PART II. Best Practices and Policy Directions

In the U.S., the federal motor fuel tax revenues, except for some proportion for national debt reduction, are dedicated to the Highway Trust Fund (HTF). A small proportion of the HTF, about 1.5 cent of the federal gasoline tax, is set aside for transit in the Mass Transit Account of the HTF, and most of it is used for highway expenditure of the state and local governments through federal funds. The state government plays a dominant role in the management of non-interstate highways. They are mostly financed with their own motor fuel tax revenues. Federal funds are also provided to state governments through the Federal Aid Highway program. The program is matched with contributions from the state, usually at 80-20 ratio. The funds are allocated to states based on the formulae that take into account population, area, mileage of highways, needs, and prior share of federal funds.

Local governments play a role in constructing and maintaining local roads and public parking facilities. Unlike state governments, even if local governments have their own motor fuel tax revenues, they finance only a small portion of highway expenditures. With the federal funds granted from upper level governments, local governments finance with special assessments and property tax revenues. These revenues are put together with other local revenues in a general account.

In Japan, on the other hand, some pre-determined distribution rules exist for vehicle-related tax revenues. For example, three fourths of the central government’s gasoline tax revenue are used for national highways and remaining one fourth of them for provincial and local highways. All of the diesel tax revenue are deposited to the general account of provincial and local governments, and used for provincial and local highways.

In Korea, slightly different rules are applied. The gasoline and diesel tax revenues are dedicated to the special account for transport infrastructure. It is allocated only for highways and railways, including urban railways. On the other hand, revenues from the vehicle excise tax, vehicle registration tax, vehicle license tax, and road tax are deposited into the general account of provincial governments. Despite of vehicle-related tax revenue, the local governments have been facing the shortage of funds for transport development.
In Brunei, Hong Kong of China, and Singapore, heavy taxes are levied on passenger cars. Because, however, there is no big demand for highway investment, since available land for highways is not enough, these tax revenues is deposited into the general account, not dedicated to highway expenditures.

Railways are very important in solving urban traffic congestion. Particularly, in large metropolitan areas, the role of suburban railways is very significant since the travel demand is so big that it is not possible to handle them only with highway systems. Many cities in the APEC region have tried to build or improve urban rail facilities. Main problem is how to finance the huge construction cost of railways. In general, the central and local government subsidies are granted for the construction. Particularly, when a new line is to be built, it is general that much of the construction cost are granted or subsidized from the federal/central government which is financed from the road users through fuel tax revenues, etc. For example, in the U.S., some proportion of the Highway Trust Fund is set aside for transit in the Mass Transit Account. This consists of 30% out of total 1994 transit revenues. In Korea, 20% of the central government revenues from motor fuel tax and special excise tax were allocated to the railway expenditures in 1997.

In case of urban metros, even though the central government grants subsidies from 30 to 50% of construction cost in most countries, financing problems are often very serious, particularly in developing countries. For the remaining construction cost, it is general that the very local government levies some specific taxes for certain limited periods. For example, some US cities levy additional sales taxes for urban metro construction.
Another way to solve the financing problem in building railways is to resort to the capital of private sectors. However, it is more difficult to induce private sectors for railways than for roads, mainly because the construction cost of railways is much greater than that of the road and the profits from railway operation are not guaranteed for short-term period.

7.3 Private Financing for Transport Infrastructure

Because many APEC countries have had difficulties in financing transport infrastructures, private sector participation is thought to be one alternative to solve this problem. Since some countries have been experiencing successes in doing so, it is quite worthwhile to review best practices and learn the lessons.

While there are some cases in which the private sector built highways despite of the difficulties, cases in which the private sector has built urban railways are rare. Though there are a few cases where railways have been under construction by the BOT scheme, all of them have been experiencing many difficulties. The main reason is that it costs too much in building railways, particularly when they are underground systems.

