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3-40 Guidebook for Freight Policy, Planning, and Programming in Small- and Medium-Sized Metropolitan Areas Common Issues and Potential Solutions Key challenges associated with the development and application of performance measures include definition of measurable impacts, staff expertise, availability of data and resources, and the availability and functionality of travel demand models. The following summarizes the key challenges and offers potential solutions. Common Issue Potential Solution Measurable impacts and data availability. Dedicate yourself to data collection. MPOs must be One of the key obstacles faced by staff will be the mindful of their capacity for data collection in drafting ongoing ability to apply the performance mea- the indicators. In addition, the process is dynamic. sures. Staff can identify a comprehensive list of Over time, indicators must change to reflect improved performance measures, but if expertise and data understanding of issues and associated problems, are not available to apply them then the program especially as informed by the involvement of industry will not succeed. participants. In the case of the EWGCC, ease of data collection was an important criteria when selecting appropriate performance measures. Staff expertise. Performance measures have Investigate training and education opportunities. become an integrated component for many There are a number of training and education oppor- MPO and state transportation programs, however, tunities available to MPO staff to enhance under- freight-specific performance measures are still standing of freight, its common issues and concerns, in their infancy. This will challenge staff members and how it can be more effectively integrated within because they will have to develop freight expertise a transportation planning process. Peer exchange to develop an appropriate set of performance programs are particularly useful for developing staff measures. expertise in specific subject areas. See Module 5 for a list of training and education resources. Multimodal and intermodal trips. A typical Engage the private sector freight community. The MPO has not developed a transportation private sector freight community can often provide the program that incorporates truck, rail, water, background and expertise to assist MPOs in evaluating air, and pipeline commodity movements. The the performance of nonroadway movements. In the ability to calculate the performance of non- case of EWGCC, the development of freight perfor- roadway movements will be a significant mance measures was conducted in cooperation with challenge for most MPOs. the region's FAC, a group of public and private freight stakeholders. Identifying Innovative Funding and Financing Techniques Overview MPOs often commit a large portion of their budgets to the maintenance and preservation of their existing roadway systems. In addition, transit, bike, and pedestrian improvement projects compete for limited transportation funds. This competitive funding environment leaves few resources available to fund freight-specific improvement projects. While roadway-related freight improvement projects are usually eligible for funding under federal and state highway pro- grams, multimodal and intermodal projects must often be shoehorned into air-quality mitigation (e.g., congestion mitigation and air quality [CMAQ] improvement program) or safety programs (e.g., highway-rail grade-crossing separation programs). Rail improvements to private rail ter- minals and lines are usually not eligible for public support except indirectly through loan credit- support programs. Despite the link to economic development and jobs, many MPOs often find it difficult to justify spending money on nonroadway projects or projects that are perceived to inordinately benefit the private sector freight community. Those freight projects that have been successfully financed and implemented often took advantage of unique blends of funds from multiple sources and often involved complex public-

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Integrating Freight into MPO Activities 3-41 private partnership (PPP) arrangements. These projects often require specialized finance skills not usually available within MPOs or local governments. MPOs typically have three basic tools for investing in freight improvements: 1. Grants from transportation programs. Grants give states and the federal government the best control over the use of funds. Funds can be targeted to specific projects that solve freight project needs. Highway freight bottlenecks can normally be funded with all the core federal- aid programs. In addition, the long-standing FHWA Section 130 Rail grade crossing program provides dedicated funding to improve safety at rail grade crossings. Also, the CMAQ improve- ment program, created in ISTEA, has benefited freight rail and marine intermodal projects where there is an air quality benefit and the new Truck Parking Facilities Grant program of SAFETEA-LU will assist states in improving rest areas for trucks along the NHS. 2. Loan and credit enhancement programs. These programs include the Rail Revitalization and Improvement Funding program (RRIF), Transportation Infrastructure Finance and Innova- tion Act (TIFIA) program, and State Infrastructure Banks (SIBs). RRIF is a loan and credit enhancement program for freight rail. It is oriented to the needs of regional and short-line railroads. TIFIA provides loans, loan guarantees, and lines of credit for large projects. The program is modeled after a loan provided for the Alameda Corridor Transportation Project, a truck and rail corridor project improving access to the ports of Los Angeles and Long Beach. To qualify for assistance under TIFIA, a project needs a source of revenue to cover debt service costs; the total project must be valued at more than $50 million ($15 million for ITS projects) or 50 percent of the state's annual federal-aid highway apportionments, whichever is less; the federal TIFIA loan cannot exceed one-third of the total project cost; and the project's senior debt obligations must receive an investment-grade rating from at least one of the major credit rating agencies. SIBs can provide loans for highway and in