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Utility, Quality and Mobility: The Trans-Texas Corridor Plan
Aakash BhattChi WangJason Yeh
Prepared for Prof. Robert StraussPublic Expenditure AnalysisSpring 2005
Innertrode Consultants:
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Today’s Agenda
1. Overview of the Trans-Texas Corridor Plan
2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis6. Concluding Thoughts
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1. Overview of the Trans-Texas Corridor Plan
2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis6. Concluding Thoughts
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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
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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
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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
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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
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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
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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
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TTC-35 Structure
Source: http://www.cintra.es/
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TTC Design Concepts
Source: http://www.cintra.es/
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TTC: A Long-Term Solution for Traffic Problems
Relieves congestionReduces pollutionRe-routes of hazardous material
transportation Increases safetySaves timeEnhances development of economy
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1. Overview of the Trans-Texas Corridor Plan
2. Costs3. Benefits4. Financing5. Synthesis- Sensitivity Analysis6. Concluding Thoughts
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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
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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
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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
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Operating Cost
Maintenance cost CostMaintenance cost per mile per lane 4656 lanes 2790800 miles 2232000
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Unquantifiable cost
– Dead weight loss– Environmental cost– Aesthetic impact– Barrier to non-car owners– Cost of sprawl
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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
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1. Overview of the Trans-Texas Corridor Plan
2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis6. Concluding Thoughts
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The Benefits that Matter
Toll Revenues Congestion Relief Faster transport Safety Economic Growth
$60.7 Billion of Benefits Over 50 Years
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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
$30 Billion Over 50 Years
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Congestion Benefit
Cost savings from congestion relief (37%)– Congestion($)/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
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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
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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
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1. Overview of the Trans-Texas Corridor Plan
2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts
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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
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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
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1. Overview of the Trans-Texas Corridor Plan
2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis6. Concluding Thoughts
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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
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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
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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%
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Sensitivity Analysis by Crystal Ball Predictor – 2000 Trials
We have 95% confidence that there are 20% chance for this project have positive NPV.
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1. Overview of the Trans-Texas Corridor Plan
2. Costs3. Benefits4. Financing5. Synthesis – Sensitivity Analysis 6. Concluding Thoughts
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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
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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.
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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
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