Transportation Finance: Meeting the Funding Challenge Today, Shaping Policies for Tomorrow (2005) / Chapter Skim
Currently Skimming:
Pages 67-92
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 67... ...
Resource Papers
|
From page 69... ...
WHAT SHOULD BE THE GOAL OF REAUTHORIZATION? Prior to TEA-21, congressional funding decisions for the federal highway and mass transit programs2 were driven by the budget.
|
From page 70... ...
biennial Conditions and Performance Report and AASHTO's Bottom Line Report. Mary Peters, Administrator of the Federal Highway Administration (FHWA)
|
From page 71... ...
dollars between 1997 and 2000 and by an even larger percentage in pure capital spending on highways. What has this money bought?
|
From page 72... ...
suggests that the federal share of the investment needed just to maintain safety, structural, and traffic congestion conditions at the 2000 level would be $47.7 billion in FY 2004 and would rise to $53.6 billion in FY 2009. According to current projections of the Congressional Budget Office, the Highway Account of the Highway Trust Fund, which took in $30.3 billion in FY 2000, will only support a program that spends $35 billion to $36 billion annually.
|
From page 73... ...
lation includes the above low-hanging fruit except for indexing. Transportation Weekly calculates that the measure, if enacted, would bring in about $3 billion in FY 2004 and perhaps $7 billion in FY 2009.
|
From page 74... ...
The following are examples of toll road developments since the Second National Conference on Transportation Finance: • The Tacoma Narrows Toll Bridge is being developed through a design–build contract awarded to a BechtelKiewit team and financed by the state of Washington through the issuance of general obligation bonds. • The Central Texas Turnpike Project, a network of new toll roads near Austin, is being developed in part by an enhanced form of design–build–maintain contract awarded to Fluor Daniel and Balfour Beatty18 and financed by a combination of tax-exempt revenue bonds issued by the Texas Transportation Commission, general obligation bonds issued by localities, a Transportation Infrastructure Finace and Innovation Act (TIFIA)
|
From page 75... ...
• The Transportation Corridor Agency recently announced plans to combine the credit of the San Joaquin, Foothill, and Eastern toll roads. Any generalizations about trends these transactions suggest is dangerous, but allow me a little risk-taking.
|
From page 76... ...
securing state leadership and local acceptance sufficient to "sell" tolling for new projects. • We should not force policy makers to choose between tax-exempt financing on the one hand or private-sector innovation and equity on the other.
|
From page 77... ...
Succinctly stated, the full value of innovations in financing methods for surface transportation programs will only be realized when they are paired with companion innovations in the project definition, development, approval, and implementation processes. INNOVATIVE FINANCE FRAMEWORK According to the Federal Highway Administration (FHWA)
|
From page 78... ...
• Accelerate projects by reducing inefficient and unnecessary constraints on states' management of federal highway funds; • Expand investment by removing barriers to private investment; • Encourage the introduction of new revenue streams, particularly for the purpose of retiring debt obligations; and • Reduce financing and related costs, thus freeing the savings for investment into the transportation system itself. FHWA's familiar diagram (Figure 1)
|
From page 79... ...
Even within the public sector, increasingly common project delivery systems, including design–build and design–build–operate–maintain, require reliance on principles of project finance that in turn demand greater certainty in the budgeting and scheduling of project development and delivery. However, the various requirements and measures associated with project delivery have the combined effect of moving the development process in exactly the opposite direction.
|
From page 80... ...
You may recall that some years ago, Section 1309 of the TEA-21 legislation also called for significant environmental streamlining and laid out an extensive process by which a "coordinated environmental review process" would expedite review of federal highway and transit projects. A detailed memorandum of understanding was entered into by the transportation and resource agencies, and there was much excited talk about finally clearing the logjam from the clearance process.
|
From page 81... ...
We all know the resolution of this classic political dilemma: the Orange County Transportation Authority has agreed to purchase the SR-91 express lanes facility from its private owners by repayment of equity to the express lanes' owners and a takeout using tax-exempt bonds. In effect, to solve the political disagreement (at least perceptually and perhaps only temporarily)
|
From page 82... ...
essary to accommodate financial innovation is often ephemeral. COMMUNITY INVOLVEMENT AND SUSTAINABILITY Closely linked to environmental permitting and local governance is the area of community and public involvement.
|
From page 83... ...
7 5 RESOURCE PAPER Institutional Framework for Innovative Transportation Finance James T Taylor II, Bear, Stearns & Co., Inc.
|
From page 84... ...
bonds, securities that are backed primarily by future federal highway grant reimbursements. Between 1998 and 2001, 10 states issued approximately $5.2 billion of GARVEEtype debt to finance various highway and bridge projects and transit equipment.
|
From page 85... ...
Regional toll authorities such as the Transportation Corridor Agencies in California and the E-470 and Northwest Parkway Public Highway Authorities in Colorado worked closely with private design–build teams to finance and develop their projects. Private nonprofit corporations, created to facilitate access to the tax-exempt markets, secured funding for the Southern Connector project in South Carolina and the Route 895 Connector in Virginia.
|
From page 86... ...
INSTITUTIONAL FACTORS INHIBITING INNOVATION The innovative finance strategies pursued to date have been constrained to some extent by the established roles and relationships among the various institutions involved in developing transportation infrastructure in the United States. The parties (federal, state, and local governments and the private sector)
|
From page 87... ...
Potential strategy: Create a standing advisory committee with broad representation from various transportation interests to help identify and evaluate relevant policy issues. Local Resistance to Innovative Finance Initiatives It is difficult for local communities to evaluate and build consensus on whether a tolled project delivered in 3 years is better than a toll-free facility delivered in 10 years.
|
From page 88... ...
McCarthy, Northeastern University Finance is about more than just money. This is notan easy sentence to say with a straight face, norone that many people necessarily will believe.
|
From page 89... ...
In sum, I believe that there is an interaction among finance, technology, customer service, and the management of departments of transportation (DOTs)
|
From page 90... ...
• Cellular geolocation technology with the capability of tracking individual vehicles to measure their speeds and travel times; • Tracking of vehicles with toll tags to measure speeds and travel times; • Tracking of vehicles through the use of license plate readers that measure speeds and travel times; and • Development of systems of instrumented probe vehicles that use the Global Positioning System for positioning and other sensors to measure travel speed, weather, and pavement conditions. Frustration with the slow pace of deployment despite the range of technical solutions has led to some new approaches.
|
From page 91... ...
The British highway authority already does this when it outsources maintenance work, with part of the compensation dependent on the lack of congestion as measured by the amount of time that design speeds are met. Let me return to the finance question once again.
|
From page 92... ...
successful in running surface transportation systems in an efficient way and charge fair prices for using the service, industry management must develop a service orientation and consider those who use surface transportation systems as customers first and foremost. The customer is someone who is a willing buyer of what you have to sell at the particular price you are charging.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.