Friday, June 07, 2013

Bridges Too Far

Anybody who drives - I'm guessing most of the people reading this - is probably receptive to the meme of "our nation's infrastructure is crumbling". Yet, though billions of dollars are spent annually between all levels of government as soon as one thing gets fixed or improved, another starts falling apart. What's the real story of America's infrastructure? Frankly it's us, the taxpayers, getting screwed.

A couple of weeks ago, a story in the Pittsburgh Post-Gazette by Jon Schmitz, "Pennsylvania bridges better, but still need work", caught my eye. The article mentions how in the last three years the number of "structurally deficient" bridges in Pennsylvania has dropped by 1,100. Before you breathe easy, that still leaves about 4,500 in the Commonwealth that need some TLC ("structurally deficient...does not mean they are unsafe but that they are showing signs of deterioration that, if unaddressed, could lead to weight limits or closings").

Later in the article, Mr. Schmitz points out that one of the most important bridges in the Pittsburgh area is on the needy list:
One of the biggest bridges on the deficient list, the Liberty Bridge in Downtown Pittsburgh, is in need of rehabilitation that will cost an estimated $40 million to $60 million, he said. Final design of the project is expected to begin this year but construction funding is not yet available. More than 16,500 vehicles use the bridge on an average day. 
The bridge superstructure is marred with patches of rust and there are areas of corrosion and deterioration in the steel, but Mr. [Dan] Cessna said the span is safe. It is currently undergoing an in-depth inspection. 
The best-case scenario has rehabilitation starting in 2015 if funding becomes available. The department will make interim repairs as necessary until then, Mr. Cessna said.
Dan Cessna is the executive of Pennsylvania Department of Transportation District 11, comprising Allegheny, Beaver, and Lawrence counties. Everybody in Pittsburgh knows the Liberty Bridge, the tunnels that join the bridge to pass under Mount Washington, the lengthy traffic jams during rush hours on both, and what a complete pig's breakfast transportation around here would be if the bridge failed or had to be closed for safety reasons. $40-60 million seems like a bargain to keep the bridge safe and sound. But is it?

It didn't happen right away, but the $40-60 million amount to rehabilitate the Liberty Bridge made me think, and brought back to mind something I wrote in December 2012 fresh off Barack Obama's reelection and opining how if people are going to claim to stand for fiscal conservatism they're going to have to slay the sacred cows of spending. In "Running on the Third Rail" I laid out how we get completely rooked on defense spending: aircraft carriers that cost four times what they used to, paying 53.6% more for an aircraft that's 40.3% less capable than an earlier one, etc., etc., etc.

You'd think that technological progress would make things better and more affordable across the board. Generally that's true, but not it seems when it comes to government. But we're all sure that the millions to be spent on preventing the Liberty Bridge from falling into the Monongahela River will be well spent, right?

The Liberty Bridge opened on March 27, 1928 to great fanfare and a five-mile long celebratory parade.  Construction on the 2,663-foot long bridge with dual 448-foot steel cantilever main spans began in 1926. According to data from the Historic American Engineering Record, the bridge cost in the dollars of the day $3,436,000 to build, which was actually $335,000 under budget as originally projected in 1924.

Correcting 1928 dollars to 2013, the Liberty Bridge - when new - cost $46,723,773 in present day terms.

Wait a second! We're now told today, in 2013, that just to repair or rehabilitate the Liberty Bridge will cost essentially the same as what the bridge cost in the first place. It's not like the Liberty Bridge hasn't also had incremental repairs and improvements across the years already costing millions either. $10 million was spent in 1975, that's $43,221,375 in 2013 dollars. Going back to the original construction costs, local, state, and federal taxpayers have paid for the Liberty Bridge time and time again.

Setting aside the costs of demolition and the economic and community hardship, could Pittsburgh get a brand new structure today to replace the Liberty Bridge for the upper limit of $60 million for the next repair? Why repair a near century-old piece of infrastructure when we can have a modern one? Hasn't progress brought savings and value?

In short: no, we can't and no, it hasn't. Recently in 2010, the Pennsylvania Turnpike finished construction on a new bridge (two independent spans, actually) carrying the toll road across the Allegheny River northeast of downtown Pittsburgh. The total length is 2,350 feet with a longest single span of 532 feet - both similar to that of the Liberty Bridge. The structures are also similar in the number of traffic lanes they carry. Cost? $193.6 million, of which at least $105 million was the bridge itself. The remaining monies were for road realignments, interchange reconstruction - all things that would also factor in replacing the Liberty Bridge.

