Taxpayers Opposed to Useless Roads

TOUR ANSWERS TDOT CHALLENGE TO COMMENT ON FIFTH INTERCHANGE

Amendment 238, Putnam County Fifth Interchange

Unless TDOT has found some magical way of controlling costs, this interchange is not the one that was presented in public meetings. The Federal Highway Administration approved a modified cloverleaf with a connector road to US-70. The project that was approved by the FHWA was associated with the Corridor "J" money, not Interstate Maintenance. Even though Interstate Maintenance money is allowed to maintain capacity of the Interstate, there is no connection or capacity to maintain. This is the use of maintenance money for what is clearly a capital project.

It is greatly disappointing to me that the Federal Highway Administration has abandoned their federal roll to protect the Interstate from gratuitous Interstate Connectors like this one. Every new exit is a potential threat to the utility of the Interstate. Exits tend to be the most dangerous places along the Interstate and so adding another one will have social costs that have not been discussed. The Interstate is a national defense asset and has been, until recently, a source of prosperity for the average citizen. The economic development aspects of the Interstate flows from increased productivity which means goods, services and people flow faster from point to point and there are new economic possibilities with shorter travel times. The Interstate is being treated like a cash cow that provides spare income for other less deserving projects throughout the state but cannot even raise enough cash to finance its own expansion to a six lane minimum. The incremental economic benefits are declining every year because of lower average speeds and a greater than expected fraction of truck traffic.

When the original Corridor "J" project moved in March of 2003, so did the theoretical traffic counts and the transportation justification. The traffic across the existing bridges is still bi-modal with morning and afternoon peaks and is about 1000 vehicles per day instead of a daily traffic count over nine times as large when it was associated with Corridor "J". This connector no longer meets FHWA published guidelines for approval because it cannot be demonstrated by a reasonable person that there is no alternative access. An alternative access road was part of the Certificate of Need application and the City /County partnership is building that alternate access road, including a bridge to nowhere over 200 feet long, as a part of the $14 million bond issue that was advertised in the local paper. Tennessee Law (54-5-403.) also mimics the Federal Highway Administrations standard of requiring "no other feasible means" to accomplish the objectives. It goes even farther to discourage frivolous exchanges by demanding local governments pay for the engineering and maintenance.

TDOT has never been given proper credit for increasing the number of exits per factory worker in Tennessee. From 1979 to 1999, the number of exits per manufacturing worker increased 2.1 % without spending anything on bulldozers or dynamite. From 2001 to 2007, according to Bureau of Economic Analysis Table CA25N, the number of Interstate exits per manufacturing worker increased by no less than 2.8% per year. Again, this expansion was done with no cost to the taxpayer because the apparent expansion of exits per manufacturing worker was accomplished by the shrinkage of that worker population. Since 1979, there is no long term correlation between increased manufacturing employment to any government effort, law or subsidy. The decline in manufacturing employment is due to factory productivity increases that targets high-wage manufacturing jobs. This decline in real inflation adjusted wages and manufacturing employment will continue as long as there is an economic incentive to do so.

Only willful self deception can permit anyone from recognizing that this project is not supporting the economy of Tennessee or Putnam County as TDOT likes to claim to do. For every dollar flowing into Putnam County there is about $2.27 flowing out of Putnam County according to Bureau of Economic Analysis inflow and outflow data on table CA91 from 2001 to 2007. Inflows plus outflows in 2007 totaled $462 million dollars. The existing system of roads is providing a means of support to adjacent counties and, from anecdotal evidence, beyond the adjacent counties. Supporting these commuters means maintaining a reasonable time required to commute from wherever workers are to Putnam County and return home. The enemy of these commuters is shrinkage of commuting distances caused by creeping congestion, declining safety and an existing road system that could become seriously impaired by weather. This proposed project does nothing for the very large group of commuters that come into or leave Putnam County every day.

The proposed Industrial Park is a "high-end park" with respect to zoning standards thus giving other low-end areas in the county a higher probability of becoming the next factory if the choices have anything to do with keeping the fraction of capital cost per manufactured unit below existing competitors. The probability of getting an important client for an industrial park in Tennessee in the over 1200 available parks or properties is about one in 600 per year. It would be more likely that one might flip a coin 9 times in a row and get all heads or all tails nine times in a row than land a major client in twenty years.

