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Status of the Nation's Highways, Bridges, and Transit:
2002 Conditions and Performance Report

Chapter 7: Capital Investment Requirements
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Index
Introduction
Highlights
Executive Summary
Part I: Description of Current System
Ch1: The Role of Highways and Transit
Ch2: System and Use Characteristics
Ch3: System Conditions
Ch4: Operational Performance
Ch5: Safety Performance
Ch6: Finance

Part II: Investment Performance Analyses
Ch7: Capital Investment Requirements
Ch8: Comparison of Spending and Investment Requirements
Ch9: Impacts of Investment
Ch10: Sensitivity Analysis

Part III: Bridges
Ch11: Federal Bridge Program Status of the Nation's Bridges

Part IV: Special Topics
Ch12: National Security
Ch13: Highway Transportation in Society
Ch14: The Importance of Public Transportation
Ch15: Macroeconomic Benefits of Highway Investment
Ch16: Pricing
Ch17: Transportation Asset Management
Ch18: Travel Model Improvement Program
Ch19: Air Quality
Ch20: Federal Safety Initiatives
Ch21: Operations Strategies
Ch22: Freight

Part V: Supplemental Analyses of System Components
Ch23: Interstate System
Ch24: National Highway System
Ch25: NHS Freight Connectors
Ch26: Highway-Rail Grade Crossings
Ch27: Transit Systems on Federal Lands

Appendices
Appendix A: Changes in Highway Investment Requirements Methodology
Appendix B: Bridge Investment/Performance Methodology
Appendix C: Transit Investment Condition and Investment Requirements Methodology
List of Contacts

Transit Investment Requirements

The Federal Transit Administration (FTA) uses the Transit Economic Requirements Model (TERM), based on engineering and economic concepts, to estimate future transit capital investment. TERM was developed to improve the quality of estimates of future transit capital funding needs. The 1997 Conditions and Performance Report was the first in this series to report investment requirements based on TERM. For this report, TERM was used to project the dollar amount of capital investment that will be required by the transit sector in order to meet various asset condition and operational performance goals by 2020. These capital investment requirements estimates are based on the condition estimation process and results provided in Chapter 3, ridership growth projections, and data from the National Transit Database (NTD) on the existing transit asset base, (e.g., number of vehicles and stations) and operating statistics, (e.g. operating speed). Estimated requirements are presented on an average annual basis, though as calculated by TERM, they fluctuate from year to year. All investments identified by TERM are subject to a benefit-cost test, requiring that all investments incorporated in the model have a benefit-cost ratio that is greater than 1. (A technical description of TERM is provided in Appendix C.)

TERM projects transit capital investment requirements for the four following investment scenarios:

  • Maintain Asset Conditions Transit assets are replaced and rehabilitated over the 20-year period such that the average condition of the assets existing at the beginning of the period remains the same at the end of the period.
  • Maintain Performance New transit vehicles and infrastructure investments are undertaken to accommodate increases in transit ridership so that the vehicle utilization rate existing at the beginning of the period remains the same at the end of the period. Ridership growth estimates are obtained from Metropolitan Planning Organizations (MPOs).
  • Improve Conditions Transit asset rehabilitation and replacement is accelerated to improve the average condition of each asset type to a least a “good” level at the end of the 20-year period (2020).
  • Improve Performance The performance of the Nation’s transit system is improved as additional investments are undertaken in urbanized areas with the most crowded vehicles and slowest systems to reduce vehicle utilization rates (and crowding) and increase average transit operating speeds.

Investment Requirements

Exhibit 7-8 provides estimates of the total annual capital investment that will be necessary to meet the four investment scenarios. These estimates combine those calculated by TERM with FTA staff estimates of rural and special service investment requirements. Annual transit investment requirements, at a minimum, are estimated to be $14.8 billion to Maintain the Conditions and Performance of the Nation’s transit systems at their 2000 level, assuming an average annual increase in transit ridership of 1.6 percent. To improve the average condition level of transit assets to “good” by 2020, as well to Improve Performance by increasing transit speeds and reducing occupancy rates to threshold levels, would require an additional $5.8 billion per year for a total average annual capital investment of $20.6 billion.

