California Transportation Commission Allocates $4.5 Billion in Discretionary Prop 1B Bond Funds

The California Transportation Commission has released its recommendations for the first round of discretionary expenditures of Prop 1B CIMA funds. How did staff first prioritize the applications and arrive at a list of recommended projects?

CTC staff faced the unenviable and daunting task of taking 149 project nominations worth $11.3 billion and cutting them down to $4.5 billion, which is the amount available in the Corridor Improvement Mobility Account (CIMA). When we originally received the proposals, we didn't know if we would have enough projects on this first go round to fully fund the CIMA. We had anticipating a round in 2007 and another in 2008. As we put together the program leading up to February 16, we were still trying to figure out an appropriate way to do that.

The original result on the February 16 was based on the written nominations. We didn't have any conversations with any of the nominating agencies, including Caltrans. We had to sort through and understand what was being nominated, what the projects' benefits were, and how the dollars would flow.

And we found that overall the nominations were poorly written-it didn't matter if Caltrans or regional agencies wrote them. We've said in public that the work would have received a grade of "C." It wasn't always easy to know what exactly was being nominated, and there were several projects that had information that we would have liked to understand better. We also knew of large requests that would probably have to be vetted.

We found that we were over-subscribed with project nominations. And we also had plenty of applications for construction activities in the 2008, 2009, 2010 time frames. Therefore, for staff to look ahead to projects in 2012 and 2011, clearly didn't make much sense, because we could fully fund great projects that were ready to go to construction much earlier. Moreover, going with ready-to-go construction was a key funding criteria, as were the benefits a project could deliver in a corridor. We also used the Caltrans' congestion model as an overall indicator, not necessarily a determinant, of general benefit level. We looked for a maximum amount of congestion relief in daily vehicle hours.

How did the CTC react to the criticism from cities and agencies over the staff's recommendations?

We knew that we were going to get push-back because we hadn't put funding on the 405, and on some priorities in the Bay Area, for several reasons. The I-405 nomination was unclear. There were some inconsistencies as to how the design-build was going to work. And Metro's request of $530 million was almost double the next highest request, which was also from Metro.

I decided that I wasn't going to negotiate behind the scenes with Metro about what an appropriate funding level might be, because if I did that, we would have to negotiate 40 or 50 projects. We knew we were going to get some push back. The push-back and advocacy was more or less in line with what we expected. I thought the intensity ratcheted up pretty quickly, which was interesting to see.

Was the omission of the 405 the result of a poorly written proposal by Metro?

No, it was that at the funding level of the request, we didn't see how we were going to put together a program in Southern California by funding the full request. We needed instead to determine was how much less than $730 million might work for Metro. We didn't initially fund the 405 but did recommend that it be a candidate for future consideration once we got the information we needed.

One of the key pieces of information was how much less than $730 million can L.A. live with. And in fact there was a number that was ultimately rejected by others involved in the process in L.A., but it was a number less than $730 million. Those kinds of conversations, I felt, needed to occur once we had made something public, once I had direction from the commission. This was not an easy process; it was cumbersome, but it both got us to where we needed to be.

Was the ‘intensity' of stakeholders' pushback of any value to the CTC staff?

Absolutely. To have that many stakeholders clearly passionate about transportation funding, was good. I think another dynamic worth noting is the importance attached to Prop 1B. Clearly, the CIMA is well-known because it's the first of the infrastructure programming events, and it couples with 30-odd freshman legislators who are all focused on what CTC are doing. Frankly, the Legislature was probably more intense than we had anticipated. We typically get the most pressure from local elected official. So, the focus from the state legislators was something we hadn't entirely anticipated.

The L.A. Daily News ran a glowing editorial on the 405 funding effort and went on to compliment Sacramento for giving L.A. what it considered its "fair share." Did L.A. get its fair share? Does the paper's compliment reflect what happened?

I was pretty amused at how, all of a sudden, many regions, and especially urban regions, embraced their congestion-they were almost proud to be the most congested. I found it kind of amusing that applicants, using and relying upon dubious distinctions, were advancing "compelling" arguments for funding when CTC staff had been focusing on the merits of individual projects in key corridors. It wasn't that there isn't a lot of congestion L.A.-sure there is a lot of congestion in L.A., and a northbound HOV lane on the 405 makes a lot of sense. Similarly, I-5 south, where L.A. and Orange counties come together has a significant amount of congestion because there are ten lanes in Orange County, six lanes in L.A. County, it's a significant goods movement corridor, and it is a situation that has been begging for mitigation for two decades. But it wasn't that it was an L.A. issue; it was that the funded projects and their corridors were most important to us.

