Franklin Perez for Florida State House

From: perezfranklin@hotmail.com
To: lpfoc@yahoogroups.com; floridaliberty@yahoogroups.com; libertarian@yahoogroups.com
Subject: PRESS RELEASE: In Defense of Free-Market Transportation Solutions - Request for Open Debate with Florida State Representative Scott Plakon (or Others Who Support SunRail Fiasco)
Date: Wed, 6 Jan 2010 18:08:45 +0000

PRESS RELEASE: In Defense of Free Market Transportation Solutions - Request for Open Debate with Florida State Representative Scott Plakon (or Others Who Support SunRail Fiasco)

From: perezfranklin@hotmail.com
To: wtln@salemorlando.com; editor@seminolechronicle.com; news@foxwofl.com; insight@orlandosentinel.com; news@wdbo.com; desk@wesh.com; news@wftv.com; wmfe@wmfe.org; editor@cfadvocate.com; cbarth@bizjournals.com; news@orlando-times.com; jbillman@orlandoweekly.com; mcortner@osceolanewsgazette.com; isaacb@observernewspapers.com; tcraft@observernewspapers.com; kyle@observernewspapers.com; bmanes@orlandoweekly.com; wmfenews@wmfe.org; skubersky@orlandoweekly.com; jstrout@orlandoweekly.com; abeaboraya@gmail.com; lp120.jrt@gmail.com; superchannel@superchannel.com; wvendesk@entravision.com; jeff@orlandoheritage.com; noelle.sliman@foxtv.com; info@tv45.org; news@laprensaorlando.com; gjudah@mysanfordherald.com; bliggett@sanfordherald.com; owens@sanfordherald.com; news@sanfordherald.com; apopkachief@earthlink.net; bbclassi@bellsouth.net; newsdesk@eosun.com; rpalacio@orlandosentinel.com; reddy@dioceseofvenice.org; madisonjim@aol.com; smcbreen@orlandosentinel.com; srecchi@orlandosentinel.com; bwhitby@orlandoweekly.com; lisa@kearneypublishing.com; hillary.pfeiffer@wftv.com; lmcdonald@local6.com; tufuente@telenoticias.net; tracie@greenlifenews.org; wotimes@aol.com; kathy.kelly@news-jrnl.com; metro@news-jrnl.com; jason@teapartypatriotslive.com; happytown@orlandoweekly.com; channel15@daytonastate.edu; wesh2news@gmail.com; letters@orlandoweekly.com; libertyandprosperity1776@gmail.com; radio@teapartypatriotslive.com
CC: scott.plakon@myfloridahouse.gov; altman.thad.web@flsenate.gov; mjf@falcondevelopment.net
Subject: PRESS RELEASE: In Defense of Free-Market Transportation Solutions - Request for Open Debate with Florida State Representative Scott Plakon (or Others Who Support SunRail Fiasco)
Date: Sun, 20 Dec 2009 18:21:25 +0000

PRESS RELEASE: In Defense of Free Market Transportation Solutions - Request for Open Debate with Florida State Representative Scott Plakon (or Others Who Support SunRail Fiasco)

Dear Members of the Press & Public:

My name is Franklin Perez, and I'm running in year 2010 for the Florida State House of Representatives (District 33) with a Libertarian platform. You may read information about my campaign by going to the following websites:
1) http://www.fperez1776.com
2) http://www.twitter.com/fperez1776
3) http://www.youtube.com/watch?v=e1Z1WI2rNqE

This PRESS RELEASE is a long one, but I felt the need to back up what I write with appropriate references. If someone would like to help me condense this PRESS RELEASE into something shorter, please do so and send it to me.

As an aside, I hope the various News Media Outlets make an attempt to print this PRESS RELEASE or a condensed version of it. I am glad that the Orlando Sentinel and the Orlando Weekly printed the matter dealing with the http://groups.yahoo.com/group/SemCountyLibs/message/4017 PRESS RELEASE entitled "Franklin Perez Expresses Disgust & Anger at Libertarian Party of Florida for Not Passing Anti-Hispanic & Anti-Censorship Condemnation Motions". I am also glad that the Seminole Chronicle reported on my views that the Sex Worker Profession amongst Consenting Adults should be decriminalized or legalized, as can be seen at the http://www.seminolechronicle.com/vnews/display.v/ART/2009/10/14/4ad634a9608c9?in_archive=1 article entitled "Libertarian's Controversial Views Garner Attention" and the http://www.seminolechronicle.com/vnews/display.v/ART/2009/09/23/4aba72bbaaf7b?in_archive=1 article entitled "Let me be, let me see sex workers".

But, I think that this matter dealing with the SunRail Fiasco Bill that Florida Governor Charlie Crist signed is a MUCH MORE important matter that deserves for the supporters of Free-Market Transportation Solutions to be heard by the PUBLIC. The PUBLIC deserves to be told of an alternative to meet Florida's Transportation needs that will not cost the taxpayers ANY money. Not having the News Media publish these free-market alternatives would be a travesty and a shame.

Rebuttal to Some of Florida State Representative's Scott Plakon's Defense of SunRail and Government's Responsibility in Providing Transportation

On 12/12/2009 from 4PM - 6PM, Florida State Representative Scott Plakon was invited to speak on the Orlando Tea Party Patriots Live Radio (http://teapartypatriotslive.webs.com) show hosted by Jayson Hoyt and Phil Russo to defend his vote on SunRail (http://en.wikipedia.org/wiki/SunRail).

I had the opportunity to speak twice to rebut Scott Plakon's arguments in favor of SunRail, but I was not given enough time to offer arguments in (a) opposition to SunRail and (b) favor of free-market solutions to transportation problems. Therefore....

Below are my further rebuttals to some of the arguments Scott Plakon gave in defense of SunRail:

1) Providing Transportation is a Legitimate Government Service and Function

Rebuttal:
This is incorrect. Government's only legitimate function is to insure that individual rights and liberties are maintained.

Most people will not use SunRail or any other Rail System. Therefore, SunRail will be funded by the expropriation of wealth from others that will NEVER use SunRail. This is nothing less than legalized theft.

There is no such thing as the right to free or subsidized transportation if others will have their wealth confiscated to provide it to others. A right (or government service) ceases to be a right (or legitimate government service) if others who NEVER use the service are FORCED to subsidize or provide it to OTHERS via confiscation of wealth. This is nothing less than legalized theft.

2) Some other State will get Federal Funding for Mass Transit if Florida Does not Pass SunRail. Florida is a Net Contributor to Washington, DC, so we should get back some money.

Rebuttal:
This is irrelevant because even if Federal Funding is obtained to build a Rail System, the cost to maintain and operate it will be a net loss to Florida taxpayers. Virtually EVERY Rail System funded by government has been a NET LOSS and bleeds RED INK in money. Also, the number of passengers that will divert to using rail is VERY FEW, which explains the NET LOSS and RED INK of virtuall all government-funded Rail Systems.

"Volusia County, Seminole County, Orange County, the City of Orlando and Osceola County... [are] the partners in the [SunRail] project. The local partners are to foot 25% of the bill, to be matched by the State of Florida. The remaining 50% is to come from a Federal transit 'New Starts' grant funds. The total cost of the system was estimated at $615 million." [9] But... "Following an 11th-hour deal with labor unions, the [Florida] Senate pushed through a rail package — which paves the way for a $1.2 billion commuter line in Orlando, dubbed SunRail — after just a few hours of debate." [10]

What about the costs of MAINTAINING the system? As shown below, virtually ALL rail systems operate at a NET LOSS and bleed red ink.

"America has decades of experience with rail systems. Amtrak has been in existence for 40 years and has lost money each and every year since its inception. The taxpayer has pumped $40 billion into Amtrak and there is no end in sight to the red ink. Atlanta's rail system loses $534 million per year and Miami's Tri-Rail loses $87 million a year. In Miami, for each $2 fare we subsidize the rider with $98 in taxpayer funds. Our new 'Florida Rail Enterprise' amounts to the biggest tax increase in Florida history." [6]

"[S]ubsidies to Amtrak are around 22 cents per passenger mile and subsidies to public transit are around 61 cents per passenger mile." [7]

"Although media reports suggest that many people are taking public transit instead of driving, actual numbers show that recent increases in transit ridership account for only 3 percent of the decline in urban driving." [8]

"Also, contrary to popular belief, rail transit does not save energy. Many light-rail operations use more energy per passenger mile than the average sport utility vehicle, and almost none uses less than a fuel-efficient car such as a Toyota Prius. People who respond to high fuel prices by taking transit are not saving energy; they are merely imposing their energy costs on someone else." [8]

And how well has Rail Systems worked in other countries?

In Japan...
A) "High-speed rail put the previously profitable Japanese National Railways into virtual bankruptcy and forced the government to absorb $200 billion in high-speed debt." [8]
B) "By 1987, expansion of bullet-train service had increased Japanese National Railways’ debt to more than $200 billion. Facing a financial crisis, the government absorbed the
debt and privatized the railway. Today, private operators earn a profit running the Shinkansen and other Japanese trains, but they do not have to repay the capital costs—
and further capital expansions of high-speed rail service continue to receive extensive government subsidies." [8]
C) "As of 2007, trains carry 29 percent of passenger travel whereas autos, including light
motor vehicles, carry 60 percent. The remainder is about equally divided between bus and domestic air." [8]

In Europe...
A) "While convenient for tourists, high-speed rail has done little to change European travel habits, as rail’s share of travel is steadily declining." [8]
B) "Not a single high-speed track in Europe has had any perceptible impact on road
traffic." [8]
C) "Rail has continued to lose importance since 2000. In the EU-25 (the 25 members in the European Union as of 2005), rail’s share of travel declined from 6.2 percent in 2000 to 5.8 percent in 2004, while air’s share increased from 7.7
to 8.0 percent and autos’ share (including motorcycles) increased from 75.5 to 76.0 percent. At best, high-speed rail has slowed the decline of rail’s importance in passenger travel." [8]
D) Rail Systems in Europe are massively subsidized by European Taxpayers: "Europe’s passenger travel mix is not much different fromthat of theUnited States.... European intercity rail carries a 5.7 percent larger share of the travelmarket than Amtrak.
But it is not even clear that this is the result of the massive subsidies Europe is pouring into high-speed rail, since this percentage is steadily declining. European planners predict that rail and bus’s combined share will continue to decline between now and 2030." [8]
E) "If high-speed rail cannot capture or even maintain rail’s share of passenger travel
in Europe [with a higher population density than the United States], how can it work in the United States?" [8]

3) Compared United States Government Inter-State Road System Success and Need with that of SunRail's Supossed Success and Need

Rebuttal:
This is not a valid argument to support SunRail as indicated below....

