Wednesday, July 17, 2019

Mobile River Bridge Plan is Fatally Flawed: Reason 19


I submitted an independent review of the Supplemental Draft Environmental Impact Statement (SDEIS) to the Alabama Department of Transportation (ALDOT) on July 10, 2019. As of this writing, ALDOT has not acknowledged receipt of my report, containing 19 specific issues with the project's decision document. The SDEIS is the most important document pertaining to the project. The bridge and bayway replacement cannot go forward without it.

The document is fatally flawed.

Since ALDOT has neither publicly nor even privately acknowledged that they are aware of these 19 specific problems with their decision document, I am sharing them with you, one at a time.

Note: Comments 12-19 are all about the Traffic & Revenue Study, which is the key to how the toll structure was developed. This is Economics 205 level stuff.

Comment 19: The T&R Study is silent on risk and uncertainty, key factors in the judgment of the ability of the project to perform as expected economically and financially.

Basis: The word “uncertainty” is used only once in the T&R Study—in the preparer’s disclaimer of any warranty on the study’s projections or estimates. The word “risk” is used in a similar fashion and only once.

A reasonably thorough discussion of the probable impacts of a project’s non-performance is required under NEPA. None of the important variables subject to uncertainty and capable of increasing risk are even identified. What is the probability that future traffic flow will fall short of forecasts? The correct answer is that we are uncertain. What difference between forecast and actual traffic is enough to drive the concessionaire to insolvency? The correct answer is if we don’t know, we had better find out because we are at risk. Here, the study avoids these discussions altogether.

Without resolution, this issue could halt finalization of the SDEIS.

Mobile River Bridge Plan is Fatally Flawed: Reason 18


I submitted an independent review of the Supplemental Draft Environmental Impact Statement (SDEIS) to the Alabama Department of Transportation (ALDOT) on July 10, 2019. As of this writing, ALDOT has not acknowledged receipt of my report, containing 19 specific issues with the project's decision document. The SDEIS is the most important document pertaining to the project. The bridge and bayway replacement cannot go forward without it.

The document is fatally flawed.

Since ALDOT has neither publicly nor even privately acknowledged that they are aware of these 19 specific problems with their decision document, I am sharing them with you, one at a time.

Note: Comments 12-19 are all about the Traffic & Revenue Study, which is the key to how the toll structure was developed. This is Economics 205 level stuff.

Comment 18: The 5% estimate for invalid tags is unrealistically small.

Basis: Alabama drivers are notorious for failure to register and/or keep registration current. Under current Alabama law, any individual may purchase a vehicle without simultaneously being required to purchase liability insurance. Since proof of insurance is required to register the vehicle and purchase a tag, a significant proportion of vehicles in Mobile and Baldwin counties do not have valid tags. While it is beyond the scope of this review to estimate tag and registration noncompliance, the percentage of vehicles with no tags will have a significant effect.

Also, a toll bridge creates an incentive to not register a vehicle or to simply remove tags prior to planned trips. This will affect out-of-state drivers as well, since a vehicle with no tag can originate from any state. There is nothing to prevent a driver from any state from stopping just outside the region, removing the tags, and replacing them once the trip is complete.

This study makes no effort to determine what percentage of the historical, existing or future vehicles in the market area are improperly tagged or simply unregistered. The 5% figure is taken from thin air.

Without resolution, this issue is unlikely halt finalization of the SDEIS.

Read the full report here.

Mobile River Bridge Plan is Fatally Flawed: Reason 17

I submitted an independent review of the Supplemental Draft Environmental Impact Statement (SDEIS) to the Alabama Department of Transportation (ALDOT) on July 10, 2019. As of this writing, ALDOT has not acknowledged receipt of my report, containing 19 specific issues with the project's decision document. The SDEIS is the most important document pertaining to the project. The bridge and bayway replacement cannot go forward without it.

The document is fatally flawed.

Since ALDOT has neither publicly nor even privately acknowledged that they are aware of these 19 specific problems with their decision document, I am sharing them with you, one at a time.

Note: Comments 12-19 are all about the Traffic & Revenue Study, which is the key to how the toll structure was developed. This is Economics 205 level stuff.

