Red-light cameras as money-making devices

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Many transport researchers jumped on the idea of having red-light cameras installed on intersections where running red lights is a common occurrence. They were motivated by the fact that such devices improve traffic safety.

City officials, on the other hand, used these devices to generate millions in revenue. The manufacturer of such devices invested heavily in the campaigns of local politicians who later doled out lucrative contracts to the manufacturers.

Problems arose when the drivers became smart and stopped violating as much resulting in a massive drop in convictions and revenue.

Read more on this below.

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Drivers Stopping Means Red-Light Cameras Don’t Yield Cash Goals

July 6 (Bloomberg) -- Miami, which counted on $10 million in fines from motorists caught on camera running red lights, is planning to furlough some workers in part because penalties didn’t come close to forecasts as drivers began obeying the law.

Houston, where voters banned cameras in November, will receive about $10 million less than anticipated and faces a potential claim from supplier American Traffic Solutions Inc. for canceling a contract. The Los Angeles Police Commission voted last month to let its agreement with American Traffic expire, citing the expense.

Since cameras began spying on motorists in the late 1980s, they’ve faced lawsuits challenging their constitutionality, been banned in voter initiatives and restricted by legislation. That hasn’t stopped U.S. cities from deploying them: The number of municipalities with cameras has doubled to 539 since 2007, according to the Washington-based Insurance Institute for Highway Safety.

“This is about money and not about safety,” Ted Hollander, a Fort Lauderdale attorney who defends people charged with traffic offenses, said in an interview.

Redflex Holdings Ltd., a South Melbourne, Australia-based camera supplier, successfully defended itself against lawsuits challenging its product in 10 states last year and legislation that would ban them in six, according to its annual report.

An Arizona employee of the company was shot and killed while monitoring a speed-detecting camera in 2009.

Enforcement Battleground

“Photo enforcement is very much a battleground,” said Gary Biller, executive director of the Waunakee, Wisconsin-based National Motorists Association, a drivers’ rights organization.

The group’s website lists 10 reasons for opposing cameras, including that vehicle owners who get tickets in the mail may be forced to snitch on friends or family who borrowed their car.

Studies diverge on whether cameras, which have been endorsed by the World Health Organization and the National Safety Council, actually reduce traffic accidents.

A September 2007 review by the National Highway Traffic Safety Administration concluded they reduced fatal side-angle collisions. It also said less-serious rear-end collisions increased as drivers braked after spotting cameras.

“These cameras are never installed as revenue generators,” said Charles Territo, a spokesman for American Traffic in Scottsdale, Arizona. “They are installed with the purpose of enhancing public safety.”

Cost-Neutral Contracts

Most contracts are “cost neutral,” Territo said.

“A city will never pay more in fees than the cameras generate,” he said. “If a camera is contracted at $4,000 a month and it generates $6,000, they pay $4,000. But if the cameras generate $2,000, they only pay that.”

In Florida, where legislation allowed cameras beginning last year, American Traffic donated $159,000 to state-level candidates and committees during the 2010 election cycle, according to the Florida Elections Division. The payments included $64,500 to Florida’s Republican Party and $37,500 to the Democratic Party.

The state, which splits camera revenue with cities, expects about a third less income than initially projected from the program, according to a March report from the Legislature’s research office.

There are 28 class-action lawsuits in Florida against municipalities related to the cameras, said Michael Popok, a partner with Weiss, Serota, Helfman, Pastoriza, Cole & Boniske in Coral Gables, Florida, who represents six cities.

Warning Signs

“If it was really about the money, we’d hide the cameras,” Popok said. “There are big signs warning people that they’re there.”

The lawsuits had a “slightly chilling effect” on the rollout, leading to the lower revenue, said Amy Baker, the Florida Legislature’s chief economist. Territo disagreed, saying 80 communities in the state use cameras.

Miami planned for $10 million from 32 cameras installed this year. Instead, projected revenue is less than $2 million, Mayor Tomas Regalado said in an interview. The shortfall will contribute to a $15 million projected fiscal 2012 budget deficit that may force the city to give employees unpaid days off one day a week.

Miami based its estimate on tickets issued at comparable intersections in other cities, Regalado said. Visibility of the cameras and news coverage led to fewer violations, a 25 percent reduction in accidents and less revenue.

“They worked too well,” Regalado said.

Goldman Investment

American Traffic, which supplied Miami’s cameras, had 19 cities sign up in the first six months of this year, Territo said. The closely held company received an investment in 2008 from Goldman Sachs Group Inc., which remains a stakeholder.

Redflex’s stock plunged 30 percent on May 10 after shareholders rejected a takeover offer from Macquarie Group Ltd. and Carlyle Group, a private-equity firm. On June 17, Carlyle announced it had withdrawn as an investor in Redflex. The firm, which held a 12 percent stake in February, didn’t respond to a request for comment.

Los Angeles has seen a 62 percent reduction in red-light- related collisions at its 32 camera-monitored intersections since 2004 and no increase in rear-end crashes, according to a report Chief Charlie Beck gave the Police Commission last month.

The program would cost the city $2.3 million over three years if American Traffic is kept as the contractor at the same intersections, the report said. Territo said the estimate includes costs not directly tied to cameras and that the contract could be structured so the city doesn’t lose money.

Lapsed Contract

The five-member commission voted unanimously June 7 to let the contract expire. During a public meeting, it cited the department’s $41 million deficit, potential changes in California law that could increase the program’s expenses and the City Council’s boycott of Arizona-based companies over the state’s immigration law.

Houston, which raised almost $16 million in fiscal 2010 with red-light monitors, stopped ticketing in November after residents voted to turn off its 70 cameras by amending the city charter. The city received about $10 million less than expected because of the ban, according to budget documents.

That loss was “one of numerous factors” contributing to a budget deficit for fiscal 2011, which ended June 30, said Janice Evans, a spokeswoman for Mayor Annise Parker.

A judge ruled last month that the vote, where 53 percent of residents favored stopping the cameras, wasn’t valid and couldn’t be used to end American Traffic’s contract.

The company maintains Houston must honor its agreement, Territo said. The city hasn’t decided whether it’s going to resume the program, Evans said.

The unpopularity of red-light cameras has spawned a business in alerting drivers when they may be photographed. Radar detectors linked to satellites and centralized databases can tip off motorists before the shutters snap.

“Public opinion is awful on the cameras,” said Aaron Thomas, a marketing manager at Escort Inc., a West Chester, Ohio-based maker of warning devices. “Everyone’s looking for a solution to get around them.”