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Funding OptiOns
t he fundamental question posed in the committee’s statement of task
concerns the responsibility of the Department of Defense (DoD) to
pay for off-base transportation impacts. The first section of this chapter
reviews existing DoD programs for assisting communities whose trans-
portation facilities are affected by military base growth. The second sec-
tion reviews traditional non-DoD government programs to fund surface
transportation infrastructure. These programs include those administered
by the U.S. Department of Transportation (USDOT), for which national
defense is an eligibility criterion. State and local government transpor-
tation sources are also reviewed in this section, including how local
governments normally work with private developers who propose major
projects that will affect the localities’ transportation networks. Alterna-
tives to construction funding for capital improvement to increase infra-
structure capacity, such as operations and maintenance (O&M) funding
for ongoing congestion management, are also discussed.
The committee is also charged with assessing current federal
programs that could be of assistance in BRAC cases. The committee’s
treatment of traditional federal, state, and local programs for funding
transportation is influenced by the current fiscal context. In the aftermath
of the “Great Recession,” governments are under the most demanding
fiscal pressure experienced in recent decades and face a public unsympa-
thetic to tax increases to fund transportation. Even as the military budget
has grown dramatically to wage wars in Iraq and Afghanistan, govern-
ments have seen their revenues decline because of the recent recession,
particularly tax revenues they typically rely on for transportation.
department OF deFense prOgrams
The official policy of DoD is that, with limited exceptions, the impact of
bases on local government infrastructure is the responsibility of those
governments (DoD 2008) (see also Box 1). The principal argument is that
DoD employees pay taxes into the state and local coffers that fund infra-
structure, and those sources should be tapped for making improvements to
meet the demands placed on the infrastructure by soldiers and DoD civil-
ian employees. DoD policy, however, also allows for special circumstances
in which DoD provides funds for transportation improvements.
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BOx 1
Policy Basis for Defense Access Roads criteria
(Quotation from DoD, Defense Access Road Criteria, October 2008)
It is the responsibility of state and local highway agencies to
provide and maintain adequate highways to serve public needs.
These needs include those of DoD. The needs of defense were
one of the original justifications for the Federal-Aid Highway
Program that includes the Dwight D. Eisenhower National System
of Interstate and Defense Highways. Defense traffic generates the
same road-user revenues for state roadways as does other traffic.
Therefore, DoD expects state and local highway authorities to
develop and maintain adequate highways to serve defense installa-
tions just as they do for other traffic generators. It is DoD policy to
not provide funds for the maintenance of non-DoD roads (except
for maintaining the structural section of county gravel roads that
support the Department of the Air Force’s Intercontinental Ballistic
Missile Sites).
DoD recognizes that situations occur where defense traffic
places an unexpected burden on state and local highway programs.
These situations may include a dynamic increase in mission-related
activities that result in a significant and sudden increase in defense
traffic. The DAR program may then be able to be used to help fund
highway improvements necessary to accommodate the sudden and
unusual defense impacts.
Defense Access RoADs PRogRAm
Under the Defense Access Roads (DAR) program, administered by the
military Surface Deployment and Distribution Command (SDDC),
DoD may pay for public highway improvements to address the impact
on traffic of sudden or unusual defense-related actions (see Box 2).
DAR enables DoD to help pay indirectly for improvements to highways
DoD designates as important to the national defense. Under DAR, DoD
can use funds provided in military construction (MILCON) appropria-
tions to pay for all or part of the cost of constructing and maintaining
roads designated as “defense access roads.”
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BOx 2
statutory Basis for Defense Access Roads criteria
(Quotation from DoD, Defense Access Road Criteria, October 2008)
The DAR program has its basis in and is authorized by Title 23,
U.S.C., “Highways,” Section 210:
23 U.S.C. 210a The Secretary [of Transportation] is authorized,
out of funds appropriated for defense access roads, to provide for
the construction and maintenance of defense access roads (includ-
ing bridges, tubes, and tunnels thereon) to military reservations,
to defense industries and defense industry sites, and to the sources
of raw materials when such roads are certified to the Secretary
by the Secretary of Defense or such other official as the President
may designate, and for replacing existing highways and highway
connections that are shut off from the general public use by neces-
sary closures or restrictions at military reservations and defense
industry sites.
The DAR program began decades ago when many bases were
located, or being located, in relatively undeveloped regions. The pro-
gram appears to have been designed to pay for access roads used princi-
pally by the military or to improve roads that would be harmed by heavy
military equipment. The program has funded road projects that access
missile installations and other military facilities that were off the federal-
aid primary highway system. These facilities were generally in isolated
areas and not served by access roads.
