Not everyone is on board with the new way of thinking about freeways. Defenders of the status quo have raised many arguments against both congestion pricing and public-private partnerships, causing delays in various projects and engendering ongoing debates in transportation circles. Here are replies to some of the most common criticisms:
Toll lanes are only for the wealthy.
This is the classic “Lexus Lanes” argument that comes up whenever a high-occupancy toll (HOT) lane or express toll lane is proposed. It is foolish in the sense that we can choose from various levels of quality, for different prices, everywhere else in our lives (Starbucks vs. Maxwell House, FedEx vs. U.S. Postal Service, even first-class vs. coach seats on government-run Amtrak). It is also false: We have extensive data showing that people of all income levels use toll lanes and appreciate having the choice. On any given day, a large majority of those who choose the pay lanes are people who do so only once or twice a week, for particularly time-sensitive trips—an expense that even people of modest means can afford.
Concessions are a foreign idea that should be rejected in the land of the freeway.
While it is true that toll concessions have an established track record dating back to the 1960s in Europe, and the late 1980s and ’90s in Australia and Latin America, the idea also has a long American pedigree.
As George Mason University economist Daniel Klein has documented, most 19th-century American highways were developed as toll concessions—first in the Northeast, later into the Midwest, and finally in California, Nevada, and other parts of the developing Southwest. The concept was also applied to toll bridges in the first part of the 20th century, including the Ambassador Bridge in Detroit and several of the toll bridges in the San Francisco Bay Area. What we are seeing now is the revival of a venerable American idea.
Foreign companies should not be buying up our highways.
Some critics have noted that companies based in other countries have taken the lead in most of the large toll road and toll lane projects. That’s because until very recently the United States had no companies with expertise in this business.
America has world-class companies that can design and build such facilities, but financing, managing, and operating them as successful businesses is something they had never been asked to do—and hence have no experience with. So it’s no surprise that toll companies from Australia, France, and Spain have become major players in the emerging U.S. toll lane and toll road marketplace. But the “foreignness” of these projects is greatly exaggerated.
First, these companies are all from countries that are longtime U.S. allies. Second, nearly all the subcontractors that actually build and maintain these projects are local firms providing local jobs. (For example, 71 of the 72 firms working on the LBJ project in Dallas are based in the U.S.) Third, many of these projects are being developed by joint ventures between a global firm (e.g., Transurban) and a U.S. firm (e.g., Fluor). Spain’s Cintra partnered with the well-respected Texas-based Zachry Construction for its first large concession project in that state. Zachry subsequently formed Zachry American Infrastructure to pursue concession projects on its own or in partnership with others. Moreover, several hundred global infrastructure investment funds have been created in the last decade, and 54 percent of the capital for the 30 largest comes from North America, with another 33 percent from Australia.
The private sector is skimming off the cream.
This objection has come from some left-wing groups but more forcefully from government toll agencies in Pennsylvania and Texas. Seeing public-private partnership toll projects as unwanted competition, these agencies have used their clout with state legislators to defeat Gov. Ed Rendell’s plan to lease the Pennsylvania Turnpike and to overturn a Texas Department of Transportation decision to award one Dallas-area toll project to the winning private-sector bidder. The fight over “local primacy” for Texas toll agencies led to a two-year moratorium on any additional concessions in 2008 and 2009, subsequently partially lifted.
But in other states, such as Florida, cooler heads have prevailed. The Florida Turnpike and local toll agencies in Miami, Orlando, and Tampa seem to have made their peace with public-private partnerships, recognizing that the private sector can take on greater risks in financing large projects and can therefore play a complementary role.
Setting toll rates is too difficult.
In 2003 I participated, as a consultant to the Florida Department of Transportation, in the first briefing of the Miami-Dade County metropolitan planning organization’s board, on what became the I-95 Express lanes project. One of the first questions from the local elected officials on the board was how they would set the toll rates, which we had explained would have to be variable to enable traffic to flow without congestion. It took several years of presenting evidence and ultimately one-on-one briefings to persuade them that the toll rates would have to be outside politicians’ control in order to work properly. The good news is that officials increasingly understand this. When the Orange County Transportation Authority purchased the successful 91 Express Lanes in 2003, it retained the variable-pricing model developed by the project’s original private owner, despite considerable political pressure to abandon it.
It’s not right for people to make a profit from highway users.
Both the left and the right make this argument. It’s a favorite theme of the Public Interest Research Group, whose reports on the subject are full of scorn for profit-hungry corporations. But it also bubbles up from the populist right wing, as in this June 2011 complaint from Texans Uniting for Reform and Freedom (TURF): “It’s piracy of the public’s assets, and state lawmakers of both parties have passed these bills by huge margins, effectively selling off what doesn’t even belong to them—our roads and infrastructure belong to the PEOPLE of Texas.” The same group also calls tolls “taxes,” apparently unable to understand the principle of users pay, users benefit.