    
Exhibit 7-8

Summary of Average Annual Transit Investment Requirements, 2001-2020 (Billions of 2000 Dollars)
 
CONDITIONS PERFORMANCE AVERAGE ANNUAL COST
Maintain Maintain
$14.8
Improve Maintain
$16.0
Maintain Improve
$19.5
Improve Improve
$20.6
Source: Transit Economic Requirements Model and FTA staff estimates.

As shown in Exhibit 7-9, replacement and rehabilitation costs are estimated to be $9.2 billion to Maintain Conditions and Performance, and $10.3 billion to Improve Conditions and Performance. Asset expansion costs needed to meet the projected 1.6 percent average annual increase in ridership growth are estimated to be $5.6 billion if conditions are maintained and $5.7 billion if conditions are improved to a “good” level. The incremental $1.1 billion needed for asset rehabilitation and replacement under the Improve Conditions scenario results from the extra investment that will be required to rehabilitate and replace additional asset purchases. The expenditures needed to Improve Performance are estimated to be $4.6 billion annually.

    
Exhibit 7-9

Average Annual Transit Investment Requirements by Type of Improvement (Billions of 2000 Dollars)

 
TYPE OF IMPROVEMENT MAINTAIN CONDITIONS & PERFORMANCE IMPROVE CONDITIONS & MAINTAIN PERFORMANCE MAINTAIN CONDITIONS & IMPROVE PERFORMANCE IMPROVE CONDITIONS & PERFORMANCE
Replacement and Rehabilitation
$9.2 $10.3 $9.2 $10.3
Asset Expansion
$5.6 $5.7 $5.7 $5.7
Performance Improvements
    $4.6 $4.6
Total
$14.8 $16.0 $19.5 $20.6
Source: Transit Economic Requirements Model and FTA staff estimates.

Average Annual Costs to Maintain and Improve Conditions and Performance

Exhibit 7-10 provides a detailed breakdown of transit investment requirements by TERM scenario and area population size. More than 90 percent of transit investment will be required in urban areas with populations of over 1 million, reflecting the fact that 90 percent of the Nation’s passenger miles are currently in these areas. It is estimated that an average of $13.4 billion would be needed annually to Maintain Conditions and Performance of transit assets in these large urban areas and $18.1 billion annually to Improve Conditions and Performance. The needs of less populated areas, i.e., those with populations under 1 million, are estimated to be considerably lower because they currently have fewer transit assets. It is estimated that $1.4 billion would be needed annually to Maintain Conditions and Performance of the transit infrastructure in these areas and $2.5 billion to improve them.

    
Exhibit 7-10

Transit Infrastructure
Annual Average Cost To Maintain and Conditions and Performance, 2001-2020
(Millions of 2000 Dollars)

 
MODE, PURPOSE & ASSET TYPE   COST TO MAINTAIN CONDITIONS & PERFORMANCE INCREMENTAL COSTS TO IMPROVE CONDITIONS INCREMENTAL COST TO IMPROVE PERFORMANCE COSTS TO IMPROVE CONDITIONS & PERFORMANCE
Areas Over 1 Million in Population
Non-rail (*) Replacement & Rehabilitation
(Vehicles)
$1,421
$471
 
$1,892
(Non-Vehicles) (**)
781
0
 
781
Asset Expansion
(Vehicles)
585
12
 
598
(Non-Vehicles)
990
0
 
990
Improve Performance
(Vehicles)
 
 
286
286
(Non-Vehicles) (**)
 
 
345
345
Special Service(***)
(Vehicles)
27
14
 
41
Subtotal Non-rail
 
3,804
497
631
4,933
Rail Replacement & Rehabilitation
(Vehicles)
2,044
-122
 
1,923
(Non-Vehicles) (**)
3,810
293
 
4,103
Asset Expansion
(Vehicles)
1,007
0
 
1,007
(Non-Vehicles) (**)
2,785
0
 
2,785
Improve Performance
(Vehicles)
 
 
317
317
(Non-Vehicles) (**)
 
 
3,038
3,038
Subtotal Rail
 
9,646
171
3,355
13,171
Total Areas Over 1 Million
 
13,450
668
3,986
18,104
Areas Under 1 Million in Population
Non-rail (*) Replacement & Rehabilitation
(Vehicles)
517
188
 