We can see typical cases in Bangkok, Thailand. One is the 23km Bangkok Transit System, which was to be opened at the end of 1999. Another is the 60km Bangkok Elevated Road and Rail Transit System, where the existing railway‘s right-of-way has been used. In both cases, they are at-grade railways of which the construction cost is not too high. The private concessionaires have been chosen through the BOT method. On the other hand, for the 20 km Metropolitan Rapid Transit System, which is a wholly underground railway, the construction work has being done by the government. The private concessionaires supply the control, power and rolling stock, then they are given the right to operate it. There is another case in Manila, the Philippines. A 17.8km light rail transit was constructed by a private consortium on the Build-Lease-Transfer (BLT) system. Aside from guaranteeing the lease payments, the government granted 14 hectares of real estate for use as depots and 17 hectares of air space.

7.4 Risk Sharing Arrangement

A risk in a project is defined as the possibility that something bad or unwanted may happen in the process of the project. In general, the more the project costs and takes long time, the higher the risk of the project becomes. Since a transport infrastructure development project needs much cost and takes long periods generally, it has a high risk and, accordingly, the risk management is very important for the successful promotion of the project, especially for the private company.

• 
  Government to take the risk of completing the necessary statutory/administrative processes in time to hand over the land to the franchisee to proceed with construction of the project.
  

• 
  The franchisee to shoulder all market risks, with no financial or any other form of guarantee from Government. The financial risks of cost overrun and late completion will also be borne by the franchisee.
  
• 
  For events causing delay to construction which are genuinely outside the control of the fr­anchisee, the risks are shared between government and the franchisee through an extension of the construction/franchise period.
  

• 
  The franchisee is given the comfort of the prospect of a reasonable return on his investment through the toll adjustment formula, which sets out the objective criteria for determining toll increases during the entire franchise period.
  
• 
  The franchisee can spread his risks under contractual arrangements with his construction contractor and the operator.
  

A pro-active government role is to ensure:

• 
  Effective coordination between relevant government departments to assist the franchisee in meeting his contractual obligations
  
• 
  A level playing field for investors through the establishment of a clear and open tendering system
  
• 
  A clear contractual and legal framework to reduce business risks and at the same time protect the interests of government and road users
  

Manila has been experiencing serious traffic congestion. So the Government has planned some large transport infrastructure projects, encouraging the private sector to participate in them. There are four large transport projects being implemented with the involvement of private sectors. These are: (1) the Metro Manila Skyway by the Philippine National Construction Corp. (PNCC) and the Indonesian-backed Citra Metro Manila Tollways Corporation; (2) the Manila-Cavite Expressway by the Public Estates Authority (PEA) and Renong Berhad; (3) the ‘Pabahay sa Riles’ Tollway by the Philippine National Railways(PNR) and San Jose Builders Inc.; (4) the Light Rail Transit line 3 by the Metro Rail Transit Corp.

Bangkok has been notorious for serious traffic congestion. To relieve the congestion, the Bangkok Government has made massive transport infrastructure development plans. But the problem was how to finance these plans. One solution has been to make the private sector participate in these plans. Actually the private sector in Bangkok has been heavily involved in building and operating railway lines and expressways over almost 7 years.

The private sector has already been involved in the first stage plans of 86km. These plans are classified into three projects. The terms and conditions between private sectors and Government for its progress are quite different depending on the project. The fastest progressing project is the Green line of 24km, which is called the Bangkok Transit System. It is an elevated system with two lines and it connects the inner business districts of Bangkok. Since there is no underground section, the construction cost is not relatively high. It was estimated at US$ 1.3 billion. It is a BTO(Build-Transfer-Operate) project under the auspices of the Bangkok Metropolitan Authority. The private concessionaire was given the right to operate for 30 years after the completion of construction. Construction work began in 1995 and it was originally scheduled to open at the end of 1998, but delayed in some reasons.

The last project is the Blue line of 20 km, which is called the Metropolitan Rapid Transit System. Different from the previous two elevated railways, it is a wholly underground railway. So the construction cost is very high. This means that the private sector cannot take the whole responsibility for its finances. So the construction work has being done by the Government and it is scheduled to open in 2002. The private concessionaire will supply the control, power and rolling stock, and then will be given the right to operate it. The Government will turn over the underground stations, tunnels and depot to the concessionaire for his use during the concession period. The concessionaire will equip the system, run trains, collect revenues, maintain it safely and turn it over to the Government in good order at the end of the concession period.

