Bacon's Rebellion

The Virginia Port Authority has a new executive director, and judging by a recent editorial in the Virginian Pilot, he thinks outside the box. When Jerry Bridges surveys the port’s strategic options, he says that privatization should be considered.

The ports have built enormous economic value in the three decades since the Commonwealth of Virginia consolidated them, rescuing them from the mismanagement of separate municipal authorities. Under the leadership of Bobby Bray, the VPA has risen into the ranks of the largest and fastest-growing ports in the United States. VPA officials guesstimate that private bidders might pay as much as $5 billion for the facilities. As the Pilot points out: “New bidders, like investment banks and pension funds, have been pouring billions into an industry where most investment used to come from large companies already involved in the industry, a much smaller, more stingy pool.”

The Pilot raises some good questions. If the state were to privatize the ports, should it try to maximize the price? Or should it consider other goals, such as environmental protection or good labor relations? What would be done with the money — and who would decide?

Although the ports are a “state” entity, I believe that the proceeds from privatization should be used for the benefit of Hampton Roads. The ports are, after all, one of the region’s most important assets. The proceeds of privatization should be set aside in a mega-community foundation, similar to foundations in Martinsville, Danville and Petersburg endowed by the sale of their community hospitals. Revenues from a Hampton Roads foundation — potentially some $200 million a year — could be applied to regional priorities.

One such priority is building a “third crossing” across the James River, deemed critical to accommodate surging truck traffic from the booming port terminals and also for evacuating the population in the event of a major hurricane. It would be poetic justice if a foundation endowed through the privatization of the ports used a portion of its income to support bonds that paid for building the third crossing.

The state doesn’t have the money to pay for the project, and the funds raised through a cluster of regional taxes enabled by the General Assembly won’t pay for it either. Tolls would cover only a fraction of the cost. Privatizing the ports may be a way to cut the Gordion knot and get the project funded.

Charlottesville area officials are studying the option of eliminating fares for the municipal bus system in the hopes of stimulating ridership, according to the Daily Progress. A recent study by the Washington state transportation system said that a free system could increase ridership by 30 percent. On the other hand, Charlottesville and Albemarle County would lose $485,000 in revenue, or 10 percent of the operating budget for the Charlottesville Transit Service.

Said David Slutzky, a member of the Albemarle Board of Supervisors and chairman of the Metropolitan Planning Organization which is considering the idea: “We don’t make people pay to take roads here, so why should they pay to get off the roads?”

My gut reaction to this idea is, are they crazy? According to Bacon’s principles of transportation economics, every mode of transportation should pay its own way. People who drive on roads pay for the vast majority of the cost to build and maintain those roads, mainly through tolls and state and federal gasoline taxes. The object of public policy should be to get them to pay 100 percent of the cost — not as we have done in Virginia this past year to sever the connection between driving and road funding.

Likewise, transit systems should pay their own way as well. If the Charlottesville bus system collects only 10 percent of the revenue it takes to operate, what does that tell us about the bus system? Either that the costs are scandalously high, operations are scandalously inefficient, or demand is scandalously low.

According to the Charlottesville Transit Service website, the system provided a little more than one million passenger trips last year. That translates into about $4.60 per passenger trip. I’m no expert in transit economics, but that doesn’t strike me as excessively high. The unwillingness of the population to pay a nominal fare, I suspect, stems from a lack of demand for the service. The transit service, I would hypothesize, does not provide the flexibility of routes and times, or the reliability, that people require.

Flipping the problem around, though, I can see what Slutzky & Company are driving at. That one million passengers translates into roughly 2,750 passengers per day, which translates into 2,750 car trips eliminated. The bus service does get cars off the road.

Does the elimination of those trips mitigate enough congestion to warrant the expenditure of more than $4 million a year in public dollars? Let’s do some calculations. As of the 2000 Census, there were about 50,000 households in Charlottesville and Albemarle County. The average household generates about 10 trips per day, implying 500,000 trips. Thus, the transit system eliminates one out of roughly 180 trips.

Would the expenditure of nearly $500,000 dollars a year for fare-free bus travel, resulting in the elimination of roughly 800 more car trips per day, be a good investment? I can’t say because I don’t know what the alternative investments are, nor how much congestion they might relieve. But that’s one question the Charlottesville MPO should ask itself rather than studying the free-fare option in isolation.