Funds appropriated for DAR projects are transferred from DoD
to FHWA to administer. The provisions of U.S. Federal Code, Title 23,
which includes requirements of federal laws applying to federal-aid
highways, apply to all DAR projects. Allocations are project specific;
therefore, underruns cannot be used on other projects and unused
DAR funds may be reallocated by the Washington Headquarters office
of FHWA or returned to the military. Funds must be obligated within
5 years of approval. Unobligated balances lapse after the period of
availability. Unexpended funds are canceled 10 years after the last
year of obligation.
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As federal transportation programs go, the DAR program is quite
modest. From 2001 to 2010, it certified as eligible 19 projects, 15 of
which have been funded. Since 2005, the program has provided about
$22.5 million annually for transportation improvements, including proj-
ects that are not BRAC related. By way of comparison, federal aid for
highway transportation funded through USDOT exceeded $30 billion
annually from 2006 to 2010.
Eligibility Criteria
Projects are eligible for DAR funding if they meet one of the following
criteria (GAO 2009):
1. The installation needs a new access road to accommodate a
defense action.
2. A defense action causes traffic to double.
3. The installation needs a new or improved access road to
accommodate a temporary surge in traffic to or from the
installation due to a defense action.
4. The installation needs a new or improved access road to
accommodate special military vehicles such as heavy
equipment transport vehicles.
5. The installation needs a road to replace one closed because of
military necessity.
Criterion 2 is of most concern in metropolitan areas. Unlike the
rural and less developed areas for which the DAR program was designed,
bases in metropolitan areas already have access roads, so Criterion 1 is not
likely to come into play; nor is Criterion 3, because an expanded access
road for a temporary surge would be impractical to try to implement in
a metropolitan area given the difficulty of adding capacity on short
notice. Criterion 4 was intended to improve formerly rural, often unpaved
roads, to handle heavy vehicles. Criterion 5 comes into play only in the
rare instance when a road must be closed (the DAR program funded such
a project at Fort Belvoir North). Criterion 2 is most problematic because,
in congested metropolitan areas, a doubling of traffic is extremely unlikely
to occur because of a BRAC action. Many of the highways surrounding the
bases reviewed in Chapter 2 carry such high levels of traffic that it would
not be possible for traffic to double because of the nonlinear impact that
additional traffic has in congested conditions (Figure 9).
As shown in Figure 9, the impact of additional traffic on congested
highways is not linear. Travel speeds fall off dramatically at high volumes
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Figure 9 generalized relationships among speed, density, and flow rate.
(SOURCE: Highway Capacity Manual 2010, Exhibit 4-3.)
when new traffic is added. With these congestion levels in place, a traffic
increase of only 5% or 10% could cause a highway facility to transition
from relatively free-flow conditions to stop-and-go conditions, thereby
limiting the maximum number of users. Adding several thousand new
commuters to the few highways serving these bases during the peak period
could have this effect. In some cases reviewed in Chapter 2, major high-
ways are operating at low-speed conditions, and adding several thousand
users during peak hours on these facilities could result in near gridlock.
Thus, it appears that the doubling criterion is not appropriate for deter-
mining DAR eligibility for funding transportation improvements in
congested metropolitan areas.
When considering travel demand management programs to relieve
congestion, the nonlinearity of a few vehicles having a disproportionate
effect can work in reverse. A small reduction in urban peak traffic vol-
ume can result in a proportionally larger reduction in delay. For example,
a 5% reduction in traffic volumes on a congested highway (e.g., from
2,000 to 1,900 vehicles per hour) may cause a 10% to 30% increase in
average vehicle speeds (e.g., increasing traffic speeds from 35 to 45 mph).
As a result, even relatively small changes in traffic volume or capacity on
congested roads can provide relatively large reductions in traffic delay.
The timing, location, and type of travel changes will have different effects
on reducing congestion.
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DoD-Funded Study of DAR Criteria
In 2010, DoD undertook a study of the DAR criteria. DoD requested that
SDDC undertake this study to evaluate the merits of safety as a potential
criterion. SDDC identified that safety and congestion should be inves-
tigated as a potential criterion. The study, which was never released,
reported the following:
According to the Institute of Transportation Engineers, traffic access
and impact studies are conducted to assess the transportation
impacts of proposed developments and other land use changes. This
may include new facilities or changes in land use resulting from the
redevelopment of an existing area. When considering installation
growth related to mission change, BRAC, or other factors, ultimately
the traffic impacts experienced are a result of the activity associated
with new or modified facilities. In that way installation impacts are
almost identical in nature to that of the construction of a new office
building or shopping center by a land developer. Therefore, it makes
sense to use the same policies and procedures in identifying the
transportation impacts of a military installation that apply to land
development. (Gannett Fleming 2010)
The recommended approach in the Gannett Fleming report for DoD
would consider the following factors to determine eligibility of projects in
highly urbanized areas where military growth causes sudden or unusual
traffic impacts:
• Military installation is within an urbanized area with population
greater than 200,000.
