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Traffic camera makers see growth

Despite Ariz. backlash, U.S. market expanding

by Ryan Randazzo - Mar. 20, 2011 12:00 AM

The Arizona Republic

In a bright south Tempe office amid dozens of workers and computers, an employee reviews video of a GMC pickup cruising through the Scottsdale Road and Shea Boulevard intersection well after the signal turned red.

The camera captured a clear picture of the driver's face and plate number, and soon enough, with a few clicks of a mouse and verification from Scottsdale police, a notice of violation will arrive in the driver's Wyoming mailbox.

At the next desk, another American Traffic Solutions Inc. employee watches on his screen as a driver whizzes past the snow-laden sidewalks in Edmonton, Alberta, reviewing the clip to ensure a violation occurred.

Similar scenes played out nearly 3 million times last year, with speeding drivers and red-light runners contributing $150 million in revenue for ATS and millions more for their local law-enforcement agencies.

And that number is growing rapidly as ATS and its competitors expand traffic-camera programs nationwide.

The tremendous growth has come despite a national recession and fierce backlash against photo enforcement in ATS' home state. The company faces proposals to ban the cameras, the governor nixed the state-highway camera program and a driver fatally shot a camera operator working for ATS competitor Redflex in 2009.

"We've gone back and forth about how visible we want to be," ATS Chief Executive Jim Tuton said. "There is a fine line we need to walk. But we are a successful local company."

Tuton launched the first photo-enforcement program in the nation in 1987 when he put a camera along Lincoln Drive in Paradise Valley. The town was trying to slow drivers cutting through suburban neighborhood between Scottsdale and Phoenix.

Growth was slow at first. So slow that in 1999, he sold the camera business to Redflex, only to get back in the business years later, when photo enforcement gained popularity.

In 2010, ATS installed about 500 new cameras nationwide, bringing in revenue of more than $150 million, and it expects to add another 700 cameras to U.S. streets this year.

"We just finished an incredible year," Tuton said. "But safety is the backdrop. This is funded through the violators, so in the end, everyone wins."

Redflex Holdings Ltd., an Australian company with its North American headquarters in Phoenix, also is growing fast. Three-quarters of its business is in the U.S., and it serves Phoenix-area communities including Chandler.

Redflex reported $136 million in revenue last year, up about 4 percent from 2009.

Australia's Macquarie Group Ltd. and U.S. finance company the Carlyle Group have proposed buying the company for about $300 million, apparently confident that despite some backlash, the industry is likely to grow.

Tickets from the now-defunct state program cost drivers a minimum of $165 plus $20 in service charges. Cities charge varying amounts for tickets. Scottsdale's fee schedule includes at least 19 different fines enforced by photo, ranging from $175 to about $360, depending on the violation.

Backlash intense

With a business based on giving people traffic citations, ATS employees expect to make a few enemies, but detractors in Arizona are among the most vocal.

One is Sen. Frank Antenori, R-Vail, who introduced three bills in the Arizona Legislature this session aimed at ridding the state of traffic-safety cameras.

Two of those bills died in the Senate, but a referral that passed the Senate still could send the matter to voters if approved in the House.

"I hate photo radar," Antenori said during a committee session before a vote on his bills. "I think they infringe on several constitutional principles. The first is due process."

Antenori also said he was concerned that some people, such as motorcyclists wearing face shields, could avoid prosecution in states such as Arizona, where a picture of the driver's face is required for a citation.

"They don't provide discretion, where a human being can analyze the situation," he said. "You also have a difficulty having the ability of being able to face your accuser and ask questions. They also seem to be more of a revenue-generating tool rather than a safety tool."

He said he was present when the city of Tucson evaluated its camera program.

"It is not about safety, in my opinion," he said. "It is clearly about revenue and fleecing the motorists out there."

ATS officials said that after years of avoiding most debates over their business, they recently decided to engage their critics, who have proposed similar camera bans in several locations.

"We let the opponents of these things cast themselves as the victims," said Charles Territo, ATS vice president of communications. "The reality is that the only victims are those who are killed or injured when a person runs a red light. More than two-thirds of those fatalities are pedestrians, bicyclists and passengers in other cars, not the red-light runners."

