Economic and Development Implications of Transportation Disinvestment (2015)

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40 GLOSSARY OF TERMS AND ACRONYMS TERMS Abandonment is the act of relinquishing an asset entirely and regarding the infrastructure investment as a “sunk cost” with the possible exception of the salvage value of the land. Adaptive re-use is a tactic of redesigning or redesignating a piece of infrastructure formerly used for one purpose so that it can be used for a different purpose (at a lower cost). The “Rails to Trails” re-use of railroad right-of-way is an example of this. Adaptive re-use may be a source of ben- efits in a disinvestment situation. Base case in an economic analysis is the scenario that assumes there is no change from the current investment pattern. Deficiency is an observed level of performance that falls below an agreed standard or target. Demand models are models that predict the future utiliza- tion of the transportation system and drive the assessment of needs. Demand models can be helpful for understand- ing how future demand may respond to a disinvestment sit- uation. Errors in these models can lead to overinvestment or underinvestment in transportation systems, and may account for some disinvestment situations. Direct economic impacts. The direct and wider transportation impacts (#1 and #2) will translate into changes in business operating cost, business productivity (returns from deploy- ment of vehicles, as well as effects on inventory levels), and household expenditure patterns. Direct transportation impacts. Disinvestment can lead to speed slowdowns, road/bridge/viaduct closures, or vehicle size/weight restrictions, all of which can lead to changes in traffic volumes, speeds, and routings—which show up as vehicle-miles traveled and vehicle-hours traveled changes. Reductions in the quality of pavement can also lead to changes in vehicle damage rates. Disinvestment. A process by which an infrastructure asset (which may be a specific facility, a program, or a network) is allowed to fall below previously accepted standards of condition or performance by either investing resources else- where or simply not investing resources in the disinvested asset. This may also include choosing not to invest in new infrastructure or assets as needed to maintain an accepted level of performance on an existing facility or system. Disinvestment scenario is a situation where an agency faces a choice about where and how much it will disinvest or channel investment away from one set of assets, programs, or priorities in order to support others. Disinvestment situation is a situation where an agency has to make decisions that may entail accepting a level of per- formance that had previously been considered deficient. It is a situation where the agency must either lower its per- formance standard or increase its investment level to more than what it has been able to achieve historically. Economic development is the process by which a state, regional, or local economy’s use of human, natural, and other resources evolves to create a given standard of living and effective role within the larger economy. Economic impact models translate economic performance outcomes found by needs models into dollar terms and identify how these dollars of economic loss or benefit are experienced in the economy. Impact models can be helpful for describing both the long-term effects of disinvestment and the effects of investment levels that are either too high or too low. Intentional disinvestment. A conscious policy choice to dis- invest in an infrastructure asset in order to make funds avail- able elsewhere, or to manage funding shortfalls. Investment (or disinvestment) case in an economic analysis is the scenario that assumes some change from the current investment pattern. In the case of intentional disinvest- ment it may represent a change in performance standard for a given program or asset, the transition of demand to an alternate facility, or the costs and economic outcomes anticipated from retrofitting the disinvested asset for some other use. Investment gap is the dollar amount that would have to be invested above and beyond currently budgeted amounts to achieve minimum tolerable conditions for all assets over a period of time. Intentional disinvestment reduces an investment gap by lowering minimum tolerable condi– tions, whereas passive disinvestment allows the gap to grow while still holding an intention to somehow “catch up.” Jurisdictional turnback is a tactic of a federal or state agency giving an asset to a county or municipal unit of government, making it effectively no longer a part of the state or federal transportation system. While a turnback is not always a form of disinvestment (it may simply change the investing agencies), turnbacks can lead to disinvestment when they are accompanied by changes in classification or intended use for a facility. Minimum tolerable conditions are an asset management term used to describe the condition or performance below which an asset is considered to be “deficient” and needing additional investment to perform properly. These usually consist of pavement conditions, bridge ratings, volume-to- capacity ratios, or intersection level of service. Intentional disinvestment lowers minimum tolerable conditions in order to reduce the needed investment level. Needs models assess in dollar terms the amount of invest- ment required to maintain a target level of system perfor- mance under any given demand forecast. Needs models can be helpful for understanding the performance implica- tions of disinvestment. Uncertainty in needs models can lead to overinvestment or underinvestment, contributing to disinvestment situations.

41 Passive disinvestment. A policy choice (or series of policy choices) that, while not intended to allow an infrastruc- ture asset to fall below previously accepted standards of condition or performance, effectively has such an effect over time. Programmatic investment strategy is a planning strategy that considers different possible revenue allocations among programs to minimize the adverse economic implications of investment gaps in various programs. A programmatic investment strategy may also compare the economic impli- cations of additional taxes, tolls, or user fees against the economic implications of investment gaps in transportation programs. Disinvestment scenarios may have a role in a programmatic investment strategy. Risk models are models that assess the likelihood that any given scenario will occur, given certain underlying assump- tions about existing and future conditions. Risk models are important for understanding the likelihood of positive or negative outcomes resulting from disinvestment. Real option is the right, but not the obligation, to buy or sell an asset under specified terms. Real options may represent policy instruments or investments that agencies can make to enable future disinvestment to be made more efficiently and also to prevent premature investment (thereby prevent- ing a future disinvestment situation). Underinvestment is any revenue or budgetary policy that allows some investment gap in any given year for any given reason. Underinvestment over time may become passive disinvestment if conditions deteriorate so much that the agency could never afford to catch up or achieve its desired performance levels. Wider economic impacts. The direct economic impacts (#3) can lead to wider economic impacts on transportation and production efficiencies (through cost impacts), supply chain and logistics technologies (through reliability and inter- modal connectivity impacts), and business agglomeration opportunities (through regional accessibility impacts). Wider transportation impacts. The direct transportation changes (#1) can affect the set of available links, their volume/capacity ratios, and vehicle size or weight limits, all of which can lead to changes in reliability, accessibility, and intermodal connectivity. ACRONYMS DOT—Department of transportation HPMS—Highway Performance Monitoring System (database) HERS-ST—Highway Economic Requirements System for States (pavement needs model) LRTP—Long Range Transportation Plan MAP-21—Moving Ahead for Progress in the 21st Century (national transportation law) MPO—Metropolitan planning organization NBI—National Bridge Inventory (database) NBIAS—National Bridge Inventory Analysis System (bridge needs model) NPS—National Park Service NTD—National Transit Database REMI—Regional Economic Models Incorporated (economic impact model) RPO—Rural or regional planning organization STIP—State Transportation Improvement Program TEA-21—Transportation Equity Act for the 21st Century (national transportation law) TERM—Transit Economic Requirements Model (transit needs model) TIP—Transportation Improvement Program TREDIS—Transportation Regional Economic Development Information System (economic impact model)