Presentation on Minnesota’s Transportation Needs

Charlie Zelle, CommissionerMinnesota Department of Transportation

February 10, 2014

Health… the peoplethe environmentthe economy

Transportation: A Top Tier Issue

U.S Bureau of Economics: MN ranked 5th among nation’s fastest growing economies

Politico: MN ranked 2nd best state in the nation

What we do today impacts tomorrow:

Population will increase by 1M (2030) Population is growing and changing Truck freight increases 30% (2030) Customers Increasingly value and rely on

transportation options Other states are investing in transportation

Transportation & Economy

50% state highway pavements are over 50 years old

35% of MnDOT bridges are over 50 years old

MN 9th most extreme temperature variations in the nation

Interstates in MN rank 38th in the nation

Challenges: Aging infrastructure, Harsh climate, Heavy use

5

Transportation Finance Advisory Committee (TFAC) $50B in total needs over 20 years, all modes To achieve an economically competitive system

Funding Needs: Need $30B for the state highway system alone Forecasts of $18B capital revenue over 20-years

Risk: Need revenue source(s) that mitigate inflation risk Deferred preservation of roads and bridges increases life cycle costs Federal fiscal outlook increases state’s risk and responsibility

Needs Outpace Funding

20 Year Funding Needs Economically Competitive

System/Mode FUNDING GAP

State Highway System*(Includes bike and pedestrian needs)

$10.0 - 12.0$500 mil- $600 mil AFG

County State Aid SystemCounty System

$9.0$450 mil AFG

$9.0$450 mil AFG

Township Roads $0.5

Municipal State Aid System

Municipal System

$2.0$100 mil AFG

$8.0$400 mil AFG

Greater Minnesota Transit $0.9$45 mil AFG

Metropolitan Area Transit $4.2 $210 mil AFG

Passenger Rail $5.0 - 7.0 $250 mil -$350 mil AFG

Freight - Rail and Ports $0.6 $30 mil AFG

State Airports $0.8 $40 mil AFG

Metropolitan Airports Commission

$0.6$30 mil AFG

Totals $50.6 -$54.6 Source: TFAC 2012

Metro Area Multimodal Vision

8

Loss of purchasing power, due to inflation Increased life-cycle cost Debt ceiling

Financial Risks

9

Timely Investments Drive Down Costs

Life Cycle

Trunk Highway Fund Debt Service Forecast - compared to MnDOT Policy

November FY2013

12

0%

5%

10%

15%

20%

25%

2012 2013 2014 2015 2016 2017 2018 2019

Debt Service Debt Limit

Additional $12B investment over 20 years, yields $31B (average) benefit ROI 2.5

Project types with the highest ROI: ◦ Active Traffic Management ◦ General Congestion Mitigation ◦ Safety Spot Improvements

Transportation is a Good Investment

Return on investment averages 2.5 times that invested

13Source: Smart Growth America Report

Progress with ‘08 Funding

14

MnDOT is replacing or rehabbing 172 BridgesLarge-Scale Bridge Projects Shown – total costs are estimatedDesoto (TH 23) in St. Cloud over the Mississippi River (complete) – $39MRobbin-Drayton (TH 11) of the Red River (complete) – $16.5MHastings (US 61) over the Mississippi River (underway) – $147.8MLafayette (US 52) in St. Paul over the Mississippi River (underway) – $172.4MSt. Peter (TH 99) over the Minnesota River (underway) – $3.5MDresbach (I-90) over the Mississippi River (underway) – $212.8MCayuga (I-35E) in St. Paul over Cayuga Street (underway) – $194.2MSt. Croix Crossing (TH 36) over the St. Croix River (underway) – $280M to $310MWinona (TH 43) over the Mississippi River (beings 2015) – $158.6MSorlie (US 2B) in East Grand Forks over the Red River (begins 2017) – $45.5M to $61.5MBaudette (TH 72) over the Rainy River (begins 2017) – $59.8M to $79.7M Red Wing (US 63) over the Mississippi River (beings 2017) – $160M to $240MNew Ulm (TH 14) over the Minnesota River (begins 2017) – $44.1M to $51.4M

Progress with ‘08 Funding

15

MnDOT is completing other projects as well Major Projects Utilizing Chapter 152 Bonds Shown – total costs are estimatedTH 55 Pavement Improvement from near Kensington to Glenwood - $11.8MTH 60 two-to-four-lane conversion from Bigelow to Worthington - $68.9MTH 169/I-494 Interchange - $170.0MI-90 Concrete Overlay  East of Rochester - $16.3MI-35 Concrete Overlay from near Sturgeon Lake to Mahtowa - $17.3MTH 11 Pavement Improvement from Frontier to Indus - $15.1MTH 23 Mill and Overlay from Russell to Marshall - $21.7MI-35 Bridges in Duluth - $88.6MI-94 Interchange at Albertville - $11.3MI-94 Lowry Hill Tunnel to John Ireland Blvd - $28.0MUS 169 Brooklyn Park - Interchanges, Bridges, etc. - $58.6MBetter Roads Program example - I-35 Maryland to University - $111.0M Flood Mitigation example - Realign Hwy 75; new bridge near Kent - $10.4M

Performance-based design projects (Hwy 169/494, TH100 near Hwy 7) MnPASS Lanes Innovative Construction Methods – Maryland & Hastings Bridges

Both projects benefited from ‘08 (Chapter 152) funding

Adopting new efficiency practices to wisely use state funding, saving money and motorist delays

16 Original bridge Float down the river 9/12/12 Completed bridge Lifted into place 60 hours later

HASTINGS BRIDGE: $120M. New bridge was built next to the old structure to keep the river crossing open to travelers and avoid a 47-mile detour.

Enhancing Financial Effectiveness

◦ MnDOT runs the equivalent of a multi-billion dollar project execution and services business

◦ Focused on being effective, accountable, transparent and efficient

MnDOT Strategic Priority

17

Seek a sustainable, long-term solution Addresses inflation risk Upholds tenets of user pay

Discussions underway Apply general sales tax rate to wholesale gas receipts to

hedge against inflation? Restructure Tab Fees? Redirect sales tax collected on leased vehicles; auto

parts, etc. to non-trunk highway transportation needs? Next generation revenue sources?

Additional Funding Considerations

Thank you

Comments / Questions