some cases transit improvements. All states are eligible to develop SIBs. 3. Tax-expenditure financing programs. These programs include accelerated depreciation, tax- exempt bond financing, and tax-credit bond financing. A tax-exempt bond is an obligation issued by a state or local government where the interest received by the investor is not taxable for federal income tax purposes. Tax-credit bond financing is a new form of federally subsidized debt financing, where the investor receives a federal tax credit in lieu of interest payments on the bonds. From the borrower's perspective, it provides a zero-interest-cost loan. These pro- grams can be used to provide targeted, income tax benefits for investments made to improve the efficiency or increase the capacity of the freight system. Two key financing programs include the Private Activity Bonds program, which allows the issuance of tax-exempt private activity bonds for highway and freight transfer facilities; and the Grant Anticipation Revenue Vehicle (GARVEE) Bonds program, which allows states to issue tax-exempt debt backed by future federal-aid highway revenues. A summary of potential funding opportunities for freight intermodal improvements is pro- vided in Module 5. Basic versus Advanced Approach There are a variety of ways to successfully fund freight projects. The most basic approach is to integrate freight elements into other high-ranking transportation projects. Initial efforts by MPO staff to fund freight projects should focus on short-term operational improvements, which can be funded through local maintenance and preservation funds and potential economies of scale by integrating freight-specific elements into existing transportation projects, which typically

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3-42 Guidebook for Freight Policy, Planning, and Programming in Small- and Medium-Sized Metropolitan Areas consist of roadway projects. This will require coordination with the local agency responsible for maintenance, such as a county's public works department. In addition, staff will need to coor- dinate with those responsible for LRTP and TIP development and implementation to include freight improvements as part of larger roadway and corridor projects. This will allow freight projects to benefit from existing funding sources. In many cases, the freight benefits are automatic. For example, developing barrier-separated through lanes on an expressway through a downtown area benefits all through traffic, including trucks. In other instances, freight can be inserted as a consideration. For example, a corridor study typically involves development of several alternatives. The needs of industry could be included in the design and operational parameters of one or more alternatives. As freight programs develop, evolve, and begin to identify and develop their own specific proj- ects, funding sources become more of a challenge, especially for nonroadway projects. In these instances, a more advanced approach is required to identify and secure funding. An advanced approach focuses on the identification and pursuit of freight-specific funding sources. There are a limited number of funding opportunities, many of which are anticipated to be strengthened by federal reauthorization. Others, such the CMAQ program, are limited to nonattainment areas and require competition with a full range of transportation projects. Advanced funding tech- niques will require a local champion within the MPO as well from the private sector for a given project. Many of the available sources require state and federal partners, such as the SIB and fed- eral aid programs. Federal earmarks, which are driven by the political process, are one such source to fund major freight projects. Key Activities The ability to successfully fund projects is a crucial part of the MPO planning and program- ming process. Existing programs have long invested public funds in the roadway and transit sys- tems, and more recently bike and pedestrian systems. However, with the exception of roadways, the majority of freight systems have been left to private industry to handle. Over the last few decades, public policy has begun to better address freight system needs. This has been motivated by continued growth and demand for overall transportation and the continued emphasis being placed on multimodal and intermodal systems. This change in policy has been challenged by the lack of new funding sources. There are very few dedicated funding mechanisms to support freight improvements. Those that do exist tend to focus on areas of conflict with passenger traffic, such as safety projects to mediate at-grade rail crossings, or economic assistance, such as new rail spurs to serve new or expanded industrial locations. While many states have developed funding programs targeted at specific freight improvements, such as short-line rail infrastructure and port-related improvements, funding for these programs can be limited and may not solve the most immediate freight mobility needs of an MPO. This section focuses on the approaches available to MPO staff to secure funding for freight-specific improvements. The first approach works within established funding programs, while the second expands on more advanced activities that secure funding for stand alone freight projects. Basic Approach Activity Identifying Innovative Funding and Financing Techniques--Basic Activity Type Programming Level of Effort Moderate Technical Complexity Moderate

