utility, quality and mobility: the trans-texas corridor plan aakash bhatt chi wang jason yeh...
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Utility, Quality and Mobility: The Trans-Texas Corridor Plan
Aakash Bhatt
Chi Wang
Jason Yeh
Prepared for Prof. Robert StraussPublic Expenditure AnalysisSpring 2005
Innertrode Consultants:
Today’s Agenda
1. Overview of the Trans-Texas Corridor Plan
2. Costs
3. Benefits
4. Financing
5. Synthesis – Sensitivity Analysis
6. Concluding Thoughts
1. Overview of the Trans-Texas Corridor Plan
2. Costs
3. Benefits
4. Financing
5. Synthesis – Sensitivity Analysis
6. 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 accidents
4. 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. Costs
3. Benefits
4. Financing
5. Synthesis- Sensitivity Analysis
6. 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 Cost
Maintenance cost per mile per lane 465
6 lanes 2790
800 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 48
right of way (billion) 2.34 7.6
miscellaneous costs (billion) 1.6 4
Real-estate tax loss for 50 yrs (billion) 1.17 5.36
Financing Cost 19.6 29.41
Maintenance Cost 0.06 0.06
Deadweight Loss NA NA
Environmental Cost NA NA
Other Unquantifiable cost NA NA
Total 50.36 94.44
1. Overview of the Trans-Texas Corridor Plan
2. Costs
3. Benefits
4. Financing
5. Synthesis – Sensitivity Analysis
6. 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. Costs
3. Benefits
4. Financing
5. 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 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
1. Overview of the Trans-Texas Corridor Plan
2. Costs
3. Benefits
4. Financing
5. Synthesis – Sensitivity Analysis
6. 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 dollars
NPV ($9)
Base case
CostAssumptions
2.70% Real estate tax rate0.06000 Cost per center mile
38.00000 Right of way20.00000 Miscellaneous costs
4.00% Financinf bond rate
BenefitAssumptions
6% Discount Rate3.15% Traffic Growth per year
45% Truck volume of I-35 that will use TTC I-3520% Car volume of I-35 that will use TTC I-350.15$ 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 dollars
NPV ($67)
Worst Case
CostAssumptions
2.70% Real estate tax rate0.06000 Cost per center mile
38.00 Right of way20.00 Miscellaneous costs
6.00% Financinf bond rate
BenefitAssumptions
6% Discount Rate3.15% Traffic Growth per year
35% Truck volume of I-35 that will use TTC I-3510% Car volume of I-35 that will use TTC I-350.15$ 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 Texas5% percentage of workers from Texas
Parameters for the NPV prediction
CostAssumptions
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. Costs
3. Benefits
4. Financing
5. 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