Since the "United States has subsidized highways for many years, so
rail needs subsidies to catch up. But subsidies to highways have actually been very minor— around one-half to one penny per passenger mile. By comparison, subsidies to Amtrak are around 22 cents per passenger mile and subsidies to public transit are around 61 cents per passenger mile." [7]

"The key to the success of the Interstate Highway System is that it was built entirely from user fees, mainly federal and state gasoline taxes. Gas taxes are not the most efficient user fee, but like all user fees they impose a discipline on those who collect and spend the money: if they fail to build facilities that people will use, they will receive little or no user fees. In contrast, when transportation facilities are funded out of tax dollars, the taxes keep rolling in no matter how much the money is wasted." [7]

"Funding transportation out of user fees thus becomes the most effective possible performance standard. Direct user fees, such as tolls and transit fares, are more effective than indirect fees, such as gas taxes. But any user fees at all are more effective than general taxes, which merely encourage pork-barreling and wasteful spending." [7]

"If any high-speed [or other] rail lines can meet the user-fee test in the United States, they will certainly make an interesting and useful contribution to the nation’s transportation system. But taxpayers should not be asked to bet billions of dollars that high-speed rail will become anything more than heavily subsidized operations that are used by a small minority of people at everyone else’s expense." [7]

Also, what makes Scott Plakon think that SunRail is going to be a success when as part of passing SunRail, the " [SunRail] bill [that was signed by Florida Governor Charlie Crist on 12/16/09 in downtown Orlando] gives Tri-Rail an extra $25 million annually, money that will be used to maintain its 50-train weekday schedule and to take over operation and dispatch duties from railroad giant CSX." [10] So, Florida State Representative Scott Plakon (as well as OTHER Florida State Legislators) passed the SunRail funding bill KNOWING that ANOTHER rail system, Tri-Rail, is a financial loss and fiasco!!! Incredible!!

Free-Market Solutions that Work to Solve Florida's Transportation Problems - A Viable Alternative to the SunRail Fiasco Passed by Florida Governor Charlie Crist

"The key to solving America's [and Florida's] transit problems lies in devising new forms of service that respond to actual needs of... [the consumer]. Those involved in providing transit must find out what these transportation needs needs are, rather than remain fixated upon moving heaven and earth to get people to use their preconceived idea of what a transit system is suppose to be." [11]

"What is needed, in short, is an economic and legal climate that enourages experimentation and risk-taking - a free market, in other words. Unfortunately, in most urban areas there is anything but a free market in transportation services. Typically, there is a large municipal rail and/or bus line serving a limited number of fixed routes. There are also one or several taxi companies, in most cases heavily regulated as to the number of cabs, the areas served, and the fares charged. Any efforts to begin other forms of service are usually legally thwarted. They are immediately attacked by the municipal transit line or taxi companies as draining away passengers ('skimming the cream') and therefore contrary to the public interest." [11]

"Should an entreprenaur persist despite these obstacles, he [or she] is likely to be classed as a 'common carrier' by the state public utilities commission and forced to prove that (a) he [or she] is 'fit, willing, and able' to provide the proposed service, (b) the operation is necessary for the public's convenience, and (c) the existing carriers are unable to meet the needs the entrepreneaur proposes to serve. In some states, he [or she] must prove that he [or she] will not take any business away from the existing carriers." [11]

"These laws, and the public utilities that support them, have effectively preserved the shared monopoly of municipal bus / rail line and cartelized taxi industry in most communities. And that has left most people with no affordable alternative to the private automobile - despite mounting congestion, worsening smog, and rising fuel prices." [11]

"There are better ways. Here and there, depsite these obstacles, private innovators have developed... forms of transportation service that respond to real needs. These... services are typically grass-roots efforts that require minimal investment and no tax funds. They go by the generic name patratransit." [11]

"Jitneys, gypsy cabs, shared-ride cabs, car pools, and van pools are among the many forms of paratransit. They vary in price, accomodations, and service levels. But they share the common characteristic of flexibility, which is very much in keeping with the decentralized nature of today's metropolitan areas. Until recently, they shared a more dubious distinction as well. All of these services (except for car pools in which no money changed hands) were illegal in most cities." [11]

Also, one needs to understand that getting government out of building expressway systems and privatizaing existing expressway systems is a much more efficient way of providing expressway road service WITHOUT the need for taxpayer dollars. You may read further about this by:
1) Reading the Arguments for Free Market Roads section in this e-mail. Allow for free-market competition in the expressway system by letting private companies build expressways with NO taxpayer money, and allow them to charge tolls.
2) Read the A New Approach to Private Roads - Granting Present-Value-of-Revenues (PVR) Franchise section in this e-mail. This is not a full free-market approach to expressways, but it's better than having expressways funded by taxpayers who may or may not use those expressways.

We should move towards free-market solutions to our Transportation problems....

.

Mathew Falconer, Orange County Mayor candidate, has proposed funding a a Mon-O-Rail system instead of the SunRail system that Florida Governor Charlie Crist passed. This would be a raised monorail system along the I-4 corridor right-of-way. "The funding for the system and operation will come from a voter approved gas tax in Orange and Seminole County." [19] I am not in favor of this solution because (a) it's just another costly rail solution (as explained previously) and (b) it's to be funded by taxpayers, many of which will NEVER use the monorail.

If a private company wants to set up a Rail System, then let them do it WITHOUT taxpayers' money and let them charge whatever they like. If the economics justify it, the private company will gladly do it. Or perhaps a Rail System can be done without taxpayer funding via the use of a PVR Auction Franchise system as explained further in the e-mail.

We should get state government out of the expressway road business: Move to privatize current taxpayer-funded and/or government-owned expressways using a PVR (Present Value of Revenue) auction system from the State to private companies charging tolls. Allow at the same time for free-market competition in the expressway system by letting private companies build expressways with NO taxpayer money, and allow them to charge tolls. The PVR auction is explained in the article entitled "A New Approach to Private Roads" in the http://www.cato.org/pubs/regulation/regv25n3/v25n3-6.pdf hyperlink.

Rails Won't Save America nor the Central Florida area as indicated in the http://www.cato.org/pub_display.php?pub_id=9703 hyperlink. As indicated in the http://www.cato.org/pub_display.php?pub_id=9703 hyperlink: "Many light-rail operations use more energy per passenger mile than the average sport utility vehicle, and almost none uses less than a fuel-efficient car such as a Toyota Prius. People who respond to high fuel prices by taking transit are not saving energy; they are merely imposing their energy costs on someone else."

A rail system is inflexible vs. a jitney, bus, or taxi system which is VERY flexible.

We should look at free-market based solutions to our transportation problems as follows:
1) Local governments should not limit the number of taxicab licenses in their jurisdiction. Such limiting of licenses artificially raises the price of taxicab service and limits the supply of taxicab service. If a local government insists on requiring that a taxi have a license, it should be issued on a shall-issue basis at a nominal fee with NO LIMIT to the number of taxicab licenses that may be issued.
2) Allow for a free-market based system of jitney cabs to flourish. These are minivans carrying up to 10 - 12 people that any entrepreneur can set up as a business. These have worked marvelosuly before and work in many cities that allow them.
3) As indicated in the http://www.cato.org/pubs/journal/cj5n1/cj5n1-12.pdf hyperlink: "Decontrol would allow jitneys, shared-ride taxis, vanpools, and private commuter buses to compete for parts of the transit market now largely monopolized by bus and subway operators. A competitive marketplace would force operators to restructure their services and price them more rationally. The riding public would benefit not only from a wider array of available travel modes but also from a more integrated system of urban transportation."
4) Slowly have local governments DIVEST themselves of any bus services and sell them to a private companies to own & operate.

The proper solution is to simply pass a law in the Florida Legislator that does the following:
1) No Florida Government entity may require a license for a taxi to operate nor limit the number of taxis that may operate within its juristiction. This eliminates the taxi monopoly that exists in many local communities where only a limited number of taxi licenses are issued. (Note: Perhaps minimal, low-cost, shall-issue licensing or registration is a valid compromise.)
2) No Florida Government entity may outlaw jitney bus service & not limit the number of jitney bus service companies. This would allow local entrepenaurs to set up minivans for local transportation needs WITHOUT taxpayer money.
3) No Florida Government entity may prohibit a private bus service to operate & will not limit the number of private bus service companies. This would allow REAL competition in bus service. Bus service would operate where economically viable. Jitney buses in others - ALL WITHOUT taxpayer money.
4) All Florida Government entities will slowly DIVEST themselves of any bus services and sell them to private companies to own & operate.

As indicated in the http://www.cato.org/pub_display.php?pub_id=6145 hyperlink: "Local public transportation monopolies forbid inexpensive jitneys that enable lower-income people to find and hold jobs." Allowing for jitney cabs to operate within the free-market will help many low-income people get around WITHOUT the need to expropriate the wealth of taxpayers.

We should move towards a free-market based system of local transportation as advocated by the following:
1) Deregulating Urban Transport - http://www.cato.org/pubs/journal/cj5n1/cj5n1-12.pdf hyperlink
2) Regulation and the Urban Marketplace - http://www.cato.org/pubs/regulation/regv17n4/reg17n4e.html

Notice that by implementaing the free-market transportation solutions mentioned above, the following will occur WITHOUT the need for a Rail System (such as the SunRail fiasco passed by Florida Governor Charlie Crist) paid for by confiscating the wealth of taxpayers:
a) You can increase the occupancy in the current I-4 expressway lanes as well as the local roads throughout Central Florida because MORE private buses, vans, and jitney cabs carrying more than ONE person will occupy those lanes and roads. Deregulating the local transportation system will encouarge MANY private entrepenaurs to set up private bus, van, and jitney cab services to help fullfil our local transportation needs.
b) As the Central Florida area become more populated, a Rail System along I-4 (or anywwhere else) becomes more economically feasible. Thus, either a private company would set up a Rail System and charge what it likes, and still have to compete with OTHER forms of transportation, such as personal automobile, private bus, private vans, and private jitney cabs going alaong roads. Or... a PVR Franchise Auction (as explained further in the e-mail) could be used to set up a Rail System along the I-4 corridor. All without taxpayer funding!

