What is a snowball’s chance in 2008-09?
Many public works agencies would like to know. After a killer snow season last year, many officials found themselves tapped out of road salt before January hit. Panic is in full swing this fall, as officials brace for another thick covering of flakes and ice. The salt industry is spinning its wheels trying to keep up with the spike in demand.
“After last year, we had a lot of people who were scared to death about running out of salt,” Dick Hanneman, president of the Salt Institute, told Roads & Bridges. “Their response has been to increase their bets this year, and we have been running domestic supply production at maximum capacity since early last winter, so there is no more to be squeezed out of it.”
Hanneman used a bit of logic to calm the catastrophic predictions. In 2006, he said, salt consumption went from a record high of 20.5 million tons in 2005 to 12.1 million. Usage went back up to 20.3 million in 2007, but on average, the U.S. goes through about 15 million tons of salt a year.
There will not be a shortage of the salt product, but the mines have only so much manpower and are still trying to catch up to the hysteria of last winter.
“The mines are working flat-out, as close to 24/7 as required maintenance and related concerns allow,” said Hanneman in a statement. “[But] the salt industry is concerned about its fatigued workers and scrupulously follows MSHA employee safety rules.”
The salt pipeline has been interrupted this year with four weeks of lock-and-dam closures on the upper Mississippi River, and in some cases a late end to last winter shortened the shipping season.
In addition, a couple of lake vessels have been removed from service and not replaced, putting the Great Lakes region at risk. Major floods and recent hurricane activity also have affected salt transportation.
Then there is the market. Demand for salt is through the roof. According to Hanneman, the bids of five large DOTs upped the ante by 2 million tons this summer. Illinois increased its request 34%, or 421,000 tons, while Wisconsin and Michigan are asking for 351,000 and 279,000 additional tons, respectively.
In response to the extra push, the price for salt has leaped. St. Paul, Minn., officials recently rejected road salt bids as high as $113 a ton. Erie County, Ohio, had just one supplier, Morton Salt of Chicago, submit a bid price of $69 a ton, which is up from $37 a ton last year.
In response to the price hike, many public agencies are scratching initial bid proposals and throwing the fishing line back out two or three weeks later. However, the maneuver has only backfired.
“In Hamilton County, where Cincinnati is located, officials went out and got three bidders on salt and did not like the numbers so they rejected them. They went out to bid again two weeks later and got no bidders and wondered how that could be,” said Hanneman.
The explanation is simple: If a bid is rejected, there are other venues willing to make a deal.
Going abroad for salt is another option, but it will take more time and could be even more expensive.
“I have a feeling a lot of people looking for salt today are going to eventually be able to get the amount of salt that they want. It’s just going to take a little longer to commit,” said Hanneman.
The Salt Institute did release the following tips public agencies may want to follow:
- Form better relationships. Get to know your main supplier of salt on more than just a “call when you need them” basis. Stop by or call and introduce yourself and let them know what is happening with your business;
- Get to know more than one supplier. Forming more than one relationship is paramount to any business where supply could be an issue;
- Review salt practices. Take a close look at your salting process and training procedures and look for ways to reduce salt usage while maintaining quality of service;
- Consider anti-icing. While it will not solve the problem entirely or replace salt, it may help you conserve your supply when times are tight; and
- Buy earlier. Next year consider approaching your supplier before the summer starts.
Bush signs bill to restore Highway Trust Fund
President Bush signed legislation approved by Congress to transfer $8 billion to the Highway Trust Fund. The move allows state departments of transportation to pay their bills and continue hundreds of millions of dollars of construction projects that had been put on hold after U.S. Secretary of Transportation Mary Peters announced that federal-aid payments to the states would be withheld because of a shortage of funds.
American Association of State Highway & Transportation Officials (AASHTO) President Pete Rahn responded to the action by saying, “The American public trusts us to keep the highways, bridges and transit systems safe and usable. A precipitous shutdown of transportation improvements shakes that confidence and negatively impacts our essential partners in the construction industry.”
