An Economic Comment on the Stillwater Bridge

Jason Scheppers writes in:

 

“Recently, Dr. Whitehead wrote regarding the Stillwater – St. Croix River Crossing. I have seen in your blog several mentions of the bridge and offer you the following economic comments:

I would recommend the following documents for any interested in the details of the current controversy: US House subcommittee hearing, Senate subcommittee Hearing, Record of Decision and US Court ruling vacating the National Park Service’s concurrence with the project.

I support Senators Klobuchar and Franken’s and Rep. Bachman’s right to follow the law which specifically called for override of the Scenic by-way by congress, if Congress deemed appropriate. The tremendously cumbersome process and triple flip-flopping by some federal agencies give significant cause to provide reasonable congressional relief.

But beyond the Congress’s right, the following shows that the economics constructing a new freeway bridge may not be as clear as suggested.

First, the existing bridge while currently rated in not so good condition and with load restrictions is not in any imminent state of collapse. It is also true that under build the new freeway bridge(s) would keep the existing bridge and make it a pedestrian and bicycle facility. The loading requirements for pedestrian facilities exceed those of vehicular loading due to possible densities of pedestrians during special events. The existing historic bridge is not going away.

Second, the I-94 Bridge is only 6 miles away from the current bridge. Attached are the Google directions for a path that goes over the existing bridge as compared to going over I-94, yielding 31 miles in 45 minutes, versus 34 miles in 46 minutes. The new route takes out the trip through Stillwater and straightens out some of the wiggles through Stillwater. I estimate that the time savings for the mean traveler is in the order of 10 minutes and 5 miles compared to the I35 route. Time valued at $15 per hour and cost of $0.40 per mile yields a total savings of $4.50. There actual has been a study done that found the revenue maximizing toll was $3.00. It found that the toll could cover only half the cost of the bridge.

Third, the cost benefit analysis provided in the Supplemental EIS had a very different take. It shows a 6.0 Benefits to Costs ratio. Call me old fashioned but if you can only generate enough toll revenue to pay for half of your project, it is hard to see how the B/C ratio could be greater than one. (There may indeed not be a toll on the new bridge, but the willingness to pay aspect of a toll illuminates the value of the facility.)

Fourth, the travel patterns of the residents of the area are highly dependent on what facilities are in place. Does the Minneapolis Regional model takes into account the natural barrier the river is to growth on the WI side of the St. Croix? The Toll study cited above assumed 2.0% traffic growth, but if you analyze the data in the FHWA vmt trends for Minnesota you will find an annual state wide traffic growth rate of 0.6% from 2004 to 2010. This implying that there is substantial risk to cover 50% of the costs with toll revenues. If this lower traffic growth rate were sustained over the length of the tolling not even 20% of the bridge could be financed.

So enough complaining, here are some things that I think would be reasonable. While the reports all document the danger, it is not the bridge itself where the DOTs are claiming most dangerous conditions. It is on the Minnesota side where the highway goes through the town. It is also the signals through town that impede the volume. The bridge can likely handle 18,000 vehicles a day in each direction without substantial delay. But looking at the route through

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Stillwater, one possible explanation for the accidents is the on street parallel parking on this high volume road. Imagine the safeness of trying to Parallel Park during peak hour traffic.

The Supplemental EIS also discusses cut through traffic. Eliminating and compensating local business for the loss of close parking and reconfiguration of the lanes to allow some more volume is one solution. The City and MN DOT could also create one way pairs for the highway through town to allow for more traffic flow. The reality is the existence and texture of Stillwater is formed by its relationship to the river and the existing crossing. Operational improvements without the following pricing would likely significantly increase the traffic leaving the Stillwater residents with equally bad congestion in their town.

Changing the bridge to a non-motorized facility essentially changes the price for an auto to cross from zero to infinity. What if it was only changed to $5 and that it was a variable toll to address some of the Stillwater residents’ concerns about congestion. The congestion, I would guess is on Friday evenings in the summer when city dwellers rush to their weekend retreats. Such a toll reduces the traffic and also generates revenue to repair and maintain the existing bridge. The existing bridge is considered historic and historic for carrying cars across the St. Croix River. It seems the 4F work on the bridge did not respect the fact that the bridge’s vehicular history and the scenic views that were obtained by all the folks driving through Stillwater and across the bridge. To be scenic you need people to see the beauty. I would argue that removing motorized vehicles from the existing bridge is a direct and adverse impact to the scenic river and is not allowed unless otherwise approved by the US congress.

The value of the existing bridge has never been greater and capturing some of that value through tolls provides the best revenue stream to maintain the historic bridge and address its current deficiencies and pay for operational improvements on the approach roadways. I am an equal opportunity toller and encourage appropriate charges to the gondolas and sightseeing boats that pass under the lift bridge. Freight barges no longer utilize this stretch of the St. Croix. The bridge lift schedule should not be fixed but based on price. Rush hour lifts for tourists to pass under the bridge should be evaluated based on prices the “overs” versus “unders” are willing to pay. Are the pedestrians and bikers willing to pay to maintain the bridge? If motorized vehicles are prohibited, what are the implications to the very limited use the bridge will have during the November to March time frame? The reduced value of the bridge by eliminating the cars is the biggest threat to maintaining the historic structure. The current bridge also has the huge value of simply existing and not subject to the regulatory capture of the regulating agency for new structures.