Among the people who testified against Antenori's bills in Arizona are people who lost loved ones in vehicle accidents.

"For those people who get tickets for breaking the law to label themselves as victims, if they want to meet real victims, I'll introduce them to a man who has lost his daughter to a red-light runner," Territo said. "These are people who live in Arizona who are the real victims of red-light accidents. Not some guy who broke the law, ran a red light and got a $50 ticket."

Debate over traffic cameras turned deadly in April 2009 when a disgruntled driver shot and killed a man working for Redflex. The shooter, Thomas Patrick Destories, is serving a 22-year sentence for the murder.

The incident sent a shockwave through the photo-enforcement industry.

"We took that seriously," Tuton said. "I've been doing this 20 years, and we only have had one or two cameras even been shot, and that was the only incidence I know of when a driver was shot. But all it takes is one crazy person."

After the shooting, ATS took extra safety measures with its own drivers to protect them from such an event, and installed video cameras in its trucks to film anyone approaching the vehicles.

Arizona program ends

The year after the shooting, Gov. Jan Brewer allowed a state program for enforcement cameras along highways to expire, which has cost Redflex more than $5 million in write-downs, the company said in its annual report to shareholders.

While most of Redflex's operations are in Arizona, it is a global company.

Camera opponents took the defeat of the Arizona highway program as a major victory. The fact that the market-leading traffic-camera companies have offices here, a camera operator was killed here and the governor buried the state program made Arizona a flashpoint for the public debate over cameras.

"Arizona definitely is a hotspot," said Henry Bentley, a Florida home remodeler who also builds websites.

One of his sites is banthecams .org, where he keeps a collection of news stories regarding traffic-safety cameras from across the country.

Bentley's opposition to the cameras started about a year and a half ago, when he was ticketed in Florida.

"I'm not the smartest guy in the world, OK, and I'm a pretty easy-going guy, but if I get . . . (provoked), I'm like a bulldog," Bentley said.

Bentley said that it appears cities using photo enforcement shorten the length of their yellow lights to entrap drivers.

"I did tons of research," he said. "I've gotten a lot of people on board knowledgeable about what is going on. When people realize all the deception and lies, there is just too much opportunity for fraud. I am totally against it."

He said that if Arizonans get the chance to vote on photo enforcement, he believes they will ban it.

Safety countered

The camera companies counter their opponents by arguing that under the watchful eyes of their equipment, people drive slower and safer, and as a result, fewer people die in car accidents.

They post to websites such as YouTube, showing video, captured by their cameras, of drivers going through intersections and causing accidents.

Redflex even has a video on the homepage of its website showing a pedestrian in a crosswalk violently struck by a rolling vehicle after a car runs a red light. The video and several other graphic accident sequences run in a loop on the site.

The companies tout research from the independent Insurance Institute for Highway Safety, which represents insurance companies, that shows cities with cameras on their streets have fewer fatalities.

The most recent study, released in February by the institute, reported that 14 cities with cameras from 2004-08 showed a 35 percent decline in fatal red-light-running crashes compared with the years 1992-96.

The institute reported that the fatality rate also fell in 48 cities without camera programs, but only by 14 percent.

The researchers concluded that the rate of fatal red-light-running crashes in cities with cameras was 24 percent lower than it would have been without cameras.

That adds up to 74 fewer fatal red-light-running crashes and approximately 83 lives saved.

Critics such as Bentley say that the institute is covertly funded by the camera companies, which the institute denies.

"The entire effectiveness for the institute rests on our credibility," said Adrian Lund, institute president.

The institute relies on its research to inform insurance companies, which have a financial stake in safety: The fewer fatalities from car accidents, the less insurance companies must compensate people and the lower it can make premiums.

If the institute's research determined that red-light and speed cameras did not make roads safer, the institute would publish those results, he said. The cameras do coerce drivers into operating their vehicles more safely, he said.

