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This report is issued to comply with Minnesota Statutes 2013, section 174.12, subdivision 8. (a) By February 1 of each odd-numbered year, the commissioner of transportation, with assistance from the commissioner of employment and economic development, shall submit a report on the transportation economic development program to the chairs and ranking minority members of the legislative committees with jurisdiction over transportation policy and finance and economic development policy and finance. (b) At a minimum, the report must: (1) summarize the requirements and implementation of the transportation economic development program established in this section; (2) review the criteria and economic impact performance measures used for evaluation, prioritization, and selection of projects; (3) provide a brief overview of each project that received financial assistance under the program, which must at a minimum identify: (i) basic project characteristics, such as funding recipient, geographic location, and type of transportation modes served; (ii) sources and respective amounts of project funding; and (iii) the degree of economic benefit anticipated or observed, following the economic impact performance measures established under subdivision 4; (4) identify the allocation of funds, including but not limited to a breakdown of total project funds by transportation mode, the amount expended for administrative costs, and the amount transferred to the transportation economic development assistance account; (5) evaluate the overall economic impact of the program consistent with the accountability measurement requirements under section 116J.997; and (6) provide recommendations for any legislative changes related to the program.

This cover letter accompanied the 2014 Report on the Transportation Economic Development (TED) Program.

This report is issued to comply with Minnesota Statutes 2013, section 174.12, subdivision 8. (a) By February 1 of each odd-numbered year, the commissioner of transportation, with assistance from the commissioner of employment and economic development, shall submit a report on the transportation economic development program to the chairs and ranking minority members of the legislative committees with jurisdiction over transportation policy and finance and economic development policy and finance. (b) At a minimum, the report must: (1) summarize the requirements and implementation of the transportation economic development program established in this section; (2) review the criteria and economic impact performance measures used for evaluation, prioritization, and selection of projects; (3) provide a brief overview of each project that received financial assistance under the program, which must at a minimum identify: (i) basic project characteristics, such as funding recipient, geographic location, and type of transportation modes served; (ii) sources and respective amounts of project funding; and (iii) the degree of economic benefit anticipated or observed, following the economic impact performance measures established under subdivision 4; (4) identify the allocation of funds, including but not limited to a breakdown of total project funds by transportation mode, the amount expended for administrative costs, and the amount transferred to the transportation economic development assistance account; (5) evaluate the overall economic impact of the program consistent with the accountability measurement requirements under section 116J.997; and (6) provide recommendations for any legislative changes related to the program.

This report provides a spreadsheet model for calculating the costs of operating cars and trucks, specifically for use in planning highway projects which change the conditions under which people drive. The specific costs addressed are: fuel consumption, routine maintenance, tires, repairs, and some depreciation. This approach to estimating costs is innovative in several ways. The authors have developed a way to determine the marginal costs of actually driving exclusive of the fixed costs of ownership. They also offer methods for adjusting the costs for different conditions and guidance on how to adjust costs in the future. The authors conclude that in a case of highway driving on smooth pavement at $1.50 per gallon for gasoline, personal vehicles average 17.1 cents per mile to operate and trucks average 43.4 cents per mile. City driving conditions increase these costs by 3.9 and 9.5 cents per gallon, respectively.

Highway capital is a major component of public capital, both in terms of impact on productivity and magnitude of expenditures. The role of highway capital seems especially important in Minnesota, because the per capita investment in streets and highways is significantly higher than the national average. Compared to the national average, per capita spending on construction and maintenance was 58% higher in Minnesota from 1992 to 1996. This study focuses on the benefits of highway capital, especially through its effects on the productivity of Minnesota firms but also on through the benefits Minnesota consumers receive because of increased accessibility. Traditional methods of assessing the significance of investments in roads examine the costs or the use of roads, and not the benefits derived from them. Measures of costs include the size of construction and maintenance expenditure or the cost of replacing roads. Measures of use include vehicle-miles traveled or ton-miles of freight hauled. Quantifying the economic benefits derived from roads is more difficult because benefits must be inferred from macroeconomic effects or choices made by individual firms.

A time series methodology is developed that differentiates the effects of highways on development from the effects of development on highways. This methodology uses pooled time-series and cross-sectional data on highway expenditures and county employment for the 87 Minnesota counties and all 9 economic sectors over the 25-year period 1957-1982 and includes classification of counties based on access, demographic and socioeconomic features. Results from vector autoregressions are tested against modern causality tests of Granger-Sims type. In the wholesale and natural-resource-based service sectors (e.g., tourism), increased highway expenditures result in long-term employment increases. While regionally very substantial, the impacts are distributional, i.e., the statewide impact is negligible. Government role is mostly reactive, increasing funding to counties whose economy is increasing, except in rural areas where government also attempts to stimulate declining economies. Funding decisions are highly sensitive to changes in the economy, especially in rural areas, and (as our evaluation of the Minnesota Department of Transportation [Mn/DOT] project selection process indicates) are primarily influenced by the District recommendation. Further, a new B/C project selection process is developed and tested on highway weight restriction policies in Northeast Minnesota. Both simulation with large 1/0 model and comparison with actual funding decisions made independently by Mn/DOT indicate agreement with our results. An extensive literature review and 175 references are included. This report consists of nine separate publications: an executive summary, the final report and seven appendices.

This is Appendix I for Report 89-11, "Transportation and Economic Development."

This is Appendix II of Report 89-11, "Transportation and Economic Development."

This is Appendix III to Report 89-11, "Transportation and Economic Development."

This is Appendix IV to Report 89-11, "Transportation and Economic Development."