As Charlotte, the Triangle, the Triad, and other communities debate the addition of light rail to their transit systems, it may be worthwhile to consider its success where systems are already in place. With the release of the 2000 Census data, the Ohio-based Buckeye Institute prepared an analysis of light-rail trends that should prove enlightening to North Carolina policymakers.
What the data reveal is that in U.S. cities with major rail lines, transit ridership is either declining significantly or increasing only slightly.
Between 1990 and 2000, the share of people traveling to work on public transit was flat or fell in major metropolitan areas. The decline in public transit’s share of ridership to work fell 22.5 percent in Atlanta and 18.4 percent in Washington, D.C. San Diego’s public transit system gained 2.6 percent, and Denver gained 2 percent.
Dallas undertook a major transit investment to open three light-rail lines and one commuter rail line in the last decade, yet ridership declined 23 percent from 1990 to 2000.
Light rail’s difficulty in reversing the trend away from transit may be due to the fact that it is usually focused on downtown. Population and employment growth have shifted outside downtowns. According to one estimate, on average, 90 percent of employment occurs outside city centers.
Light rail also faces competition from less-expensive options such as carpooling and telecommuting. Telecommuting made significant gains in market share in nearly every major metropolitan area from 1990 to 2000. Washington, D.C.’s grew by 20 percent, Denver and Dallas by 30 percent, and Atlanta’s by nearly 56 percent.
Interstate usage up
Meanwhile, increased traffic on interstate highways is beginning to choke the system’s capacity to move people and goods, concludes a report by the Road Information Program, a Washington, D.C.-based nonprofit group supported by the transportation industry. According to the report, travel on the nation’s 45,000 miles of interstates increased by 37 percent between 1991 and 2001. But the number of miles added to the system during the 10 years has increased by only 5 percent.
Congestion has grown so bad on interstates in metro areas that two out of every five miles of urban interstate highways experience significant traffic delays on a daily basis. The five states with the busiest interstates are California, Maryland, Minnesota, Rhode Island, and Washington.
Drawing on data from the Federal Highway Administration, the report predicted that traffic on the system will increase by 42 percent over the next two decades, while truck traffic is expected to grow by 54 percent.
There was some good news, however. The amount of interstate miles listed in poor or mediocre condition fell from 27 percent in 1996 to 16 percent in 2001. In 1996, 25 percent of interstate bridges were rated as either structurally deficient or functionally obsolete — a figure which dropped to 21 percent in 2001.
Toll road contracts
Transportation agencies are franchising highway construction and operation to private firms in order to reduce costs and attract private capital. The right to build and operate the highways are auctioned to bidders who recoup their investment by collecting tolls. But the two private highway franchises operating in the United States have encountered serious problems.
Researchers at Yale University and the University of Chile suggest a variation on the classic Demsetz auction, which awards the franchise to the bidder who asks for the lowest toll.
Under the new proposal, firms would compete on the basis of the minimum toll revenue (in present value terms) requested by bidders — a Present Value of Revenues (PVR) auction. In a PVR auction, regulators set a maximum toll, and the firm that wins the contract is the one that bids the least present value of toll revenue.
This modified Demsetz auction has a number of advantages. It reduces risk and thus lowers the return required by bidders. It reduces the need for guarantees and the scope for future renegotiations. In addition, the transit authority can adjust the tolls in response to changed conditions without harming the franchise holder.
Moreover, the franchise is flexible because it can incorporate a buyout option that leaves both parties satisfied, so that widening the road itself or allowing free competitors to widen the road in response to increased traffic is not an issue.
For more information, see: Eduardo Engel, Ronald Fischer and Alexander Galetovic, “A New Approach to Private Roads,” Regulation, Fall 2003, Cato Institute.
Lowrey is an associate editor at Carolina Journal.