• Proposed project area must be within a mile of the military facil-
ity perimeter.
• Proposed project area has a minimum increase of 100 peak-hour
DoD trips.
• Project area must operate below level-of-service D after the mili-
tary impact.
Upon determination that a project is eligible for DAR funding, a DoD-
share analysis would be conducted to identify the installation’s potential
contribution to the roadway improvements necessary to maintain accept-
able or current operating conditions.
The recommended project will, at a minimum, restore the level of
service or delay time to levels which existed prior to the military
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action. For all DAR projects, SDDC conducts an analysis to deter-
mine the fair-share that should be funded by DoD. This analysis
considers the military impact to traffic on the subject roadway seg-
ment and mitigation required to address the impact. The appropriate
military funding share is then determined based on the instal-
lation’s proportion of the total traffic which utilizes the subject
roadway segment. For large, complex projects involving military
and non-military impacts, other factors (such as overall project
scope, total project cost, and funding available from other sources)
are taken into consideration. A similar fair-share analysis shall be
conducted for projects found eligible for DAR funding using the
criteria recommended in this study. (Gannett Fleming 2010)
There are limitations to the share approach recommended in the
Gannett Fleming study. First, calculation of the military’s impact on con-
gestion using the impact fee model should not be based merely on the
military’s share of total traffic. Impact fees charged to new developments
assess costs on new development if the new use causes an infrastructure’s
level of service to fall below an established standard. Moreover, the
additional military traffic load could have a disproportionate effect on
traffic flow as illustrated in Figure 9. Therefore, it makes more sense for
the military share to be based on the increased delay caused by additional
military traffic (the increased traffic may not all be attributed to the
military, as many routes are experiencing traffic growth over time from
all sources). Second, the impact of military traffic could affect traffic
flow well beyond the arbitrary 1-mi limit. Metropolitan areas have fairly
dense, interconnected networks of roads and highways. The source of
congestion is not necessarily at the location of the traffic generator; it
may be located at a bottleneck miles away or it may affect congestion on
a major access route for miles beyond the 1-mi perimeter.
DAR Eligibility for Nonhighway Transportation Improvements
Most BRAC bases that were studied have adopted a multimodal approach
in the development of their traffic management plans. They recognize the
need to limit single-occupancy vehicle traffic onto bases and provide
travel alternatives for base personnel. According to presentations made to
the committee, they are motivated by the need to meet air-quality stan-
dards, reduce their carbon footprints, and minimize energy usage (Presi-
dent Obama 2009). Included in many base traffic management plans are
strategies to improve bus transit; provide shuttles to rail and commuter
rail stations; increase use of bus pools, carpools, and vanpools; expand
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the use of telework, variable work hours, and schedules; and other travel
management measures. Many bases are working with surrounding juris-
dictions and service providers to carry out these plans. However, limited
funds are available for these purposes. By statute, DAR can fund only
road improvements. DAR limitations illustrate the need for other funding
sources in addition to MILCON, such as O&M or other accounts over
which commanders have some discretion, to be identified and used for
multimodal and ongoing congestion management and improved access
programs.
Competition for MILCON Funds
The DAR program funds projects relatively infrequently (15 projects over
the last 10 years) in part because of the strict criteria used to approve
projects and in part because of competition for funds with other MILCON
projects. If a project is approved, funding is not guaranteed; projects must
compete through the normal DoD MILCON appropriations process. In
that context, the DAR project must compete with every other MILCON
project being considered by DoD.
Even before entering the competition, a DAR project must be sup-
ported by the garrison commander. Bases preparing for a large influx of
personnel have myriad needs for MILCON funds for essential items such
as barracks, training facilities, and on-base infrastructure. The individual
responsible for public works at Joint Base Lewis–McChord explained
to the committee that improving off-base access was a low priority for
the base commander compared with these more immediate needs (see
Chapter 2).
office of economic ADjustment
The Office of Economic Adjustment (OEA) is DoD’s primary source
for assisting communities that are adversely affected by DoD program
changes, including base closures and realignments, base expansions, and
contract and program cancelations. OEA offers technical and financial
assistance to adversely affected communities and coordinates the involve-
ment of other federal agencies through the Defense Economic Adjust-
ment Program and the President’s Economic Adjustment Committee.
Economic adjustment assistance provides a community-based con-
text for assessing economic hardships caused by DoD program changes
by identifying and evaluating alternative courses of action, identifying
resource requirements, and assisting in the preparation of an adjustment
strategy or action plan to help communities help themselves.