An even better question the MPO should ask is this: Instead of operating a transit system at a cost to taxpayers of $4 million to $5 million a year, should the region shut down the transit service and allow free market competition for shared ridership services?

I hate to say I told you so, but… I told you so.

According to a USA Today analysis of the latest federal highway data, despite the addition of one million drivers to the nation’s roads and streets since 2005, vehicle miles driven in February declined 1.9 percent year over year in February 2006 before rebounding slightly for a 0.3 percent year-over-year gain in March. That’s the sharpest cutback in 26 years, and a marked contrast to the 2.7 percent average annual increase between 1985 and 2005.

Even if total vehicle miles driven managed to squeeze out incremental gains last year, the VHD per motorist declined.

USA Today cited several economic and demographic factors:

• Gas prices. Seven of 10 Americans are combining trips and taking other steps to reduce driving.

• Public transportation. More people took public transit last year than at any time in 49 years. “We’re seeing suburban locations create new transit systems,” says William Millar, president of the American Public Transportation Association. “They’re expanding into areas that never thought they needed transit because they could do everything by car.”

• Demographics. Two generations ago, a significant percentage of women did not drive. As they women took to the roads over the past few decades, the percentage of the population with a drivers license increased steadily. Today, most women drive. The surge in women drivers has leveled off. Meanwhile, the population is aging, and old people drive less.

• Urban revitalization. Many Americans, particularly young, upwardly mobile singles, are moving back into the city, where there are more transportation options and distances between destinations are shorter than in the suburbs.

I cited three of these four factors (I didn’t pay sufficient attention to mass transit) a couple of years ago when I critiqued the assumptions of the VTrans2025 report written by the Warner administration, which projected relentless traffic increases over the next 20 years and a $108 billion shortfall in transportation funding to meet the demand. The increases in VMD of the past 25 years are economically and demographically unsustainable, and we should not be basing public policy on outmoded assumptions.

(Hat tip to Larry Gross for pointing out this story.)

Traffic fatalities.

Last year Fairfax Country reported a total of 17 pedestrian fatalities, up from 10 in 2005, reports Nicole Theberge with the Falls Church News-Press.

Reasons for the spike are not entirely known, according to Fairfax County Pedestrian Program Manager Chris Wells, but suspicions focus mainly on increasing numbers of immigrants without personal automobiles who are dependent on public transportation and walking as their main modes of transportation. …

A 2005 study by Inova Health Systems found that a disproportionate number of victims of pedestrian related accidents and fatalities were of Hispanic ethnicity, immigrants and often poor. These inhabitants tend to live centered around commercial developments for convenience sake, but the probability of a harmful or fatal incident is much higher in some of these areas, like the Route 50 and Patrick Henry Drive intersection.

Fairfax county has approved a 10-year, $60 million pedestrian improvement plan that includes sidewalk improvements, pedestrian bridges, bus stop upgrades, additional signage and lighting at crosswalks and public education on the subject of pedestrian safety. The improvements will be far more expensive than if a pedestrian-orientation had been built into the design of affected Fairfax communities from the beginning. A pedestrian bridge across Rt. 50 (Arlington Boulevard) will cost $5 million.

The National Capital Region plans to spend $530 million for sidewalks, bike lanes and handicapped accessibility.

Northern Virginia’s Transportation Planning Board has approved plans to build express toll lanes on Interstate 95 and Interstate 395. Next step: State officials must negotiate an agreement with Fluor Virginia and Transurban, the companies that proposed it, reports Eric Weiss with the Washington Post.

The I-95/395 project would convert two carpool lanes into three high-occupancy toll, or HOT, lanes from the Potomac River to Stafford County. Tolls would fluctuate based on the traffic volume to ensure that the lanes remain free-flowing at speeds of 65 miles per hour outside the Beltway and 55 mph inside. The lanes could open by 2010.

Writes Weiss:

In exchange for permission to build the road and keep toll revenue, the companies have also promised to pay for $390 million in new bus service, six park-and-ride lots with 3,000 spaces, interchanges and an extension of the roadway to eliminate a daily bottleneck in Dumfries.

Not only will this project will make a huge difference to travel in the I-95 corridor, it could prove to the be one of the most important transportation projects in the history of Virginia. If it works as billed, it could legitimize the concept of congestion pricing, an idea that has yet to generate much enthusiasm in the state, and create a template for other projects.