Yep. Taxpayers are getting screwed on infrastructure. We'll pay another $45 million or so to repair a bridge that cost that much in the first place, because a new bridge would cost about five times as much - in itself, indicative that over time we receive less value out of government expenditure than more. As the P-G's Jon Schmitz reports on June 7 in a follow-up to his earlier, "1,364 Pennsylvania bridges face weight limits unless repaired", the political solution is always to soak more money out of taxpayers, rather than assess the value of what is spent already.
Gov. Tom Corbett is scheduled to be in Pittsburgh today to press his case for funding, and he will hold a news conference under the 2,700-foot-long Liberty Bridge crossing the Monongahela River. The bridge is in need of rehabilitation estimated to cost $40 million to $60 million, but PennDOT doesn't have the money... 
Mr. Corbett has proposed raising up to $1.8 billion in new annual revenue by uncapping the state tax on gasoline at the wholesale level. Currently, wholesalers pay tax on just $1.25 per gallon of the price. The governor's plan eventually would apply the tax to the full wholesale price. That likely would lead to higher prices at the pump. 
Senate Bill 1, approved in a 45-5 vote this week, also uncaps the wholesale tax, but, in addition, it raises driver fees, including registration and license fees, and fines for traffic violations. It would raise an estimated $2.5 billion in new annual revenue for roads, bridges, public transit and other transportation modes. 
Various estimates of the cost of the increases to a typical driver range from $125 to $150 per year.
Do you buy the max $150 impact to a "typical driver"? Yeah, thought not. Guess what? It gets worse. Let's swing around the rest of the country for a while.

Right as we were headed into the 2013 Memorial Day weekend, we saw the news reports of the bridge carrying Interstate 5 in Washington collapsing into the Skagit River. Thankfully, no one was killed in the collapse, and the bridge actually didn't fail because of age or lack of maintenance: an oversized load struck the bridge's structure causing the failure. I'm sure for many of you, the Skagit River bridge collapse brought back memories of the 2007 collapse of the I-35W Mississippi River Bridge in Minneapolis, Minnesota.

That bridge was opened in 1967, cost $5.2 million at the time ($36,202,431 present day), and took the lives of thirteen and injured about 100 others when it fell into the Mississippi River. It also had been tagged as "structurally deficient" multiple times, and was in the process of being resurfaced at the time. Officials knew that the bridge was going to have to be replaced sooner rather than later, and the collapse was determined to have resulted from a poor design in the first place.

Amazingly, given today's regulatory and anti-development environment, the replacement I-35W Saint Anthony Falls Bridge opened just slightly more than a year after the collapse. All who were involved in its design and construction are rightly to be applauded for their work, as I did at the time. The new bridge cost $234 million and the contractor earned a $27 million performance bonus. It's said that the total $261 million dollar structure will have a service life of 100 years.

100 years is 2.5 times how long the original I-35W bridge lasted before collapse. Would a 100-year bridge have cost 2.5 times as much in 1967? Lets say it would have cost five times as much. That would have been an expenditure of $26 million in 1967, and $167.6 million corrected to 2008. I don't think nearly $70 million in cost increase (minus the performance bonus) can be attributed just to rapid construction, but as it's a "one off", perhaps it isn't the best example.

Bridges though seem to be particularly bad offenders when it comes to costs in excess of inflation. Construction began on the San Francisco-Oakland Bay Bridge on July 8, 1933. 1,223 days and $77 million later, the bridge with a total spanned distance of almost 4.5 miles opened on November 12, 1936. Correcting to the present, the original construction cost was a not insignificant $1.288 billion. During the 1989 Loma Prieta Earthquake, part of the eastern truss span of the Bay Bridge collapsed. While the bridge was repaired and retrofitted for better seismic resistance, the eastern spans were thought to still be at earthquake risk, so they're being replaced. Construction of the new eastern spans began on January 29, 2002 and are replacing 2.2 miles of the bridge's total length. The project was originally supposed to be finished in 2007.

Surprise, surprise, it's still being built today six years later. It's supposed to open around Labor Day this year, but even that's in doubt as some bolts used in the bridge failed load tests just this past March! Assuming the work is completed in time for a Labor Day 2013 opening, it will have taken 4,234 days with an astronomical (estimated) price tag of $6.3 billion. Three and a half times longer for construction at nearly five times the cost as the original bridge complex...for just replacing half of it.

At least motorists pay tolls to use the Bay Bridge and that defrays the construction costs...sort of. Well, with 270,000 daily trips across the bridge, only tolled one way (so, half the trips) at an average of about $4.50 per vehicle, that means the bridge brings in around $607,500 per day in tolls. Assuming all the toll revenue was allocated to the replacement, and had been since the start, tolls would pay off the project (assuming no accrued interest) in another sixteen years from right now. Yep, we're screwed.

But enough of bridges too far and too costly, well, I do need to mention the Gravina Island Bridge. You know, the famous/infamous "Bridge to Nowhere" that featured in the 2008 Presidential Campaign because of Governor Sarah Palin? Thanks to the inability of our Congress to pass a budget and instead operating the government on continuing resolutions, funding for the project was retained in both 2011 and 2012!