Speculative interchanges with weak connections to true transportation need should not be built and maintained with transportation money. The chances of concrete and asphaltic concrete deterioration from the day they are laid down due to chemical and physical forces is one-hundred percent. The provision of excess capacity beyond what is reasonably expected in the future is a manifest waste of tax money. A much better deal would be to buy Pick Three lottery tickets, especially since about 29% of the money lost would return to education. The time to build a major manufacturing facility and the time to build or upgrade an interchange is virtually the same provided that there are no environmental challenges. This interchange has been an ongoing project for over 11 years and as of March of 2009, the Chamber of Commerce can only report in the public County Commission meeting a few "suspects" but no prospects since Katrina blew in ORECK from Louisiana.

Providing an interchange without a committed industrial client has profound ethical problems when condemnation is used. There is no provision in the law that allows condemnation to be used for non-industrial projects. The temptation to convert speculative property to non-industrial uses or incidental non-industrial uses will be enormous. The government has a moral obligation to provide the service that was promised when they use the power of eminent domain but have only charm and more tax money to make a deal happen against all odds. The government is in a buyer's market and wields no important power to change the economic forces operating on the manufacturing sector of the economy. The fact that everyone else is doing it is emotional, not rational, since the other people are also flailing against the same wave of impossible financial barriers. As long as the final use and the speculative use of property is an uncertain possibility, the land should be acquired only by negotiations between the government and willing sellers.

Federal law permits and encourages the taking of Interstate related property for future high capacity interchanges but only if there is a reasonable expectation of need for that high capacity interchange in 20 years. Changing this interchange from a modified clover leaf to a low volume diamond interchange and the eliminating the connector road to Highway 70 means that there is no real transportation related need in the near or far future. There never was enough technical data available to the public for TDOT to rid itself of the suspicion that of the four leaves of the clover leaf that could have been built, only the one that went through the most resistant owners land was thought to be required by TDOT. TDOT's superior ability to condemn at will would therefore be brought to bear to support the local government rather than be properly used to solve the technical transportation problem of exiting safely from the Interstate.

In spite of many announcements of success, the government data still says that the losses are exceeding the gains in manufacturing employment. By March of 2009, the number of manufacturing workers should have fallen below the number of government workers in Tennessee. The definition of "success" has been degraded to include pirated factories from other states and projects moved from county to county within the state. This is a dishonest way of pretending that the subsidy created a job when it is more likely that the subsidy helped the industry move and shed workers in a restructuring of its work force. There is industrial property or industrial zoning already at three of the four existing exists in Cookeville and it did nothing to prevent the loss of 2223 jobs in Putnam County from 2001 to 2007. Before building another connector, someone should be tasked to find out why the existing infrastructure has been losing its factory magnetism and then concentrate on that cause in a moral and ethical way.

The purpose of a road is access to land and all of the dozens of current local manufacturing properties for sale, both public and private, have road access at least to the edge of the property. An Interstate access would be nice to have for anyone trying to sell or lease industrial property but I see no particular advantage to the large numbers of people who have to pay for it. Socializing the cost makes them more bearable but does not make it right or ethical when the benefit goes only to a few. Beyond a certain point, the concept of user-based fees within the transportation tax system is violated when the non-user is so heavily burdened. An upper limit of non users can be estimated by dividing the estimated cost by the average per capita transportation tax in Tennessee. This calculation shows that it takes over 37,000 people to pay for this interchange with a one-year contribution of $300 each.