Another beauty of free-market solutions to transportation problems: If a a private company and/or individual tries to fullfill a transportation need that does not work or goes in the red, the taxpayer does not have to pay a dime. Contrast this to any government-subsidized transportation solution where the tendency is to throw more money into a government-funded solution that does not work or goes further into the red!

Free Market Solution #1: Deregulated Jitneys

"The term jitney refers to a small (usually 8- to 12-passenger) vehicle carrying passengers to various destinations, along a relatively fixed route, usually for a flat rate per passenger, but sometimes on a zone-rate fare. Jitneys are typically far less expensive than taxis. Usually the jitney is owner-driven, though the driver may coordinate his [or her] operations with other drivers by belonging to an association. Jitneys developed in the 1914-18 period - the heyday of the Model T. In 1915, there were 62,000 of them, in every major Amrican city. So successful were jitneys that they threatened to put the trolley lines out of business. Owners of the... [trolley lines] - generally well connected politically - succeeeded in having laws passed in most cities completely outlawing jitneys." [11]

"Jitneys extend the shared-ride concept even further. Perhaps the purest form of transportation entrepreneurship, jitneys (cars or station wagons with room for 5—12 passengers) pick up and drop off patrons over a semi-fixed route on a fairly regular basis. Customers are generally taken until the vehicle is full, and only slight detours from a major street are typically made. Political pressure mounted by trolley operators to bar jitneys from 'skimming the cream' resulted in the banning of jitneys in most cities. Although jitneys may well have threatened municipal transit systems in 1915, a time when those systems were in their infancy and struggling to survive, they would actually benefit urban transit systems today by providing, as sharedride taxis do, a much-needed supplement to peak-period capacity." [20]

"Publicly sanctioned jitneys currently operate in San Francisco, Atlantic City, and, most recently, San Diego, but ordinances restrict their numbers to below 500. By contrast, in many Latin American, Asian, and Middle East cities, jitneys are the chief mode of urban
transportation. It has been estimated, for instance, that in Caracas, Buenos Aires, and Istanbul jitneys serve over half of the daily commuters." [20]

"[J]itneys often provide a portion of a large city's transportation. Over half of all daily tarvelers in Caracas and Buenos Aires ride either jitneys or large jitney-buses called colectivos. Smaller, more conventional jitneys play a major role in Santiago, Chile and Lima, Peru. 'Jeepneys' and free-market taxis provide 25% of all mass transit in Manila, 15% in Seoul. And in Tehran, jitneys and taxis constitute the entire mass-transit system." [11]

"Despite restrictive ordinances, the market demand for jitneys has become so great that they operate illegally in Chicago, Pittsburgh, Baton Rouge, Miami, Chattanooga, and probably other cities as well. In Chattanooga alone, it has been estimated that over 85 jitneys illegally serve over 20 million willing customers a year. These clandestine operations generally thrive in low-income, minority communities where a market exists for a service that is a hybrid between more expensive taxis and less convenient bus transit.
Authorities have tended to look the other way when confronting these illegal, albeit successful, operations." [20]

"Besides supplying convenient, low-cost transportation to low-income people, jitneys also provide self-employment to the owner-drivers, with compensation in direct compensation to how hard they work. Jitneys are a perfect example of a form of transportation that fits the changing needs of its riders." [11]

Free Market Solution #2: Deregulated Taxis

"Studying the taxi industry several years ago, respected transportation economist Martin Wohl of Carnegie Mellon Inuversity reached a striking conclusion: 'It is my view that changes in taxi regulation, pricing, and operation would markedly improve the availability, usage, and financial viability of cabs and probably do more than any other transportation improvement to lure commuters out of cars and increase total transit patronage.' What he was talking about, inparticular, was 'lifting of barriers' on the number of taxicabs allowed to operate, the places they're allowed to serve, and the fares charged. Political scientist Sandi Rosenbloom studied the effects of regulation on the extent of taxi service in 1970.... [T]he only three cities with relatively large numbers of cabs (more than four cabd per 1,000 people) are Washington, D.C., Atlanta, and Honolulu, and they are the only cities that don't restrict either the number of cabs or the number of firms allowed to operate." [11]

"Taxi representatives in regulated cities frequently claim that the legal number of cabs in all the market will support and that any larger number would simply spread the demand too thin for anyone to make money. This is utter nonsense, as the thriving Washington, D.C. market, with its 10.2 cabs per 1,000 people (compared to New York's 1.5 or Houston's 0.3) demonstrates. Rosenbloom cites a variety of studies to show that there is a large unfilled demand for taxi service in restricted cities. Poop people, housewives, and students all use taxi service in considerable numbers - when sufficient service is available. But in restricted cities, cabs tend to concentrate on business users, serving the downtown, hotels, and the airport, and leaving resdidential areas undersupplied." [11]

"The regulation of taxis in U.S. cities is universal, and few people question the propriety of regulating driver qualifications and insurance coverage. Limits on the number of taxis that can operate in a city, however, as well as limits on the types of services provided and the rates that can be charged have not generally been accepted by the traveling public. Most cities place a ceiling on the number of licenses (medallions) granted, often based on the number of cabs per capita. In the case of a handful of cities, notably Los Angeles and Chicago, exclusive franchises are granted to one company or a few
companies. Because of these restrictive practices, large fleets offering fairly uniform-quality services have become the norm in most big cities." [20]

"Limits on supply more often than not have also meant relatively high fare rates. For instance, Washington, D.C., allows almost unrestricted entry into the taxi market and boasts a ratio of over 13 cabs per 1,000 residents, by far the highest in the country. For a typical four-mile trip, the cab fare in the nation’s capital is only about $2.75. By comparison, New York City’s notoriously restrictive taxi regulations have resulted in fewer than 1.5 cabs per 1,000 residents. A four mile taxi ride in Manhattan costs about $4.75. With a New York City taxi medallion today bringing in $65,000 or more, it is clear that the
cost of monopoly privileges are being passed on to customers." [20]

"Studies have found that travelers are more sensitive to the availability of taxis than they are to travel times, speeds, or almost any other service features. Where taxis are given unrestricted freedom to ply their trade, the quality of’ urban transportation has generally improved. Not only do unregulated cities have more than three times as many cabs per capita, but services are often closely integrated with local bus and rail services as well. Taxis have also proven their strength in low-density areas where public transit is highly unprofitable or uncompetitive. Where individual owner-operators are allowed to act as entrepreneurs, marginal markets abandoned by large fleets are again being served." [20]

"Deregulation would be a particular boon to small taxi companies and private individuals who are currently denied entrepreneurial freedom. Moreover, lifting entry controls should be expected to increase employment opportunities for some urban residents, particularly
among low-income and minority populations in which joblessness is the highest." [20]

Free Market Solution #3: Deregulated Shared-Ride Taxi Cabs

"Somewhere between conventional taxis and jitneys is the shared-ride cab. Like a regular taxi, this service uses a conventional sedan and provides personalized, door-to-door service. Like the jitney, however, it carries several passengers making different trips at the same time. Consequently, fare levels are a good deal lower than in regulat taxis - although more than bus or jitney fares." [11]

"Another constructive regulatory reform would be to allow cabs to pick up more than one party en route. The serving of multiple passengers by cab is often referred to as shared-ride taxi; when a van-sized vehicle is dispatched to pick up and unload unrelated trips
with only minor route deviations, the service is referred to as dial-a-ride. Dial-a-ride vans are often run by private, profitmaking companies that receive public subsidies for serving special passenger groups, such as the elderly and physically disabled. Shared-ride taxis, on the other hand, are typically unsubsidized." [20]

"During World War II, shared-ride taxis flourished in Washington, D.C., and they have had a modest resurgence there since the 1970s. Washington taxi drivers openly displayed destination signs on their front windows during the war period, allowing people to hail cabs going their direction. Riders received a break in fares, and scarce war-time resources were being used efficiently. In 1974 Washington again adopted a version of taxi ride-sharing, primarily in response to gasoline shortages." [20]

"Unfortunately, most city governments - other than Washington, D.C. - ban shared-ride service. Two that don't, however, are Davenport, Iowa, and Hicksville, New York. In both cities private cab companies provide low-cost, high-volume, shared-ride taxi service that appeals to manyn of the same people who ride bus lines." [11]

"Davenport's Royal Cab Company increased its ridership by 179% in five years, while the patronage of the local bus system dropped by half. Royal Cab now carries nearly as many passengers per year as the bus system. Many users prefer the shared-ride cabs, because they provide door-to-door service at an average fare of only $1.05 and, even with stops, take less time than the bus. The time savings are particularly important to the Hicksville riders of the Orange and White Cab Company, most of whom are commuters racing to catch the Long Island Railroad." [11]

"Professor Kenneth Heathington of the University of Tennessee's Transportation Center had made an extensive study of the Davenport and Hicksville companies. He found that... the operating costs [of the shared-ride taxi cabs] are much lower than those of the highly touted Dial-a-Ride systems funded by the federal government - systems that provide a similar kind of service, but with a heavy subsidy. But the Davenport and Hicksville companies are private, profit-making concerns that don't receive a cent of tax money. They have simply found a ready market for this type of intermediate transit service. Party due to Heathington's research, both Knoxville, Tennessee and Los Angeles have... legalized shared-ride service." [11]

"As in the case of the nation’s capital, use of the shared-ride concept in other areas would require the decontrol of taxi price structures to allow zonal fares rather than distance metering so that riders would not be overcharged. It would not be necessary to operate all cabs on a shared-ride basis, however, as some passengers could be dissuaded by even modest time delays in picking up other fares. A mix of exclusive-ride and shared-ride taxis, however, is the best way to satisfy the riding public’s preferences." [20]

"Experiences with shared-ride taxis in El Cajon, Calif., Davenport, Iowa, and some 20 other cities have been positive. Shared-ride taxis have operated at a much lower cost per passenger than subsidized dial-a-ride vans. Much of the cost savings has been attributed to lower wage levels and higher productivity among privately employed taxi
workers. Shared-ride taxis have actually been a boon to local bus systems in these areas by siphoning off some of the already oversaturated peak demands, in addition to serving as feeders into buslines and rail stations. They have proven particularly cost-effective in
suburban, peak-hour markets." [20]

