Utility, Quality and Mobility: The Trans-Texas Corridor Plan

Aakash BhattChi WangJason Yeh

Prepared for Prof. Robert StraussPublic Expenditure AnalysisSpring 2005

Innertrode Consultants:

Today’s Agenda

1. Overview of the Trans-Texas Corridor Plan

2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis6. Concluding Thoughts

1. Overview of the Trans-Texas Corridor Plan

2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis6. Concluding Thoughts

Texas Facts

Texas is a center for international trade activities, located at the crossroads of North America.

79% of all U.S. – Mexico trade flows through Texas ports of entry.

The population of Texas (22 million) has increased 65% since 1988

Source: http://www.corridorwatch.org/ttc/cw-where.htm

1. Overloaded highway system due to population and passing traffic growth

2. Existing transportation infrastructure inadequate for future needs

3. Over-capacity leads to accidents4. Expanding existing highways is not cost-

effective 5. Hazardous material transporting is a

concern

Texas Transportation Issues

Population Predicted to Grow Rapidly in Next 25 Years

• 2000 Total Population: 20,900,000

•2030 Projected Total Population: 33,000,000

Source: http://www.keeptexasmoving.com/pdfs/Texas_Population.pdf

Increasing Truck Traffic a Threat to Transportation Safety

Source: http://www.keeptexasmoving.com/pdfs/Truck_Rail_Freight_Texas.pdf

•Freight Volume By Route (1998) •Truck and Rail Border Traffic by Year

The TTC: 4,000 Miles of New Roads to Criss-cross the State

Priority Corridors

Other Proposed Corridors

Source: http://www.corridorwatch.org/ttc/cw-where.htm

Dallas

• Centerville

Houston

Refined Study Area for Our Cost-Benefit Analysis

TTC-35

– Parallel to I-35

– Oklahoma Border to the Gulf Coast or Mexico

– 800 Miles in Length

Source: http://www.corridorwatch.org/ttc/cw-ttc35f2004map-start.htm

TTC-35 Structure

Source: http://www.cintra.es/

TTC Design Concepts

Source: http://www.cintra.es/

TTC: A Long-Term Solution for Traffic Problems

Relieves congestionReduces pollutionRe-routes of hazardous material

transportation Increases safetySaves timeEnhances development of economy

1. Overview of the Trans-Texas Corridor Plan

2. Costs3. Benefits4. Financing5. Synthesis- Sensitivity Analysis6. Concluding Thoughts

Cost

Quantifiable cost- Construction cost- Operation cost-

Unquantifiable cost- Environmental cost: Air pollution and noise- Aesthetic Impact- Barrier to non-car owners

- Cost of Sprawl- Dead weight loss (DWL) from taxes and tolls

Official Construction Cost Breakdown

Cost Table  

Item Cost/centerline mile

Roadway trucks/passenger vehicles 6997000

Grade-separation bridge structures 5175000

Interchanges 3195000

Commuter and freight rail 7357000

High-speed passenger rail 5000000

Utilities 3650000

Total 31374000

Low Official Cost Per Mile

TTC costs 31.37 million per centerline mile AVG 4 lane freeway costs 20 million Estimated real cost = 40 - 60 million

Operating Cost

Maintenance cost CostMaintenance cost per mile per lane 4656 lanes 2790800 miles 2232000

Unquantifiable cost

– Dead weight loss– Environmental cost– Aesthetic impact– Barrier to non-car owners– Cost of sprawl

Cost

 Officialestimate Worst Case

800 mile corridor (billion) 25.1 48right of way (billion) 2.34 7.6miscellaneous costs (billion) 1.6 4Real-estate tax loss for 50 yrs (billion) 1.17 5.36Financing Cost 19.6 29.41Maintenance Cost   0.06   0.06Deadweight Loss NA NAEnvironmental Cost NA NAOther Unquantifiable cost NA NATotal 50.36 94.44

1. Overview of the Trans-Texas Corridor Plan

2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis6. Concluding Thoughts

The Benefits that Matter

Toll Revenues Congestion Relief Faster transport Safety Economic Growth

$60.7 Billion of Benefits Over 50 Years

Toll Revenue Benefit

Assume Dallas-San Antonio corridor operational by 2010

Toll expected to be about $0.15/mile for cars and $0.48/mile for trucks

3.5% growth in traffic per year along I-35 TTC-35 is a partial substitute for I-35

$30 Billion Over 50 Years

Congestion Benefit

Cost savings from congestion relief (37%)– Congestion($)/traveler given by 2002 Urban

Mobility Report Benefit for 80 mph speed limit (25%) Benefit for commercial vehicle time (37%)

$22.5 Billion Over 50 Years

Truck lanes apart from car lanes (93%)– Includes monetary benefits + value of life– Lane designation benefit:cost ratio given by 2002

ATSSA Roadway Safety Program

Secure pipes for natural gas (7%)– Pipeline incident info given by Railroad

Commission of Texas

$1.25 Billion Over 50 Years

Safety Benefit

Source: HAZMAP website

Economic Growth from TTC-35

The Perryman Group forecasts– 2.6 million permanent jobs – $585 million in annual expenditures

Using Fed. Highway Administration multipliers,– 259,000 person-years of employment generated– Equal to 5,183 jobs for 50 years

$7 Billion Over 50 Years

1. Overview of the Trans-Texas Corridor Plan

2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts

Possible Financing Sources

Private Bonds Float Government Bonds Tolling Existing I-35 Federal funding Increase Gas Tax

"It is my belief that Texans, if given a choice, would prefer to pay an extra 10 cent per gallon gasoline tax rather than convert an existing highway to a toll road."— Senator Jeff Wentworth (November 7, 2003)

