Because mass transit is a public service, authorities rarely can charge market rates for public transportation, except in a few of the densest urban areas. The traditional American concept of public transportation, combined with declining overall government support, has resulted in a mass transit funding shortfall of more than $43 billion — a staggering sum that is increasing annually. While federal funding often is available for mass transit capital expenditures, such as building a light-rail line or expanding access to bus routes through construction of park-and-ride facilities, federal funding rarely is available to support the ongoing operation of these programs. Perversely, this means that public authorities may be able to afford to build something they cannot afford to operate. Unfortunately, these challenges loom as rising gasoline prices and sustained economic growth in the United States are increasing demand for mass transit. Mass transit is an indispensable element of most communities' economic growth and job creation opportunities because highways simply cannot provide all the necessary access within the desired commute times. The addition of rail or bus rapid transit to a community's transportation infrastructure can improve commute times and air quality, and relieve congestion. In fact, during the past several years, use of public transportation has grown faster than vehicle and air miles traveled as a whole. Although many mass transit officials feel they cannot afford to miss a golden opportunity to capitalize on the public's increased interest and acceptance of mass transit, they are frustrated by the glacial response of funding authorities. Some are beginning to look to financing models pioneered in the highway infrastructure industry as possible solutions. RESPONDING WITH INNOVATIVE SOLUTIONS Achieving 21st century public transportation goals will require mass transit authorities to grow — institutionally, experientially, intellectually and philosophically — beyond their traditional operational funding base of fares and advertising. To overcome the challenges confronting the mass transit community there is a variety of opportunities, some of which may seem unusual to public transportation officials. Funding of highway, road and bridge construction increasingly takes advantage of innovative financing, such as public-private partnerships and tolling. Mass transit authorities should explore ways to leverage these emerging trends to support both capital and ongoing expenditures for public transportation. These innovative solutions include:
Compared to traditional procurement methods, public-private partnerships are any situation in which the private sector assumes a greater role in the planning, financing, design, construction, operation and maintenance of a transportation
Currently, fewer than half the states permit public-private transportation partnerships. Legislation can encourage private investment by eliminating legal barriers, including laws that limit the ability to impose tolls to special public authorities.
There are many reasons to include private sources in a mass transit funding strategy. Among the primary reasons:
Partnering with the private sector illustrates some of the advantages and best practices involved in innovative financing of the public transportation network. Mass transit authorities can generate new revenue streams over the long term, which can support transit operations or the expansion of the network. For example, integrating mass transit hubs or stations with TOD improves both a system's accessibility and the prosperity of participating private-sector developments. Focusing on population density and development at mass transit stations increases ridership (and, therefore, revenue from fares as well as the advocacy base for public transportation) and enhances the system's efficiency and convenience. To make joint development/TOD projects successful, mass transit officials must prove to the private sector that they are credible, reliable and responsive participants. Private developers require public partners with the ability and willingness to solicit, respond to and pursue joint development opportunities. Some approaches that can convince developers to partner with mass transit authorities include:
The items on this menu of solutions are neither exhaustive nor required. Each mass transit project requires careful consideration and analysis, and which solutions apply to which projects will vary based on unique local, state and situational demands. DEVELOPING A CUSTOMIZED FUNDING PLAN Without funding, even the most logical or beneficial mass transit projects are doomed to fail. The following four-step funding strategy plan can help match the right solutions with the circumstances that define each individual project. It also identifies and leverages tools used to create the political will to support mass transit, including education, advocacy and the use of cost-benefit statistics to prove the value of mass transportation. STEP ONE - IDENTIFY COSTS AND BENEFITS The first step in any strategy to secure funding for a mass transit project is to identify the costs and benefits of required capital improvements. This provides a consistent starting point for various stakeholders as the project sponsor seeks support from local, state and federal leaders, and funding decision makers. The building blocks necessary to develop such a funding strategy include:
STEP TWO - DEVELOP AND DISTRIBUTE INFORMATIONAL MATERIALS Project sponsors must tell a clear, compelling story about why the capital improvements are vital to achieving a particular transportation goal. They must detail the need for the project, but focus on its impact: the benefits to local communities, the region and the nation. Sponsors also should include honest assessments of the anticipated cost, schedule, funding plan and quantifiable benefits. In today's complicated and busy world, sponsors must develop informational materials designed to present the project's benefits in an appealing way to the several specific audiences who must respond to the need, including funding agencies as well as civic leaders, users and potential users and anticipated opponents. Those messages must be simple, memorable and focus on the real-world impact of the project, as well as respond directly or indirectly to expected opposition. Sponsors also must design audience-specific messages to appeal through a variety of communication channels: brochures, videos, news coverage, the Internet, etc. STEP THREE - APPROACH FUNDING AGENCIES DIRECTLY Once the project sponsor has developed funding strategies and ranked them in order of relative ease of implementation, and created the informational materials that support the project, its time to actually secure the funding. The sponsor's goal is to leverage the cost-benefit analyses, informational materials and public advocacy to negotiate commitments for both short- and long-term funding of capital and operating expenditures at the local, regional, state and federal levels, and among private sources, as appropriate. STEP FOUR - REACH OUT TO ELECTED OFFICIALS Only after the various funding sources have agreed that the project is a priority and that the funding strategy is reasonable can a project sponsor successfully secure legislative support for a particular project. Once a project has been agreed upon as a priority, a legislative strategy plan should be created, including an outline of the strategies and tasks necessary to bring the project to a swift and successful conclusion. In 2002, the American Public Transportation Association (APTA) identified several legislative proposals to level the playing field between highway infrastructure and mass transit priorities that any particular project's legislative strategy should consider:
ACHIEVING AMERICA'S TRANSPORTATION GOALS In 2002, APTA noted that our national transportation policy should include:
Mass transit is an integral and indispensable element of the transportation system and the achievement of these important goals. However, today's public resource constraints so severely limit our ability to leverage the benefits of mass transit that we have no choice but to rely on innovative new financing strategies. Taking advantage of new funding opportunities will require not only new thinking, but new strategies for overcoming institutional barriers, as well as intellectual and political inertia. Fortunately, we can look to the public-private partnerships emerging in the highway infrastructure industry for inspiration and instruction. We know that we will have to secure legislative authorization to accommodate the many forms of joint developments. We will have to make careful, analytical decisions about the risks and rewards of new financing solutions and technologies. We will have to leverage our existing assets and audiences to prove the value of mass transit as an enabler of economic opportunity and environmental improvement. We will have to educate leaders and policymakers that mass transit funding from current and innovative sources can extend quality of life benefits to larger communities of riders and deliver even greater economies of scale than simple investments in the highway infrastructure. The nontraditional funding sources detailed in this article are unlikely to displace traditional public funding, except in cases of outright privatization or concessions. However, innovative financing can help close the gap in regularly occurring shortfalls faced by public transportation authorities, extend the benefits of public transportation to more people and communities, and help to achieve the transportation goals of our country. Linda Bohlinger is a vice president of HNTB Corp. and the company's national director of management consulting.
from Mass Transit Magazine: http://www.masstransitmag.com/publication/article.jsp?id=2554&pubId=1 |