Thursday, September 19th, 2013

Louisville Bridges Project Proceeds From Tragedy to Farce

I’ve written a lot about the $2.6 billion boondoggle project to build two new bridges across the Ohio River in Louisville (see here, here, here, here, here, here, and here). A new East End river crossing is without a doubt necessary and adds regional value, but the rest of the project is basically bad news.

But no matter how crazy this project is, it always manages to find ways to show that it’s even more wacky than I thought. The latest installment comes from the so-called “investment grade toll study” that was conducted in order to set toll rates and issue bonds.

New Bridges Plus Existing Downtown Bridge to Carry Less Traffic Than Existing Downtown Bridge Today

The entire premise of building this mega-boondoggle instead of a simple East End bridge has been congestion. That is, the existing bridges are over capacity. For example, we’ve been solemnly told that the I-65 Kennedy Bridge has a capacity of only 105,000 vehicles per day but carries 122,000 today and will carry much more than that in the future. So to deal with that a new parallel span is being built that will give I-65 about six lanes each direction at the river, plus a new I-265 bridge is being built with four lanes (two each direction).

After building this, how many cars do you think these bridges will be carrying in 2030 (the latest year for which the study provides a breakdown)? Would you believe less than the existing Kennedy Bridge carried in 2007? Crazy as that sounds, it’s true.

Source: Louisville-Southern Indiana Ohio River Bridges Traffic & Revenue Study, Table 6.4, Page 87 (page 107 in PDF) and Table ES-2, Page ii (Page 6 in PDF)

Come again?!?!?

This value is significantly less than the 155,000 projected traffic in 2030 from the “Do Nothing” scenario in the Environmental Impact Statement (SDEIS, Table 2.2). Now that the region is doing $2.6 billion worth of something, traffic will actually be less than in 2007.

Incidentally, the forecasted traffic on the Downtown + East End bridges in 2030 is now much less than in the Supplemental Environmental Impact Statement used to get the project approved, 132,000 now vs. 157,000 then. More on that in a moment.

Doubled in Capacity Downtown Bridge Will Never Carry As Much Traffic As Existing Bridge Today

But wait, there’s more. Let’s zoom in on the downtown bridge. The toll study doesn’t report the breakdown of traffic by bridge post-2030. But if we assume the split as of 2030 remains constant, and use their total toll collection figures and leakage factors, we can estimate traffic by bridge until 2054.

Traffic on the downtown bridge will never again reach what is currently being carried on the existing Kennedy Bridge.

Source: Louisville-Southern Indiana Ohio River Bridges Traffic & Revenue Study, Table 6.4, Page 87 (page 107 in PDF); Table ES-2, Page ii (Page 6 in PDF); Table 6.7, Page 91 (page 111 in PDF); and Table 5.17, Page 79 (page 99 in PDF)

Not only will this massive new twin bridge never carry what just the old bridge does today, it doesn’t even exceed the design capacity until 2050 and never exceeds it by more than a modest amount, which is actually common on roads that function well and need no improvement.

In short, no new downtown bridge needed to be built at all. So Indiana and Kentucky are flushing $1.3 billion down the drain.

The declines in projected traffic vs. the studies that got the project approved even caught the attention of the Courier-Journal, normally an unrelenting cheerleader for the project. The C-J noted:

The report also predicts fewer drivers than previously thought for the area’s five Ohio River bridges. An estimated 285,000 vehicles would cross by 2030, down from predictions of 310,400 made two years ago and a prediction of 362,900 made a decade ago. Currently, about 224,000 vehicles cross the river each day.

Louisville resident Tyler Allen said of this, “When it comes time to issue bonds, all of a sudden everybody gets all serious.” But an alternate explanation could be that since the project is already under construction, it doesn’t matter what the numbers say anymore. As Oxford researcher Bent Flyvbjerg has documented, major projects are consistently mis-estimated in a manner favorable to proceeding with them, which raises troubling questions. Flyvbjerg refers to the effect this produces as “survival of the unfittest.”

The Bridges Project Has a Far Greater Tax Contribution Than Advertised

The new bridges will be tolled to help pay for the project. It was always known that the tolls would not be sufficient to pay off the costs of the bridges – which right there tells you that from a market perspective, the project was dubious – but a recent document reveals that the taxpayer contribution will be far higher than previously advertised.

A copy of a revised agreement between Indiana and Kentucky shows that about $1.5 billion in taxpayer funds will go to this bridge, $723 million from Indiana, and $756 million from Kentucky. Given that we’ve been old the entire project is “only” $2.6 billion, this implies over half the funds will come from taxes, not tolls.

As always, it’s difficult to make full sense of the murky details of this project, but the Indiana contributions would make it appear that yet again the public has been mislead on the project. For example, just last year Indiana publicly said it was committing $432 million in traditional funds to the project. Indiana also has been publicly bragging that its agreement with the contractor (which included a revised and cheaper bridge design I’ll cover in a future post) saved $225 million.

