In This Issue

	With Bonds in Trouble, States Seek Federal Help
	North Light Rail’s Price Hits $900M
	Oklahoma Approves $4B Transportation Plan
	More Road Projects on the Chopping Block in Va.
	Proponents of P3s get Boost with Chicago Midway Airport
	Tolls Roads needed to Build More Highways, Trans. Chief says
	New Calif. Law is Intended to Reduce Vehicle Pollution
	Williamette Bridge Planners say Design is Key
	$300 Million for Road Work

With Bonds in Trouble, States Seek Federal Help

Some states struggled to cover bills this week as the municipal bond markets were largely unable to help them: more than one state was forced to seek federal help. California faced the largest and most urgent problem, as state officials told the Treasury Department they might need to borrow up to $7 billion to cover bills coming due in the next few weeks, including those to municipal governments and school districts due Oct. 29.

Although great progress has been made by the federal government in providing more money to banks and loan money to corporations in the short-term market, officials have not found a way to assist local governments because they issue tax-exempt bonds. The federal government is barred from guaranteeing tax-exempt bonds under a longstanding stipulation of the Internal Revenue Code.

As officials struggle to find a way around this barrier, local governments continue to face serious cash shortages. Massachusetts also had to turn to the federal government for help. One idea under consideration is to find a way for the federal government to provide some guarantee of municipal bonds, without violating the tax code, as a way to build investor confidence in the bonds.

“It’s critical,” said Jeffrey L. Esser, executive director of the Government Finance Officers Assoication. “There are no buyers out there for the governments, to meet their short-term financing needs.”

When our children were little they played a board game called, “Easy Money.” In a simple way it taught some valuable lessons about the stock market, gambling, taking risks and other pretty important lessons about finance. It struck me that the days of “Easy Money” for state DOTs are gone as their state budgets need shoring up. The current situation in the credit markets is starting to impact operating budgets like California’s and in the availability of money for bonding transportation programs. TW

North Light Rail’s Price Hits $900M

The Charlotte Area Transit System’s proposed light rail extension to University City is moving ahead; following six months of engineering work, the cost of the project is progressing as well. The 11-mile extension’s price tag has risen to $900 million, up from a $750 million estimate two years ago.

CATS says the price increase is due to the rising cost of raw materials, and because the line is becoming more complex, with more bridges, a new station and longer platforms to accommodate three-car trains. The agency is hoping to have the final design complete by 2010, and also that the federal government will cover half of construction costs, as it did in building the Lynx Blue Line.

Recent changes to the plans include lowering 36th Street with light rail and four other train tracks running over the road which eliminates the need for gate crossings and makes it safer for pedestrians. CATS now plans to cross W.T. Harris Boulevard with a bridge instead of the previously considered tunnel, and another new bridge for the line for the westbound lanes of Tryon.

Oklahoma Approves $4B Transportation Plan

OKLAHOMA CITY – Transportation officials in Oklahoma approved a $4 billion program this week to upgrade roads, replace 449 deficient bridges and finish relocating the crowded Crosstown Expressway downtown. The eight-year construction plan includes projects in all 77 counties.

The Oklahoma Transportation Commission’s approval provides the final $194 million needed to move the Crosstown, an elevated portion of I-40, south to its new location along the Oklahoma River, freeing up land for development between the shore and the city core. Built in 1965, an estimated 120,000 cars travel the expressway daily, nearly 50,000 more than the intended capacity of 72,000. The project, which will also expand the highway to 10 lanes, is expected to be completed in 2012.

Transportation Director Gary Ridley said the plan was made possible by legislation approved this year to increase the state department of transportation budget by $30 million annually until the extra funding reaches $370 million. Legislators also approved $300 million in bonds to keep ODOT’s work on track.

The $4 billion plan includes 95 miles of concrete and cable barriers on highway medians, 460 miles of improvements to inadequate two-lane roads and $2.1 billion of major improvements to high-volume highways.

More Road Projects on the Chopping Block in Va.

Virginia officials say they will be holding a special session to cut additional road projects, just months after cutting $1.1 billion in road and transit projects from the state’s six-year plan, because the state’s fiscal situation is so critical. Deputy Transportation Secretary Barbara Reese said this week that the Commonwealth Transportation Board will meet in November or December to re-examine the plan.

Although the midyear correction to the spending schedule is very unusual, officials feel it is necessary to ensure regions knows exactly what will, and what will not, be funded. “Keeping [the plan] where it is is not realistic,” Reese said. “We’re in recession.”

Funding sources for the state’s transportation system continue to decrease rapidly: The Commonwealth Transportation Board said gas tax collections are at a 20-year low. Taxes on motor vehicle sales also go to transportation, but the number of vehicles sold in the state is predicted to fall to levels unheard of since the mid-90’s.

Estimates are already showing a $740 million shortfall for the maintenance fund over the next six years. While still incomplete, officials forecast the state’s transportation trust fund outlook, which funds new projects, as gloomy.