"The shedding of peak loads to private taxi operators could result in real cost-savings to public transit. The peak is transit’s nemesis, largely because of restrictive work rules requiring time-and-half pay for spreading drivers’ duties over the morning and evening peaks. Studies have shown the cost of running an additional bus during rush
hours to be two to three times as much as during the off-peak period. The shedding of peak loads to shared-ride taxis would likely be welcomed by transit managers, as well as by commuters seeking a service of a higher quality than that offered by buses." [20]

"U.S. experiences with substituting shared-ride taxis for fixed-route bus services on a contract basis have proven particularly successful. In Phoenix, for example, the local transit authority contracted with a taxi company to replace minimal-level Sunday fixed-route bus services — an arrangement that resulted in an estimated cost savings of
$600,000 per year. Similar arrangements have recently been made for evening services in Ann Arbor, Mich., and Chapel Hill, NC. In the Norfolk—Chesapeake—Virginia Beach area, a number of poorly patronized bus runs have been replaced with private services that use smaller vehicles tailored to lower demand levels; taxis operate between suburban residential neighborhoods and a number of shopping-office complexes in the region, replacing comparable bus services at an estimated savings of $16 per hour." [20]

"Another advantage of incorporating shared-ride taxis into the urban transportation market is that they can also provide more specialized curb-to-curb services for elderly and handicapped populations. Programs that have given senior citizens, disabled persons, and poor people travel vouchers (that is, user-side subsidies) for riding their choice of transportation — be it bus, shared-ride taxi, dial-up van service — have encouraged healthy competition among different service providers while serving an important public need. Clearly, sharedride taxis would mesh nicely into most cities’ transportation milieu
by complementing peak-hour transit operations and providing a necessary off-peak service to disadvantaged persons." [20]

Free Market Solution #4: Deregulated Carpools, Vanpools, and Commuter Buses

"Vanpools and commuter buses—paratransit modes that provide prearranged or book-in-advance commuting — have similarly been stifled by regulation, although perhaps to a lesser extent than taxis and jitneys. Court rulings in a number of states during the 1970s
generally held that vanpools are public carriers and thus subject to various certification requirements. Some courts even interpreted vanpools to be illegal bus lines. Several states, notably California and Tennessee, subsequently passed legislation exempting employer sponsored vehicles carrying 15 or fewer passengers from any government
regulations, while in others (such as Washington, D.C.) fairly strict compliance requirements remained in place. Voluntary, share-the-expense carpools are permitted in all states, while nonemployment-related van services operating on a profit basis are generally prohibited." [20]

"Transportation planners have... discovered car pooling - a form of paratransit with significant potential for reducing congestion, air pollution, and energy use. But any large-scale use of car pooling requires that people who are otherwise strangers find each other and work out a suitable sharing arrangement. One of the smoothest ways to do this id for one person to be the driver and the others to pay to be driven. Unfortuantely, in many states, any [for-profit] exchange of money is construed by the public utility commission as offering transportation service for hire - making the driver a common carrier subject to incredible regulations. Thus, the success of car pooling depends considerably on whether such absurdities of the law can be removed." [11]

As an aside: Florida should allow, if it has not done so yet, for at-profit or non-profit car pools or van pools to help fullfill our transportation needs. I remember when I grew up in Miami from 1972 to 1977, my parents would pay private car, van , or bus operator a reasonable monthly fee to pick me up from my parents' house to elementary and junior high schools and then take me back to my parents' house; the need to do this was there because both of my parents had to start work at a certain time. I remember when my mother and I were not happy with one of those private operators; she simply chose another private operator. Such is the beauty of a free-market transportation system.

"A pioneer in... [for-profit car pooling] was Mrs. Garlene Zapitelli. Several years ago, fed up with the rush-hour congestion and concerned about the energy crises, she bought a Dodge van and began carrying fellow commuters to work, for small fee. In short order, she was hauled before the California Public Utilities Commission and charged with operating an illegal bus line that unfairly competed with exisiting bus companies. [As an aide: All it probably takes is ONE person to denounce you to make you a criminal for providing a service that some people want.] Several appeals later and many thousands of dollars later, the [California] legislature voted to exempt for-hire car pools and van pools from state juristiction, provided the driver was also a commuter." [11] I think that it does not matter whether the driver is a commuter or not. Government should simply state out and let the free-market decide whether car pooling or some other mode of transportation serves comsumer needs.

"With that decision, California became one of a handful of states - including Minnesota, Tennessee, Virginia, and Connecticutt - to legalize car and van pooling. Commuters especially like van pooling because, compared with bus service, it offers door-to-door transportation and a semblance pf privacy. And compared with driving your own car, the van offers a chance to stretch out and relax, sometimes in airliner-type seats with stereo music, at real dollar savings. A 12-passenger van, in fact, is more efficient than the New York subway, providing more than 110 passenger miles per gallon." [11]

"[V]an pooling... [occurs] in the corporate arena. This approach was originated by Robert Owens of the 3M Company in Minneapolis. Under his plan, the company provides - and insures - 12-seat vans to volunteer employee drivers. The first eight passengers pay the company a monthly charge that covers al operating costs. The driver can addn up to three more passengers to earn an income and can take the van home om weekends for a small mileage charge." [11]

"'The beauty of (corporate) van pooling is that everybody wins,' says Owens. The company saves on parking expenses, commuters save $150 - $750 per year in commuting costs, and the general public saves in terms of reduced congestion and pollution - as well as reduced demand for tax-payer funded mas transit systems." [11]

"Corporate van pooling... [has gained] converts: about 150 large corporations are... involved in such projects. Atlantic Richfield (ARCO) has helped sponsor the Commuter Computer Vanpool Project in Los Angeles. Led by ARCO and the Crocker Bank, the project operates 133 10-passenger luxury vand and 13 economy 15-passenger vans in five Southern California counties. The vans and all operating costs are paid for by participating employers and employees." [11] All this without taxpayer's expense!

"Commuter buses have become particularly popular in recent years, providing subscribers with high-quality services (for example, comfortable seats and express rides) between suburban neighborhoods and central office locations. Today, subscription buses commute regularly to government offices in Washington, D.C., San Francisco’s financial district, and military bases in Virginia’s tidewater area. The largest fleets of subscription buses in the United States, however, are in Los Angeles and Chicago, where over 5,000 commuters ride in comfort to major employment centers in each area." [20]

"Although there appears to be a much larger market demand for subscription services, local transit authorities have succeeded in holding down the number of subscription services. A recent study by the Southern California Association of Governments estimates that 22 public transit routes in the area could be replaced by subscription
buses for about one-half of current costs, saving over $5 million annually. Yet transit authorities have filed protests against a number of commuter bus operations. The reactions of transit properties toward private competition in other parts ofthe country, however, have been much different. In Mann County, Calif., for example, the regional transit authority was instrumental in establishing a number of private commuter van and bus services simply because it realized that the cost ofrunning its own buses along certain corridors would be prohibitive." [20]

"Tennessee lifted controls over private bus operations. The state Public Service Commission has designated certain counties as 'citizen transportation areas' to allow privately owned vehicles to be used for passenger services. Church and other special purpose buses are doubling as commuter vehicles in these counties. These reforms have provided vital travel alternatives to residents of small communities that have recently lost intercity bus services." [20]

Free Market Solution #5: Move Towards Private Bus Service - Slowly Divest Ourselves of Government-Run Bus Service - Deregulate Bus Service

"There are still roles that buses can play, as part of an overall transit / paratransit system. But the sensible roles for buses is no longer to be the transit system. As we have seen, the many forms of paratransit can do a convenient, efficient job of serving the low-density portion of the transit market. Where buses still make sense is on heavily traveled commuter routes. And it is on these routes that bus service can pay its own way. It can even be turned back to the private sector." [11] I say Bus Service should be turned completely to the private sector.

This is what "happen[s] in a number of metropolitan areas, with the phenomenom known as subscription bus service. The basic concept is simple. Employees in a large office or industrial complex who live in the same suburb band together and rent a deluxe, highway-type bus (reclining seats, air conditioning, music) from a private charter bus company. I some cases one employee obtains a bus driver's license and serves the regular driver, perhaps with another employee as back-up. In other cases, the bus company provides the driver as part of the deal. In still other cases, the employer hires the bus, complee with driver." [11]

"Subscription bus service is especially prevalent in sprawling Southern California. Many large firms, especially aerospace companies, draw employees from up to 100 miles away. Lockheed Aircraft, for example, has hired buses to bring groups of employees to its plants in Palmsdale where L-1011 jumbo jets are built. One bus makes the rounds of the San Fernando Valley, where many of the employees - who used to work at Lockheed's Burbank plant - still live, 50 to 75 miles from Palmdale. Another Lockheed bus comes from Ontario, racking up 172 miles each day on the round trip." [11]

"When General Telephone centralized many operations in Santa Monica, a groups of employees who were transferred from Pomona to Santa Monica each day - 100 miles round trip. After the system was set up in 1973, an official of the Southern California Rapid Transit District (SCRTD) offered to provide the same service at $65 per passenger per month - more than double the $32 the private bus company was charging. For several years SCRTD attempted to discourage the growth of subscription buses, complaining that they would 'dilute' the district's revenues and its ability to provide such services.... There are estimated to be several hundred private subscription buses... in Southern California." [11]

"Like car pools and van pools, subscription bus service succeeds where conventional tranist fails. It gets commuters out of their cars and into an efficient, less-polluting alternative. A ridership survey on the Reston Express in 1971 showed that 21% of the passengers had actually reduced the number of automobiles they owned as a direct result of the subscription bus service. And another 8.4% said they would probably do so in the future. But its greatest advantage - except where operated by government transit districts - is that subscription bus service costs the taxpayer nothing." [11]

It's been shown that consumers will use a subscription bus service to go to/from work and home as part of their daily commute. But what about having a private company provide the bus service WITHOUT taxpayer funding that is done by many county and city governments at taxpayer-subsidized rates? Will consumers choose such a private company? The answer is YES even when the private bus service is at a competitive disadvantage to the taxpayer-subsidized bus service and costs more than the taxpayer-subsidized bus service.