You would think that if Indiana saved $225 million its tax contribution would go down. But if you thought that you thought wrong. The revised agreement with Kentucky says that at a minimum “INDOT has committed $570 million in federal and state conventional funds through 2018.” Also, while the source of these funds is unclear, “INDOT has committed an additional $108 million” for 2019 and 2020, and is creating a $45 million “Relief Events Allowance Account.” So here’s what the reality adds up to:

Source: Bridges Project Press Release, March 5, 2012 and Development Agreement Addendum #2, Section 6, September 11, 2013.

Incidentally, when you add the Indiana tax contributions plus the bonds issued on behalf of the developer, it’s clear the price of Indiana’s bridge has actually gone up, not down.

Tolling to Congest Sherman Minton Bridge

Part of the marketing on the project has been that only the new I-265 and I-65 bridges would be tolled. The existing Sherman Minton I-64 bridge and 2nd Street (US 31 aka George Rogers Clark Memorial) Bridge would remain free.

Unsurprisingly, the toll study predicts significant diversion of traffic to those bridges to avoid tolls that will range from $1-$12. The 2nd St. Bridge has four narrow lanes and deposits traffic onto 2nd and Main St. in downtown Louisville. It carries 24,100 cars today but is predicted to carry 32,000 in 2030. This is actually a surprisingly low diversion rate to me, given that traffic can easily jump off and on I-65 to use this bridge.

The Sherman Minton, however, is predicted to carry 121,000 vehicles. That’s up 55% (42,800) from today’s 78,200. The Sherman Minton has a design capacity of 90,000 cars, so in 2030 the bridge would be 34% over capacity. I think it can probably handle it, honestly, but these figures suggests a very large diversion of vehicles and explain why traffic on I-65 actually shrinks after its capacity is doubled.

Query: If the 122,000 cars on the I-65 bridge designed for 105,000 resulted in this boondoggle, what is likely to be the effect of 121,000 on a bridge designed for 90,000? It doesn’t take a genius to figure out that once the current bridges project is complete, the next step will be a Sherman Minton replacement, driven by traffic and structural “problems.” This will result in another mega-bridge project that will undoubtedly be tolled. Then all it would take is the closure of the Second Street Bridge (which was opened in 1929 and is identical in age and similar in construction to a bridge in Madison that is currently undergoing an emergency replacement) to create a hermetically sealed toll barrier on the river at Louisville.

I should mention that I’m not opposed to tolls. I think they’re the best way to pay for infrastructure today. I also like building new roads and bridges – where they make sense, as in the East End Bridge. But implementing big tolls to pay for boondoggle welfare projects for road builders makes no sense at all.

Miscellaneous Additional Items

I realize this is a project of mostly local concern and the things I’m covering are somewhat esoteric. But this is how we in America keep pouring staggering sums of money into boondoggle highways while neglecting infrastructure (including other, more worthy road projects) that actually make sense.

In addition to the above figures which make it abundantly clear a downtown bridge isn’t needed, there are several other miscellaneous items that popped out of the toll study:

  • 95% of the automobile traffic crossing the bridges is either local or has an origin or destination in Louisville. So it will be locals, not out of towners paying the tolls.
  • About 25% of the trucks on I-65 are through traffic, so there’s a bigger opportunity there, unless those truckers choose an alternate route. But 75% of the trucks will be local, and so there will be a significant cost increase for those firms. One Southern Indiana business-owner suggested his bill would be over $200K per year. It doesn’t take a rocket scientist to figure out that this type of cost in a cost-sensitive business will affect business location decisions.

Louisville is hanging its hat economically on the logistics and distribution industry, were it already benefits from being UPS’s largest air hub. If that’s your economic strategy, why would you want to impose large costs on trucking when none of your regional competitor cities have tolls? Expect Indy, Columbus, Nashville, Cincinnati, and St. Louis to be salivating over this. Also, a quick look at a map shows that for large amounts of through traffic, it’s easy to avoid Louisville. For example, I-65 traffic can divert over I-74 from Indianapolis to Cincinnati, then take I-75 south.

  • The job growth forecast for the region seems inflated. The toll study suggests regional job growth of 0.9% per year (CAGR). But the actual CAGR since 2000 has been -0.13%. Louisville actually has less jobs today than in 2000. Even if you assume the 2000s are an aberration and average with the go-go 90s, you still only get a CAGR of 0.8% over the last 22 years. That might not sound like much but since this is a compound interest formula, the rates matter a lot.
  • Similarly they project population growth of 2.2% per year in Floyd County, IN versus 0.5% actual since 2000. In Clark County, IN they project 1.7% vs. 1.2% actual. No justification is given for this.

