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Infrastructure

HNTB: Go Conservative on Revenue Studies for Border Crossings

WASHINGTON — The growing traffic between the United States and its international neighbors is sparking more interest in border crossings, but revenue studies for tolls should be conservative, the Kansas City, Mo.-based engineering firm HNTB stresses in a new white paper.

Nearly 93 million personal vehicles entered the U.S. in 2011, according to the Department of Transportation’s Bureau of Traffic Statistics. About 31.6 million came from Canada and 61.2 million from Mexico. This large flow of traffic can lead to massive congestion, sometimes taking hours to enter or exit the U.S. at the busiest crossings.

“No question the need for more border crossings and expansion of near-border facilities is there, but the funding to pay for them is not,” HNTB says in its paper. “As cash-strapped state departments of transportation try to keep pace with demand, many are considering tolling as a solution to funding the mobility-enhancing projects their constituents so desperately need.”

Examples are underway on both borders. The Texas Department of Transportation is in the process of implementing new toll lanes near El Paso. Detroit, Mich. and Windsor, Ontario, also are working toward a new tolled international bridge. Sponsors of all bond-funded and public-private partnership projects try to show how they can generate revenue to repay investors, but this is especially problematic for near-border facilities, HNTB warns.

“Forecasting the socioeconomic trends and fluctuations in transportation patterns and mode choices that will influence demand for a proposed near-border facility are enormously challenging,” the paper explains, “but getting that data is only half of the battle for near-border facilities.”

Jim Ely, HNTB vice chairman of toll services and one of three authors of the paper, said U.S. traffic data is usually easily available and reliable, but might not be across the border.

Traffic and revenue studies for toll projects near international borders also need to be more detailed, HNTB’s toll team concludes.

“The typical investment-grade traffic and revenue report contains an origin and destination study. But reports for near-border facilities will need to go into much more detail about the makeup of users and the frequency of their trips. Owners should factor into their reports any historic trends of toll facilities in the same area,” the paper advises.

Revenue studies can be the most controversial part of a project. A study seen as too optimistic can generate heat from lawmakers and local activists. Revenue estimates for both the Dulles Toll Road in Virginia and the California High Speed Rail project have come under fire for being overly optimistic.

“A near-border facility cannot approach the financial market with an inflated or unrealistic revenue capture rate,” the paper warns. “Investors and rating agencies will not have faith in them or the overall soundness of the toll plan.”

“Be conservative in the estimate,” Ely adds.

Such projects also need to have a plan to work with U.S. and foreign police to ensure compliance. International agreements can be complicated and might need to involve both national governments. “Tolling can be part of the solution in addressing the need for enhanced mobility,” HNTB’s study concludes, “as long as public owners understand and prepare for the unique risks they will face.”

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