Proponents of P3s get Boost with Chicago Midway Airport

Illinois - Chicago Midway Airport will soon become the first privatized major airport in the U.S., under a new $2.5 billion 99-year lease contract. The Midway Investment and Development Corporation (MIDCo), comprised of Citi Infrastructure Investors, Vancouver Airport Services and John Hancock Life Insurance Company was awarded the contract.

Public-private partnership advocates hope the latest development with Chicago Midway will serve to jump-start similar projects in waiting, such as Florida’s Alligator Alley, the Pennsylvania Turnpike and New York’s Tappan Zee Bridge. According to the Wall Street Journal, proponents of P3s believe the lease approach could provide financial relief to state governments struggling with foreclosures, inflating pension obligations and reduced tax bases.

In the past three years, eight states have approved legislation enabling officials to sell or lease highway or transit infrastructure, bringing the total to 25 states, reports the U.S. Department of Transportation.

While not specifically a highway project, I felt like there are many lessons to be learned from the Chicago Midway experience. Each time another PPP comes to fruition our industry becomes more experienced and capable of moving other projects ahead. TW

Tolls Roads needed to Build More Highways, Trans. Chief says

BATON ROUGE – The head of Louisiana’s transportation department says tolls must be considered an option as a way to fund road projects in the state during the current economic crisis. Dr. William Ankner, Secretary of the Louisiana Department of Transportation and Development said in a recent interview that state officials need to look at ways to finance road projects.

While Ankner did not suggest tolls as a financing option, he said they should be considered, despite the controversial nature of the issue. Former Transportation Secretary Johnny Bradberry ignited a political firestorm in 2006 when he submitted a federal request to impose tolls on I-10 and I-12. Governor Kathleen Blanco immediately rejected the proposal following heavy criticism of the idea.

New Calif. Law is Intended to Reduce Vehicle Pollution

California – The governor of California has signed a new law that taps drivers to help reduce pollution. The bill approved by Gov. Arnold Schwarzenegger authorizes air pollution control districts and air quality management districts to charge up to a $2 fee on motor vehicle registrations. The fee could be up to $6 under certain conditions, and the San Joaquin Valley Unified Air Pollution Control District can increase it up to $30.

The revenue must be used to develop “incentive-based programs” to meet state and federal air quality standards. At least $10 million must be used to decrease air pollution in “disproportionately impacted” communities in the San Joaquin Valley.

An analysis of the bill states that revenue from the fees will support programs focusing on modernizing the fleets of passenger vehicles and light- and heavy-duty trucks. In its effort to cut air pollution from vehicles, the new law also gives the San Joaquin Valley district the authorization to adopt rules and regulations to reduce vehicle trips.

Williamette Bridge Planners say Design is Key

Oregon - Bridge planners in Portland say the first new downtown bridge in 35 years should not carry cars across the Williamette River, but be limited to buses, streetcars, bicyclists and pedestrians crossing the river. Engineering and cost limitations require the bridge to be tall and wide enough for barges traveling on the river, yet low enough for train stations to be located a few blocks from the river bank.

A committee chaired by former Mayor Vera Katz will narrow the bridge types down to two or three options by the end of the year, using budget, functionality and aesthetics as the key considerations. “It has to be a bridge the public can be proud of,” Katz said. “It’s not only about engineering but design. I would like for this bridge to be beautiful.”

The types of bridge introduced last spring when planning began last spring ranged in cost from $58 million to $84.2 million.

Everyone wants a signature bridge these days. Most who do have no connection to the money actually be needed to build one. It’s always been easy to spend someone else’s money. Signature bridges have a place in our system but so do regular bridges. The challenge we have is helping stakeholder groups appreciate our financial straits and, in many cases, keep expectations within the realm of reality. I continue to be amazed at the lack of understanding by community leaders and others as to the realities of a state’s transportation funding situation. We need to do a better job of communicating that information. TW

$300 Million for Road Work

Illinois - Lawmakers in Will County, Illinois, have unveiled a $300 million transportation package they believe will not only help improve congestion, safety and repair bridges, but also help fix the troubled nation’s economy. County board members say their ambitious seven-year plan could generate up to 8,400 new jobs in the county and be funded by local, state and federal funds, including the state’s recently approved regional transportation tax.

“In these times of economic uncertainty, there is always something that can be done,” said County Board Chairman Jim Moustis (R-Frankfort). “We’re creating jobs and improving our infrastructure to keep Will County not only the fastest-growing county, but the strongest economically in the state.”

Moustis and others hope the county’s investment will encourage government officials to invest money into long-term projects that spur job growth. The 60 projects included in the county’s plan would generate jobs in fields including building, planning, vending and other construction-related areas, said County Engineer Bruce Gould. The county also anticipates receiving $15 million to $20 million this year from the state sales tax increase, which will go toward improving the county’s overworked road network.