the program, the electrification of mainline rail corridors, could be pursued on the basis of public interest cost subsidy with freight railroad users paying user and access fees that retire the capital cost of the corridor they are using, and so free up capital funding for extension of the system. This leverage allows some ongoing revenue source to finance a substantially greater amount of capital works. Appealing sources for those revenue sources are an export tariff on coal and an import tariff on petroleum.

  6. Adirondacker12800May 23, 2012 at 9:56 PM

    National standard would be 25kV 50 Hz

    Building an separate electric grid for the railroads would be very very expensive. Makes much more sense to go for 60Hz. 12.5kV is going to be the standard in the Northeast along with 25kV. Might make sense in the Midwest too. You have to balance the cost of the more frequent substations with the cost of increasing clearances for the catenary.

    daily passenger rail to all cities with a population greater than 50,000

    That's going to be powerfully expensive for places that don't have rail service now. Irvington New Jersey for instance.