"There is a payoff here in public health," Lund said. "But one of the reasons we are supported by insurance companies is it affects their bottom line as well. We are kind of unique as an institute. The interests of our member companies are aligned with the public-health interest."

The institute has found that in some cases, red-light cameras increase the number of rear-end collisions, at least initially after the cameras are installed, he said.

"There are two reasons we are less concerned about that," Lund said. "One, it doesn't always occur. And two, the reductions in other crashes are larger, and rear-enders are less likely to involve serious injuries or fatalities."

Other critics charge that the institute supports photo enforcement only because it allows insurance companies to charge higher rates to people who get tickets.

"Their members make more from insurance surcharges," said Craig Peterson of Mesa, the general manager of Radartest.com.

Peterson both sells radar-detection equipment and works as a consultant for the radar-equipment industry, and is opposed to cameras because he says they don't make roads safer.

"Depending on the state, insurance companies can charge you three to seven years on those tickets," he said. "If you have several expensive cars, what was a $200 or $300 ticket becomes a several-thousand dollar ticket with insurance surcharges."

Lund responds to that criticism by saying that the organization doesn't support all laws that lead to more tickets, because some laws, such as texting bans, have not been proven to influence drivers to be safer.

Lund said that the institute did not endorse text messaging on a cellphone while driving, but said that bans had proven ineffective. Photo-enforcement is different, he said, because the cameras change how people drive.

"We are pointed to as a tool of the insurance industry," he said. "In this case, they are disagreeing with the research. Almost no matter what position the data point toward, there will be somebody's ox in there getting gored."

Municipal revenue

One of the most contentious issues for critics of traffic-safety cameras is the money they generate for municipalities and the camera companies.

Arizona's statewide program was widely perceived to be a revenue generator rather than a public-safety program, especially after former Gov. Janet Napolitano predicted in 2008 the system could generate $90 million in revenue in its first year.

"We did not care for the statewide program because we felt it was put in place as a revenue generator," said AAA Arizona spokeswoman Linda Gorman, adding that AAA supports traffic cameras in general.

"The state program was such high visibility, and when it was put in they said they would put in 100 cameras across state. That had a huge impact on motorists. And it was intentionally designed to raise a certain dollar amount. We've never seen in any other instance where a program has intentionally been put in place to raise revenue."

AAA "recognizes cameras as an effective tool to encourage people to drive safer," Gorman said, but the insurance company and auto club does not like to see them replace actual officers or raise funds that are not directed back to traffic safety.

Some officials said it is a misconception that traffic cameras raise lots of revenue for cities. Scottsdale, for example, reported $427,000 in net revenue in fiscal 2009-10 from its camera program, which includes seven intersection cameras and two midblock speed cameras.

The city collected $2.21 million in fines and court fees from photo tickets that year, but paid ATS $1.79 million.

If the city calculated the actual time and expense for the staff to process those photo tickets, and the judges' time spent on the cases, "I believe we'd probably just about break even," Court Administrator Janet Cornell said.

"In Scottsdale, we have pretty much fine-tuned as much efficiency and economy of scale as possible from the program," she said.

Chandler does track the time staff and judges spend on photo-enforcement tickets, and the city reports that in the last fiscal year, its program actually cost $22,500 more than it generated.

Officials from cities that use photo enforcement all said that the programs were aimed at safety first.

"For our police chief, it is first and foremost a safety issue," said Mary Okoye, a government-relations spokeswoman for Tucson.

She said that the cameras free officers to work in the most critical areas.

"It has been shown over and over that increased traffic enforcement has a positive effect on traffic safety," she said. "The use of photo enforcement allows the City of Tucson Police Department to increase its presence in the traffic enforcement arena by enforcing laws without stationing actual officers at the locations where photo enforcement is used."

Chandler Police Sgt. Frank Mendoza said that the city didn't install its cameras in 2001 to generate revenue, and that a ban on them would make the city's streets less safe.

"As you are approaching those intersections, you know (the cameras) are there, so it alerts you," he said. "You know if you are going too fast, you will get popped, so you change your behavior. That is the goal, to change behavior to reduce accidents or the severity of accidents."