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OEA has funded studies, such as traffic studies, which help states
and local communities define the impact of military growth on trans-
portation. In BRAC 2005, for example, OEA provided transportation-
planning grants to Maryland and Virginia. According to local officials,
OEA also funded transportation studies for communities near several of
the bases the Government Accountability Office visited in its assessment,
including those near Eglin Air Force Base, Florida, and Fort Knox, Ken-
tucky (GAO 2009). These studies can provide communities with more
detailed, precise information about the transportation impact of military
growth than the initial environmental studies performed by DoD. The
funds used in these studies cannot be used to build infrastructure.
OEA has funded local coordinator positions to assist in coordinat-
ing local activities responding to BRAC, including transportation-related
activities. For example, Harford County, Maryland, established a BRAC
planning commission for Aberdeen Proving Ground. This commission,
with OEA funding, helped establish the Chesapeake Science and Security
Corridor Consortium, which includes eight jurisdictions in Delaware,
Maryland, and Pennsylvania. With Harford County as the lead agency,
the Chesapeake Science and Security Corridor Regional BRAC Office
administers grants and coordinates regional BRAC responses.
OEA’s efforts occur after DoD has decided to make changes to
military bases. Its function is to help communities cope with military
decisions that have already been made.
tRAnsit Benefit PRogRAm
Executive Order 13150 created the transit benefit program. The provi-
sion of these incentives is authorized by the Federal Employees Clean Air
Incentives Act of 1993. This program is designed to improve air quality,
reduce traffic congestion, and conserve energy by encouraging employ-
ees to commute to work on a daily basis by means other than single-
occupancy motor vehicles. This program provides a financial incentive to
federal employees in the National Capital Region in the form of a subsidy
for using transit services or qualified vanpools (Kepplinger 2008). DoD
launched its transit benefit program with an effective date of October 1,
2000. Personnel eligible to receive transit benefits must be a civilian,
military, or nonappropriated fund employee paid and employed by DoD
and permanently stationed and working in the National Capital Region.
The Army established a policy implementing 5 U.S.C. 7905, which
permits agency heads to reimburse federal employees, including members
of a uniformed service, for certain commuting expenses. The policy allows
army bases outside the National Capital Region to provide transit benefit
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payments. Funds for the transit benefit program are included in the budget
of the individual DoD commands or their components (Chu 2008).
Under this program, participating employees receive, in addition to
their current compensation, transit passes in amounts equal to their per-
sonal commuting costs, not to exceed $230/month. Parking costs are not
used in establishing commuter costs. This benefit applies to both mass
transit and qualified vanpool participants. Employees with subsidized
parking must relinquish their parking permits to receive the transit pass.
AmeRicAn RecoveRy AnD Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009 (ARRA) was
passed by Congress and signed into law by President Obama on Febru-
ary 17, 2009. The purpose of the $787 billion recovery package was to
jump-start the economy to create and save jobs. The Act specifies appro-
priations for a wide range of federal programs. Twenty-eight agencies,
including DoD, were allocated a portion of the $787 billion in recovery
funds. Each agency develops specific plans for how it will spend its ARRA
funds. The agencies then award grants and contracts to state govern-
ments or directly to contractors or other organizations. Some of these
funds were used to expand the Fairfax County Parkway near Fort Belvoir.
enhAnceD use LeAses
Title 10 U.S.C. Section 2667 allows military installations to lease land
and facilities to a private or public entity (http://www.ftmeade.army.mil/
pages/eul/eul.html 2010). Specifically, installations can, among other
things, accomplish the following:
1. Grant the use of land and facilities for mission-oriented
functions.
2. Enter into long-term or short-term leases, providing greater
flexibility for facility reuse.
3. Receive no less than fair market rental, in cash or in-kind, as
consideration for the leased property.
The process supplements underfunded and unfunded capital
improvements and operations and maintenance expenses. By statute, the
lease must promote the national defense or be in the public interest. The
property must not be excess to military department needs as defined by
40 U.S.C. 102 and determined to be available. This DoD leasing program
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allows a multiyear lease of installation property for commercial use in
exchange for cash or in-kind services to the installation. Limited DoD
maintenance funding and recent changes to the program have made it a
popular tool for installations to address maintenance needs. Importantly,
the revenues earned from enhanced use leases (EULs) remain under the
control of the garrison commander rather than being returned to the DoD.
This program essentially allows installations to become developers;
however, there is no requirement that these commercial projects follow
local and state processes to mitigate for impacts. In some cases, such as
Fort Meade, the growth from EUL activities may exceed the BRAC-related
growth and create more demand on access roads around the base than
the BRAC movements. Communities sometimes oppose EULs because
the program also potentially captures contracting activities that would
follow the BRAC consolidations but would have been located outside the
gate, where they would be taxable and would have to follow state and
local processes. Nevertheless, the EUL process provides an opportunity
for military bases that have developable excess land to raise revenues
that could be used to improve transportation access services to that base.
Because of base commanders’ many competing demands, however, these
funds would need to be dedicated to transportation uses if revenues from
EULs were to relieve the traffic impacts of bases.