Source:http://www.senate.state.tx.us/75r/Senate/members/dist25/pr03/p110703a.htm

Official Legislation about Financing

2001 S.B.4 Texas Mobility Fund2005 H.B.3588 Art. 5 Conversion of non-toll state high way Art. 7 Issuance of bonds and other securities

(<$3 Billions) Art. 9 Motor Vehicle Taxes Fees: Court fees and public safety fees

Source: http://www.corridorwatch.org/ttc/cw-hb3588-toc.htm

1. Overview of the Trans-Texas Corridor Plan

2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis6. Concluding Thoughts

Costs BenefitsConstruction $29.04 Toll Revenue $18.04Operation $0.06 Congestion $14.84Financing $19.61 Safety $1.25Taxes Loss $1.65 Economic Development $6.97DWL $0.00 Total $41.11Total $50.3614Cintra :$29 - $36.7 billion dollarsNPV ($9)

Base case

CostAssumptions

2.70% Real estate tax rate0.06000 Cost per center mile

38.00000 Right of way20.00000 Miscellaneous costs

4.00% Financinf bond rate

BenefitAssumptions

6% Discount Rate3.15% Traffic Growth per year

45% Truck volume of I-35 that will use TTC I-3520% Car volume of I-35 that will use TTC I-350.15$ Toll per mile for cars0.48$ Toll per mile for trucks

1.30% inflation rate for car tolls2.30% inflation rate for truck tolls

1.25 passengers/vehicle13.45 $ per person per hour25% Lane designation portion of safety cost50% percentage of direct workers from Texas25% percentage of indirect workers from Texas10% percentage of workers from Texas

Costs BenefitsConstruction $59.60 Toll Revenue $10.10Operation $0.06 Congestion $11.43Financing $29.41 Safety $0.55Taxes Loss $5.37 Economic Development $5.02DWL $0.00 Total $27.10Total $94.4396Cintra :$29 - $36.7 billion dollarsNPV ($67)

Worst Case

CostAssumptions

2.70% Real estate tax rate0.06000 Cost per center mile

38.00 Right of way20.00 Miscellaneous costs

6.00% Financinf bond rate

BenefitAssumptions

6% Discount Rate3.15% Traffic Growth per year

35% Truck volume of I-35 that will use TTC I-3510% Car volume of I-35 that will use TTC I-350.15$ Toll per mile for cars0.40$ Toll per mile for trucks

1.00% inflation rate for car tolls1.00% inflation rate for truck tolls

1 passengers/vehicle10 $ per person per hour

10% Lane designation portion of safety cost35% percentage of direct workers from Texas20% percentage of indirect workers from Texas

5% percentage of workers from Texas

Parameters for the NPV predictionCostAssumptions

Uniform2.70% Real estate tax rate

0.06000 Cost per center mile (0.03137-0.06) billion38.00 Right of way (11.7-38) billion/4000 miles (2,34-7.6) billion/800 miles20.00 Miscellaneous costs (8-20) billion/4000 miles (1.6-4) billion/800 miles

6.00% Financinf bond rate (4%-6%)

BenefitAssumptions

Uniform6% Discount Rate 3%-6%

3.15% Traffic Growth per year 3.15%-3.85%35% Truck volume of I-35 that will use TTC I-35 35%-55%10% Car volume of I-35 that will use TTC I-35 10%-30%

0.15$ Toll per mile for cars 0.15-0.20.40$ Toll per mile for trucks 0.4-0.6

1.00% inflation rate for car tolls 1%-3%1.00% inflation rate for truck tolls 1%-3%

1 passengers/vehicle 1 --210 $ per person per hour 10--20

10% Lane designation portion of safety cost 10%-30%35% percentage of direct workers from Texas 35%-55%20% percentage of indirect workers from Texas 20%-30%5% percentage of workers from Texas 5%-15%

Sensitivity Analysis by Crystal Ball Predictor – 2000 Trials

We have 95% confidence that there are 20% chance for this project have positive NPV.

1. Overview of the Trans-Texas Corridor Plan

2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts

Problems or constraints

The Corridors do not directly connect large cities.

Topography will also be very important because of the high-speed rail component of the Corridor.

Corridor must be as straight and level as possible (no uphill or downhill grades or sharp turns).

Source: http://www.corridorwatch.org/ttc/cw-where.htm

Concluding Thoughts

Should Texas stop the project?-Yes, because the NPV is negative for 80% of the time.

However, Texas already signed the contract, the project will continue.

The state government should hold off investments for other sections until TTC-35 shows promising results.

Works Cited

Corridor Watch Org, http://www.corridorwatch.org/ttc/cw-where.htm Crossroads of the Americas: Trans Texas Corridor Plan,

http://www.keeptexasmoving.com/publications/files/ttc_report_full.pdf Question: Gas Tax Increase or Toll Roads?

http://www.senate.state.tx.us/75r/Senate/members/dist25/pr03/p110703a.htm Keep Texas moving Web, http://www.keeptexasmoving.com/ Cintra Web, http://www.cintra.es/ “ATSSA’s Roadway Safety Improvement Program: Economic Impact of $3.0 Billion

Annual Safety Initiative”, American Economics Group, Inc., November 2002 Railroad Commission of Texas Website, http://www.rrc.state.tx.us Perryman, Ray M., “The Net Economic Benefits of the Trans Texas Corridor,” The

Perryman Group, January 2002 HAZMAP website, http://www.hazmap.dfwinfo.com/risk_assessment/Chapter4.asp Schrank, David and Lomax, Tim, “2002 Urban Mobility Report”, Texas Transportation

Institute and the Texas A&M University System, June 2002 “Summary: Economic Impacts of Federal-Aid Highway Investment,” Federal Highway

Administration, December 1999