To recover the estimated cost of the connector, $11,210,920, over 40 years at 5% would require a yearly income of $653,351.80. This translates into 26.1 million vehicle miles traveled every year or a daily traffic count of 71,551 over one mile for the next 40 years. That is about 1.5 times the current traffic passing under the Mine Lick Creek bridges over I-40 right now. If the mythical 2000 workers at the mythical factory at the Business/Industrial Park each drove 50 miles or averaged 50 miles per day in a five day week, the incremental Vehicle Miles Traveled would actually pay for the interchange. No new worker could be allowed to quit the current job to get the new ones however and there is also a nagging problem of industrial productivity. If worker productivity continues to increase at 2.8 percent per year for the next 40 years, the mythical workforce at the mythical business park would decline from 2000 to 663. Perhaps the declining worker numbers would accommodate the calculation by moving farther away every year or agree to pay 2.8% more transportation related taxes each year? Even if the park expands from its current 290 acre size, the daily inflow of workers to the site, even if it were to become an auto manufacturing plant, assures that this project is nothing short of welfare for a well-to-do county that can handily afford, according to testimony at the Certificate of Need proceedings this year, to pay $5 million for the land plus $14 million for the internal infrastructure.

Two thousand workers going and coming to the mythical and imaginary plant on the Fifth Interchange would need to pay a daily toll of $1.25 for 40 years just to pay for this Interchange. Failing to get a client in a timely manner has the same effect as capitalizing the interest or turning the interest payment into principal. A five year delay in filling the park and attempt to recover the initial cost over the same 40 year period would raise the toll to $1.67 per mythical worker. It is easy to find partially filled parks all over Tennessee, some of them along the Interstate and some are 30 years old. There is no greater hypocrisy than a legislature being opposed to real tolling with actual toll booths and at the same time letting TDOT do invisible tolling of non-users to recover losses on unwise projects like this one.

The social cost of not having this connector is the cost of driving from the closest existing exit and driving on Gould Avenue from Highway 135 or Mine Lick Creek from Highway 56 at Baxter. Even with a new mythical worker population of 2000 accessing the new Business Park five days per week, the difference in the distance to the site from a direct new exit and using the one at Baxter or Cookeville is barely a mile per worker per day if you assume all workers will use the new exit. The social cost borne by these mythical workers in the no-build scenario is still below the cost of construction even if you count driving costs at a dollar per mile. They would be better off without the Connector. The City, the County and Chamber of Commerce however would be inconvenienced by having to do a better job of marketing the community and their property which includes another industrial park on STR 111.

It is not at all clear how this connector somehow got an exemption from the requirements of the Interstate Connector Act (54-5-507. State-local agreements. ) and the requirement of the requesting entity to come up with matching funds. The law says that there will be an agreement to share costs and nothing has been said about that so far. The lack of public disclosure on this point has, no doubt, contributed to the appearance of public support. The law is attached below the body of this comment. The efforts to purchase this Business Park/Industrial Park property and the infrastructure costs have a history of understating the financial requirements that can not be explained by mere inflation. For instance, on 30 SEPT 1988, the local paper reported the Mayor of Cookeville stating the costs was estimated to at $1 million dollars and the connecting road along Gould Ave was to cost half of that. According to the Amendment 238, there are no local funds involved. The City and County currently do not have a clear title to all of the property required because of court actions that are currently in the State Supreme Court. That problem should disappear in a few months but it does not clear up the question of whether there will be more money required in the future for the local taxpayers to finance this connector. In my opinion, there has been a lot of deception about costs and it would be best to expose any more surprises as soon as possible.

TDOT is opening a Pandora's Box of future projects like this by abandoning its own rules, set by the legislature, which mimic FHWA federal guidelines. This Business Park project is seeking to exploit a weakness in the law that permits creeping toward incidental non-industrial use of the property. The current City Manager of Cookeville has stated in an open meeting that was recorded, that the City and County intend to sell the property for $50,000 per acre. There is Industrial property all over Tennessee that is out there for much less than that and some of it is on existing Interstates and near existing exits. If the entire state inventory of 84 square miles were sold to a manufacturer or multiple manufacturer's who had capital cost at the national average of 3.5% of the product cost, it would cost over $161 million dollars to buy it at a bargain basement price of $3000 per acre and those manufacturers would have to produce products valued at $4.6 Trillion to support the capital costs. The Tennessee GDP from manufacturing was measured in current dollars in 2008 at only about $40.6 Billion dollars. Tennessee manufacturing GDP would have to grow over 113 times the 2008 estimate provided by the Bureau of Economic Analysis to afford to occupy and pay for the existing stock of empty land that we had in 2008. There is a glut of these properties and TDOT cannot sustain the effort to serve one percent of them with ideal conditions.