BAse oPeRAting AnD mAintenAnce Accounts
Military construction funding is only one source to address traffic con-
gestion caused by base activities. Capital expenditure programs, such as
DAR, can provide site-specific traffic fixes but are not sufficient alone to
address ongoing, variable, fluid, and non-site-specific impacts of traffic
congestion. For example, transient base activities can temporarily over-
load existing road capacities, but planning for such peaks through capital
improvements may be unduly expensive, resulting in underutilized
capacity if a peak is a one-time effect. Further, defining the contracting
requirement for a military construction project may be difficult if the
capital expenditure is off base, may benefit others besides the military,
and may depend on complementary funding from nonmilitary sources,
such as state and local transportation agencies, and regulatory approvals
from nonmilitary entities, such as local planning agencies.
Use of noncapital funding, such as O&M accounts or employee
compensation accounts, may provide more flexible funding to meet
variable traffic management needs. O&M funding, for example, could
be made available to pay for dedicated bus service, commuter assistance
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These grants are awarded on a competitive basis for capital
investments in surface transportation projects. The projects must have a
significant impact on the nation, a region, or a metropolitan area—and
they must create jobs. TIGER II applicants must contribute at least 20%
of a project’s cost. (No nonfederal matching funds were required in the
first TIGER round, although ARRA gave priority to projects for which
the federal money would “complete an overall financial package.”) These
project proposals will undergo an evaluation of expected project costs
and benefits: USDOT believes that benefit–cost analysis is an important
discipline for surface transportation investment, and applicants are gen-
erally required to identify, quantify, and compare the project’s expected
benefits and costs. In the selection of projects in the first and second
TIGER rounds, no base access projects for BRAC bases were selected
for funding. This is perhaps explained by the requirement that projects
be “shovel ready,” which means that they have cleared NEPA review,
acquired right-of-way, and met other federal eligibility requirements.
Nevertheless, in future rounds of TIGER grants, base access projects
may be selected.
The TIGER grant program has considerably more demand than it
can accommodate. In the first round of TIGER grants, USDOT received
applications for 32 times the available funds. Nearly 1,000 transporta-
tion grant applications were submitted for more than $19 billion worth
of projects, far exceeding the $600 million available from the program
(USDOT 2010).
Environmental Streamlining
The development of transportation projects depends as much on meeting
state and federal environmental requirements as it does on funding. The
Safe, Accountable, Flexible Efficient, Transportation Equity Act of 2005
includes a number of provisions designed to expedite the environmental
review of transportation projects mandated by NEPA.1 These provisions
are designed to improve interagency communication and analysis in
order to meet NEPA requirements in a more timely way than they have
been met in the past. Executive Order 13274 (September 18, 2002),
among other things, empowered the Secretary of Transportation to iden-
tify high-priority projects that deserve special attention by resource agen-
cies required to conduct NEPA reviews and analyses in order to expedite
their review. Streamlining does not bypass NEPA or other federal require-
ments; instead, it attempts to resolve complex interagency reviews and
http://www.environment.fhwa.dot.gov/strmlng/es2safetealu.asp. Accessed Jan. 12, 2011.
1
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enhance communication so that determinations can be made regard-
ing compliance with NEPA and other requirements. FHWA maintains
a website with extensive information about environmental stewardship
and streamlining, including case examples, guidance, and performance
reports.2
stAte AnD LocAL goveRnments
Along with funding some capital improvements, state and local govern-
ments fund transportation infrastructure operational and maintenance
expenses, which account for most transportation spending. From a state
and local finance perspective, the BRAC 2005 round could hardly have
come at a more difficult time. The year-over-year growth rate in state tax
revenues began to slow in late 2005, well before the recent recession, but
then went sharply negative in late 2008 (Rockefeller Institute of Govern-
ment 2010, Figure 2). Although state revenues have begun to rebound,
2010 revenues are forecast to be 14.9% lower in 2010 than in 2008.
Federal aid through USDOT programs discussed above almost exclu-
sively fund capital improvements. Most states have a highway trust fund
that is funded through motor fuels and other user fees, while local govern-
ments rely on a wide variety of taxes to support their transportation assets,
particularly property and sales taxes. The states rely on their trust funds for
both highway capital and operating expenses. The sales tax on motor fuels
provides an index of motor fuel tax revenues; the year-over-year growth
rate in this tax went negative in 2006 and has remained so in 15 of the last
16 quarters (Rockefeller Institute of Government 2010, Table 5), which
caused many states to suspend or cancel proposed capital spending.
Local property taxes have been less severely affected by the economic
downturn in the near term because they depend on reevaluations that lag
swings in market values. Many jurisdictions will experience less revenue
from this source over the next 3 to 5 years as jurisdictions reevaluate. Sales
taxes, which many jurisdictions use to support transit, are still well below
2008 levels (Rockefeller Institute of Government 2010, Figure 3.)
