Finance: The Critical Link The Transportation – Land Use – Environment Connection Brian D. Taylor October 2003 Institute of Transportation Studies

Reflection in the Midst of Fiscal Crisis A apropos time to consider finance. Institute of Transportation Studies

Reflection in the Midst of Fiscal Crisis The political consequences of this crisis have never been more visible. Institute of Transportation Studies

Crisis as Both Constraint and Opportunity History of transportation finance: –The most creative changes to the status quo… –And the longest-lasting effects… –Emerged from times of fiscal stress. Institute of Transportation Studies

The Missing Link: Transportation – Land Use – Environment – Finance A common view… Finance is central to – but somewhat separate from – land use regulation, transportation policy, and environmental planning. Institute of Transportation Studies

The Missing Link: Transportation – Land Use – Environment – Finance Put another way… First we figure out what we want to do, and then we figure out how to pay for it. Institute of Transportation Studies

The Missing Link: Transportation – Land Use – Environment – Finance But, in reality, what we want to do is influenced greatly by whether we can pay for it. And how we pay for things helps to determine what we want (and need) to do. Institute of Transportation Studies

For example… A travel demand study may forecast a significant increase in travel over an already heavily used bridge. This forecast prompts proposals to construct a new parallel span to accommodate the growth in traffic. Which in turn leads to efforts by local officials to secure funding for the new bridge. Institute of Transportation Studies

The Finance Link But how we fund the bridge influences its use. The decision whether or not to use tolls to help finance the new span will significantly influence the level of demand for the bridge. Institute of Transportation Studies

The Finance Link Limitations on property taxes can encourage cities to zone for land uses that tend to generate more in tax income than they consume in local services. Which, in turn, can contribute to shortages of affordable housing. And an abundance of auto malls. Institute of Transportation Studies

We Cannot Opt Out of Pricing Most public officials are loathe to think about pricing, which they see as inequitable or “social engineering.” But however we decide to tax land and finance infrastructure sends price signals to consumers. In other words, even making something free is a pricing decision. Institute of Transportation Studies

Example: User Fees and General Taxes in Transportation Finance

Our Goal With This Symposium Focus on how finance both shapes and is shaped by the transportation – land use – environment connection. Institute of Transportation Studies

The Finance Link How do we define “successful” public finance programs. –Generate needed revenues. –Maintain sufficient popular and political support. –Encourage efficiency, effectiveness, and equity in land development, transportation systems, environmental management. Institute of Transportation Studies

Example: Linking Finance Programs with Transportation Systems

The complexity of these issues can make it easy for people to talk past one another The role of finance in the transportation – land use – environment connection involves… –Both private and public expenditures. –And both internal and external costs. Institute of Transportation Studies

The Transportation – Land Use – Environment – Finance Link Transportation –Significant private expenditures on vehicles, fares, fuel, insurance, etc. –But also substantial public expenditures on way (such as roads) and terminals, plus some expenditures on vehicles, fuel, etc. Institute of Transportation Studies

The Transportation – Land Use – Environment – Finance Link Land Use –Mostly private investment, but publicly regulated and taxed. –Such expenditures, however, directly affect public expenditures on infrastructure, schools, parks, safety, etc., and on the taxes and fees used to pay for them. Institute of Transportation Studies

The Transportation – Land Use – Environment – Finance Link Environment –Environmental costs generated by private (and public) actions, often related to transportation and land use. –Funding of environmental regulation and mitigation programs. –Pricing and regulation seek to internalize otherwise externalized costs. Institute of Transportation Studies

Coming Up Transportation and Land Use in the Broader Context of Public Finance –Paying for Infrastructure: Implications for Transportation Systems and Land Development. –Managing Infrastructure Assets: Implications of New Accounting Guidelines. –The Fiscalization of Land Use: Effects on Development and Travel Patterns, and Opportunities for Reform. Institute of Transportation Studies

This Afternoon The Anatomy of Transportation Finance –Shifting Sands: The Evolution of Surface Transportation Finance. –Where it Comes From and Where it Goes: The Current State of Transportation Finance. –Reforming Surface Transportation Finance: Needs, Opportunities, and Constraints. Institute of Transportation Studies

This Evening Working With, and Against, Fiscal Politics to Improve Land Use, Transportation, and Environmental Outcomes –A moderating roundtable discussion. Institute of Transportation Studies

Tomorrow Morning The Fiscal Link Between Land Use and Transportation: Assessing Research From Home and Abroad –The Fiscal Impacts of Alternative Forms of Development: What Has the Evidence Shown? –The Role of Transportation Investments in Shaping Land Development. –Using Public Finance Tools to Shape Land Development and Travel Patterns in Europe. Institute of Transportation Studies

Tomorrow Morning Making Land Use and Transportation Investments Work Together: Recent Innovations in Practice –Using Finance Creatively to Better Integrate Public Transit and Land Development: Assessing Recent Efforts. –Turning Small Change into Big Changes: Using Parking Revenues to Revitalize Commercial Districts and Neighborhoods. –Commentary: Making Land Use and Transportation Investments Work Together. Institute of Transportation Studies

Tomorrow Afternoon Linking Land Regulation and Transportation Finance to Environmental Quality –Measuring and Pricing Environmental Externalities in Land Use and Transportation Systems. –Transportation Pricing as an Air Quality Management Tool: Case Studies of Recent Practice –New Developments in Incorporating Environmental Mitigation into Project Planning and Finance. Institute of Transportation Studies

Tomorrow Evening Private Sector Views on Development, Land Use, and Transportation –A Moderated Roundtable. Institute of Transportation Studies

Tuesday Morning Moving the Economy: Who Should Pay for Goods Movement? And How Should they Pay? –The Restructuring of Freight Logistics: Implications for New Technologies, Land Use, and Infrastructure Finance –Case Study: Financing Regional Goods Movement Projects in Southern California Institute of Transportation Studies

Tuesday Morning The Political Challenges to Fiscal Reform –Moderated Roundtable on Improving the Transportation – Land Use – Environment – Finance Connection. Institute of Transportation Studies

Finance: Which Way Do We Go?