Following President Bush’s action on the Highway Trust Fund, Peters also released a statement:
“Following the president’s signature of legislation to prevent a funding shortfall in the Highway Trust Fund, $8.017 billion of general funds has now been transferred to the highway account of the Highway Trust Fund,” Peters said. “Yesterday, we paid all current state payment requests, and today we will resume daily payments. While the highway account has been temporarily replenished, we should not delude ourselves into thinking the fundamental problems of transportation funding are somehow resolved. It is imperative that the debate begin now as to the most effective means to finance and improve highways and transit infrastructure in the U.S. Clearly, the current model is both unsustainable and unresponsive to the country’s needs.”
Industry leaders discuss future of public-private partnerships
More than 350 transportation design and construction executives, financial services and consulting professionals and government officials attended the American Road & Transportation Builders Association’s (ARTBA) 20th Annual Public-Private Ventures (PPV) in Transportation Conference Sept. 15-16 in Washington, D.C., to discuss the role of public-private partnerships (P3s) in building transportation improvement projects.
Sessions focused on high-occupancy toll lanes, truck-only toll lanes, the value of risk transfer and future P3 opportunities in the highway, transit and airport markets.
ARTBA Vice President of Policy Alison Black outlined the potential $20-30 billion in new P3 market opportunities that could come with the association’s “Critical Commerce Corridors” (3C) proposal—a 25-year construction program aimed at adding new intermodal capacity to safely and efficiently move goods. ARTBA is calling on Congress to include 3C in the next multiyear surface transportation investment bill.
ARTBA highlighted its P3-related legislative achievements at the federal level and recognized more than 50 industry executives, public agencies and private-sector companies for their outstanding advocacy and leadership in promoting the “practice, use and adoption” of P3s during the past two decades.
Prairie Parkway in Ill. on its way
The U.S. DOT has approved the plan for a 5-mile segment of the controversial Prairie Parkway, and construction could start in late 2009, according to a report in the suburban Chicago Daily Herald. The new portion of roadway would connect I-80 and the Reagan Tollway. The full project, estimated at nearly $1 billion, is planned to stretch 37 miles from Kaneville, Ill., to Minooka.
Environmental groups such as Citizens Against the Sprawlway have fought the plan for years, saying the money could be better spent elsewhere and the road will cause environmental harm and eliminate valuable farmland.
Illinois DOT Secretary Milton Sees said the parkway will reduce congestion, aid the region’s economy and give workers a better way to get to work.
The project would include building a bridge over the Fox River to help commuters get to jobs faster along the corridor.
About $38 million has been spent so far on preliminary engineering and studies, according to the Daily Herald.
Another $182 million has been allocated to build the first 5-mile stretch, purchase land for the entire 37-mile corridor and mitigate the effects of the project on nearby wetlands.
FHWA offers grants to relieve congestion
The FHWA expects to offer $12 million in grants for innovative pricing strategies that relieve congestion under the Value Pricing Pilot Program in fiscal year 2009.
The agency’s selection will first focus on projects that use pricing and are consistent with the DOT’s national congestion strategy, with an emphasis on broader region-wide approaches and congestion relief in major urban areas.
The agency also encourages projects that use pricing in new ways to combat congestion.
More information on the program is available at www .fightgridlocknow.gov.
FHWA does not approve Pennsylvania’s plans to toll I-80
The FHWA announced Sept. 11 that it did not approve an application from the Pennsylvania Department of Transportation and Pennsylvania Turnpike Commission to place tolls on I-80. The agency said the planned use of toll revenues does not meet federal requirements, because there is no basis to conclude that the proposed lease payments are legitimate operating costs.
“Tolling interstates is a viable option for many states to fund highway improvements or to improve performance conditions,” Highway Administrator Tom Madison said. “Because we are legally bound to ensure applications for this program meet all Congressionally mandated requirements, however, we are regrettably unable to approve this application.”