State and local agencies, particularly in the current economy, are
experiencing demand for available transportation funds that far exceeds
supply. Trends affecting the federal trust fund are also affecting sources
of state and local transportation funds. In addition, many states are fac-
ing large budget deficits, which have forced state and local agencies to
reprioritize their transportation projects and eliminate many of them
(AASHTO 2010, NCSL 2010, Ybarra 2008).
http://www.environment.fhwa.dot.gov/strmlng/index.asp#history.
2
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stAte infRAstRuctuRe BAnks
Many of the states with BRAC actions have state infrastructure banks that
could be a source of upfront capital to improve transportation facilities at
low or no interest if a revenue source could be found to repay the loan.
In the case of Fort Bliss, the state is dedicating a share of future federal
surface transportation revenues to pay a developer who financed the
project. Another possibility is for a local jurisdiction or state to dedicate
some portion of existing tax revenues, or raise taxes, to repay a loan from
a state infrastructure bank. Some complexities with this approach are
obvious. Most of the facilities adversely affected by base expansion are
state highways, and local property or business taxes would not apply.
The state could dedicate a share of future highway user taxes to repay the
loan, but, as indicated above, most state transportation trust funds are
inadequate to meet current needs. Given the current status of state and
local finances, the concept of diverting existing tax revenues to a new
purpose, or raising taxes, would be politically unpopular, but such an
approach might be possible in the future for some projects.
imPAct fees
The situation of a sharp increase in base personnel being transferred to
new or expanded facilities is analogous to an unanticipated new, large
private development occurring within a metropolitan region. Typically,
regional leaders would negotiate with the developer and require that
certain conditions be met to ameliorate the negative impacts of the
development, and they often impose fees to offset capital improvement
needs as a result of the development. If developers in such instances are
unwilling to pay the impact fees, local governments can refuse to allow
the development.
Exactions, the on-site construction of public facilities or dedication
of land, have been used for decades.3 Impact fees, a form of exaction,
were instituted in the 1920s as a local financing tool. Where no appro-
priate land was available for a traditional exaction, off-site land or a fee-
in-lieu could be substituted for a dedication. Over time, these fees came
to include capital costs for on- and off-site improvements brought about
by new development. Rooted in the idea that new development should
pay its own way, impact fees increasingly have been used to pay for
improvements traditionally paid for by property taxes. According to the
California State Controller’s Office, fees and service charges account for
See Appendix A, from which this chapter is derived, for a more extended discussion of impact fees.
3
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almost 20% of annual local government revenues. They are generally a
one-time charge on new development by local government as a condition
of approval for a building permit to pay the development’s proportional
share of capital improvements.
New development requires improvements such as roads, utilities,
parks, and schools as well as police, fire, and solid waste disposal ser-
vices. Historically, such improvements were financed with bonds and
local property taxes supplemented by state and federal grants along with
subdivision dedications and fees. These public expenditures were seen as
a spur to private investment. However, a combination of more complex
(and costly) improvements, environmental considerations, a dramatic
decline in federal expenditures on local infrastructure in the 1980s,
and the property tax revolt epitomized by Proposition 13 in California
led local governments to search for other methods of financing needed
infrastructure. Consequently, California has been one of the leaders in the
development of impact fees. Impact fees have grown increasingly popular
with local governments as a supplementary financing source4. Altshuler
and Gómez-Ibáñez (1993) found that approximately 60% of local gov-
ernments used impact fees along with in-kind levies by the mid-1980s.
The legal basis for government intervention in the development
process is its police power to protect the public health, safety, and welfare
of its citizens. Through a series of court cases, a set of standards have
been established on the application of impact fees. These standards apply
to both legislatively imposed and ad hoc fees.
A government entity imposing an impact fee on development proj-
ects must meet several standards (Powell et al. 2006):
• Establish the purpose of the fee.
• Establish the use of the fee, including public facilities to be
financed.
• Show a reasonable nexus between the purpose of the fee and the
type of development.
• Show a reasonable relationship between the public facility to be
constructed and the type of development.
• Show a reasonable relationship between the specific amount of
the fee and the cost of public facilities attributable to the project.
• Account for and spend collected fees only for the purposes
intended, with a provision for returning unexpended funds.
Impact fees on new development have been imposed to make improvements to transportation
4
facilities and corridors, examples of which would be informative in developing an approach that
would work for base expansions (Cooper 2000; Nelson\Nygaard Consulting Associates 2004;
Newport Partners and Virginia Polytechnic Institute and State University 2008).
