Government Issues

New Rail Projects Continue in Climate of Fiscal Restraint

Posted on September 23, 2013 by Cliff Henke and Ivan Gonzalez

Page 3 of 3

Oregon has adopted a voluntary pilot vehicle miles-travelled fee, allowing up to 5,000 registered car owners to pay 1.5 cents per mile instead of paying the state gas tax at the pump.
Oregon has adopted a voluntary pilot vehicle miles-travelled fee, allowing up to 5,000 registered car owners to pay 1.5 cents per mile instead of paying the state gas tax at the pump.

Interesting bellwether
Another example of how urban rail projects will be funded and financed in a post-MAP-21 future might be found in Los Angeles. Several voter-approved sales tax increases over the past three decades, most recently Measure R in 2008, have allowed the Los Angeles County Metropolitan Transportation Authority (Metro) to provide a stable funding stream to match federal New Starts and leverage TIFIA dollars. Indeed, Los Angeles is currently in the midst of a rail transit construction boom, with three major rail projects slated to begin construction within the coming year.

One of the projects prioritized through 2008’s Measure R, and included in Metro’s long-range plans, is a potential transit and/or highway improvement project through the perennially congested Sepulveda Pass.

The Sepulveda Pass provides an important transportation link across the Santa Monica Mountains between the household-dense San Fernando Valley and major employment and activity centers in Los Angeles County’s Westside. The I-405 Freeway is one of the most traveled urban highways in the U.S., according to the Federal Highway Administration (FHWA) with an average annual daily traffic of 374,000 vehicles in 2010.

In late 2012, Metro completed the Sepulveda Pass Corridor Systems Planning Study, an initial study that evaluated potential transit and/or highway capacity improvements beyond those currently being constructed as a part of the I-405 Sepulveda Pass Improvements Project. This study evaluated six broad level concepts — from BRT, light rail (LRT) and heavy rail transit (HRT) to highway improvements, including High Occupancy Toll (HOT) lanes and tolled tunnels, and at-grade and above and/or below grade-separated rail alignments. Development of these concepts took into account travel markets, engineering constraints and environmental issues.

Even with Measure R funding, a transit or highway project over the Sepulveda Pass may require additional funding and financing to accelerate construction. To this end, the Metro board has recommended further study of a PPP to implement toll lanes and expedite funding and construction of one of the concepts. Under this funding scenario, a private development consortium would provide funding to construct a project through the Sepulveda Pass and Metro would grant the consortium a franchise to possibly operate and maintain the new facility for a number of years to recover their capital investment.  

Although no individual concept has been chosen as the preferred alternative to date, several of the concepts being contemplated have potential for PPP application. Aside from its initial study and the recommendation by its board to further study a PPP as a potential funding and project acceleration strategy, Metro has not moved forward with any other plans or decisions related to a potential highway and/or transit project through the Sepulveda Pass.

Short, long-term implications
How all three levels of government will respond to both the growing demand for public transport infrastructure to meet the challenge of a changing economy as well as the growing interest in PPPs to help fund this demand will shape the future of public transportation infrastructure funding. More state and local revenue and PPP approaches could lessen the pressure for Congress to come up with increased resources to fund the next reauthorization. The CBO estimated that to finance a six-year program at current spending levels would require roughly $320 billion ($53 billion/year), but projected revenues in the Highway Trust Fund would leave an unfunded gap of $80 billion.

However, others argue that greater federal involvement than the currently provided is being demanded more than ever to meet the national international challenges of climate change, global economic competitiveness and other forces of economic and social change in America. The American Public Transportation Association will ask for a six-year authorization of $100 billion, which assumes that federal share of capital projects remains at the recent history of 40%. Any less would reduce the federal share of public transportation investment to levels not seen in many decades.

Cliff Henke is a senior analyst and assistant VP at Parsons Brinckerhoff.
Ivan Gonzalez is a transportation planner at Parsons Brinckerhoff.
Both are based in Los Angeles.

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