Ch 8. Integration of Land-Use Planning and Transport Policy

8.1 Approach to Integrated Land-Use and Transport Policy

Urban transport problems cannot be solved by the traditional methods using individual policies without linking land-use to transport policies. The traditional method expands transport space and increases the car-ownership/usage rate. A wide range of agreement is being reached regarding the need for a new approach to problem solving. The approach is an integrated model of land-use and transport based on the sustainable development concept, and the main targets are as follows :

• 
  Decrease of travel demand
  
• 
  Decrease of auto-dependence rates
  
• 
  Choice of energy-efficient transport modes
  
• 
  Fundamental reduction in auto emission gases and noise
  
• 
  Efficient use and maintenance of automobiles for energy saving and pollution reduction
  

Specific policy instruments to attain such targets are diverse, and their relevance differs from level to level of governments. An ECMT(European Conference of Ministers of Transport) report presents such various policy instruments by classifying as shown in , and the key policy instruments are as follows :

• 
  Land-use planning and development control policies
  
• 
  Pricing policies, affecting the use of fuel, car purchase, modal choice, etc.
  
• 
  ITS Technology to raise the efficiency of urban travel systems and promote shift from car to other modes
  
• 
  Commuter transport planning to reduce peak traffic flows
  
• 
  Public transport upgrade policies to increase the efficiency and attractiveness
  
• 
  Policies for pedestrians and cyclists
  
• 
  Policies to suit logistics to urban conditions
  

8.2 Package of Options for Integrated Land-Use/Transport System

The OECD/ECMT presented the following 3 policy packages as alternatives of the integrated policy of land-use/transport (ECMT, 1995).

1. 
   Strand 1: Best Practices
   

A policy package consisting policy instruments which were previously attempted and are widely recognized as effective.

Policy Instruments For Sustainable Development

	Level of Government Responsible for Implementation
	Local	Nation	International
Land-Use Management
Urban containment	+	+
Mixing land use	+
Density standards	+
Parking standards in commercial and residential areas	+
Car-free zones	+
Location of park and ride sites	+
Promoting city-centre development	+
Road Traffic Management
Bypassing sensitive areas	+	+
Priorities for bus, tram and HOVs	+	+
Segregated rights of way for transit	+	+
Commuter planning	+	+
Telematics standard and application	+	+	+
Traffic calming	+	+
Cycle lanes and path	+
Pedestrian facilities	+
Casualty reduction targets		+
Lower speed limits and enforcement	+	+
Environmental Protection
Vehicle noise and emission standard/target		+	+
Lower fuel consumption goal for car and trucks		+
In-use vehicle inspection standard		+	+
Noise screening	+	+
Noise minimising road surface	+
Maximum allowable traffic levels for residential and shopping streets		+
Pricing Mechanisms
Carbon taxes		+
Vehicle purchase tax/annual licence fee		+
Fuel duty		+
Parking charges	+
Transit pricing (subsidy policy)	+	+
Urban road tolls	+
Congestion pricing	+	+

Source: ECMT (1995) P.148

2. 
   Strand 2 : Innovative Policies
   

A policy package consisting policy instruments which were not fully verified on their effect, but are expected to produce effect to a certain degree, considering previous application cases.

3. 
   Strand 3 : Sustainable Development Policies
   

A policy package consisting of new and innovative policy alternatives by which a sustainable urban development concept is differentiable from others. The main aim is to reduce the use of automobiles, fuel consumption, and various emission gases.

• 
  To limit the spread of cities to keep up residential densities and protect open land;
  
• 
  To steer offices and shops to city centers or other locations that are well served by public transport;
  
• 
  To limit the amount of car commuting to new office developments by imposing low maxima on the number of car parking space that can be provided;
  
• 
  To increase the supply of city-center and inner-city homes, as in Portland, Oregon;
  
• 
  To shift the supply of parking from central and inner districts to suburban and exurban park- and-ride interchanges, as Oxford, UK; and
  
• 
  To reserve locations for freight distribution close to the existing transport network (whether rail, water or road).
  