How about going under water instead of over it? Tunnels assuredly are economical, right? Baltimore's Harbor Tunnel is 7,650 feet long and was completed in 1957 for a cost of $130 million. The second Baltimore tunnel, the Fort McHenry, is shorter at 7,200 feet but cost $750 million when it opened in 1985. Correcting both projects to 1985 dollars, the Fort McHenry tunnel cost $252 million more. Or, looking at it per foot of infrastructure, $65,100 per foot for the Harbor Tunnel and $104,200 per foot for the Fort McHenry.

Bringing that to the present, the Harbor Tunnel cost about $141,100 per foot and the Fort McHenry $225,200. Actually, Marylanders should breath easy as it looks like they regardless got a bargain. Costs for Boston's "Big Dig"? Just over $608,000 per foot of construction.

Looking at infrastructure costs, I can finally appreciate and approve of President Carter's decision to cede the Panama Canal back to the Panamanians effective in 1999. The United States completed the canal between 1904 and 1914 for $375 million, or about $8.72 billion today. The current operators are working on doubling the capacity of the canal by 2015 for a cost of about $6.06 billion. Do you think if the United States Government was still running the canal we'd get a doubling of capacity for less than the original cost? I don't.

Let's move on to rail, shall we? The California High-Speed Rail project, which eventually will link San Francisco and Sacramento in the north with Los Angeles and San Diego in the South - but is starting with a 130-mile link between the booming metropolises of Fresno and Bakersfield - was projected as of 2011 to cost $43 billion. That's since been upped to $68 billion! The rail system might be complete by 2030, assuming the exorbitant funds needed to be spent are secured. Ultimately, the train trip from San Francisco to LA would be three hours.

Right now, people can fly on Southwest Airlines between four LA-area airports and San Diego to three San Francisco-area airports and Sacramento at an average ticket price (assuming a one-week advance purchase) of $171 - for a transit time of just 90 minutes versus the 180 promised by the train. Assuming the train is priced more cheaply to entice riders, let's say $120 for a one-way trip, if the system ran 12 trains in each direction every day with the same capacity as Amtrak's Acela Express in the Northeast Corridor (304 seats), that'd be 24 trains per day, 7,296 seats per day, and $875,520 in revenue - assuming that every train was full. At that rate, the system would make back the projected $68 billion in costs (assuming no interest or operational costs) in a mere 77,668 days. We'll be celebrating California High-Speed Rail turning a profit in the year 2242 if it opens on time and is run with that schedule, fare, and completely full trains!

What if the trains were larger and the frequency increased? Let's say that the trains held 1,200 people and ran every hour on the hour in both directions (48 trains per day) and every train was full. That's 57,600 seats and $6,912,000 in ticket revenue. The system (again, no interest or operating costs considered) would have to run all-out for 9,838 days - 27 years - to break even. It's just ridiculous, especially since there aren't 28,800 people in southern California who have to travel to northern California and vice versa every day, seven days a week, 365 days a year. For comparison, LAX handles an average of 169,500 passengers to/from all destinations in a day and SFO 122,900. Intrastate traffic is a small fraction of those totals. There just isn't a demand that could ever make such a train profitable, or even come remotely close to recouping its cost.

It's likely however that whatever fares are proposed for the HSR in California, it won't be anywhere near $120 per trip. The current San Joaquin train of Amtrak California runs between Bakersfield and Oakland/Sacramento. It currently carries an average of 2,924 passengers per day (total, both directions), with a daily frequency of 12 trains and journeys of five or six hours. Fares? $48 for Oakland, $45 for Sacramento. LA to San Francisco on Amtrak's Coast Starlight (or via the San Joaquin) requires a shared rail/bus journey and ranges in price from $58 to $94. High speed rail just doesn't make any logical sense for those routes at what it's going to cost.

Not everybody buys into rail insanity though. In 2010, New Jersey Governor Chris Christie pulled the plug on "Access to the Region's Core" (ARC) - a new dual-tunnel underneath the Hudson River and a supplemental station to Pennsylvania Station in Manhattan to add capacity and relieve congestion on the current century-old tunnels and rails. Governor Christie cited the project's ballooning costs - $8.9 billion to $11 billion - as a reason to dump the project. Predictably, a certain Nobel laureate decried the cut in infrastructure funding. Let's say the $8.9 billion amount was right. Would it have been worth it? What did the original system still in use today cost the public?