Comment 17: Toll price elasticity of demand is treated improperly.

Basis: Chapter 10 of the study discusses drivers’ sensitivity to toll price only theoretically and uses assumptions rather than empirical data. There is extensive literature on price elasticities and studies conducted on tolled thoroughfares from around the country. Little of this information was used in this study, if any. It is inexcusable to simply make assumptions based on a review of internally produced synthetic data.

The study then comes up with the conclusion that travel demand is price inelastic. This conclusion is based on supposition rather than observation of actual consumer behavior.

Without resolution, this issue is unlikely to halt finalization of the SDEIS.

Mobile River Bridge Plan is Fatally Flawed: Reason 16


I submitted an independent review of the Supplemental Draft Environmental Impact Statement (SDEIS) to the Alabama Department of Transportation (ALDOT) on July 10, 2019. As of this writing, ALDOT has not acknowledged receipt of my report, containing 19 specific issues with the project's decision document. The SDEIS is the most important document pertaining to the project. The bridge and bayway replacement cannot go forward without it.

The document is fatally flawed.

Since ALDOT has neither publicly nor even privately acknowledged that they are aware of these 19 specific problems with their decision document, I am sharing them with you, one at a time.

Note: Comments 12-19 are all about the Traffic & Revenue Study, which is the key to how the toll structure was developed. This is Economics 205 level stuff.

Comment 16: The assumptions regarding historical, existing and expected future traffic patterns and growth do not appear realistic.

Basis: Negative growth in traffic between 2005-2014 assumed to be related to increased gas prices and the 2008-09 financial crisis and recession. This assumption does not address technological growth during this period (eg, iPhone introduced in 2007) and remote work capability. Also, 2004 and 2005 were the years of Hurricanes Ivan and Katrina respectively, which temporarily altered traffic patterns due to recovery efforts (debris management, construction, temp relocations, etc).
Using the 10-year period between 2005-14 thus does not likely reflect the true underlying historical traffic growth. The T&R Study should explore a more detailed economic setting that addresses the effects of back-to-back storm years, reduced traffic flows due to technological growth and other external factors affecting traffic on the I-10 corridor between the AL/FL line and the AL/MS. Line.

Without resolution, this issue is unlikely to halt finalization of the SDEIS.

Read the full report here.

Mobile River Bridge Plan is Fatally Flawed: Reason 15


I submitted an independent review of the Supplemental Draft Environmental Impact Statement (SDEIS) to the Alabama Department of Transportation (ALDOT) on July 10, 2019. As of this writing, ALDOT has not acknowledged receipt of my report, containing 19 specific issues with the project's decision document. The SDEIS is the most important document pertaining to the project. The bridge and bayway replacement cannot go forward without it.

The document is fatally flawed.

Since ALDOT has neither publicly nor even privately acknowledged that they are aware of these 19 specific problems with their decision document, I am sharing them with you, one at a time.

Note: Comments 12-19 are all about the Traffic & Revenue Study, which is the key to how the toll structure was developed. This is Economics 205 level stuff.

Comment 15: Chapters 8-11 use arbitrary and different inflation rates for both system costs and revenues. This artificially distorts the effect of inflation and produces a meaningless comparison of revenues, costs and financial feasibility.

Basis: Expected future cash flows should NEVER be expressed in inflated values. Only constant (real) dollars are meaningful because any rate of growth used to inflate the values would also be used to discount them in a present value calculation. This is a basic concept in economic and financial analysis and the fact that it was abandoned in this study is deeply troubling.

Worse, a different rate of growth is used to inflate toll revenues in Chapter 9 than either the value of time or vehicle operating cost in Chapter 8. Worse still, a different and undisclosed rate is used to inflate future operations and maintenance costs in Chapter 11.

Having at least two and as many of three different inflation rates makes any comparison of cash flows meaningless. It is especially troubling to have toll revenues with a growth rate higher than the growth rate of toll system costs. This could lead to suspicion that the analysis is rigged to favor implementing the project. This appearance must be avoided.

Without resolution, this issue could halt finalization of the SDEIS.