"A variant on subscription bus service has turned up in New York City. Some 75,000 commuters pay three times the city transit fare to ride privately owned express buses - making the 12 companies involved the joint equivalent of the fifth largest mass transit service in the United States. The city government franchises the companies, limiting them to specific routes. Despite having to pay city, state, and federal taxes; pay for the buses themselves (no UMTA funds); and build their own depots; the private lines make money. By charging three times the regular 50 cents fare and operating on high-volume commuter runs, they can cover all their costs and still make a profit." [11]

"What attracts riders? High-quality service seems to be the key. New York Bus Line, for example, provides high-back reclining seats, individual reading lights, heating and air-conditioning that work, a seat for every rider, cleanliness, safety, and customer-oriented service - attributes similar to those of subscription buses and van pools." [11]

Experiments with Taxi and Jitney Deregulation

"Major monopoly or near-monopoly cab companies have gone bankrupt in Los Angeles, San Diego, Philadelphia, and elsewhere, leading the first two cities to ease restrictions on entry. In Los Angeles, the area formerly served exclusively by bankrupt Yellow Cab was opened to competition. Now a new Yellow Cab Co. competes with two associations of independent cab owners. In 1979 the City Council removed all restrictions on the number of cabs allowed to operate in Los Angeles. San Diego, faced with a similar bankrupycy situation, began licensing individual owner / operators to compete with cab companies. A year later (1979) the City Council doubled the number of new cab licenses to be issued each month and raised the maximum fare levels far above market levels, to promote competitive pricing. Eugene, Oregon deregulated taxi fares in 1978, as did Seattle. In each case, deregulation is leading to more services and lower fare levels." [11]

"Recent experiences with taxi entry and fare deregulation in 22 U.S. cities over the past five years, and with jitney deregulation in San Diego, have been encouraging. Most areas either have removed the ceiling on taxi permits or have raised it significantly. Some have
permitted ride-sharing in taxis, along with the introduction of zonal fares. Some cities also have allowed exclusive-ride fares to vary. Although taxi operators and transit interests have fought these open door policies in most places, strong city council and public support for these programs ultimately have prevailed." [20]

"In almost every setting, the number of firms and cab service hours have increased markedly since deregulation. Between 1979 and 1983, for instance, the total number of cab permits in Seattle rose 178 percent. Small cab companies and private owner-operators have proliferated the most. In Seattle, for instance, small fleets (those with
four to 13 cabs) increased in number from nine to 23, whereas the share of cabs held by the three largest firms declined from 70 percent to 54 percent." [20]

"More cabs have generally meant more and better service (in particular, shorter waits, fewer nonresponses to phone requests, and cleaner vehicles). Total weekly hours of cab service in San Diego, for example, has increased 26 percent since deregulation. Passenger waits at major cab stands have almost disappeared in several places. Average waits for San Diego’s radio-dispatched cabs, moreover, fell from 10 minutes to 8 minutes in the first two years of deregulation, In Seattle, price decontrol has also led to a variety of fare structures, including off-peak discounts and lower fares for repeat, advanced reservation customers." [20]

"San Diego’s experiences with legalized jitneys have been equally impressive. By early 1983 15 jitney companies, owning a total of 48 licensed vehicles and serving nearly 12,000 weekly customers, had entered the market. They operate on streets paralleling the new light rail trolley and main bus routes, concentrating mainly on commercial
strips and tourist spots. Jitney and shared-ride taxi fares can be set at any level as long as they are posted in the vehicle’s front window (in two-inch-high lettering) and do not exceed a maximum rate. Fares have proven to be a real bargain. A five-mile trip from San Diego’s airport to the downtown area, for instance, today costs about $3 by
jitney compared to $12 by exclusive-ride taxi." [20]

In conclusion, in a fully free-market transportation environment, private buses or rail trains would fullfill consumer needs for the high-volume commuter routes, while other paratransit methods - such as car pool, van pool, jitney, commuter bus, taxis, shared taxis, etc. - would fullfill consumer needs for the less dense commuter routes. And the beauty of this free-market environment is that it's possible to do this WITHOUT taxpayers' money!

Arguments for Free Market Roads

1) Competition will motivate better service than is provided by the government road monopoly

"Proponents often cite competition among road providers as an advantage, as road companies would have an incentive to seek innovative ways of lowering prices and improving service to gain a competitive edge. For this reason, arterials (major highways) are often viewed as a prime candidate for privatization, since there are typically many possible routes one could take to get to a particular destination, which could facilitate competition among road companies. However, local neighborhood streets could also be provided by private road associations, in much the same way that common stairs, hallways, etc. are provided in a cooperative living arrangement, condominium, or gated community. The association might allow members to drive these streets for free and charge fees to motorists using them as cut-throughs to get to other places. Contractors would compete to provide good road service in much the same way as elevator companies compete for the business of office buildings, despite the fact that a typical building may only contract with one elevator provider at a time." [1]

We should move towards getting state government out of the MAJOR highway road business: Move to privatize MAJOR highways from the state to private companies charging tolls; let private companies build MAJOR highways with NO taxpayer money, and allow them to charge tolls.

Also, read the A New Approach to Private Roads - Granting Present-Value-of-Revenues (PVR) Franchise section in this e-mail. This is not a full free-market approach to expressways, but it's better than having expressways funded by taxpayers who may or may not use those expressways.

2) Privatization will encourage infrastructure construction and reduce congestion

"Since traffic congestion is caused by there being more traffic than the highway can handle, one way to look at congestion is simply a shortage of roads, lanes, exits, or other infrastructure. Libertarian economists frequently cite the free market's pricing mechanism as a superior means of avoiding shortages than government planning. Peter Samuel's Highway Aggravation: The Case For Privatizing The Highways compares American traffic jams and Soviet grocery store lines:^{[2]" [1]}

'In Russia communism's failure was epitomized by constant shortages in stores. Empty shelves in supermarkets and department stores and customers in line, wasting hours each week, became the face of the system's failure, as well as a source of huge personal frustration, even rage. Communism failed because prices were not flexible to match supply and demand; because stores were bureaucracies, not businesses; and because revenues went into a central treasury and did not fuel increased capacity and improved service. We in supposedly capitalistic America suffer communism--an unpriced service provided by an unresponsive monopolistic bureaucracy--on most of our highways. Our manifestation of shortage, our equivalent of Russian lines at stores, is daily highway backups. There is no price on rush-hour travel to clear the market. There is no revenue stream directly from road users to road managers to provide incentives either to manage existing capacity to maximum consumer advantage or to adjust capacity to demand.' [1]

"Ronald F. Kirby, transportation director for the Metropolitan Washington Council of Governments, opined that private companies have more of an incentive to invest in infrastructure early, before a public outcry prompts construction. He noted, 'Too often in the public sector, the easiest thing to do is let things sit unresolved. The private sector is motivated by self-interest to resolve things quickly.^[3]' [1]

"A company that owns a private road will typically want to at least recoup its earlier investment to construct the road. Furthermore, when construction is complete, the company wants to keep investing in the road to keep up its initial value, because roads deteriorate over time. Road maintenance needs to be quick and of high quality, to keep the road from becoming idle again in the future resulting in a capital loss for the company; road traffic needs to be maximized, because that will result in the most revenues to the company. A government does not seek to maximize traffic or reduce road maintenance, because it has no incentive to do so, claim supporters of private roads. These supporters also claim that road safety is increased by companies that own private roads. Those companies do not want to see people getting injured on their roads, as it will tarnish a company's reputation. The companies will seek active removal of unfit, drunk and other reckless drivers, if allowed to discriminate so by the state, and will want to see increased mechanical standards of vehicles, because a stalled vehicle means an idle road. The company itself needs to pay for its removal, or passes this cost on to the owner of the stalled vehicle, inciting the owner to upkeep the quality of one's property." [1]

"B. H. Meyer stated, 'It is evident that the turnpike movement resulted in a very general betterment of roads.'^[4] The book Street Smart claims that Brazil has saved 20 percent and Columbia 50 percent through efforts to outsource road maintenance to the private sector.^{[5]" [1]}
3) Voters prefer tolls to taxes
"Voters frequently support tolls over taxes:^{[6]" [1]}

"Washington, D.C. (60% / 30%): A randomized telephone survey conducted by TNS of Horsham, Pennsylvania of 1,003 adults for The Washington Post conducted in the last days of January, 2005 had Washingtonians saying tolls are a 'better way to pay for highway expansion or new highways' locally than taxes by a 60/30 split. 9% said neither and 1% no opinion.^{[7]" [1]}
"Minnesota (69% / 23%): An opinion survey for the Star Tribune between January 15–20, 2004, showed 69% of people there favored tolled express lanes against 23% who wanted the gas tax raised to pay for extra free highway capacity." [1]

4) Free market roads facilitate internalization of external costs

"A private company can more easily be held accountable for negative effects of the highway than that if it is publicly owned. For example, residents living next to urban highways will benefit from noise barriers. However, campaigning for the city council to erect the walls is often ineffective and the process can take years, since the council needs to divert funding from other more pressing projects. A private highway will try to avoid court action and feel more obliged to cater for residents. The cost of erecting the walls will be passed on directly to the drivers (who are causing the noise), rather than the general public." [1]

5) Private roads wouldn't use eminent domain

"In 2006, eminent domain authority was stripped from private highway developers in Colorado due to concerns over abuses.^[8] Cato rebuts the potential for eminent domain abuse by noting, 'In California the state highway agency approved private development of the Mid-State Tollway on the eastern fringe of the San Francisco-Oakland area. Bay area residents, however, strongly opposed the tollway and favored... a Bay Area Rapid Transit line built nearby to serve the area. As a result, the highway developer abandoned the northern leg of the project. Had a public agency been building the highway, it could have invoked eminent domain authority to build the road in spite of political opposition.'^{[9]" [1]}

"Toll Road Investors Partnership II CEO E. Thomas, in testimony before the State Corporation Commission, said that the lack of eminent domain power required developers to 'acquire necessary property through private means, which was a costly and time consuming exercise for the private investors in the Greenway.'^{[10]" [1]}

6) Private roads won't lead to Bridges or Roads Nowhere at Taxpayers' Expense

Several cases come to mind:
a) Orange County Florida's Proposed Road to Nowhere (Press Release from Matthew Falconer, Candidate for Orange County Mayor): "It is truly remarkable to me how little information the public gets about where their tax dollars go. Most readers... have no idea our local government is about to spend $2 billion on a road most people will never use. It is Orange County's 'Road to Nowhere'..... The road is the 'Wekiva Parkway' that is planned to take a circuitous route from Apopka to Sanford. The plan is to connect the 429 to I-4, but because of environmental issues the road goes 15 miles out of its way. I use the 429 daily and I can tell you there is already a connection from 429 to I-4, it is the Maitland Expressway (the 414). I use the new road to get to Winter Park and Daytona to avoid downtown traffic. The 414 is embarrassingly empty and I am usually the only car traveling in either direction." [18]
b) "Gravina Island Bridge (never built), a proposed road bridge over the Tongass Narrows to the town of Ketchikan, often cited as an example of politicians' spending on projects that are intended primarily to benefit particular constituents, and a controversial topic of the 2008 U.S. presidential election campaigns." [17]
c) Other Bridges to Nowhere: http://en.wikipedia.org/wiki/Bridge_to_Nowhere