In marketing this site, and application for Certificate of Need, the local governments never miss a chance to tout its visibility from the Interstate. This is not something that traditional manufacturing needs but it is highly prized by road side service and commercial enterprises that have a superior capacity to recover the cost of high land prices at exits. The loose definition of an industrial park or business park and the poorly limited "incidental use" exception means that others will demand parity and that the demands for completion of the grossly unwise Interstate Connector projects will proliferate for the purpose of being fair to local governments. Being fair to local governments has overwhelmed the concept and consideration of being fair to the taxpayer.

The cost of this project and the associated future loop connecting to SR 111 is more than the costs of the current three year work program for I-69 projects in Obion County, about $268 million, or Cumberland County, $234 million. The only reason these counties have such generous allotments is due to earmarking. While TDOT may be forgiven for building its way to the poor house because of federal mandates and federal earmarks, there is no rational excuse for this project now, especially in this era of low reimbursement per vehicle mile. The gas tax has declined in inflation adjusted terms to Depression levels. Corporate Average Fuel Economy standards, Cash for Clunkers legislation and a demographic change in driving habits makes future increased consumption of Vehicle Miles Traveled a minimum requirement for just a flat yearly income. The County Seat Connector Legislation by the state was never funded to a level that was adequate for the task and is a constant drag on building and sustaining a reasonable system with a tax rate that is competitive with adjacent states. Even the federal government, with larger resources and the ability to reach into general funds was never able to finish the Appalachian Highway program for the same reason. Some of the most difficult terrain and the highest cost roads have been saved until last.

The ability of the employer and the employee to connect to each other via a financially sustainable infrastructure is shrinking because of projects that cost more than they reasonably can be expected to bring in as yearly income. Instead of supporting the current need, the project supports a need that cannot possibly materialize. In an odd way, the mirage of the bird in the bush is worth more than the one in the hand. The tens of thousands of people who pass under Mine Lick Creek Road every day and those who will never or rarely pass under Mine Lick Creek Road are better off without this exit. TDOT is trading a very large pile of 2010 and 2011 cash for an inadequate flow of future revenues that cannot possibly replenish the state Highway Fund with the income from transportation taxes.

Danny L. Newton

Cookeville,

Tennessee 38501

54-5-403. Industrial highways authorized. -

(a) In order to facilitate the development and expansion of industry and to provide access to industrial areas, the department, with the approval of the governor, is authorized to use any powers granted under any general law to construct and maintain industrial highways when there is a finding by the department that the highways are clearly necessary to secure the development of an industrial site or park or lessen serious congestion and hazards or facilitate the movement of persons, commodities or raw materials, and no other feasible means exist for accomplishing these objectives.

54-5-507. State-local agreements. -

(a) The department will receive proposals from local agencies, either city or county, for the construction of a connector. Proposals shall contain an agreement on the part of the local agency to participate in the amount of fifty percent (50%) of the cost of the project, and to maintain the connectors at its own expense after completion of the project. The department shall receive the proposals on the basis of coordinated development of access to the various sections of interstate highway routes or fully controlled access highways as they become open to traffic, and in accordance with established departmental criteria for priority of construction and in accordance with the availability of funds.

(b) In no event shall the engineering phase of a connector project be begun by the department until the entire cost of the engineering, as estimated by the department, is deposited with the department by the local agency.

(c) After the engineering phase of the project has been completed, the right-of-way phase of the project shall not be begun by the department until fifty percent (50%) of the cost of the right-of-way phase of the project, as estimated by the department, is deposited with the department by the local agency.

      (d) (1) After the right-of-way phase of the project has been completed, the construction phase of the project shall not be begun by the department until fifty percent (50%) of the remaining cost of the project, as estimated by the department, is deposited with the department by the local agency.

      (2) In arriving at the amount mentioned in subdivision (d)(1), the local agency shall receive a credit of fifty percent (50%) of the amount deposited by the local agency for the engineering phase.