Give Northern Virginia an extra $500 million a year to spend on transportation, and the first dime isn’t spent before people start carping that it’s not enough. “The plan as passed puts only $200 million into Northern Virginia roads,” Del. Vivian Watts, D-Annandale, told the Times-Community newspapers. “I’m certainly not going to sneeze at it. But a billion dollars over a 20-year period [from the state] is not sustained enough.” (I’m not sure if those numbers all add up; I’m just quoting what I read. The sentiment is clear enough.)

Northern Virginians are supposed to be so bloody smart. They’ve got the highest education levels of anywhere in the country. They deploy the world’s most advanced technology. They do business at Internet speed. But when it comes to transportation policy, they’re stuck in a 19th century mindset. Tax, spend, build. Tax, spend, build. And instead of thinking creatively, they mope excessively about how unfairly they’re treated.

Get over it! Apply some of that brainpower to public policy!

There are well-understood mechanisms for raising capital to underwrite transportation projects. These mechanisms engage market forces, hew to the bedrock principle of user/beneficiary pays, and avoid the shortfalls of funneling money through Richmond, where the politicians and bureaucrats take their vigorish before recycling it back to Northern Virginia. I’ve written extensively about these ideas, so I will note them only briefly:

• Community Development Authorities. CDAs can finance improvements like Metro rail stations, bus lanes, interchanges, road widenings — any transportation infrastructure you can think of. Property owners pay off the bonds through the increased value of their real estate holdings that the transportation improvements make possible. If needed, local governments can give property owners an extra density allowance, which increases property values even more, as an added inducement.
• Congestion tolls. Charge motorists tolls for entering congested corridors or zones at rates that vary by the time of day. Tolls do three things: (1) They reduce traffic to optimal levels, thus increasing effective capacity; (2) they encourage motorists to change their behavior, modifying word schedules, telecommuting, carpooling, riding vans, riding buses, whatever; and (3) they provide revenue that can be used to increase the capacity of the affected corridor/zone.

That’s not the end of the story, of course. Raising the money for transportation improvements is only a part of the solution. Other vital pieces are to plan balanced communities, and to adopt more transportation-efficient land use patterns.

Northern Virginians aren’t just the best educated people in Virginia, they’re the richest. They can invent new technologies and business models out the wazoo, but they don’t want to change the way they get around. In the public realm, they’re addicted to Business As Usual. But I’m not buying it. They’ve got all the tools they need. It’s time to start using them.

Hallelujah! The Daily Press has seen the light — at least one anonymous pundit has. States an editorial today:

One way to ease the transportation problem is to get people off the roads. Most of the conversation is about building more roads, but if there were ways to have a meaningful reduction in highway demand, maybe we could save some money and aggravation.

Exactly what I’ve been saying for years! The Daily Press’ remedy is a bit more problematic.

Toward that end, here’s a thought, tossed out to be shot down or embraced: Give people a break on their state income tax if they live close to where they work. … Why not use the tax code to reward people for not clogging the highways?

I’m not wild about using the tax code for social/economic engineering. I believe in keeping tax rates flat and low. But it would be churlish for me to dwell on points of disagreement. The Daily Press, long a supporter of the tax-spend-build transportation paradigm is thinking outside the box. Rather than dwell on the problems with the DP proposal, I welcome the writer to Life Outside the Box. You never know where your inquiries will take you. My humble suggestion: If you want to link supply, demand and financing of transportation facilities, think congestion tolls and balanced communities.

Meanwhile, there is more evidence of sound thinking in the editorial:

People are choosing to commute, and that choice is driving the transportation problem. Yes, raising the fuel tax would be a way to deal with that problem – a negative incentive, some might call it, one that might discourage commuting and also raise money to build more roads. But more roads might make commuting easier, which might encourage more people to commute or commute farther. You could have a circle in which the “solution” contributed to the problem.

Yes, yes, just follow that line of logic a little further. You can’t build your way out of congestion… We need to use the infrastructure we have more efficiently… Congestion tolls will (a) encourage people to change their behavior and (b) generate revenues for transportation improvements, be they extra lanes, synchronized stoplights or Bus Rapid Transit, that ideally are spent in the same transportation corridor where the congestion exists.

This is so exciting! A Mainstream Media editorial writer who actually has something sensible to say. Maybe there’s hope after all.