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

1. Utility, Quality and Mobility: The Trans-Texas Corridor Plan Prepared for Prof. Robert StraussPublic Expenditure AnalysisSpring 2005 Aakash Bhatt Chi Wang Jason Yeh Innertrode Consultants:

2. Today’s Agenda • Overview of the Trans-Texas Corridor Plan • Costs • Benefits • Financing • Synthesis – Sensitivity Analysis • Concluding Thoughts

3. Overview of the Trans-Texas Corridor Plan • Costs • Benefits • Financing • Synthesis – Sensitivity Analysis • Concluding Thoughts

4. 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

5. Texas Transportation Issues • Overloaded highway system due to population and passing traffic growth • Existing transportation infrastructure inadequate for future needs • Over-capacity leads to accidents • Expanding existing highways is not cost-effective • Hazardous material transporting is a concern

6. 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

7. Increasing Truck Traffic a Threat to Transportation Safety • Freight Volume By Route (1998) • Truck and Rail Border Traffic by Year Source: http://www.keeptexasmoving.com/pdfs/Truck_Rail_Freight_Texas.pdf

8. Priority Corridors Other Proposed Corridors The TTC: 4,000 Miles of New Roads to Criss-cross the State Dallas • Centerville Houston Source: http://www.corridorwatch.org/ttc/cw-where.htm

9. 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

10. TTC-35 Structure Source: http://www.cintra.es/

11. TTC Design Concepts Source: http://www.cintra.es/

12. TTC: A Long-Term Solution for Traffic Problems • Relieves congestion • Reduces pollution • Re-routes of hazardous material transportation • Increases safety • Saves time • Enhances development of economy

13. Overview of the Trans-Texas Corridor Plan • Costs • Benefits • Financing • Synthesis- Sensitivity Analysis • Concluding Thoughts

14. 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

15. Official Construction Cost Breakdown

16. 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

17. Operating Cost

18. Unquantifiable cost • Dead weight loss • Environmental cost • Aesthetic impact • Barrier to non-car owners • Cost of sprawl

19. Cost

20. Overview of the Trans-Texas Corridor Plan • Costs • Benefits • Financing • Synthesis – Sensitivity Analysis • Concluding Thoughts

21. The Benefits that Matter • Toll Revenues • Congestion Relief • Faster transport • Safety • Economic Growth $60.7 Billion of Benefits Over 50 Years

22. 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

23. 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

24. Safety Benefit • 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 Source: HAZMAP website

25. 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

26. Overview of the Trans-Texas Corridor Plan • Costs • Benefits • Financing • Synthesis – Sensitivity Analysis • Concluding Thoughts

27. 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

28. Official Legislation about Financing 2001 S.B.4 • Texas Mobility Fund 2005 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

29. Overview of the Trans-Texas Corridor Plan • Costs • Benefits • Financing • Synthesis – Sensitivity Analysis • Concluding Thoughts

30. Base case

31. Worst Case

32. Parameters for the NPV prediction

33. Sensitivity Analysis by Crystal Ball Predictor – 2000 Trials • We have 95% confidence that there are 20% chance for this project have positive NPV.

34. Overview of the Trans-Texas Corridor Plan • Costs • Benefits • Financing • Synthesis – Sensitivity Analysis • Concluding Thoughts

35. 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

36. 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.

37. 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