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Bankruptcy Info for Colorado

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					      COLORADO TRANSPORTATION FINANCE
     1. Governor Ritter‟s Blue Ribbon Panel on Transportation
     Finance and Implementation
           •Kicks off April 2007, for one year (?)
           •A result of Federal Act (below)


     2. Federal National Surface Transportation Policy and
     Revenue Commission
           •Created under Section 1909 of the Safe, Accountable,
           Flexible, Efficient Transportation Equity Act—A Legacy
           for Users (SAFETEA-LU).
           •Future changes in mpg, VMT etc = revenue changes
           and reductions


Albert G. Melcher MS, APA   3/24/2007                               1
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COLORADO TRANSPORTATION FINANCE

We are in a non-sustainable situation

   •July 1, 1935: HUTF (purpose: farm-to-market))

   •Built-in decisions (lobbying power)

   •We created a roadway monster demanding more
   and more “feed”

   •Infrastructure neglect

   •Ignoring externalities, especially sustainability of
   resources



                                                           3
                           The “Gap”:
 Statewide Transportation Funding, CDOT 2030 Plan

 Scenario: 25-year time frame           Revenue           Gap
CDOT Forecast Revenue                  $28 Billion
Others (Local gov.) Forecast Revenue   $36 Billion

Total Forecast Revenue                 $64 Billion
CDOT Cost to Sustain                   $67 Billion     $39 Billion

Others Cost to Sustain                 $56 Billion     $20 Billion

Total Cost to Sustain                  $123 Billion    $59 Billion

CDOT Vision (Enhanced) Cost            $94 Billion     $66 Billion

Others Vision (Enhanced) Cost          >$73 Billion    >$37 Billion
Total Vision Cost                      >$167 Billion   >$103 Billion

                                                                       4
              HOW DID WE GET HERE?

• The following slide is from a study I did in 1998 after a
  Statewide Blue Ribbon Panel showed the needs-
  revenue gap for 1995.

• I analyzed documents from my term as CDOT
  Commissioner to explore how 20-year highway needs
  gaps compared to population growth and to growth in
  Vehicle miles of travel, 1967 and 1995.




                                                              5
                    HOW DID WE GET HERE?
                 GROWTH OF PROJECTED
            COLORADO HIGHWAY FUNDING NEEDS


  Ratio of 20-year                                              13.5
  Projection of                                                    “A” : See
  Highway Needs to                                                 next slide for
  Population growth                                                elements of
                                                                   relative
                                    Ratio VMT Growth               growth of $
                                    to Population                  Needs
                                    Growth
                                                                 2.5
                                                                 1.0
1967             Population Growth Rate                1995

   Inflation-adjusted (Inflation multiplier) 1967-1995 = 4.91
                                                                                6
         “A”: Elements of Relative Growth of
          Projected Highway Funding Needs
              (Creating “Infrastructure Debt”)

1. Deferred expenses, primarily maintenance
    • Result: accumulating inadequate funding
    • Inadequate forecasting of needs)

2. Off-book and unrecognized liabilities
  • Safety (example: median barriers were just starting to be
  desirable, we are paying now)

  • Induced travel and induced growth creating future
  liabilities associated with congestion

  • Upgrading needed to higher geometric and other standards

                                                                7
       “A”: Elements of Relative Growth of
  Projected Highway Funding Needs (Continued)

3. Abandonment of fully-amortized but economically
cost-effective modes & facilities

(result: “Vicious Circle”: highways     low-density land
use       Exponential increase in VMT     $ needs
growth.)




4. Erosion of purchasing power of un-indexed revenue
                                                           8
    How Do We Get Out of this Situation?

•Moderate and Manage growth

•Fiscal prudence as fiduciary agents
               (“Prudent Man” Rule)

•Multi-purpose funding

•Avoid unintended consequences & adverse side
effects

•Preserve existing infrastructure
•Decisions for economic efficiency

                                                9
 SURFACE TRANSPORTATION FUNDING NEEDS
         “GROWTH MANAGEMENT”
            (Reduce the “Gap”)
                                       “B” : “Needs
                   13.5 Historic       Management”
                   ratio               elements for
Ratio 20-year                          moderating growth
Projection of                          of relative growth of
Highway Needs)                         $ Needs
to Population
growth: Historic                            “B”
Trend, 1967-1995

                                       Moderated
                                       growth of
                                       projected
                                       Highway funding
NOW                            2030    Needs

 Population                        Ratio VMT Growth
 Growth Rate                       to Pop. Growth     10
 “B”: Elements of “Needs Management” to Moderate
         Projected Highway Funding Needs
1. Transportation Demand Management (TDM)
    • Ridership shifts to transit.
    • Car-pooling, telework, etc.

2. Land use
    • Density, TOD, infill.
    • Urban Growth Boundary policy on funds allocation;
      similar land consumption methods.

3. “Fix it First”: Do not build new infrastructure that cannot be
   maintained.

4. Use cost-effective decisions
    • Direct & Indirect Benefits & Costs.
    • Use the most cost-effective modes.


                                                                    11
“B”: Elements of “Needs Management (Continued)
5. Economic incentives and disincentives:
    • Fuel costs at pump: fuel product increases and tax
      increases at pump.
    • Financial incentives for enhancing TDM.

6.Intelligent Transportation Systems (ITS) and
    Intelligent Transportation Drivers (ITD).