      (e) In the event the local agency does not deposit with the department fifty percent (50%) of the cost of the right-of-way phase of the project, as estimated by the department, within sixty (60) days after the completion by the department of the engineering for the project, or should the local agency not deposit with the department fifty percent (50%) of the cost of the construction phase of the project, as estimated by the department, within sixty (60) days after the completion by the department of the right-of-way phase of the project, the department may, at its option, terminate any agreement with the local agency with respect to the local connector, and any funds deposited with the department by the local agency for the engineering phase or the right-of-way phase, or both, shall become part of the general highway fund free from all claims by the local agency.

      (f) In the event the local agency does not deposit with the department fifty percent (50%) of the cost of the construction phase of the project as provided for in subsection (d), and the department exercises its option to terminate any agreement with the local agency with respect to the project, the local agency shall pay to the department, upon written demand, the actual amount necessary to reimburse the department for expenditures made in accomplishing the engineering and right-of-way phases after deducting the amounts previously deposited by the local agency as the entire estimated cost of the engineering phase and as fifty percent (50%) of the estimated cost of the right-of-way phase.

      (g) In the event of the failure of the local agency to fully comply with this section, the department shall be authorized to receive any funds, excluding rural roads and federal-aid secondary roads funds, that would otherwise be payable to the local agency for highway purposes from the state, until the department has recovered the amount necessary to result in the fifty percent (50%) financial participation in the actual total cost of any phase, or reimbursement in full, as provided for in subsection (a), (c) or (d).

      (h) Following the completion of the project, the department shall determine the actual total cost of the project and either pay to or receive from the local agency an amount that results in the equal financial participation by the parties in the total cost of the project.

      (i) It is the intent of this part for the local agency to participate in the cost of connector projects with road or street funds of the local agency that shall, in no event, include in any part funds from the rural roads program or the federal-aid secondary roads program.

      (j) The maintenance of any road designated as a connector under this part shall be the responsibility of the local agency that participated in the cost of the project.

[Acts 1965, ch. 159, § 7; 1967, ch. 19, § 1; 1968, ch. 577, § 3; 1971, ch. 93, § 1; impl. am. Acts 1972, ch. 829, § 7; T.C.A., § 54-575; Acts 1981, ch. 264, § 12; 1991, ch. 133, § 4; 1999, ch. 249, §§ 5, 6.]

How Not to Regulate Greenhouse Gases by Dr. Robert W. Poole,Jr.

On Earth Day, April 16th, the Environmental Protection Agency is widely expected to announce an endangerment findings about CO2. That would be a legal declaration, under which EPA would then be required to prepare a proposal to regulate CO2 like other criteria pollutants that come out of factories, refineries, dry cleaners . . . and motor vehicles. That may not sound like a big deal on first hearing, but the consequences could be hugely negative for transportation on our highways.

It was unclear for a long while whether the EPA had legal authority under the Clean Air Act to regulate greenhouse gases (GHGs). But in Massachusetts vs. EPA, the US Supreme Court held that it does, if it chooses to exercise it. So last fall the Bush EPA put out an Advanced Notice of Proposed Rulemaking (ANPR) laying out how it might go about regulating GHG under the Clean Air Act (CAA). The comments filed in response to Docket # EPA-HQ-OAR-2008-0318 make for chilling reading.

In order to regulate GHGs under the CAA, the EPA must establish National Ambient Air Quality Standards (NAAQS) for CO2 and other GHGs. And since the sources of GHGs are global, and concentrations produced today remain in the atmosphere for decades, under the CAA transportation conformity provisions, the entire country would be a non-attainment zone, and would probably remain there for decades or centuries regardless of what regulatory actions are taken here. That means federal transportation funds would be withheld unless and until states produced implementation plans showing the attainment of conformit”very likely impossible for the next few decades. As the US DOT comments made clear, Such a finding would reach beyond power plants and other installations to include vital transportation infrastructure such as roads, bridges, airports, ports, and transit lines. At a time when our country critically needs to modernize our transportation infrastructure, the NAAQS that the draft rule would establish and the development of the implementation rules that would follow—could seriously undermine these efforts. You can read a lot more of the gory details in the docket submission by my former Reason colleague Marlo Lewis, PhD, former staff director of the House Government Affairs subcommittee on national economic growth, natural resources, and regulatory affairs.REPORT)

It’s clear to me that using the Clean Air Act in this way would be disastrous for the economy as well as for transportation. It’s the wrong tool to use against GHGs. As I’ve written elsewhere, the least-bad approach is a revenue-neutral carbon tax, which would accomplish what a cap-and-trade system aims to do (put a price on emitting CO2) but without either (a) creating huge political gains and losses as various sectors jockey for allocations of free permits or (b) producing windfall revenues to be allocated to politically favored purposes.