• 
  limiting road investment to bypasses (possibly in tunnels, as in Oslo) of sensitive areas, combined with traffic calming measures and other improvements, such as the provision of parks and open spaces (as in Oslo and Portland), applied to the areas which has been bypassed;
  
• 
  investing in lanes of high-occupancy vehicles, as in Amsterdam;
  
• 
  using reserved lanes and telematics to give widespread priorities over other traffic to trams and buses, as in Zurich;
  
• 
  extending pedestrian precincts and creating traffic cells, as in Gothenburg;
  
• 
  providing improved facilities for cyclists and pedestrians;
  
• 
  enforcing 30 km/h speed limits (or lower) in residential streets and other areas, as appropriate;
  
• 
  using telematics (responsive urban traffic control systems) to minimize congestion, improve air quality and facilitate pedestrian movement;
  

• 
  providing travelers with real-time information about services at all stops.
  

• 
  To tighten regulation to reduce emission of gas and noise from new vehicles;
  
• 
  To introduce progressively lower fuel consumption targets for new vehicles;
  
• 
  To introduce more frequent and stringent tests for emissions from vehicle already in use;
  
• 
  To promote the use of low-polluting buses;
  
• 
  To ban/restrict road freight movement in sensitive areas at night.
  

• 
  To use fuel taxes, vehicle purchase taxes and annual license fees to promote the purchase and use of vehicles with low fuel consumption, as in Italy and France;
  
• 
  To use on- and off-street parking charges to balance demand and supply for road use;
  
• 
  To use toll rings, as in Oslo and Bergen, to pay for new infrastructure;
  
• 
  To make businesses which benefit from improvements to public transport contribute toward the cost of those improvements.
  

• 
  land-use policies designed to promote mixed uses of “urban village” and improved facilities in local centers, as in the UK’s current planning guidance;
  
• 
  new tramways threaded through existing suburban districts, with residential densities raised in the vicinity of stations and new travel attractors located near them;
  
• 
  measures to encourage development around existing transit routes and stations by the offer of more highly permitted densities to developers (density bonuses);
  
• 
  provision of network of foot and bicycle ways with priority over vehicle roads; and
  
• 
  establishment of car-free areas.
  

• 
  To limit urban road construction to serving new development areas and to providing opportunities to improve the quality of public transport, through the provision of extra space for bus lanes and suggested tram and bus ways;
  
• 
  To use telematics to integrate all aspects of urban transport management, to keep demand for road space in balance with supply (through advanced signal control techniques) and to provide a wide array of real-time information services for travelers;
  
• 
  To use area and city-wide traffic calming measures;
  
• 
  To enforcing speed limits using video analysis and recognition techniques and ultimately through the use of speed governors or sensors on vehicles, in order to reduce the risk posed to walkers and cyclists ;and
  
• 
  To oblige employers to introduce commuter plans as in many US cities.
  

• 
  To use an array of regulatory and pricing mechanism to promote the use of low-polluting fuels and low-polluting, city-friendly cars, buses and goods vehicles;
  
• 
  To set deadline for cities, tied to the receipt of national grants, to reach defined noise and air quality goals; and
  
• 
  To use telematics, regulations and engineering techniques to keep traffic levels within defined environmental limits in residential streets and urban roads.
  

• 
  Electronic congestion pricing for city centre and inner cities and other areas where congestion, safety or air quality requires a reduction in traffic; pricing mechanisms could practically eliminate congestion and improve the quality of tram and bus services at the same time; and
  
• 
  The replacement of operating subsides for transit, where appropriate, by user subside, This could be facilitated by smartcard technology.
  

It is designed to influence lifestyles, vehicle design, locational decisions, driver behavior, choice of travel mode, and the length of car journeys. Its aim is to reduce car use, fuel consumption and emissions. All three strands need to be implemented as soon as possible, but the nature of the third strand means that only in the long term will it become fully effective.

