US Sec Mary Peters calls for end to cash tolling by 2014, discussion of $-crisis at IBTTA

US secretary of transportation Mary Peters this week called for the toll industry association IBTTA to work for the elimination of all toll booths in the US by 2014. The last ones "should be sent to the Smithsonian (Museum)," she said. Peters extolled the advances which have been made in electronic tolling and open road toll collection, and argued for universal all-electronic toll (AET) collection and traffic management with variable pricing.

Peters: "I would like to issue a challenge to the toll road operators here today. You hold the key to speeding the transition to open-road tolling, the key to attracting more investment, and the key to unlocking gridlock through dynamic pricing. Open-road tolling equipment can be installed quickly and easily, and I am asking you to commit to making tollbooths obsolete in the United States of America by the time the next surface transportation authorization expires. Let’s send these relics the way of the horse-and-buggy."

The next federal surface transportation authorization is expected to run from 2009 to 2014.

Peters was speaking at the IBTTA transportation finance summit at the Fairmont Hotel in Washington DC to a crowd of about 200 attendees. At the conclusion of her talk she was presented with an award by IBTTA executive Pat Jones.

The secretary said we must "wean ourselves from fuel taxes"  and institute what she called a smarter and more sustainable method of financing.

"This past year has dramatically highlighted the contradictions inherent in relying on gas taxes to fund surface transportation. September marked the 11th straight month that Americans have put fewer miles on their cars and trucks than the month before. And consistent with our national objective to reduce fossil-based fuel consumption, our vehicles are becoming more fuel efficient than ever."

"Remove restrictions on tolling..."

Peters said the Congress should "remove restrictions on tolling on our Interstates and provide states with greater flexibility to implement electronic road pricing."

"We have come a long way from the days when toll collection was limited to expensive, unsightly toll booths, accompanied by long lines and backups and frustrated drivers fishing for change. Technology has given us high-speed, open-road tolling."

She congratulated the industry on having 24 million electronic toll transponders in use, and cited the cashless, highway speed tollroads now coming into use. The "stubborn bottlenecks" of the past are being relieved almost overnight she said with management of roads by variable pricing.

"But we are only just beginning to tap the potential of this simple but powerful technology."

Then she issued the "challenge" to make tolling universally all-electronic saying: "You hold the key to speeding the transition to open-road tolling, the key to attracting more investment, and the key to unlocking gridlock through dynamic pricing."

In order to compete in the 21st century global economy, she said, America needs to acquire world-class transportation infrastructure – something we can only achieve by "abandoning the methods we know do not work, and pursuing new ones that do."

The great crisis of finances

Peters had an interesting angle on the great financial crisis saying it made roads a relatively more solid investment.

"I recognize that the financial market is in upheaval right now. There are implications, one being that infrastructure just went from a safe investment to a smart investment. A year ago, a 5-to-6 percent return on transportation might have seemed modest compared to the double- and triple-digit figures being touted on mortgage-back securities and hedge funds. But in today’s environment, transportation represents an attractive investment – one that is literally backed in concrete. And when capital begins to flow again, transportation is a natural first place for those investment dollars to go."

Most other speakers at the forum were more focussed on immediate disruptions.

Susan Buse, IBTTA president and treasurer of North Texas Tollway Authority hit a common theme in saying present financial conditions are unprecedented in living memory and have generated huge "anxiety, uncertainty, anger and fear." She said that while the situation is very serious it will pass, using a metaphor of seasons.

Jordi Graells of Abertis said that while borrowing has become more difficult for many there are still "hundreds of billions of dollars" in private capital ready to be invested  and that this can "double or triple" what government is likely to provide.

"Let market resources multiply what you have" was his message to the Obama administration, he said.

Frank McArdle of the New York General Contractors Association said that he's afraid political obstacles will "prevent those stimulus dollars moving."

We mustn't repeat the mistakes of the Great Depression when private capital was discouraged, he said.

Robert Atkinson a Washington thinktanker said there was a danger the financial crisis would be used to impose unproductive policies based on unrealistic expectations of mode shift to transit. It needed to be recognized that people will still rely basically on private vehicles. The focus should be on pricing the use of private vehicles properly and on changing the technology of their propulsion.

Dan Heimowitz of RBC Capital said while there has been an unprecedented flight to quality in lending and "spreads" pushing common borrowing from 5.5% to 7% that make a lot of debt unworkable, equity capital is "still looking at infrastrtucture as very safe and very attractive".

And he said there are benefits from the recession, notably "plummeting prices" of steel, cement and other materials.

Tolls, he said, are being seen for their value in pricing road use, not just as cost recovery.  However to get roads built there will have to be higher ratings of bond debt:

"BBB just won't sell at all. The municipal market is broken."

Heimowitz also called for simplicity in financing: "No one has any appetite to look at anything complicated."

Carol Rein of Merrill Lynch said the collapse of the muncipal bond market was severe. She said the failure of Port Authority New York New Jersey to get a single bid for its $300m of bonds was particularly shocking.

"The Port Authority is the gold standard. They've been around since the beginning of this market. They are very strong. It's the first time in history."

Brad Gewehr of UBS said the municipal markets are severly hampered by the disappearance of bond insurance.

"The bond insiurers are all sidelined, or defunct... many innocent bystanders have been trampled in the stampede."

He said about half the deals in the pipleline are off, waiting to see where things go. It is not clear what will take the place of bond insurance and loss of confidence in ratings, Gewehr said. Rating agencies themselves are uncertain and many securities are now unrated.

David Joyner CEO of the North Carolina Turnpike Authority said the collapse of the credit markets has forced his authority to put its financing on hold. NCTA needs to raise around $600m in the capital markets for their Triangle Expressway project that is now ready to go.

"We're in port waiting for the big storm to pass. We just have to sit and wait it out," Joyner said.

TOLLROADSnews 2008-12-10