705
(Non-Vehicles) (**)
194
0
 
194
Fleet Expansion
(Vehicles)
174
3
 
177
(Non-Vehicles) (**)
82
0
 
82
Improve Performance
(Vehicles)
 
 
120
120
(Non-Vehicles) (**)
 
 
71
71
Special Service (***)
(Vehicles)
151
82
 
233
Rural
(Vehicles)
237
207
315
758
(Non-Vehicles) (**)
4
9
11
24
Subtotal Non-rail
 
1,359
489
517
2,364
Rail
Replacement & Rehabilitation
(Vehicles)
5
3
 
8
(Non-Vehicles) (**)
6
0
 
6
Fleet Expansion
(Vehicles)
4
 
0
4
(Non-Vehicles) (**)
17
 
0
17
Improve Performance
(Vehicles)
 
 
10
10
(Non-Vehicles) (**)
 
 
102
102
Subtotal Rail
 
32
3
112
148
Total Areas Under 1 Million
 
1,391
492
629
2,512
Total
 
14,841
1,160
4,615
20,616
(*) Buses, vans and other (including ferry boats.)
(**) Non-vehicles comprise guideway elements, facilities, systems and stations.
(***) Vehicles to serve the elderly and disabled.
Source: Transit Economic Requirements Model and FTA staff estimates.

Non-rail Needs in Urban Areas with Populations over 1 Million—The cost of maintaining the conditions of the non-rail infrastructure (buses, vans, and ferryboats) in urban areas with populations over 1 million is much lower than the cost of maintaining the rail infrastructure. About 30 percent of the total transit investment requirement in these areas, or about $3.8 billion annually, would be needed to maintain this infrastructure’s conditions and performance. Fifty-eight percent, or $2.2 billion annually, would be needed to rehabilitate and replace assets to Maintain Conditions and 42 percent, or $1.6 billion, to purchase new assets in order to Maintain Performance. It is estimated that sixty-five percent of rehabilitation and replacement expenditures would be for vehicles, while asset expansion would be geared more heavily toward non-vehicles. The incremental costs to improve non-rail conditions are estimated to be $497 million annually, of which $471 million, would be needed for vehicle rehabilitation and replacement. The incremental costs to Improve Performance are estimated to be $631 million annually, of which 45 percent, or $286 million, would be spent on new vehicles (principally buses) and 55 percent, or $345 million, on new non-vehicle assets. Expenditures on non-vehicle assets include investments for the purchase or construction of dedicated highway lanes for Bus Rapid Transit. A total of $4.9 billion would be needed on an average annual basis to Improve both Conditions and Performance.

Rail Needs in Urban Areas with Populations over 1 Million—About 70 percent of the total transit investment requirements of large urban areas, or about $9.6 billion annually, would be needed to Maintain Conditions and Performance of the rail infrastructure. Sixty-one percent, or $5.9 billion annually, would be required to rehabilitate and replace assets to Maintain Conditions, and 39 percent, or $3.8 billion, for asset expansion, i.e., to purchase new assets to Maintain Performance as ridership increases. Sixty-six percent of the investments to rehabilitate and replace existing assets and 75 percent of the investment to acquire new assets would be for non-vehicles. The incremental cost to improve rail asset conditions so that they achieve an average condition rating of “good” by 2020 is estimated to be $171 million annually. This $171 million results from an incremental increase of $293 million for non-vehicle asset rehabilitation and replacement coupled with an incremental decrease of $122 million in vehicle rehabilitation and replacement. Vehicle rehabilitation and replacement expenditures are reduced under this scenario since vehicles are replaced earlier in their useful life leading to a reduction in rehabilitation expenses. The incremental costs to Improve Performance of these rail systems are estimated to be $3.4 million annually, including the cost of purchasing rights-of-way. Ninety percent, or $3.0 billion, of this would be needed to expand the non-vehicle rail infrastructure. This split between vehicle and non-vehicle investment for performance improvement is typical for new heavy and light rail infrastructure development projects. A total of $13.2 billion would be needed on an average annual basis to Improve both Conditions and Performance of rail in these areas.