We as commission staff-and I can't speak for the commissioners-never fell into the fair-share argument. We heard it from several corridors, but given that Prop 1B asked the commission to use its discretion and that the only applicable formula would be the 40/60 north-south split we weren't concerned with fair share, whether determined by population or anything else, such as congestion levels. What we did know, however, was urban regions would get a substantial amount of the dollars, and that there would likely be amounts that achieve a level that different regions what consider appropriate.

What do you say to the regions that feel like they were shortchanged by CTC?

We believe that the 149 nominations we received (and the $11.3 billion that they represent) are the best congestion relief and connectivity projects in California today. They could all be built in the next five years. We now have to find the needed dollars-through either Prop 1B or normal programming cycles-to invest in all 149 projects. We don't believe that these 149 projects are fundable from CIMA; we expect to draw from other funding sources to invest in those projects.

I don't think that the CIMA should be seen as a separate programming event, but rather as kicking off a series of programming events that will be focused on filling as much of the $11.3 billion need as possible. Just because a certain project wasn't funded, and just because certain regions feel that they have not received an appropriate level of funding out of CIMA, does not mean that the commission is going to direct resources to those regions.

Assessing these first allocations of the $20 billion, do you feel like Prop 1B is fulfilling its promise?

The $20 billion in Prop 1B, while the largest general obligation bond in U.S. history, is nonetheless just attempt at what's needed to deal with the transportation challenges that California faces. Those challenges are not just on the capital side: They are on the operating side-there is a tremendous need for operators to maintain and grow their transit services. We are going to need a significant number of dollars to meet the needs of an expanding population and an expanding economy.

As to what happens once Prop 1B is fully invested, I think we are going to develop new ways at looking at funding. I think the gas tax remains a viable funding mechanism, as well as a sales tax on gasoline, at least until the early part of the next decade. But sometime we're going to have a serious conversation about how we go from a per-gallon fee for transportation to a travel usage fee-whether that is vehicle miles traveled or some other approach. You could ultimately charge by how much people use the system, not how much energy they consume.

I think that ten years from now we will have a new revenue scheme. It's going to use pricing to get at some for transportation of our environmental objectives-whether that is reducing emissions or a better connection between land use and transportation. We don't presently do that in transportation. We basically build a facility-whether we build freeway, add a lane, add an HOV lane, add a railway, or add a rail line-and kind of throw it out there, and it gets used as it is going to get used.

We haven't done anything to change the traveler's behavior to maximize whatever capacity there might be, even in congested areas. The result is congestion, and it is difficult, therefore, to create effective incentives for alternative behaviors.

We are going through a transition period-it's the equivalent of going from land lines with rotary phones to cellular phones in ten years. That means we are going to have to plan differently; we are going to have to implement differently; we are going to have to develop a new approach to pricing. When we move away from funding infrastructure and try to fund and develop mobility solutions... that is when things will get a lot easier, and that is when that $20 billion initial investment will truly pay off.

Now that these CIMA allocations have been made, how soon does CTC expect concrete to be poured? And what are the benchmarks for success?

In making our final recommendations, we funded only construction, not pre-construction. We will start making construction allocations later this calendar year, so earth will be moved and concrete and steel being put into place. And we are going to see significant amounts of construction-some in 2008 but significant amounts in 2009 and 2010.

For us, success is that all 50 some-odd projects that we have now funded get constructed, that they are under construction before the end of 2012, that they are open to the public a year or two after that, and that the congestion relief and the promised mobility benefits by 2013–2015. Success is not a new lane or a new HOV lane. Success is going to be the 24-minute time-savings going from the 10-405 interchange to the 101-405 interchange. Success is that we are shaving off a significant amount of time and that that time is being put back into people's lives.

The final point that I think is important to underscore here, and the reason that I think the 405 is so important, right now the state gas tax and federal gas tax do not go into capital projects. Today, transportation capacity projects are dependent on the general fund; we are no longer specially funded. That means that transportation is in the same situation education, health, or public safety as it relates to the annual budget process and the need to be a strong and vocal advocate in Sacramento during the budget process.

As a result, for transportation to advocate for the funding that it needs, we need to take a page from the playbooks of those other major sectors; we need to put a face on transportation. The face can't be concrete, steel, and asphalt structures. It has to be projects that real people can identify with. The 405 HOV, the I-10 and Fontana-Colton are real projects to real people. That is important, and those of us in transportation are now realizing it.