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Consequently, in most states, impact fees must meet the rational
nexus and rough proportionality tests. First, there must be a reasonable
connection between the need for additional facilities and new develop-
ment. Second, it must be shown that the fee payer will benefit in some
way from the use of the fee proceeds. Third, calculation of the fee must
be based on a proportionate fair-share formula.
A number of elements of the impact fee model can be applied to
BRAC cases. However, the process would require some analytical rigor
to ensure equity among all parties. Moreover, to date, impact fees have
been assessed only at the community level and not at the state level.
Nevertheless, the principles that have been used to structure impact fees
at the local level can be a useful basis for allocating costs resulting from
personnel increases at military bases. To avoid confusion about impact
fees, it should be understood that impact fees are associated with the
costs imposed by new developments; they are not based on the economic
benefits new developments might provide to communities.
Application of the impact fee model requires a traffic impact study.
Following the impact fee model, the first step in the application is to assess
the deficiencies in the existing transportation system before the person-
nel increases in the military bases occurred. The cost to alleviate these
deficiencies needs to be estimated. The cost would not be assessed to the
military. Next is an assessment of the system improvements requirement
to accommodate the additional travel demand resulting from the increases
in military base personnel. The cost to meet these requirements needs
to be estimated. Since the new development contributes some taxes and
fees that could be used to offset some of the cost of needed infrastructure,
these financial payments need to be estimated as well. Finally, the costs of
meeting the additional travel demand due to the new development can be
attributed to the new development based on its share of delay caused by
the new traffic it generates.
Allocating costs of the marginal user in these cases can require a
sophisticated analysis because of the nonlinear impact of added traffic
to a congested route serving a new facility. There may well be network
effects that must be accounted for. In addition, the decision about how to
assign costs is not completely straightforward. The marginal user added
to a traffic stream that causes speed to fall and flow per hour to actually
decline imposes a disproportionate cost on all other users. In the case
of BRAC projects, if the military is the only source of new demand, then
it would be subject to all the costs of improvement. Typically, however,
even congested facilities are experiencing growth from other sources;
even in this situation, there is still a decision to be made about how to
assign costs across classes of new users.
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Funding OptiOns
Whatever analytic process is used to assign costs, it should be con-
sistent with the principles listed below.
• The application of impact fees should be nondiscriminatory. The
military should make the same contributions that a developer
would have to make, if any, including whatever concessions are
routinely provided. Thus, any required fee should be modeled
on how impact fees are imposed on the private sector. If a region
welcomes private development without charging fees or receiving
exactions, then DoD should not be expected to provide support
for transportation improvements for base expansion.
• The military responsibility should extend only to restoring
the level of service to what it was before the new traffic was
added. The cost assigned to the military would be designed to
alleviate the delays its action imposes on other highways, not
to improve traffic flow beyond what it was previously.
• The geographic area of responsibility should be defined by com-
mute sheds rather than some predefined distance from the base
perimeter. Commuters going to and from a military base in a
metropolitan area travel across a dense network of roads, and
delays could be imposed at intersections or along routes that
are more than 1 mi from the base perimeter. Determining these
impacts requires some form of traffic simulation modeling.
• Military cost responsibility should be conditioned on the civil
sector contributing its share. In estimating future delays in a
network as a result of a base expansion, the analysis would
need to factor in future growth resulting from the military base,
along with growth associated with the long-term trend on the
existing network. This future growth in civilian traffic, if any,
would need to be included in assigning cost responsibility. It is
not expected that a DoD impact fee would cover the whole cost
of needed improvements unless it was the only source of future
growth. Future economic expansion along major corridors
as an indirect consequence of base expansion should also be
assessed impact fees.
• Nonlinearities of impacts and costs should be accounted for
and reflected in the impact fee. In allocating costs imposed on
traffic flow, the impact of the last marginal user tends to be the
most disproportionate; thus, assigning the responsibility for this
impact imposes a disproportionate cost. Assigning this cost is a
nontrivial matter because, in theory, the last marginal user before
traffic flow in a congested corridor reverses imposes a very large
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Federal Funding OF transpOrtatiOn imprOvements in BraC Cases
cost. The committee’s recommended resolution of this matter
is as follows: in cases in which expected traffic growth from the
civil sector will complement the incremental growth attributable
to base expansion, the military and the civil sector cost should
be shared based on the projected share of growth on the civil
side and the projected traffic added because of the military.
Assuming that impact fees were paid by the military in BRAC cases,
the process would require careful accounting to ensure that the proper
payments are made and that the funds are used to improve the trans-
portation facilities in a timely manner. It needs to be understood that
the funds from impact fees would pay for a portion of the cost for the
needed transportation improvement if the military is not the only source
of increased demand.