Non-rail Needs in Areas with Populations of Under 1 Million—Over 95 percent of the transit investment requirements in areas with populations under 1 million is projected to be for non-rail transit. The annual cost to Maintain Conditions and Performance of the non-rail transit infrastructure in these areas is estimated to be $1.4 billion. The incremental investment required to Improve non-rail conditions, is estimated to be $489 million annually, with the bulk to be spent for vehicle acquisitions. Of the $517 million incremental annual investment to Improve Performance 84 percent, or $435 million, would need to be invested in acquiring new vehicles and 16 percent or $82 million would need to be invested in the new non-vehicle infrastructure. Sixty-three percent of investment required to Improve Performance stems from the lack of coverage by rural transit systems and unmet rural transit needs. The total amount needed to Improve both Conditions and Performance of non-rail transit in these areas is estimated to be $2.4 billion annually.

Rail Needs in Areas with Populations of Under 1 Million—Rail needs in these less populated areas are minimal because only three light-rail systems currently operate in them. An estimated $32 million annually would be needed to Maintain Conditions and Performance. An additional $3 million would be required to Improve Conditions by increasing the rate at which old vehicles are replaced with new vehicles. The additional $112 million to Improve Performance will be principally for expansions of light rail. Of this amount, $10 million is estimated to be needed to purchase vehicles and $102 million to purchase non-vehicle assets— reasonably in line with the industry rule-of-thumb that light rail projects typically have a ratio of vehicle-tototal- system costs of about 11 percent. A total of $148 million would be required to Improve both Conditions and Performance of rail in rural areas.

Q.
Why have estimated requirements for rural areas increased so significantly since the last C&P Report?

A.
Investment requirements in rural areas have been reevaluated to take into account their lack of transit coverage. This lack of coverage was most recently documented in a 1994 survey of rural systems undertaken by the Community Transportation Association of America (CTAA), but estimates of the unmet requirements were not included in the 1999 C&P Report. (The most recent CTAA survey in 2000 did not resurvey rural system coverage.) Although the number of rural transit vehicles increased at an average annual rate of 7.8 percent between 1994-2000 and the population in areas of less than 50,000 inhabitants decreased by 3.4 percent between 1990-2000, there are still believed to be significant unmet rural transit needs. Recent surveys of rural transit needs in five states—Minnesota, Montana, North Carolina, Vermont and West Virginia—identified considerable unmet requirements within these states. The investment requirements estimates presented here assume an annual rural vehicle growth rate of 3.5 percent.

Average Annual Investment Requirements by Detailed Asset Type

Exhibit 7-11 provides disaggregated annual investment requirements for rail and non-rail transportation modes by asset type for:

  • asset replacement and rehabilitation,
  • asset expansion, and
  • performance improvement.
    
Exhibit 7-11

Transit Infrastructure
Average Annual Investment Requirements by Asset Type, 2001-2020
(Millions of 2000 Dollars)

 
MAINTAIN CONDITIONS AND PERFORMANCE
ASSET TYPE REHABILITATION AND REPLACEMENT ASSET EXPANSION IMPROVE PERFORMANCE TOTAL
Rail
Guideway Elements
$2,318 $1,427   $3,746
Facilities
111 123   235
Systems
1,007 231   1,239
Stations
379 313   692
Vehicles
2,049 1,011   3,060
Other Project Costs
  707   707
Subtotal Rail
5,865 3,813   9,678
Non-Rail
Guideway Elements
11 342   353
Facilities
802 325   1,127
Systems
145 62   207
Stations
21 141   162
Vehicles
2,352 759   3,111
Other Project Costs
0 203   203
Subtotal Non-Rail
3,331 1,832   5,163
Total Maintain Conditions
9,196 5,645   14,841
IMPROVE CONDITIONS AND PERFORMANCE
ASSET TYPE REHABILITATION AND REPLACEMENT ASSET EXPANSION IMPROVE PERFORMANCE TOTAL
Rail
Guideway Elements
2,607 1,427 768 4,802
Facilities
111 123 59 294
Systems
1,012 231 120 1,363
Stations
379 313 289 981
Vehicles
1,930 1,011 327 3,269
Other Project Costs
  707 614 1,321
System Design and Right-of- Way Acquisition
    1,290 1,290
Subtotal Rail
6,039 3,813 3,467 13,319
Non-Rail
Guideway Elements
11 342 107 460
Facilities
802 333 258 1,393
Systems
145 62 2 209
Stations
21 141 37 199
Vehicles
3,314 774 721 4,809
Other Project Costs
0 203 24 227
Subtotal Non-Rail
4,293 1,855 1,149 7,297
Total Improve Conditions
10,332 5,668 4,616 20,616
Source: Transit Economic Requirements Model and FTA staff estimates.