History Demonstrates that Private Toll Roads Worked Efficiently in the Past - Road Subsidization Was Bad

Toll Roads are not a new concept. Little is known about the history of toll roads, but in the United States "beginning in the 1790s and continuing throughout the nineteenth century, more than 2,000 companies financed, built, and operated toll roads with a combined extension of more than 10,000 miles in 1821." [12]

"In a market economy, people generally pay for what they use, and get what they pay for. But until recent technological developments — like electronic tolling —it was impossible to charge directly for road use without requiring vehicles to stop at pay tolls. Most drivers today probably assume that fuel taxes coupled with an occasional toll is the way roads have always been financed." [16]

"However, government use of fuel taxes as the primary funding mechanism for building
and maintaining roads is a relatively new invention that has its roots in the 20th century.
During the late 18th and most of the 19th century, intercity roads in the United States and the United Kingdom were primarily toll roads financed by private capital." [16]

"In the beginning of the 19th century, hundreds of turnpike companies operated thousands of miles of toll roads in the United
Kingdom and the United States. In 1830 there were, in Great Britain, 1,116 turnpike
trusts maintaining 22,000 miles of toll roads, which accounted for about one-fifth of the
total road system. Those companies were financed almost entirely by private capital." [16]

"Toll road companies in the United States followed the British example. The first turnpike
road to operate in the United States, connecting Philadelphia and Lancaster, was built by a private company chartered by the Pennsylvania government in 1792. The road opened in 1794. Other roads quickly followed and, by 1800, a total of 69 companies had been chartered in New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Virginia, and Maryland. Ohio, Pennsylvania, and Virginia were the only states that subsidized their turnpike companies. The total length of these roads exceeded 10,000 miles, and they comprised a substantial part of the
economy at that time.... Their comparative magnitude exceeded the public-sector investments in the Interstate Highway System after the Second World War." [16]

"In the first three decades ofthe 19th century Americans built more than 10,000 miles of turnpikes, mostly in New England and the Middle Atlantic states. Relative to the economy at that time, this effort exceeded the post—World War II interstate highway system that present-day Americans assume had to be primarily planned and financed by the federal government. The turnpikes markedly upgraded the road system. Roadbeds were smoothed and hardened to aid year round use. Curves were straightened and bridges replaced fords. This prompted a predictable surge in traffic and gave a big boost to the developing economy. Toll roads continued to carry much of the interior commerce of the United States until newer technologies, particularly steamboats and railroads, surpassed them." [15]

"Most of the toll road companies were put out of business in the 19th century by a mode
of transportation technically superior to animal-drawn vehicles—the railroad." [16]

What was the experience of "Ohio, Pennsylvania, and Virginia... [who] were the only states that subsidized their turnpike companies" [16] back in the 1800s? Not good as indicated below:
a) "It is not surprising, therefore, that the states in the 'old frontier' experimented with public policies that attempted to compensate for the deficiency of private demand. The mid-Atlantic states, particularly Pennsylvania, Maryland, and Virginia, were keenly aware of the potential for commerce with the growing West. NewYork seemed to be winning the race for the West so the other players were actively searching for ways to become more competitive. Toll roads, along with canals and railroads, were a natural component of such strategies." [15]
b) "Alone among the states, Pennsylvania attempted to encourage turnpikes by becoming a partner in them; in other words, the state purchased stock in formative projects much as local investors were being solicited to do. The logic of this tactic is not clear. It seems unlikely the state expected to recoup much from its investments, as the lack of dividends from toll roads was widely recognized. Nor did Pennsylvania seem to use its equity position to dictate operating policies of the roads. Whatever the case, the exercise was cut short by the panic of 1837 during which Pennsylvania defaulted on its
bonds and thus suspended its internal improvements." [15]
c) "Virginia followed a more typical government tactic, giving construction subsidies to turnpikes deemed to have particularly large social benefits. Subsidies ranged from 11 percent to 60 percent with 35 percent to 40 percent being typical (Hunter 1957). The results were disappointing. The claims for meritorious need for projects were shaped much more by the political influence of recipients in the legislature than by an objective assessment of likely benefits. Much of Virginia’s toll road assistance went to its western routes in the mountains, routes that had little chance of becoming major thoroughfares." [15]

"The demise of [the 18th and 19th century] turnpikes points to another advantage of privatization. Private operations are much more likely to cease operations when demand becomes inadequate. The worst defect with public operations is probably not so much starting improper services as getting them stopped once they become unprofitable. Public suppliers have much more leverage to keep the revenues coming from
taxpayers than they do from unsatisfied users." [15]

"When the turnpikes began to lose their prime customers, the long distance users, the private owners had to make adjustments. And unlike governmentally run projects, which can rely on legislative assistance, privately run roads were forced to drop the least remunerative sections. Such disciplinary action, taken under decentralized decision making, provides a wealth of information that is unobtainable in a centralized system. It is this connection that modern opponents ofprivatization continue to neglect and in doing so fail to see the opportunities inherent in private as opposed to public choice." [15]

"At the turn of the 20th century, when the railroads were, in their turn, challenged by motorized road transport, the intellectual climate in the United States was dominated by the Progressive movement, which advocated a larger role for government in many areas, including transportation. As tolls were generally unpopular, it was politically easy to abolish them and finance 'free' roads (some of which came to be called 'freeways')
out of the proceeds of taxation. Some toll facilities remain, but most roads in the 20th and 21st centuries were, and are, provided outside the market system on the basis of what are essentially political decisions. Thus, to this day, roads, together with education, health, and pension services, constitute major socialistic elements even in free-market economies." [16]

Conclusion: The Inter-State System passed during the Eisenhower Administration was not necessary. Had the free-market (or semi-free market via use of a PVR Auction Franchise system explained further in the e-mail) been allowed to operate, long-distance expressway roads would have been built WITHOUT the use of taxpayer funding. You would also not have gotten "bridges or roads to nowhere" built or proposed at taxpayers' expense.

Another argument for user-fee based private toll roads: As automobiles require less gasoline, the gas taxes used to fund these taxpayer-funded roads will decrease. Automobile technology will one day reach the point via electric or hydrogen-powered cars, where automobiles will not require ANY gasoline. Then, the gas tax will be made irrelevant.

A New Approach to Private Roads - Granting Present-Value-of-Revenues (PVR) Franchise
"During most of the twentieth century, highways, tunnels, and bridges were viewed as public goods that government must provide. By the end of the century, however, chronic budgetary problems had led governments to allow some participation of private firms in financing, building, and operating infrastructure projects. For example, worldwide private investment in transport infrastructure went from almost nothing before 1990 to $10 billion in 1990-91 and almost $30 billion in 1997-98. Massive projects like the Second Severn Bridge in Great Britain, the Guangzhou-Shenzen highway in China, or the 1,000 miles of upgraded Panamerican Highway in Chile have been financed and are being operated by private firms. Even in the United States, cash-strapped Orange County, Calif., resorted to private funding and operation when it was unable to provide for needed expansion of the Riverside Freeway in the early 1990s." [12]

"In light of those trends, it is remarkable that only two private toll roads were built in the United States during the twentieth century: the Dulles Greenway in Virginia and Orange
County’s State Route 91 Express Lanes. That contrasts with the early days of the United States; beginning in the 1790s and continuing throughout the nineteenth century, more than 2,000 companies financed, built, and operated toll roads with a combined extension of more than 10,000 miles in 1821." [12]

"Are there any advantages to privatizing roads? Before comparing private and public provision of transport infrastructure, it is useful to clarify what is meant by those terms. Under public provision, the government designs, finances, and operates the infrastructure project. Private firms may participate in the building stage and may even be selected in competitive auctions. But once the facility is built, the government operates and maintains it. Taxpayers pay construction costs and, even when users pay
tolls, the revenues are not directly related to construction costs. By contrast, when roads are privatized, a concessionaire finances, builds, and maintains the facility. The franchise owner collects tolls until the concession term ends, and the facility is
transferred to the government — usually 20 to 30 years later. Such Build-Operate-and-Transfer (BOT) contracts can be awarded either through direct negotiations between the transit authority and an interested firm or through a competitive
auction for the right to franchise a well-defined project." [12]

"Road privatization offers many potential benefits, including:" [12]
a) "No need for new taxes to finance the BOT projects." [12]
b) "Having the same firm in charge of construction and maintenance provides better incentives to build a road that lasts longer." [12]
c) "Private firms usually are better at managing and more efficient than state-owned companies." [12]
d) "Cost-based tolls are easier to justify to the public when infrastructure providers are private." [12]
e) "Those who benefit from the infrastructure pay for it." [12]
f) "In stark contrast to public provision, the BOT scheme uses the market mechanism instead of central planning to screen projects, which reduces the probability of white elephants." [12]

Problems with Traditional BOT Schemes and Demsetz Auctions

"A Demsetz auction is a system which awards an exclusive contract to the agent bidding the lowest price. This is sometimes referred to 'competition for the field.' It is in contrast to 'competition in the field,' which calls for two or more agents to be granted the contract and provide the good or service competitively. Martin Ricketts writes that 'under competitive conditions, the bid prices should fall until they just enable firms to achieve a normal return on capital.'^[1] Disadvantages of a Demsetz auction include the fact that the entire risk associated with falling demand is borne by one agent and that the winner of the bid, once locked into the contract, may accumulate non-transferable know-how that can then be used to gain leverage for contract renewal." [13]

"Unfortunately, the advantages of private highways are not automatic. For example, in the early 1970s, France awarded four concessions, three of which went bankrupt after the oil shock and were bailed out by the government. Around the same time, several of the 12 highway franchises in Spain had higher costs than anticipated, while traffic was much lower than expected. Three highways went bankrupt and the remaining contracts required renegotiation. More recently, the “private” Mexican highway concession program cost Mexican taxpayers more than $8 billion after renegotiation of the initial
contracts." [12]