The transportation community should line up in favor of a revenue-neutral carbon tax, because the alternatives—especially EPA regulation under the CAA—would be so much worse.

GAS TAX INDEXING PLAN DIED!

by Danny Newton

06 MAY 2009

The plan to index the gas tax to the Consummer Price Index is dead for this legislative year according to taxpayer advocate Ben Cunningham at his blog. This makes one wonder if there was another balencing plan somewhere that also died that was being used as a trade off to get the tax.

CITY MISSES DEADLINE... ON WE GO TO COURT OVER THE BUSINESS PARK

by Danny Newton

30 APRIL 2009

The city and the county have rejected the proposed partition made by the owners of the Pyle Property and have ignored the 30 APRIL 2009 deadline for avoiding a trip to the Supreme Court. The Supreme Court Case is primarily a move to clarify the law with respect to procedures used against the owners in order to bully them into submission in this outrageous eminent domain abuse case.

If the city/county should lose this case, there will be a precedent set for other counties wishing to use eminent domain abuse and it will mean that the attorney's fees will have to be paid by the city/county The city and the county have already complained about the dollar amount on the basis that they were unusual. This will not settle the owners petition for a partition of the land rather than taking the money offered by the government. The defendants lawyer has already presented an outline of his case in an earlier court hearing for actual partition by asserting that the law gives preference to this solution over simply buying out the owner.

Maybe Bob Anderson, the defendant's attorney, has to charge extra because he is always going up against two attorneys whenever they meet the city and county in court?

WILL THE FIFTH INTERCHANGE GET STIMULUS MONEY?

by Danny Newton

30 APRIL 2009

Several people have told me that they heard that the Fifth Interchange is going to get stimulus money but it seems unlikely that this will happen unless we are still stimulating the economy several years from now. The Fifth Interchange is not shovel ready because it does not have land purchased and it does not have a set of plans. We still don't know what the geometry of the road is going to be. The Diamond or Modified Cloverleaf layout is a closely guarded secret. Only the Modified Cloverleaf design with a connector road to US 70 has a blessing from the Federal Highway Administration but the amount of money available is more consistent with the cheaper low volume diamond interchange that the city/county have shown on some of their planning documents.

There is a possibility that the city or the county could come up with some stimulus money that might help with the hidden cost that have not been sprung on the public yet. That would be the matching money required by the Interstate Connector Act of 1965. I have a letter from TDOT that assures me that the Interstate Connector Act will be applied to this interchange. That means at least $15 million, in addition to the $5 million purchase price plus the $14 million dollar infrastructure costs. TDOT has also administratively modified the amount they will assist in the cost of an interchange by limiting the state participation to only $2 million dollars. That won't even pay for a new bridges over the Interstate. The current bridges are a little narrow for the car volumes that they project.

PUTNAM COUNTY AND THE CITY GET DUAL CERTIFICATE FOR THE INDUSTRIAL PARK

KANGAROO COURT IGNORES THE FACTS AGAIN.

by Danny Newton

6 MAR 2009

      A delegation of 18 people plus Representative Henry Fincher and Senator Charlotte Burks converged on the Building Finance Committee of the Department of the Economic and Comunity Development to plead their case for another industrial park in Putnam County. Everyone got to say something positive about the project and the result was that the Certificate of Need was authorized not only for a Business Park but for an Industrial Park.

      Attorney Bob Anderson, speaking for the Lynch Family, reminded the committee that the current legal action in the state supreme court was still pending and that the only assurance that the most valuable property near what might be the Fifth Interchange would not be in the park was a few city and county resolutions. The attorney for the Lynch family has yet to see confirming paperwork that the battle is really over.

More about the meeting later....