Assets are disaggregated into 5 categories—facilities, guideway elements, stations, systems, and vehicles. The annual funding requirements for supporting services are provided under “other project costs.” These include expenditures for administrative services and vehicles used for administrative or security purposes. The annual investment needed to design rail new systems and acquire rights-of-way to support new rail investments are reported under the Improve Performance scenario.

Rail—More than 40 percent of rail rehabilitation and replacement investment, both in the Maintain Conditions and Improve Conditions scenarios, is estimated to be required for investment in guideway elements, including elevated structures, systems structures, and track. Investment required to Maintain guideway conditions is estimated to be $2.3 billion annually, and to Improve guideway conditions, $2.6 billion annually. Guideway elements are estimated to account for slightly more than 40 percent of the total value of the existing U.S. transit asset base. Twenty-four percent of elevated structures, 23 percent of underground tunnels, and 17 percent of rail track are in less than-adequate condition (below condition level 3). More than 32 percent of total rail rehabilitation and replacement investment will be needed for vehicles— $2.0 billion annually to Maintain vehicle conditions and $2.9 billion annually to Improve vehicle conditions.

Rail systems (substations, overhead wire, and third rail), estimated to comprise about 10 percent of the value of the transit asset base, would also require investments—$1.0 billion annually, or 17 percent of total rail infrastructure investment needs. Although many of these systems are in adequate or better condition (level 3 or above), they have an average useful life of around half that for other non-vehicle assets and have a more accelerated replacement schedule.

Facilities and stations would require the smallest levels of investment. Although 36 percent of facilities and 16 percent of stations are in less than adequate conditions, they have longer average replacement ages and comprise a relatively smaller proportion of the total rail infrastructure base (about 10 percent each).

The largest incremental investments needed to Maintain Performance through the expansion of the asset base would be for guideway elements ($1.4 billion annually) and vehicles ($1.0 billion annually). To Improve Performance $1.3 billion annually is estimated to be required for system design and rights-of-way acquisition.

Non-rail—Vehicles account for the largest component of non-rail investment requirements. The bulk (70 to 75 percent) of non-rail rehabilitation and replacement expenditures would be for vehicles—$2.4 billion annually to Maintain Conditions and $3.3 billion annually to Improve Conditions. Vehicles are also estimated to account for the largest proportion (about 40 percent) of non-rail asset expansion investments, at about $800 million under both the Maintain and Improve scenarios. Guideway elements and facilities would also account for considerable proportions (20 percent each) of future non-rail asset expansion—$342 million annually for guideways and $333 million annually for facilities. About 62 percent of the expenditures required for performance improvement would be for vehicles ($721 million annually), 22 percent for facilities ($258 million annually), and 9 percent for guideway elements ($107 million annually).

Q.
Could U.S. Federal Lands benefit from additional investment in transit?

A.
A recent study of transportation alternatives on Federal Lands managed by the Interior Department identified transit investment requirements of $1.71 billion in 1999 constant dollars over the period 2001-2020, which converts to about $1.75 billion in 2000 dollars. The largest investments will be required by the National Park Service ($1,554 million) with considerably smaller amounts required by the U.S. Fish and Wildlife Service ($126 million) and the Bureau of Land Management ($30). (In 2000 dollars these estimated investment requirements are $1,586 million, $129 million and $31 million, respectively.) These investment requirements, which have been estimated outside the TERM framework and which have not explicitly been included in the estimates of transit investment requirements presented in this chapter, are discussed in more detail in Chapter 27.

Existing Deficiencies in the Transit Infrastructure

TERM estimates the amount of investment that would be required in order to correct existing deficiencies in the Nation’s transit infrastructure. This deficiency may also be referred to as the transit investment “backlog” similar to the backlog requirement calculated by HERS. TERM corrects infrastructure deficiencies by replacing all assets with conditions below the specified replacement level. These expenditures are averaged over the 20-year investment period. [See Appendix C]. TERM estimates that the $16.4 billion would be needed to correct all existing deficiencies under the Maintain Conditions scenario and $30.7 billion under the Improve Conditions scenario. These numbers do not include the costs of correcting for deficiencies in rural or special service transit services.

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