The revised application seeking tolling authority under the Interstate System Reconstruction and Rehabilitation Pilot Program was submitted to the FHWA on July 22. Under the proposal, PennDOT would transfer I-80 to the Turnpike Commission and make payments.
The FHWA said the commonwealth’s application did not meet legal requirements for the correct use of toll revenue. Specifically, the application called for the Turnpike Commission to use toll revenue to pay annual lease payments to PennDOT.
The federal agency noted that while under the program toll revenue can be used for lease payments, the amount of the payment is required to be based on an objective market valuation.
The commission’s application, however, included no information or data justifying the proposed amount for the annual toll payment or establishing that the level was based on an objective market valuation. The agency noted that earlier this year it had asked for just such justification as it reviewed the tolling application. The commission, however, sent no additional information supporting the lease payment level, the agency said.
“There is simply no evidence that the lease payments are related to the actual costs of acquiring an interest in the facility,” explained Madison. “Although we are unable to move the application forward, we stand ready to assist the commonwealth in finding creative ways to address its transportation needs.”
Missouri moving forward to improve 802 bridges
Director of the Missouri Department of Transportation and AASHTO President Pete Rahn has announced that the state will move forward with a new bridge program that will fix 802 of the state’s worst-rated bridges in five years.
The Missouri Transportation Commission has decided that its “Safe and Sound” bridge program, which has been under development for two years and was first planned as a design-build-finance-maintain concept, will be funded through bonding rather than private financing.
The program includes 554 bridge replacements in a single design-build package that will be advertised this fall and awarded in late spring 2009.
The remaining bridges will be contracted using a modified design-bid-build approach, where projects are classified by type, size or location to accelerate construction schedules.
Dueling Colo. amendments
Two contradictory amendments will be on the ballot in Colorado this fall. Amendment 58 would eliminate a tax deduction for the oil and gas industry and use the money for college scholarships, The Durango Herald reported.
Amendment 52, backed by three Republican lawmakers, would take any new revenue from the state’s “severance” tax, which is paid by gas and oil companies when they sever nonrenewable resources from the ground, and direct it to highway construction, with priority going to I-70.
Awards announced for Virginia public-private partnerships in transportation
ARTBA has honored the Virginia Department of Transportation (VDOT), Secretary of Transportation Pierce Homer and Deputy Secretary of Transportation Barbara Reese for their outstanding work on Virginia’s nationally recognized P3s. The three honorees were recognized Sept. 15 at ARTBA’s 20th Annual Conference on Public-Private Ventures in Transportation.
“Virginia is recognized by Forbes.com as the best place to do business in the U.S. and as the best managed state in the U.S. by Governing Magazine,” said Virginia Gov. Timothy Kaine. “I think we can now safely add that Virginia has the best P3 program in the U.S., thanks to leaders like Secretary Homer and Deputy Secretary Reese and the hard-working men and women of VDOT.”
According to ARTBA, these three were honored “for their outstanding advocacy and leadership in promoting the ‘practice, use and adoption’ of public-private partnerships on transportation improvement projects.” Since 1995, the commonwealth’s Public-Private Transportation Act has delivered approximately $9 billion in transportation projects.
“Virginia has consistently led the P3 revolution in the U.S., and these awards from their peers recognize the Virginia leadership role,” said Jim Weinstein, ARTBA Public-Private Ventures Division chairman. “ARTBA is proud of the past, present and future work of the commonwealth in the P3 arena.”
VDOT also was honored as a champion for its 13 years of commitment to P3s, demonstrated by the dedication of resources to major P3 projects including the Capital Beltway and I-95 HOT Lanes, Pocahontas Parkway in Richmond, Rte. 28 in northern Virginia, the Coalfields Expressway in southwest Virginia, and Rte. 460 and Midtown Tunnel projects in Hampton Roads. Thomas Pelnik III, VDOT director of innovative project delivery, and Deborah Brown, VDOT director of innovative finance, were specifically recognized for their work.
-edited by Tara VanTimmeren and Allen Zeyher