7. Continuity of funding with multimodal flexibility.

8. Secure high ratings („AA‟ or higher) for bonds such as TRANS and
   RTD.

9. Comply with Federal law on energy conservation.

10. Integrate National Environmental Policy Act with
   transportation/land use planning.

                                                                      12
                   SUSTAINABILITY
"Sustainable development: Development that meets the needs of
  the present generation without compromising the ability of future
  generations to meet their needs." - - World Commission on
  Environment and Development (Brundtland Report).

"The problems we face today cannot be solved at the same level of
  thinking we were at when we created them" - - Albert Einstein.

"Then I say the Earth belongs to each (succeeding) generation
  during its course, fully and in its own right. The second
  generation receives it clear of debts and encumbrances, the third
  of the second, and so on. For if the first could charge it with a
  debt, then the earth would belong to the dead and not to the
  living generation. Then no generation can contract debts greater
  than may be paid during the course of its own existence." - -
  Thomas Jefferson, September 6, 1789.



                                                                13
             SUSTAINABILITY

• Our present transportation system is
  not sustainable:

  – Economically and financially.

  – Functionally.

  – Environmentally and in resources.



                                         14
        Develop Institutions, Policies & Practices that
           “Connect The Dots” in our decisions.
 Essential for
    •Long-term Sustainability
    •Avoiding “Law of Unintended Consequences”
    •Avoiding adverse side effects

      Global Resources &                Land Use & Travel
      Environment                       Generation

        Policies &
        Institutions                            Equity


   Transportation Funds:                Transportation
   Revenues &                           Technologies & Fuels
   Allocations


Albert G. Melcher MS, APA   3/24/2007                          15
             American Planning Association:
                  Criteria for Funding

1. Revenue sources must have long-term continuity and
stability because capital and operating costs cannot be subject
to short-term political processes.

2. The mix of public sources at all governmental levels and of
private sources must be maintained.

3. Funding must improve and not damage equity, community
integrity, and sustainability.

4. True multimodal flexibility in use of funds is essential.

5. Cost effectiveness of both capital and M&O costs, and not
predetermined highway mode, must determine project choice.


                                                                 16
Transportation and other infrastructure are all in trouble and are
competing for limited dollars, with future “Infrastructure Debt” to
be paid by future generations.


                                                  National,
                                                  1962-2007




                                                                      17
            AVOIDING INFRASTRUCTURE DEBT

                  From “PUBLIC WORKS, PUBLIC WEALTH - - -
         NEW DIRECTIONS FOR AMERICA‟S INFRASTRUCTURE”
         A Report of the “Center for Strategic and International Studies”
                    Public Infrastructure Project (Nov. 2005)
    “But the risk of under investment is only part of the equation. Of
    equal or greater concern is the prospect that the investments we
    make are not the right ones. Our nation's infrastructure policy
    favors new construction even when maintenance, renovation, and
    improved management offer better responses to the problem.
    Infrastructure policy favors politics over sound investment
    principles. It ignores emerging needs - - while securing funds for
    programs whose objectives have largely been met, such as the
    interstate highway system.”
Albert G. Melcher MS, APA   3/24/2007                                       18
     AVOIDING INFRASTRUCTURE DEBT

  FIDUCIARY and PRUDENCE CONCEPTS

• A fiduciary agent is a person or organization acting
  on behalf of and/or with the authorization of another
  person.

• The fiduciary is required to invest trust assets as a
  "prudent man" would invest his own property with
  the following factors in mind: the needs of
  beneficiaries, the need to preserve the estate (or
  corpus of the trust) and the amount and regularity of
  income (“net benefits”).

                                                          19
    FIDUCIARY and PRUDENCE (Continued)

• Assume that a public official responsible for public
  monies is a fiduciary agent.

• Assume, therefore, that our official wants to give the
  public the biggest and longest-lasting bang for the buck.

• Also, to avoid “hidden” and “indirect” costs, such as more
  people in the hospitals, many at public expense.

• Our official calls this “fiscal prudence.”



                                                          20
    FIDUCIARY and PRUDENCE (Continued)

• Assume that our public officials have (for simplicity) two
  acceptable alternatives for mobility, both with feasible
  and comparable capital investment.

• #1: a 20 year-life of the initial project, committing to a
  second phase of new construction at a very high total
  cost, with a net life cycle Benefit-to-Cost Ratio of O.8 to
  1.0.

• #2: a 50-year life with no second phase needed, same
  mobility result, but a net life cycle Benefit-to-Cost Ratio
  of 1.3 to 1.0.

                                                                21
    FIDUCIARY and PRUDENCE (Continued)

• Money is not unlimited; there are competing public
  needs for funds.

• Methods for finding full direct and indirect benefits and
  costs exist.

• Assuming a responsible and informed public, which
  alternative would the officials and the public select?

• Obviously: Alternative 2 as fiscally prudent and
  economically efficient.

                                                              22
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                  WHITHER?

• Given:
  – The need for economic, resource and
    environmental sustainability

  – The need for fiduciary prudence

  – The effective bankruptcy of the present system




                                                     24
                WHITHER?
• How do we develop a system of transportation to
  improve mobility and ensure economic, ecological
  and equitable sustainability?

• We cannot accomplish this with “Business as
  Usual.”

• New approaches are essential - - - - NOW.

• Otherwise, We Are Creating Tomorrows’
  Transportation Financial and Functional Problems
  Today!

                                                     25
WHITHER?




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