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Integrating Freight into MPO Activities 3-43 Data/Analytical Tool Needs Moderate. Requires data collection and analysis to support the positive impact of proposed projects; outreach to private partners to build sup- port for specific projects. Outreach/Partnership Needs High. Requires significant outreach to private partners to build support for projects; activities should consist of interviews, focus groups, and formal freight technical advisory committee meetings. Training/Education Needs Moderate. Requires staff to combine freight knowledge and financing techniques; should explore resources and training available from FHWA and NHI. http://ops.fhwa.dot.gov/freight/FPD/index.asp Related Activities Freight Project Identification, LRP Freight Element, Freight Project Impact Assessment, Freight Project Evaluation Criteria. Key activities: Identify and fund short-term, "quick-fix" projects and integrate freight con- siderations into funded projects. Step 1. Identify short-term operational projects. One of the most basic mechanisms for advancing pro-freight projects is to deal with quick-fix projects using available maintenance funds. Examples of quick-fix projects include traffic signal re-timings, turning radii improve- ments, and even pothole repairs. These types of projects can be identified through outreach to private partners and a review of local operating bottlenecks identified by the regional freight pro- file and freight project identification activities. Step 2. Allocate maintenance and preservation funds. Once the projects have been identi- fied, MPO staff must work closely with the local public works department to solicit project sup- port and funding. This is a critical step, because MPOs need an implementation partner. Step 3. Identify longer-term capital improvement projects that could effectively address freight bottlenecks. Steps 1 and 2 build support for more immediate investments for freight projects. Once that has been accomplished it is important to identify proposed capital projects that could be modified to improve freight mobility. Step 4. Define specific opportunities or modifications to integrate freight elements into existing transportation projects. Once the projects have been developed, specific modifications should be developed. For example, new capacity added to an urban arterial could be reviewed to include geometric design considerations at key truck access points. Step 5. Coordinate with appropriate staff to promote the inclusion of freight considera- tions. MPO staff should work with individual project champions or leaders to incorporate freight improvement elements into the established project definitions. These freight considerations will take advantage of the traditional funding sources already in place for the overall project. Advanced Approach Activity Identifying Innovative Funding and Financing Techniques--Advanced Activity Type Programming Level of Effort High Technical Complexity High Data/Analytical Tool Needs High. Requires data collection and analysis to support the positive impact of proposed projects; conduct outreach to private partners to build sup- port for specific projects. Outreach/Partnership Needs High. Requires significant outreach to private partners to build support for projects; activities should consist of interviews, focus groups, and formal freight technical advisory committee meetings.

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3-44 Guidebook for Freight Policy, Planning, and Programming in Small- and Medium-Sized Metropolitan Areas Training/Education Needs Moderate. Requires staff to combine freight knowledge and financing techniques; should explore resources and training available from FHWA and NHI. http://ops.fhwa.dot.gov/freight/FPD/index.asp Related Activities Freight Project Identification, LRP Freight Element, Freight Project Impact Assessment, Freight Project Evaluation Criteria. Key activity: Develop funding process for key freight improvement projects. Step 1. Identify freight capital improvement projects. The regional freight profile and freight project identification activities will provide staff with a list of needs and project concepts. Based on these data sources, specific capital improvement projects should be selected for fund- ing consideration. Step 2. Identify project champions from public and private entities. Soliciting the support of private industry and public agencies is important in building support and funding for a spe- cific project. These champions should be responsible for building support among local decision- makers to ensure funding is made available. Step 3. Identify potential funding sources. There are a limited number of funding sources available for freight projects. There are the traditional funds available to MPOs which typically are available for roadway projects. CMAQ program funding can be used for nonattainment areas. Other sources to consider include federal aid grants, and public private partnerships. Staff should work with funding experts to fully explore the options. Step 4. Build local support for specific freight projects. MPO staff and project champions should work together to promote a defined freight project. This activity builds support and increases the likelihood that the project will be funded and advanced. Step 5. Pursue and compete for funds. Based on the successful identification of funding sources, and project promotion, staff should pursue and compete for funding allocations. Most MPOs have an established process for the allocation of funds. Freight projects should be integrated/ inserted into this process for consideration. Step 6. Track funding processes. Once a freight project has been successfully incorporated in the funding process, staff should monitor the process to ensure that the project is continu- ously promoted and advocated for as decisions for advancement are made. Common Issues and Potential Solutions There are many issues and challenges that face an MPO's ability to fund freight projects. Lack of available funding, competition for available funding, eligibility of freight projects for funding, and political support are but a few of the challenges faced by MPOs and their partners. The fol- lowing summarizes the key challenges and offers potential solutions. Common Issue Potential Solution Competition with other projects. The availability Develop freight-specific evaluation criteria. To put of funds makes it imperative that freight projects freight improvement projects on a level playing field be competitive within the established ranking and with other potential transportation improvements, prioritization processes. Given that freight is a MPOs should develop evaluation criteria that reflect relatively new discipline within MPOs, the ability the economic and business development benefits of to compete within these established processes is freight improvement projects, such as how they may limited. improve shipping-time reliability or the extent to which they may attract or retain businesses and jobs in an area.