The Stillwater lift bridge is a man-made bridge, historic and integral part of the scenic
river. Review of Google images of the Lower St. Croix River, show the
lift bridge may be the most popular image per linear foot of river it occupies. Why would it not be possible to build (if needed) a bridge that would age gracefully and be equally accepted into the eco-system. The current unconditional discrimination against massiveness and man-made form denies the man- made massive existing historic lift bridge, the center piece of the scenic lower St. Croix River.

Jason Scheppers
(Crossed the beautiful scenic lower St. Croix River twice in the past year (in a car))”

2 thoughts on “An Economic Comment on the Stillwater Bridge”

  1. This post is all over the place. For one thing, any “time savings” in a cost-benefit analysis are a complete sham, and they make up 85% of the “benefits” for this project. Nobody actually accrues those benefits as real cash money, and thus the government can’t collect any taxes on it. That makes the government bear the full cost of the project, but the benefits are externalized and thus the project isn’t self-sustaining. The article even says that with tolls it wouldn’t be self-sustaining. If you take out the “time savings” then the cost-benefit ratio goes negative immediately.
    Also, eliminate on-street parking and create one-way pairs of streets to improve vehicular traffic flow through an historic downtown? What is this, 1956? Safety for parallel parkers might be of some concern, but turning those streets into what will essentially be 4-lane highways will only deaden the historic core of Stillwater, and it will make the area much less safe for pedestrians, cyclists, and ALL motorists, due to increased speeds. Has nobody learned anything in the last 60 years?

  2. Dear Mr. Jakucyk,
    It is true my style is to some extent “all over the place”. I wish it were more succinct, but it is not and that is partly due to attempting to address economics as Henry Hazlitt suggest: “Good economist looks beyond the immediate and examines the longer and indirect consequences of a given policy.” This method leads to consideration of both points for and against to make a more informed decision and may not be as pretty.
    To summarize my position: It is first that the extensive decision processes that was followed to date makes me believe that starting over and losing all that work should be avoided if possible. Congress gave its self the power to assist if the process did not seem to produce reasonable results. I judge the transaction cost to start the process over (A process that is much more all over the place than the above post) worse than coming up with a reasonable way to proceed that offers the Scenic River good cost effective protection.
    I did consider waiting until it was clear if there would be a new law on the bridge before discussing options that addressed the continued use of the existing bridge, but in the end thought discussing the options as providing value to those trying to judge how to proceed. I do agree to an extent with Mr. Jakucyk that the proposed bridge is not clearly financially self-sustaining. The remainder of my post was intended to show a possible use of the existing bridge. This could be used in conjunction with a new bridge or a means to address traffic if a new bridge is not allowed.
    But the comment states “Has nobody learned anything in the past 60 years?” Since I was the author, I will take up the defense of nobody. I will presume that Mr. Jakucyk was succinct and focused in his comments, thereby making his best points regarding what nobody has (not) learned.
    First “any “Time savings” in a cost savings is a complete sham is a complete sham…” In the Minneapolis Metropolitan Region Implemented HOT lanes and developed “MnPass II Study” regarding the lanes that showed an actual revealed preferences (what people actually paid for time savings) on Figure 3.2. In analyzing the data extrapolating some on the high value found the average value of time was $14.86 with a very high variation in individuals’ assessment. My post used a stated a value of $15 per hour. I appreciate that when values are used without focusing on actually revealed preference misleading conclusions can be reached. My point regarding the SFEIS benefit cost ratio vs. the toll financing study predicting covering only 50% of the costs directly addresses this point.
    Mr. Jakucyk adds “If you take out the “time savings” then the cost-benefit ratio goes negative immediately”. Benefit-Cost ratios or Cost-Benefit ratio by definition are never negative. Benefits-Cost ratios are the sum of all benefits (all positively valued transactions) divided by the costs (the absolute value of all negatively valued transactions). If you get a negative Benefits-Costs ratio you have confused the difference between benefits and costs. A project with a benefit to cost ratio of less than 1 has losses.
    I believe that I and Mr. Jakucyk come close to agreeing on that the cost benefit ratio is likely less than 1 for the new bridge. But with uncertainty, not by so much that I think that redoing the complete NEPA process is warranted. The elected officials have the funding lined up. That means someone is paying for this even though not directly through user fees.
    In regard to 4 lane highway with high speeds through Stillwater. I was thinking more in the range of removing the parking and making a 3 lane section. The best configuration would be a reversible center lane, but 2 lanes north bound to handle the higher volumes would be better than 1 lane in each direction with few left or right turn bays. The goal and configuration would not have to be high speed. It would be possible (even desirable) in the 3 lane configuration have wider sidewalks. Control or restrictions of left turns during peak hour and traffic signal synchronization could also help. The simple goal would be to get 1800 cars per hour through the intersections to match the directional capacity of the bridge.
    I would add agreeing with Mr. Jakucyk that financially self-sustaining is a great goal and it was the intent of the increasing the value of the existing historic bridge proposal to be self-sustaining with the tolls from the variable toll pricing on the bridge covering the bridge maintenance and approach roadway work.
    My proposal placed a price on many actions and assets that are commonly viewed as belonging to the community. I understand that explicit valuation can be hard to accept and in many cases our communities choose not to do so. Concurrence with my valuation or proposal is not my primary goal, but to ask what and how you value the elements of the river crossing to sustain its beauty and function.

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