"Those examples illustrate a common experience: Most private infrastructure concession contracts are renegotiated. J. Luis Guasch examined more than 1,000 concession contracts awarded during the 1990s in Latin America and found that, within three years, terms had been changed substantially in over 60 percent of the contracts." [12]

"The frequency of renegotiation is troubling because the contractual changes often are not desirable. In some cases, renegotiations allow governments to expropriate concessionaires after they have sunk their investments. In other cases, concessionaires renegotiate contracts in order to shift losses to taxpayers. The renegotiations thus void the public benefits of private highways by limiting investors’ risk of loss, diminishing franchisees’ incentives to be efficient and cautious in assessing project profitability,
and advantaging firms with political connections." [12]

"Many of the problems with traditional highway concessions result from a combination of a front-loaded investment and substantial uncertainty about demand for the road. To resolve those problems,... [The CATO Instute Reference Article 12 proposes] a new type of auction that allows more flexibility to changing conditions, which will reduce the necessity of renegotiation." [12]

"Many highway projects, including the two cases in the United States, were awarded through negotiations between a firm and a transit authority. There is an alternative, proposed by economist Harold Demsetz, that is particularly suited for highway concessions. In a 'Demsetz auction,' firms compete for the franchise in a process that seeks to emulate competition. In the words of Edwin Chadwick, who proposed a precursor to Demsetz’s idea in 1859, competition for the field substitutes for competition in the field. For example, a BOT highway project in Chile usually is awarded to the firm that makes a bid that charges the lowest toll to use the road. If tolls equal average costs, no excess (monopoly) profits will be earned. Thus, if competition among bidders is sufficiently strong, the toll set by the lowest bid will equal average cost and eliminate any monopoly profits. Consequently, the projects will be run as efficiently as if highways were competitive, even though they are local monopolies." [12]

Problems with Demsetz Auction: Uncertainty

"But while a competitive auction is necessary to produce good outcomes, the Demsetz format, by itself, appears unable to resolve contemporary roadway concession problems because of demand uncertainty and large initial capital costs." [12]

"To understand why that appears to be the case, consider the experience of the" following two cases: [12]
a) Dulles Greenway: The demand that was expected does not materialize within the time-frame of the roadway franchise. "Investors underestimated how much users disliked paying tolls, and initial revenues were much lower than forecasted. Two independent consulting companies had predicted that in 1996, with an average toll of $1.75, there would be a daily flow of 35,000 vehicles. But by March 1996, the average number of vehicles per day was only 8,500. What is more, investors did not count on the state of Virginia later widening the congested Route 7, which serves as a free alternate. After Greenway tolls were lowered to $1.00, ridership increased to 23,000, which was
still far below predictions. Bonds that were issued to finance the project were renegotiated and investors wrote off their equity. More recently, the highway’s prospects have improved because the alternative free roads have become congested.
Senior bonds received a stable rating from Moody’s and Fitch Ratings in 1999 and 2000." [12]
b) Orange County California's Route 91 EXpress Lanes: Too much demand for the fixed time-frame privatized roadway franchise and NO buyout option. "Also consider the experience of Orange County’s Route 91 Express Lanes — a 10-mile privately owned toll road, running from Anaheim to Riverside, that lies in the middle of the congested Riverside Freeway. Motorists can use the private lanes to get relief from congestion by paying up to $8 for a round trip. The concessionaire can increase tolls freely in order to relieve congestion, and they have been hiked seven times in five years. With 33,000 daily trips, the express lanes are close to congestion at peak time and the franchise is a financial success. Yet users of the freeway experience enormous congestion. Expansion is difficult because cash-strapped Orange County accepted a clause in the toll-road franchise contract that prevents any expansion in capacity until 2035." [12] A PVR Auction franchise, as explained later, would have alllowed the local Transportation Authority a buyout option. Also, with the PVR Auction franchise, as explained later on, there is no fixed time-frame and thus the franchise would have ended once the Present Value of Toll Revenues equaled the franchise hilder's bid.

So, traditional BOT and Demetz Auction schemes suffer from the followng: "Both examples demonstrate that demand-side risk (upside and downside) is a characteristic of private highways. The standard [fixed time-frame] concession contract exacerbates that risk because it lasts a fixed number of years. A few bad years at the beginning of the franchise may not leave enough time with normal traffic flows to recover the initial investment. Conversely, a heavily used highway may bring the franchisee excessive revenue over the life of the [fixed time-frame] BOT contract." [12]

PVR Auction Franchises to the Rescue.....

"The problems created by fixed-term franchises have an obvious solution: Franchise contracts should be lengthened whenever demand initially is sluggish or shortened when demand is higher than expected. Can such a contract be implemented without giving discretionary power to regulators?" [12]

YES, it's called a Present-Value-of-Revenues (PVR) franchise!

"A PVR franchise solves the time uncertainty of the revenue stream and has some additional attractive features. In a PVR auction:"
a) "The regulator sets a maximum toll." [12] The PVR franchise operator can vary the tolls charged based on date, day-of-week, and/or time-of-day, but it cannot charge more than the maximum toll set by the regulator or transportation authority during the lifetime of the PVR Auction franchise.
b) "The firm that wins the contract is the one that bids the least present value of toll revenue that it will receive over the life of the contract." [12]
c) Most importantly: "The franchise ends when the present value of toll revenue equals the franchise holder’s bid." [12] Once the franchise ends, the transportation authority can do another public PVR Auction and repeat the process again.
d) "Toll revenue is discounted at a predetermined rate specified in the contract. The rate should be a good estimate of the loan rate faced by franchise holders." [12]
e) An unconditional Buyout option could be added and highly recommended to avoid the Orange County California Route 91 Express Lane fiasco explained further along in the
PVR Franchise Advantage #2: Adaptation and Flexibility section. The Transportation Authority at any time can choose to "buy out the [PVR Auction] franchise at the difference between the initial-value bid and the present value of revenue already received." [12]

In summary: "Under the PVR design, the state conducts its franchise auction in a manner similar to a standard Demsetz auction except that bidders compete on the present value of revenue they would like to obtain from the project." [12]

Has the PVR Auction franchise system been done in the past? Yes, as indicated below:
a) "Great Britain was probably the first nation to use a contract similar to PVR. Both the Queen Elizabeth II Bridge on the Thames River and the Second Severn bridges on the Severn estuary were franchised for a variable term. The franchises will last until toll collections pay off the debt issued to finance the bridges and are predicted to do so several years before the maximum franchise period." [12]
b) "Chile was the first country to use an outright PVR auction. In February of 1998, a franchise to improve the Santiago-Valparaíso highway was assigned in a PVR auction." [12]

Advantages to a PVR Franchise Contract for Expressway Road Systems

"PVR franchise contracts are superior to traditional private franchise agreements because they reduce risk by incorporating the possibility of adaptation to shocks into the basic contractual framework." [12]

"The major disadvantage of PVR contracts is that their risk-reduction features can make the franchise holder indifferent toward customer service and other demand-enhancement activities." [12] But as explained below, the PVR Auction is suitable for roads:
a) "While PVR ... [auction franchises] have a big advantage in terms of reduced risk, the downside is that the franchise holder has no incentive to increase demand for the infrastructure project because any action that increases demand will shorten the term of the franchise. Projects earn their income regardless of efforts of the franchise holder." [12]
b) "By contrast, demand increasing investments are more attractive under fixed term
franchise." [12]
c) "That suggests that the PVR method is applicable only in cases in which demand does not respond to the actions of the franchise holder. Bridges, tunnels, water reservoirs,
and roads are examples for which PVR seems appropriate because, other than maintenance (for which standards can be set and checked fairly easily), the franchise holder can do little to increase demand." [12]
d) "On the other hand, PVR would be inappropriate for projects for which service quality is essential and demand responds to performance — seaports, airports, and public utilities. In those cases, a traditional Demsetz auction on minimum price seems more appropriate." [12]
e) "In some cases, an infrastructure project can be unbundled into separate parts, with different responses to demandenhancing activities. For example, an airport franchise can
be divided into a PVR-auctioned franchise for the landing strip and franchises for all other services that would be awarded via a standard auction." [12]

PVR Franchise Advantage #1: Risk Reduction

"A PVR contract reduces risk:" [12]
a) "When demand is less than expected, the franchise period is longer, while the period is shorter if demand is unexpectedly high. Assuming that the project is profitable in the long run so that repayment eventually can occur, all demand-side risks have been eliminated." [12]
b) "Even if that assumption does not hold and the project never collects enough revenues to equal the present value bid by the franchise holder, the revenue will still be larger than would have been collected by a franchise holder under a traditional
fixed-term contract." [12]
c) "PVR also reduces risk by placing the decision of whether to invest in a project in private hands. Private bidders are more likely than traditional transportation agencies to avoid projects with little possibility of paying for themselves." [12]

"PVR franchises should attract investors at lower interest rates than traditional Demsetz franchises. Toll revenues are the same under both, but the franchise term is variable under PVR. If demand is low, the franchise holder of a Demsetz-awarded contract may default; in contrast, a PVR concession is extended until toll revenue equals the bid, which rules out default. Of course, under PVR, the bondholders do not know when they
will be repaid, but that is less costly than not being paid at all." [12]

PVR Franchise Advantage #2: Adaptation and Flexibility

"PVR franchises allow adaptation to changing circumstances that cannot be made easily
to contracts awarded in standard fixed-term [time-frame] Demsetz auctions. Consider again California’s Route 91 Express Lanes. As traffic has increased on the freeway, the congestion tolls in the private lanes have increased. The California Department of Transportation (Caltrans) would like to widen the freeway in order to accommodate the increased traffic. But it is hampered by the contract it signed with the owner of the express lanes, which prevents Orange County from raising the capacity of the Riverside Freeway without the franchise holder’s consent. Given the experience of the Dulles Greenway (low demand because a free alternative road was widened), the Route 91 provision was reasonable at the time the contract was signed. But under current conditions, it allows the franchisee to price congestion as a monopolist." [12]

"Within the PVR framework, a solution to the problem is to include an option to buy out the franchise at the difference between the initial present-value bid and the present value of the revenue already received. That solves the problem of widening a highway in response to increased congestion because, after buying back the franchise, the transit authority can set up another PVR auction for operation of the tollway that would take into account the new, wider freeway as competition. As a numerical example, assume that the owners of the Route 91 Express Lanes had asked for $160 million in present value terms on the $130 million investment. Suppose they had already collected $65 million. Then, according to the PVR scheme, the Orange County Transportation
Authority could have bought them out for $95 million, which is exactly what the owners would have obtained if the franchise had run to term. But because the existing franchise is not PVR and does not have a buyout provision, Caltrans has considered negotiations to buy out the private operator, only to encounter buyout prices as high as $274 million. Specifying a fair buyout price with a fixed term franchise is much
harder than with a PVR franchise." [12]

"Another feature of the PVR auction is more flexibility in setting tolls.... Under PVR, transit authorities could include toll flexibility in the PVR auction contract...." up to a maximum toll amount specified in the contract. [12] This flexibility could be based on anything the PVR Auction Franchisee desires, such as date, day-of-week, and time-of-day.

