Wednesday 12 March 2014

City of Cupertino’s opposition to HOT lane misguided

According to the San Jose Mercury News, the City of Cupertino is opposing a proposed conversion of a HOV lane on California State Route 85 on grounds that unfortunately very misguided and seem to more of a kneejerk response to political polemic than being evidence based. The proposal is to convert existing HOV lanes on the highway to HOT lanes, extending them slightly to the south on route 101. Full details are given here. 

It includes adding a lane between SR80 and I-280 by using the median strip land, another auxiliary lane and some bridge widening. Santa Clara Valley Transportation Authority and Caltrans are pushing the project, which has yet to be approved for funding, to get better utilisation out of existing lanes, whilst preserving the lanes availability for HOVs included buses.  Cupertino appears almost ideologically opposed to the project.

The FAQs about the project and how the lanes will work from here, but I find Cupertino's concerns (detailed here) as worthy of a response.  I also think they miss my key criticism of HOT lane schemes - that they don't always appear to be based on financial or economic viability.

The key objections from Cupertino are: 
  • The HOT lane could “hinder of preclude” LRT. This is because of a desire to use the median strip for LRT. I would doubt if a LRT line that follows a highway that is effectively the San Jose bypass could readily be justified in any case. The City is concerned no public transit alternative was considered, although the HOT lanes could facilitate rapid bus services, this isn’t what is really meant. It is unclear how a new LRT line would get anywhere near the expected demand of this project. 
  • Widening highways is “antiquated”. Yet there is little widening, with additional capacity being taken from the median strip on part of the route. Is it antiquated to provide more capacity at low cost that is then charged to those who use it? Hardly. It is quite innovative.
  • “Discourage car pooling”. The only reason to raise this is that the HOT lane will have more use, but if the pricing is done right (to maintain quality of service) it should have little effect, except that maybe a few carpoolers would rather pay a toll and drive themselves. 
  • “Discourage electric vehicles”. That is even less clear, it is difficult to see how this would make any difference.  It is notable that there would remain a toll exemption for "clean air vehicles with applicable decals".
  • “Poor people should not be required to travel more slowly than those with more money”. 
 his last point is worthy of more attention. It is easy to dismiss this as ludicrous. You may as well say the poor should get subsidised airfares, or cars, but the real point here is a belief that paying to bypass congestion is “wrong”. However, the assumption appears to be that wealthy people will pay to use HOT lanes and poorer people will not, when the actual factor is value of time. There will be a greater willingness to pay the more money you have, but that isn’t as critical as the time value of a specific trip. e.g. travel time reliability to correspond to an appointment or a flight may be more important. 

Yet surely the question in response is what does the HOT lane conversion take away? 

The untolled lanes remain the same. Carpoolers still maintain access to superior service. What is available is that a minority of users, who are travelling alone, can buy premium service if they wish. The price of that will vary according to demand, and so ensure that those users and carpoolers (arguably, the most efficient users of road space other than buses and trucks), have a reliable trip. You’d think that a city that hosts one of the world’s great capitalist enterprises would have a culture that would embrace a more commercial, competitive and choice oriented approach to transport that includes incorporating price into the usage of highways. Sadly it is demonstrating quite the opposite. 

There is a useful point though. The claim that as all taxpayers pay for the road including the HOT lane conversion, then it is wrong that only a few can pay to use it. Yet this is no difference at all from the public transit infrastructure that is taxpayer funded, but still requires a ticket to be bought to use the service. Much of the rest of the objections are standard “anti-road building” ones that simply consider any effort to improve traffic flow on a highway that involves improving conditions for road users as automatically being bad for the environment, for users of other modes and the like. I do have one criticism of these projects. They should be self-funded, as any project that involves charging motorists more should be able to pay for itself.

Unfortunately, the material I could find did not make it clear whether the revenue that would be raised would be sufficient to pay for the project.   What IS said is that revenue will be spent on maintenance and on public transit, indicating a strange set of cross subsidies.  The capital tied up in the project is effectively spent, then written off.  

I like HOV-HOT lane conversions as they are a good way of improving utilisation of scarce road space and introducing dynamic pricing, but they shouldn't be done at any cost, but rather only cases where net revenues and net benefit/cost appraisals make them worthwhile.

It is notable that in the "Project Study Report To Request Conceptual Approval" there is absolutely no economic appraisal of any kind.  That's not the fault of those who wrote the report, but rather a funding and project approval framework that doesn't consider it at this stage.

It is possible that this project could generate enough revenue, over 30 years to pay for its amortised capital costs, and that it will generate net economic benefits (which primarily are captured by those paying to use it anyway, but also captured by users of untolled lanes who gain from the shift to the HOV lanes, offset by a mild reduction in service for HOVs).  However, to tackle the critics advocates of HOT lanes need to do this work.

It is not commonplace in the United States, but it is time that highways in the US get treated as economic assets, treated on an accounting basis like commercial assets - with capital value and depreciation.  Then such projects can be evaluated for their financial viability, and if that does not deliver financial sustainability, justify public subsidy on the basis of economic appraisal.

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