Aha! The original rail infrastructure that ARC would augment wasn't built with public money! It was constructed solely by the Pennsylvania Railroad (PRR), using their own funds and financing. Why did they do it? For profit, naturally. Not only did they bore the two tunnels from New Jersey to Manhattan, they also bored four from Manhattan to Long Island. And built their station in Manhattan. And put in the infrastructure necessary to connect the Pennsylvania's system to New England. When the project started in 1902, it was expected to cost $40 million. In reality, the whole project wound up costing the PRR $111 million, or about $2.6 billion today. So, simply repeating what was done before, only not as extensive since it would just be a NJ to NY effort, would cost nearly 3.5 times more after 100 years of technological advances and modern efficiencies? Really?

The thought that a private company would use their own funds for that kind of infrastructure project today is almost silly. Actually, it seemed silly to some at the time as well; why use private funds when governments can open up the tax coffers? On September 14, 1902, H.G. Prout, then-editor of Railroad Gazette (today Railway Age) wrote in The New York Times:
[T]he Pennsylvania Railroad Company has but one hope of financial success in this tunnel enterprise, namely, by giving to the people who travel to and from Greater New York conveniences and attractions which they do not enjoy now. 
We need not now enter upon the terms of the franchise, but there are those who think that the Pennsylvania Railroad Company made a mistake at the outset in not asking the city to co-operate in the cost of bringing its lines to the centre of the island. The city could well have afforded to do so.
Of course, the infrastructure junkies of the present day haven't given up on a publicly funded expanded rail infrastructure between New Jersey and New York, even with ARC's cancellation. Just a few months after Governor Christie rightly stuck a fork in its pipe-dream predecessor, Amtrak announced the Gateway Project with plenty of politicians in tow. The projected cost - which they have absolutely no idea from where they'll get the money - is now up to $14.5 billion and could be completed by 2025 if funding is obtained.

Hey, it's still cheaper than the trains in California! Let's do it!

Back on March 29, 2013, President Obama spoke on infrastructure and job creation at the Port of Miami.
When you ask companies who brought jobs back to America in the last few years they’ll say, if we upgrade our infrastructure, we’ll bring even more.  So what are we waiting for?  There’s work to be done; there are workers who are ready to do it.  Let’s prove to the world there’s no better place to do business than right here in the United States of America, and let’s get started rebuilding America.  (Applause.)  
Now, over the last four years, we’ve done some good work.  Construction crews have built or improved more than 350,000 miles of road.  That's enough to circle the globe 14 times.  We’ve upgraded more than 6,000 miles of rail -- enough to go coast-to-coast and back.  We’ve repaired or replaced more than 20,000 bridges.  We’ve helped get tens of thousands of construction workers back on the job.  
Because of these efforts, when the American Society of [Civil] Engineers put out their 2013 report card on our national infrastructure, they gave it the best overall grade in 12 years. That’s the good news.  The bad news is we went from a D to a D+. We still have all kinds of deferred maintenance.  We still have too many ports that aren’t equipped for today’s world commerce.  We’ve still got too many rail lines that are too slow and clogged up.  We’ve still got too many roads that are in disrepair, too many bridges that aren’t safe. 
We don’t have to accept that for America.  We can do better. We can build better.  And in a time of tight budgets, we’ve got to do it in a way that makes sure taxpayer dollars are spent wisely.
Tight budgets? Taxpayer dollars spent wisely? Yes, Mr. President, we can do better, and we can build better. But to do so, we're going to have to demand value out of what's already being spent rather than continuing to spend more and more for less and less return.

It's not unusual for the cost of individual items to outstrip inflation, but usually there will still be more value added that produces the increase. In 1982, a Toyota Corolla had an MSRP of $5,683; corrected for inflation that's $13,694. A 2013 Corolla MSRP is presently $16,230 - a real increase of $2,536. Although, for the 18.5% price increase today you get a car that has 81% more horsepower at essentially the same fuel consumption/MPG rating, plus today's car has a lot of features that while if available in 1982 weren't standard (like air conditioning). That's increased value for increased cost. The cost increases we see on infrastructure projects can't be attributed to new values as the fit and function of what's being built are essentially unchanged from decades ago.

If you compare data from the Bureau of Labor Statistics' Producer Price Index (which measures sale price of commodities vs. the Consumer Price Index, which measures consumer prices) you'll find that for common construction materials - crushed stone, concrete of various forms, steel - used in major construction products that their prices have exceeded inflation since the 1982 datum of the index by as much as two times or more.

What has driven those costs so much higher? The governments who are building and maintaining our national infrastructure are largely to blame for the increases due to the costs of complying with a myriad of rules and regulations that beset construction projects from the time the first shovel goes into the dirt to gather raw materials to when the final stroke of paint goes on the sign dedicating some new public edifice to the politician who got the money allocated from tax revenue to build it.

As with defense spending, until the success or failure of public infrastructure projects is measured by the value obtained rather than the raw amount spent, we'll never get control of the spending crisis faced today at local, state, and federal levels.

No comments:

Post a Comment


Note: Only a member of this blog may post a comment.