These figures suggest to me that traffic could end up being lower than even these already reduced figures. In any events, this remains one of the worst transportation ideas I’ve ever seen, particularly when a far cheaper and better – and for downtown Louisville, transformational – alternative was available and rejected.

More on the Louisville Bridges Project:

Hoosiers to Pay 70% of Local Tolls on Ohio River Bridge Project
Media Finally Wakes Up to Louisville Tunnel Boondoggle
Bridges Project a Financial Fiasco
Hoosiers to Pay Even More With Tolling
A Mini-“Big Dig”
A Better Bridges Plan
The Case for 8864

Topics: Public Policy, Transportation
Cities: Louisville

14 Responses to “Louisville Bridges Project Proceeds From Tragedy to Farce”

  1. Dan Borsch says:

    “In short, no new downtown bridge needed to be built at all. So Indiana and Kentucky are flushing $1.3 billion down the drain.”

    Wish it was only $1.3 billion, but we are borrowing the money and will have to pay interest and operating costs on the new toll collection system.

  2. Claude Masse says:

    Wow this is getting comical.
    From what I can gather in my little mind,it seems the Indiana metro side crosses over to Kentucky in diminishing amounts.
    Could it be they are doing more “staycations&employment options in the land to the north?
    Those rust bucket bridges need refit&their butt ugly cantilevers on top of all said.
    The leaders of up and coming Louisville want cable stay&prominent landmarks found in world class cities upstream.Can I blame them for going after the monumental?
    No I would not dare.

    This massive project will go on I’m thinking.Louisville will find a new “brand” to soften the blow of debt.At least they aren’t stadiums.

  3. Chris Barnett says:

    Louisville already did stadiums. For their minor league baseball and college football and basketball teams.

  4. Claude Masse says:

    Mr Barnett can you tell us(me) more about this?
    Most of the big metros in the greater Ohio valley appear to be courting teams &facilities.Is this a model for other cities to follow?
    I recall a stimulating conversation with a Columbus resident.He went on about the value of Ohio State.
    I was captivated be the pride he had,and bought him a beer(s)
    There is something about good turf that brings out the best in the Ohio region.I get it.
    What makes me think though,is your investments in the Pro’s
    You seem more sorry,and beaten, when a team packs up for warmer towns south.

  5. Strangely, this reminds me of recurring plot element in Tolstoy novels, which Tolstoy often used for common effect. As the Flyvbjerg study indicates, we can always find a way to rotisserie those “objective” numbers so that, however mis-estimated they may be, they come to favor the goals of the project’s proponents. It works much the same way one of Tolstoy’s buffoon characters was determine that he carried the mark of Satan embedded in his name…by encoding his name to numbers in a way that, after many tries, finally added up to 666.

  6. Matthew Hall says:

    Some lessons just have to be learnt the hard way. Steiner and Co. is building a “life-style center” in Butler County, Ohio that “required” $43 million. That county will never make that back in a world of high gas prices, declining income, and internet shopping. It will be the the ‘bridge too far’ for suburban Cincinnati development just as the bridges around Louisville will be for that region.

  7. Matthew, don’t you worry, they are planning something similar for the Brent Spence Bridge replacement.

  8. Matt Hall says:

    I-75 is busier than any highway passing through Louisville. Still, the Brent Spence replacement is still very much up in the air.

  9. wkg in bham says:

    The guy who runs this site (highly recommended) used to do highway engineering. He occasionally rants on dopey road projects and the laughable forecasts justifying them.

  10. John says:

    Is it too late to challenge the EIS in court?

    Why not just toll the existing bridge?

  11. John, I wouldn’t expect any court challenges to be fruitful, unless there was proof of outright fabrication.

    Tolling the existing bridge isn’t a simple matter as it’s illegal to toll an existing free bridge without special federal permission. The construction of a parallel span is what is allowing them to toll it, though the state’s never seriously investigated another option.

  12. Paul Lambie says:

    Aaron, thanks for continuing to shine a light on this example of terrible governance. The only good thing I can say about it is: at least it’s not happening in Indianapolis. Unfortunately, we won’t have money for projects here while so many of our federal funds are being wasted down there.

    I wonder how likely it is that they could end up stopping the tolling of I-65 if there ends up being too much diversion to US 31 and I-64, and then use more federal funds or other sources to cover the rest of the bonds.

  13. Paul, given the state of highway budgets in Indiana and Kentucky, I wouldn’t expect anything like it. Especially the politics of Kentucky would not support more money going towards Louisville (that’s my guess at least).

  14. Mordant says:

    The Indiana Department of Highways (incorrectly named INDOT) has only one goal, and that is to pave as much of the planet as possible. Facts, costs, design – nothing else matters. Got a problem? Build a highway!

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