PVR Franchise Advantage #3: Opportunism

"The efficient flexibility provided by the PVR method reduces the likelihood of opportunistic behavior. Requests to alter traditional franchise contracts often reflect
opportunistic behavior by one of the parties. For example, the government could try to expropriate the franchise holder (a regulatory taking) or, alternatively, the franchise holder may pressure the transit authority to change the conditions of the contract at the expense of the public." [12]

"Traditional contracts are renegotiated by extending the length of the franchise, increasing tolls, or providing a government transfer. Extending the franchise term with a PVR contract is not possible because, by definition, the term is variable. Increasing tolls is ineffective because it shortens the franchise term without increasing overall income. Government transfers are not logically impossible under PVR but, because the franchise holder cannot claim that it will receive less toll revenue than expected, a government transfer would be difficult to rationalize to the public." [12]

"Consider Mexico, where the franchise procedure awarded concessions to the firm that consented to build the road and operate it for the shortest time period. The result was
highway tolls as high as $35. Because parallel (although congested) freeways were available, the toll highways had little traffic. The government was pressured into bailing out the franchises (and the banks that lent to them), at a cost of at
least $8 billion." [12] Had a PVR Auction franchise been put in place, the Mexican taxpayers would not have paid any money." [12]

"Fixed-term franchises often obtain government loan guarantees. Guarantees weaken the market test that privatization is supposed to provide and escape the usual scrutiny that accompanies specific appropriations in the budget. PVR schemes reduce the need for guarantees because the risk to investors is much smaller. For example, when the Chilean government used PVR to auction the Santiago-Valparaíso highway, it did not have to offer guarantees, in contrast to previous highway franchises using traditional fixed-term auctions." [12]

Explaining Failure of Road Privatization in the Orange County California Route 91 Express Lanes

Much criticism has been leveled at road privatization. Many enemies of road privatization point to the monopolistic behavior and failure of the Orange County California Route 91 Express Lanes built and maintained by a private company; but the FAILURE was due PRIMARILY to the WAY in which the franchise contract was written as explained below:
a) Their was NO BUYOUT option in the contract. [12] Had a buyout option been placed, the Orange County Transportation Authority would have rid themselves of this private company and re-issued ANOTHER PVR Auction.
b) A "clause in the toll-road franchise contract that prevents any expansion in capacity until 2035." [12]
c) Anti-Competitive Non-Compete Clause: "The express lanes have been controversial because of a 'non-compete' agreement that the state made with CPTC. The clause, which was negotiated by Caltrans and never was brought to the legislature, prevent any improvements along 30 miles (48 km) of the Riverside Freeway to ensure profit for the express lanes. This includes restricting the state from widening the free lanes or building mass transit near the freeway. CPTC filed a lawsuit against Caltrans over freeway widening related to the interchange with the Eastern Transportation Corridor interchange, which was dismissed once the purchase with OCTA was finalized." [14]

Had the 91 Express Lanes been done via a PVR Auction Franchise system, the problems encountered would have never materialized.

Conclusion on PVR Auctions
"PVR franchises allow adaptation to changing circumstances that cannot be made easily to contracts awarded in standard fixed-term Demsetz auctions." [12]

"Private highway franchises can lead to large improvements in infrastructure provision. But the experience accumulated so far suggests improvements are necessary. [The CATO Institute Reference 12 article suggests] a variation to the classic Demsetz auction, which awards the franchise to the bidder that asks for the lowest toll. [The CATO Institute Reference 12 article] proposal is that firms compete on the basis of the minimum toll revenue (in present value terms) requested by bidders — a PVR auction." [12]

"[The PVR] auction has a number of advantages: " [12]
a) "It reduces risk and thus lowers the return required by bidders." [12]
b) "It reduces the need for guarantees and the scope for opportunistic
renegotiations." [12]
c) The "franchise is flexible because it can incorporate a buyout option that leaves both parties satisfied, so that widening the road itself or allowing free competitors to widen the road in response to increased traffic is not an issue." [12] A PVR auction franchise would avoided the California Riverside Private Expressway Franchise fiasco.
d) "In addition, the transit authority can adjust the tolls in response to changed conditions without harming the franchise holder." [12]
e) No taxpayer funding of road infrastructure. [12]
f) "Those who benefit from the infrastructure pay for it." [12]
g) "The regulator sets a maximum toll" that may be charged and can vary the toll based on day-of-week and time-of-day as long as the toll does not exceed the maximum toll. [12]
h) "Superior to traditional private franchise agreements because they reduce risk by incorporating the possibility of adaptation to shocks into the basic contractual framework." [12]

"The PVR auction solves most of the common problems that occur with highway franchises. In particular, the serious problems encountered by both private highway franchises currently operating in the United States would have been avoided with
a PVR contract." [12]

Request for Open Debate with Florida State Representative Scott Plakon (or Others that Supported SunRail Fiasco)

After Fiscally Conservative Republicans like Florida State Representative Scott Plakon, my Florida State Senator Thad Altman, and other Fiscally Conservative Republicans voted for the SunRail fiasco, I cannot see how thay can call themselves Fiscal Conservative Republicans knowing ahead of time the record of other Rail Systems' red ink such as the South Florida Tri-Rail System. It's bad enough that these Conservative Republicans continue to dictate personal morality to Consenting Adults by supporting Victimless Crime Laws amongst Consenting Adults - such as War on Drugs, Sex Worker profession, Gambling, etc. - but now we cannot expect these same Conservative Republicans to live up to being fiscally Conservative! That's a travesty and a shame! (Note: As for the Democrats, we know that they like to waste taxpayers' money on government programs that do not work. So, I'm not surprised if any Democrats did vote in favor of the SunRail Fiasco!)

I would be more than happy to debate Florida State Representative Scott Plakon or any other individual that supported the SunRail fiasco and argue the merits of a free-market solution to Florida's transportation problems vs. the government-paid taxpayer-funded transportation solutions.

Perhaps the Orlando Tea Party Radio show hosted by Jayson Hoyt and Phil Russo would be kind enough to host such a debate. Or perhaps some other television or radio host can do so also. I await the news media's reply to see if they're interested. I know I am.

Sources and References:
[1] Free-Market Roads: http://en.wikipedia.org/wiki/Free-market_roads
[2] Private Roads Work: http://www.fff.org/freedom/fd0809d.asp
[3] Free Market Roads: http://www.libertocracy.com/roads.htm
[4] Free Market Roads: essential for preserving liberty:once it's achieved of course: http://bbs.freetalklive.com/index.php?topic=1219.0
[5] Roads, Education, and Waterways: The Case Against Public Services: http://www.youtube.com/watch?v=b_lAw8rGU4Q
[6] PRESS RELEASE: Franklin Perez Blasts E-mail to Florida State Senators Telling them to OPPOSE SunRail Because It's a Waste of Money! Offers Free-Market Solutions to Florida Transportation Problems! : http://groups.yahoo.com/group/SemCountyLibs/message/4057
[7] High-Speed Rail - The Wrong Road for America: http://www.cato.org/pubs/pas/pa-625.pdf
[8] Rails Won't Save America: http://www.cato.org/pub_display.php?pub_id=9703
[9] SunRail: http://en.wikipedia.org/wiki/SunRail
[10] Florida Senate saves Tri-Rail: http://www.sun-sentinel.com/news/palm-beach/fl-trirail-senate-vote-20091208,0,1059024.story
[11] Cutting Back City Hall (Copyright 1980): Book written by Robert W. Poole. Transit Systems chapter.
[12] A New Approach to Private Roads - Granting Present-Value-of-Revenues (PVR) Franchise: http://www.cato.org/pubs/regulation/regv25n3/v25n3-6.pdf
[13] Demsetz Auction: http://en.wikipedia.org/wiki/Demsetz_auction
[14] 91 Express Lanes: http://en.wikipedia.org/wiki/91_Express_Lanes
[15] Privatization and the 19th Century Turnpike: http://www.cato.org/pubs/journal/cj9n1/cj9n1-9.pdf
[16] Liberating the Roads - Reforming U.S. Highway Policy: http://www.cato.org/pubs/pas/pa538.pdf
[17] Bridge to Nowhere: http://en.wikipedia.org/wiki/Bridge_to_Nowhere
[18] Orange County Florida's Road to Nowhere (Press Release from Matthew Falconer, Orange County Mayor Candidate): http://groups.yahoo.com/group/SemCountyLibs/message/3607
[19] Matthew Falconer SunRail Alternative Proposal: http://www.matthewfalconer.com/transportation.htm
[20] Deregulating Urban Transportation: http://www.cato.org/pubs/journal/cj5n1/cj5n1-12.pdf

Sincerely,

Franklin Perez (Libertarian)
Florida State House Candidate (District 33) - Year 2010
Libertarian and Independent! Not Beholden to Party Politics!
http://www.fperez1776.com
http://www.twitter.com/fperez1776
http://www.youtube.com/watch?v=e1Z1WI2rNqE
(407) 694-7805

Franklin Perez for Florida State House

Saturday, July 26, 2014

Nobel Economist Joseph Stiglitz Hails New BRICS Bank Challenging U.S.-Do...

Sunday, March 9, 2014

Meet-and-Greet Event on 3/12/2014 with Franklin Perez, 2014 Libertarian Candidate for the Florida State House of Representatives (District 28), at the Patio Grill in Sanford, Florida from 7:00 PM EST to 9:00 PM EST.....

Friday, January 24, 2014

PRESS RELEASE: In Defense of Free Market Transportation Solutions - Request for Open Debate with Florida State Representative Scott Plakon (or Others Who Support SunRail Fiasco)

1) Competition will motivate better service than is provided by the government road monopoly

2) Privatization will encourage infrastructure construction and reduce congestion