• 
  To implement year-by-year increases in the price of fuel to conserve fuel and reduce CO₂ emissions to recommended target levels. These would be set by national governments, but influenced by international bodies such as the APEC, the EU and the UN;
  

• 
  To implement additional taxes on the purchase, licensing and use of vehicle to ensure that road users pay the full external costs of their journeys; and
  

• 
  To ensure that the use of specialized, high-efficiency, low-weight, low-polluting urban cars, vans, lorries and buses becomes the norm in cities.
  

In addition to telecommunication, international air transportation is a critical system to link regional economic activities nowadays. Especially, if an airport can be developed as a hub for the regional air transportation network, it will stimulate economic development of its surrounding areas.

Recognizing the importance of international airports to the future economic development, more and more countries are making efforts in the development of new airports and the expansion of existing airports. In East Asia, for example, China; Hong Kong; Japan; Korea; Singapore and Chinese Taipei, all are making tremendous investments in airport development and expansion projects. It was reported by Business Week in 1996 that 16 big airport construction projects were underway in the Asian region with a total budget of more than US$ 50 billion. These development projects will certainly bring significant impacts to the economic growth and the spatial development of global cities. However, airplane noise and accident risks to surrounding communities have caused conflicts in airport development.

It has been widely recognized that strong interaction exists between land use and transportation sectors, coordination and integration of the two sectors is thus an important task at the planning level for different spatial scales. How to plan and control the land use adjacent to major transportation nodes (ie., rail station, freeway interchange, seaport, and airport) for sustainable environment is a challenging task to spatial planners, particularly the planning and development of areas surrounding international airports. The purpose of airport city planning is to maximize the transportation function of airport and its surrounding area, while environmental conflicts are to be minimized.

From the viewpoint of services provided, an airport city is different from traditional airports in that it is an integrated area of airport service function and urban service function, while only airport services are provided in traditional airports. Three types of airports can be identified according to the service functions provided by the airports.

• 
  Managing environmental conflicts through land use planning
  
• 
  Reserving space for airport growth and development
  
• 
  Improving service functions to support airport operation
  
• 
  Enhancing gateway function by transportation system integration
  
• 
  Expanding urban service function to release development pressure of metropolis
  
• 
  Taking transportation advantage to stimulate economic development
  

The land use planning in airport cities should be to accommodate activities that are needed to enhance or support the airport. Based on the service function, industrial activities related to airport can be ground into three types:

Ring 1 : airport

Ring 2 : land controlled by the airport, boundary of the airport master plan

Ring 3 : outside of airport master plan, but within the radius of 5 km.

Ring 4 : outside of airport, between the radius of 5 km and 15 km.

Ring 5 : area located between the radius of 15 km and 35 km.

With the above five rings, ideally, land uses should be allocated according to the following principle:

1. 
   Residential areas have to be located far away from the airport since residential activities are sensitive to airport noise and airplane safety. Besides, they are the obstacles most difficult to move out for the future expansion. Ideally, a minimal distance of 10 km should be maintained between houses and the airport.
   
2. 
   The airport authority should have more power to control the land development around the airport. Land in Ring 2 within 5 km of the airport should be reserved for future expansion space, and it would be better if they are owned by the airport authority and used by airport-dependent industries.
   
3. 
   In order to attract related industries to locate in the airport city, land located between 10 km and 15 km should be planned for service industries. Labor intensive industries should be located in outer ring of the airport city in order to avoid congestion. If land in this area is not planned for business use, it should be planned for low density uses (i.e. agriculture) so that land can be reserved for future development.
   
4. 
   Land located in ring 5 (between 15 km and 35 km) if not planned for airport related industries, should be planned as agricultural areas, green space or recreation areas.
   

Based on the above planning concepts, the Ministry of Transportation and Communications has prepared a Comprehensive Land Use Plan for CKS Airport Surrounding Area. Figure 1 and Figure 2 show the geographic relation of each administration area in the airport city and the land use plan proposed respectively.