California Department of Transportation Transportation Economics California Bypass Study The Economic Impacts of Bypasses Volume 1: Planning Reference FINAL REPORT System Metrics Group, Inc. In association with Cambridge Systematics, Inc. Economic Development Research Group, Inc. HLB Decision Economics, Inc. Judd Associates May 2006 California Bypass Study Table of Contents INTRODUCTION THEORETICAL RESEARCH CALIFORNIA CASE STUDIES HIGHWAY BYPASS IMPACT (HBI) MODEL REFERENCES Final Report Volume 1 - i - System Metrics Group California Bypass Study INTRODUCTION By rerouting traffic around the main streets of small towns, highway bypasses can provide a number of direct transportation benefits, such as diverting unwanted traffic, increasing roadway safety, reducing travel delays, and improving local access for people and goods. While these traffic impacts are well-understood, bypasses also have the potential to impact local economies. Area business owners may fear potential reductions in sales, while civic leaders may look forward to redeveloping downtown or promoting development along the new bypass. California is planning a number of bypasses over the next few years, particularly as the State Highway System matures and bypasses help to relieve congestion in local communities. Understanding the potential economic impacts is particularly important since local stakeholders often raise economic considerations to support or oppose proposed bypasses. Although the California Division of Highways conducted small studies in the 1950s, there have not been many studies of the economic impacts of California bypasses in recent years. The California Department of Transportation (Caltrans) sponsored the California Bypass Study to improve basic knowledge about the impacts of bypasses on small-town economies. The study included an investigation into the economic impacts of recent bypasses nationally and in California. This research is intended to foster better planning and construction of highway bypass projects by allowing the State to: • Develop a better understanding of the economic, fiscal and other closely related social and environmental impacts on communities affected by highway bypasses • Identify factors that can adversely affect the economic health of communities and the development of a standard methodology for the analysis of the economic impacts of bypass projects • Promote better project planning, design and implementation of bypass projects on a statewide basis to minimize adverse economic impacts and to maximize beneficial outcomes of such projects • Consider fully “community livability,” “context sensitive solutions” and “environmental justice” issues in project planning and implementation as they relate to proposed bypass projects. Although bypasses are planned for California communities of all sizes, the study focused on small towns, where bypasses are more likely to affect the local economy. In these settings, disruptions to a few local businesses can result in large impacts. Smaller Final Report Volume 1 - 1 - System Metrics Group California Bypass Study communities also tend to have fewer alternative highway routes, making the addition of bypasses more significant. As part of the California Bypass Study, the project team investigated previously constructed highway bypasses, both in California and other states, on a before-and-after (with-and-without) basis. Information about other states comes primarily from literature reviews, while direct field visits and published data provide substantial information about the California experience. The project team produced a database of four previously constructed and ten planned bypasses in California small towns. From a review of theoretical research and field research in California, the team developed best practices and lessons learned to help Caltrans planners and engineers plan for future bypasses. The project team also developed a spreadsheet tool that helps forecast potential economic impacts for planned bypasses. The Highway Bypass Impact (HBI) Model provides a range of possible impacts for use in discussions with the local community. The project included extensive field work and site visits to ensure that the results reflect the views of local stakeholders and is context sensitive. Summary Findings This report describes what the project team learned about the economic impacts of bypasses and is intended to serve as a reference handbook for Caltrans planners and engineers. In general, bypasses impact the local economy as a function of the type of traffic addressed. Businesses in communities with heavy local traffic or with through traffic that does not stop will not be impacted. Communities that provide services to pass-through traffic are more likely to be impacted. Caltrans planners and engineers, local business leaders, and local governments should consider several issues in planning and designing bypasses: What types of towns are impacted economically? • Highway-oriented towns have a much harder time transitioning their economies after bypasses are constructed than those that cater to local residents or offer tourist attractions. • Towns that serve as residential communities or as tourist destinations can benefit from reduced traffic and improved safety as a result of highway bypasses. Local government and the business community may need to engage in complementary efforts, such as marketing, downtown redevelopment, additional parking, and sidewalk improvements, to take advantage. Final Report Volume 1 - 2 - System Metrics Group California Bypass Study • Towns that serve regional markets by providing services, such as big box retail, automobile dealers, department stores, or hospitals, may experience little or no economic impacts. If a bypass provides better access to regional services, the local economy may actually improve as the town expands its regional draw. • Towns with other economic bases, such as government employment, mining, agriculture, manufacture, etc. are not likely to be economically impacted by bypasses. Which businesses are impacted? • Gas stations and quick service or fast food restaurants cater the most to pass-through traffic. They are most likely to be impacted by the diversion of traffic due to bypasses. • Other visitor-serving businesses, such as motels, art galleries, antique stores, and curio shops, cater more to visitors attracted to the community as a destination rather than those simply passing through. These businesses are less likely to be negatively impacted by bypasses and may find that business improves if the downtown is turned into a destination. • Regionally serving businesses, such as big box retail and departments stores, may benefit from improved access. • Businesses that serve local residents, such as drug stores, banks, and grocery stores are generally not impacted by bypasses. What other impacts occur? • Bypasses often have a short-term (and negative) impact on the local economy, but retail sales often improve in the longer term. However, some communities may never fully recover. • The construction of a bypass may also provide an opportunity for revitalization of the local community. • Bypasses are often promoted as improving pedestrian safety along Main Street. Since traffic accidents involving pedestrians are relatively rare events, Caltrans collision statistics may not reflect improved safety. However, bypasses may improve the perception of safety, which is a benefit in its own right. Final Report Volume 1 - 3 - System Metrics Group California Bypass Study What design features are most important? • Visibility. Negative economic impacts (losses of customers and sales) are likely to be small for businesses that remain visible from bypasses. In some cases, the goal of making downtowns visible from bypasses may conflict with the desire to protect communities from noise and visual impacts. Caltrans can provide some “visibility” for businesses through signage. • Distance from downtown. Bypasses located close to existing downtowns are less likely to hurt local economies. Travelers may be able to see businesses and access times are shorter. • Direct access. Highway interchanges can provide direct access from bypasses to downtowns and existing businesses. However, interchanges can also encourage the development of competition to existing businesses by offering new “prime” locations. • Time savings. The difference in travel time between the old route and the new bypass determines how many vehicles (and potential customers) divert to the bypass. What can Caltrans do? • In the field research, local communities offered several suggestions on how Caltrans can provide signs that may mitigate negative economic impacts. For example: – Caltrans could provide signs indicating services are available at the next exit. Some businesses have offered to pay for signs, but Caltrans districts have raised a concern whether the Department can be involved in “advertising” for specific businesses. – Caltrans could designate the existing route as a “scenic or historic” route to encourage tourist traffic. However, this must fit within the Department’s guidelines for such designation. – A bypass could be designated as a bypass route, while the original route retains the State Route designation. This may conflict with the State’s policy to avoid parallel routes. • The large lag between initial planning and engineering and construction may discourage businesses and residents from believing that a bypass Final Report Volume 1 - 4 - System Metrics Group California