COnClusiOns
DoD PRogRAms
The official DoD policy is that, aside from the DAR program, when
bases impose new transportation demand on surrounding communities,
state and local governments should look to their own and traditional
federal-aid transportation programs for capital and operating funds. The
DAR program is the only capital program for meeting road access needs
outside the base; however, it is too limited to meet the needs of metro-
politan areas experiencing rapid base expansion. The eligibility criterion
of a doubling of traffic, which simply cannot happen on highly congested
facilities, is not appropriate in the metropolitan context. DAR, by statute,
is limited to funding road improvements, even though transit is essential
for meeting demand in some urban locations. Moreover, DAR applicants,
once certified, must compete for funds. Base commanders experienc-
ing rapid increases in personnel indicate that they have higher priorities
for essential facilities on the base, such as barracks. Even when a base
commander supports a DAR application, it must compete against every
other capital item in the MILCON budget. Finally, once a DAR project is
awarded funding, it is available for only 5 years. For localities wishing to
use DAR funding as a component of a larger capital improvement, this
time window is simply too short for local agencies to complete environ-
mental and public participation requirements and secure funding.
Other possible sources of DoD funds to tap for ongoing transporta-
tion expenses, such as transit services, transit subsidies to travelers, and
travel demand management programs include EULs and base O&M and
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Funding OptiOns
employee compensation accounts. Military construction and operating
and maintenance funding are authorized and appropriated for specific
purposes and typically must be used or contractually obligated within
specific time periods. Generally, base commanders are subject to use-it-
or-lose-it restrictions that limit their discretionary use of funding made
available to them.
In addition, the priorities established for use of existing authorized
and appropriated budgets may change during a fiscal year, as emergen-
cies and other contingencies arise. MILCON and O&M funding for base
operating expenses may be delayed or canceled and the funds reallocated
and, in effect, often become the bill payers for such contingencies, par-
ticularly when military missions change or direct military operation or
war-fighting expenses increase.
For a revised DAR or O&M to be relied upon for transportation
management expenditures, it needs to be better insulated or fenced from
competing military priorities and use-it-or-lose-it restrictions, particu-
larly when (a) military funding complements nonmilitary or nonfederal
funding, such as state and local transportation funds, and such outside
funding is subject to planning and other regulatory approval processes
that may exceed the time frame within which the military funding must
be used; (b) outside funding has been committed but projects cannot
proceed if the military complementary funding is rescinded; and (c) long
lead times are necessary to coordinate related and required regulatory
and planning approvals and stability of funding is a necessary prerequi-
site for such approvals.
Options to improve fencing of military funding could include
specific authorization or appropriations language included in the relevant
statutes or accompanying congressional reports, DoD policy statements
creating priority for such funding or increasing flexibility for use by base
commanders, and transfers of DoD funding to other federal entities such
as USDOT, which may have longer time frames for use or obligation of
such funding.
non-DoD funDing souRces
Funding transportation improvements in the current constrained fiscal
environment is challenging. In the slow-growth aftermath of the most
severe recession since the Great Depression, states and metropolitan areas
are finding that they have, and expect, insufficient funds to make needed
and anticipated transportation improvements. Limited federal transpor-
tation funds, and uncertain prospects for a new multiyear authorization
of highway and transit programs, have put greater pressure on states
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Federal Funding OF transpOrtatiOn imprOvements in BraC Cases
and metropolitan areas. The current lack of public support to fund tax
increases or increase gasoline user fees has made this problem even
more difficult. Consequently, states, MPOs, and local governments
have had to prioritize their transportation projects and fund only those
with the highest priority and those for which they can find funding.
Whereas states and regions that benefit economically from the presence
of military bases should contribute to the cost of improving facilities
that the military requires, and may need to reconsider their priorities in
order to do so, the demands of BRAC 2005 could hardly have come at
a more difficult time.
The impact fee model is one approach for sharing costs between
DoD and state and local agencies. Although not a perfect analogy, it is
appropriate to consider DoD in a manner akin to any private devel-
oper who wishes to locate a large new development in a metropolitan
area. In most areas, the developer is charged a fee to cover the costs
of improvements needed to serve the transportation demand the new
project engenders. The developer pays these fees upfront, in addition
to the stream of future revenues it pays in the form of property taxes
and that its users pay in motor fuel and other taxes that directly fund
transportation. Impact fees typically do not charge the full cost of the
improvement to the developer unless the traffic growth attributed to
the development is the sole source of new demand. Typically, growth
from the civil sector is occurring, even on congested facilities. In such
cases, state and local governments that benefit economically from the
location of bases in their regions bear some responsibility for providing
funds for base access improvement projects. Principles for assigning
cost responsibility are provided in the previous section of this chapter.
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Bureau of Transportation Statistics. 2010. Pocket Guide to Transportation. BTA,
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Cooper, C. 2000. Transportation Impact Fees and Excise Taxes: A Survey of 16
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Chu, D. S. C. 2008. Mass Transportation Benefit Program (MTBP). Instruction
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