ICF INTERNATIONAL MEMORANDUM To: From: Jeffrey Ang-Olson and Nita Bhave, ICF Intemational Date: May 17, 2010 Re: RIC Traffic Forecasts ~ Summary of Major Faults ‘This memo summarizes key shortcomings of the DRIC traffic forecasts. Past Forecasts Were Way Off ‘The DRIC travel forecests to date have grossly overestimated both automobile and truck crossings at the Michigan-Ontario border. 29000000 +4000 000 6.000.000 +4000 .000 s20m.000 +10.000.00 3000000 +4900,000 2.900,00 | ° 2004 09 0 fn : ageSee == =4 f . 4 | Frontier Traffic - EIS vs. Actual EIS - Autos = 38% EIS - Trucks 2008 2008 2007 008 2008 630 Sues Suite400— Secramentn,CA $5814— 916-737.3000-— 916-737-300 fx — wow fi comTraffic Forecasts for Toll Facilities are Notoriously Bad Forecasts for proposed new toll facilities consistently overestimate traffic volumes and toll revenue. A study by JP Morgan compared projections against actual toll revenue for 22 new USS. tall roads. In 19 of the 22 cases, the actual toll revenue was less than projected, based on the first two to five years of operation, On average, toll revenue was only about 60% of projected revenue for these 22 facilities. ‘Actual Toll Revenue as a Percentage of Projected Revenue ay 18 am ates Groeney-VA pice OK “raenileComectr- 80 Senge ‘Orenla- FL Corr Feria Grn S17 Sen Josqun iA coat Fea reson Sout Gran Pale ge FL cre 0K Seninae-FL Sem Howton -1% cerita Peta Greaney Hoch F= ura. Tay George en Epes -TX : . = = 12% George 0 8 om oe OTM Source: JP Morgan, Municipal Credit Mor +, “Startup tll roads: Separating winners from losers.” May 10, 2002. TGF intemationa z May 17, 2070,Latest MDOT Forecasts Are Unreal MDOT's latest forecasts for traffic across the frontier assume significantly higher growth rates than in the EJS. MDOT now believes auto traffic will grow 95% between now and 2035, while the EIS assumed just 35% growth over this period. Commercial traffic is now expected to triple by 2035, compared toa doubling forecast in the EIS. Frontier Auto Traffic Forecast Growth Rate Frontior Truck Traffic - Forecast Growth Rate ae os os SSLLESLLLSLL LS | |PLKLLLS SLPS POLL eee aes MDOT Forecasts for Same-Day Auto Crossings Are Faulty ‘The largest component of frontier traffic is same-day work trips. Previous forecasts had assumed these ‘rips would prow in proportion to employment in the SEMCOG or Windsor-Samia area. The latest MDOT forecast departs from that method and assumes same-day work trips will grow in proportion to ‘employment for all of Michigan and Ontario. This is an unrealistic basis for forecasting same-day work ‘rips, and it results in a much higher growth rate than using SEMCOG employment. Michigan + Ontario Source: Exhibit 8, Appendix C — Corridor Growih Assessment, Preliminary Results ofthe Comprehensive Traffic and Toll Revenue Study for the Detroit River International Crossing Project Forecast Refresh and Update: Traffic~ Only Suaumary, Prepared by Wilbur Smith Associates, Prepared for Michigan DOT, February 2010. TOF International 3 : Way 17, 2010MDOT Forecasts for Trucks Crossings Are Overly Optimistic DOT's latest forecasts predict a sharp increase in commercial vehicle crossings over the next six years (10.2% annual growth), followed by strong annual growth (3.1%) between 2015 and 2025. Given the shrinking ofthe North American automobile industry and decline in other manufzcturing in the region, ‘such a sharp rebound in commercial vehicle crossings appears unsealistc. Indexed Forecast Corridor Growth for Commercial Vehicle Crossings i PERE GEER SEER ELE | wo ‘Source: Exhibit 18, Appendix C~ Corridor Growth Assessment, Preliminary Results ofthe Comprehensive Traffic and Toll Revenue Study for the Detroit River Intemational Crossing Project Forecast Refresh and Update: Trafic- ‘Only Summary, Prepares by Wilbur Smith Associates, Prepared for Michigan DOT, February 2010. (One reason for the overly optimistic truck crossing forecast is a change in methodology. In 2004, ‘utomobile-related trade accounted for about 43% of truck crossings. So because this sector isso crucial, the previous traffic studies used a separate forecast of automotive commodities. The latest MDOT forecasts do not break out automotive commodities, and therefore ignore the trends in this key industry. ‘The internal peer review of the latest MDOT forecasts points this out, noting: “The economic projection for the DRIC Refresh aggregated all of the commodity groups, and as such the automotive sector was ‘assumed to grow in line with the rest of the American economy”. " jatemal Peer Review ofthe Comprehensive Traffic and Toll Revenue Study forthe Detroit River Intemational Crossing Projet Forecast Refresh end Update, Appendix D, Prepared by IBI Group for Wilbur Smith Associates, February 2010. IGF inematonal a Tay 17, 2010MDOT Overstates the Job Retention Impacts of DRIC MDOT’s May 1, 2010 Report to the Michigan Legislature claims the DRIC will “help retain 25,000 jobs in Michigan”, This jobs figure is pulled from an old report for MDOT by HLB that relies on traffic forecast developed in 2002. The report assumes that, without the DRIC, bridge traffie congestion will 10W significantly and lead to job losses in Michigan. However, the traffic forecasts used to estimate congestion are now widely off the mark. Moreover, the report does not consider the potential for “Ambassador Bridge expansion to relieve congestion TGF itematonal 3 May 17, 2010