Thursday, November 29th, 2007

Ohio Facing $3.5 Billion Road Construction Shortfall

The Ohio Department of Transportation this week unveiled its 2008-2009 business plan. This plan calls for a “new dialogue on how best to determine Ohio’s transportation priorities and identify the fairest ways to finance them”.

Why this new dialog? Basically Ohio is facing a convergence of an over-committed road building program and an inflation rate for new construction that vastly exceeded the previous (ridiculously low) estimates. Typically Ohio overcommits to 20% of projects. This is done so that if one project hits a delay, another project can be slotted in its place. However, the Transportation Review Advisory Council recently over-committed by 47%. On the inflation front, ODOT has experienced 41% inflation in construction costs since only 2004. Prior to 2005, ODOT didn’t even take inflation into account in its construction projections, with a paltry 1% forecasted rate. The commodities boom and oil price spikes, exacerbated by the collapse of the dollar, led to much greater inflation. Add it all up, and Ohio is $3.5 billion short.

In addition to laying this on the table, ODOT has some interesting items in this report. Some of these are of the motherhood and apple pie variety one would expect, but are nonetheless good to read and think about. For example, their new mission statement:

“To seamlessly link Ohio’s highways, railways, transit, aviation and port facilities, the Ohio Department of Transportation will promote a world-class, integrated multi-modal transportation system that is efficient, cost-effective and reliable for all of the state’s citizens, businesses and travelers.”

Multi-modality is a big theme, as is world class. What that means in reality remains to be seen.

Also, they lay out a series of core values. Interestingly, two of them are “High Ethical Standards – We will uphold the sacred duty of telling the truth” and “Financial Responsibility, Efficiency, and Accountability – Money matters. We will be good stewards of the public trust”. I believe there had been some bridge inspection bribery problems in Ohio. But beyond that, this seems to indicate a department that wants to shoot straight with the public about the real cost of projects and state’s ability to pay for them, not indulge in chicken in every pot politics.

There is a lot of other good stuff in there. For example, ODOT is legally prohibited from starting any new major build projects until it completes its entire list of committed “Tier 1” projects. This sounds good in theory, but in practice will put big constraints on the department, especially as the list of uncompleted projects gets smaller. There is a lot more, so check out the full report.

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Topics: Transportation
Cities: Cincinnati, Cleveland, Columbus (Ohio)

Wednesday, November 28th, 2007

Projected Metro Area GDP Growth and Impact of Housing Market

The US Conference of Mayors issued a report with a forecast of metro area GDP growth, along with the projected drag from the subprime mortgage fallout. Below is where some of the cities I covered stacked up. I’m not sure how this was calculated. I’ve run several articles, for example, stressing the severity of the foreclosure problem in Cleveland, but that city is projected to have no impact from it. Caveat emptor.

City GDP Growth Subprime Impact
Charlotte 4.0% (1.0%)
Minneapolis 3.3%
Indianapolis 2.6%
Columbus 2.5%
Milwaukee 2.5%
Nashville 2.5% (0.7%)
Portland 2.2% (0.7%)
Kansas City 1.9% (0.7%)
Louisville 1.7% (0.6%)
Cleveland 1.6%
Cincinnati 1.5% (0.5%)

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Topics: Economic Development

Sunday, November 25th, 2007

Metropolitan Area GDP

The US Bureau of Economic Analysis provides a lot of interesting facts and figures that aren’t so well known to most people. One of these is its analysis of metropolitan area and state GDP. I think it would be interesting to slice this by GDP/person. It’s probably on there, but if not you could easily do the analysis yourself. Here’s a map of percent change in GDP from 2004 to 2005 by metro and micropolitan area.
It doesn’t take a lot of fancy analysis to see that the slow-growing Midwest is near the bottom here. Keep in mind, big driver of GDP is people, so slow population growth translates into slow GDP growth, ceteris paribus. Interesting the Iowa is doing so well, however.

Here is the 2005 total metropolitan are GDP for some of the metros I track.

City 2005 GDP ($M)
Minneapolis 171,361
Charlottee 106,408
Cleveland 99,388
Portland 95,573
Kansas City 91,169
Cincinnati 90,963
Indianapolis 87,645
Columbus 82,745
Nashville 68,639
Milwaukee 73,333
Louisville 50,108

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Topics: Economic Development

Monday, November 19th, 2007

The Real Basis of a Local Economy

The big economic development news in Indianapolis the last couple of weeks was the announcement that Medco would build a mail order pharmacy center there employing 1,300. That was big news in both the mainstream media and the blog world, and articles posted about it drew significant comments.

But I was more attracted to a Sunday Indy Star profile of a much smaller local company called AIT Laboratories [dead link]. This is a lab outfit offering toxicology and other services that employs 160. The online version of this article only attracted four comments.

The profile in itself was interesting, but I also was particularly taken by this passage:

Central Indiana is becoming a hub of specialized laboratory and service companies. Dozens of outfits — from clinical-trial operations to toxicology labs to specialized biological-storage companies — employ more than 6,000 people in Indiana, according to BioCrossroads, a life-sciences initiative that invests in emerging Indiana companies.

This is where the real economic base and future of a city is built. It is in a thriving SME sector of companies like AIT. These companies don’t usually make the headlines. But they are the fundamental base of any economic ecosystem. If Indianapolis is to realize its dream of being a life sciences hub, it won’t be because of a handful of Medcos. It will be because of dozens of AIT’s. Some will succeed, others fail, but this is where a dynamic local economy is built. Cities shouldn’t lose sight of this in the competition for major plants, etc.

Sunday, November 18th, 2007

Quote, Unquote

I noticed this 1964 quotation amongst the many articles written to mark the death of Norman Mailer.

Modern architecture . . . tends to excite the Faustian and empty appetites of the architect’s ego rather than reveal an artist’s vision of our collective desire for shelter which is pleasurable, substantial, intricate, intimate, delicate, detailed, foibled, rich in gargoyle, guignol, false closet, secret stair, witch’s hearth, attic, grandeur, kitsch, a world of buildings as diverse as the need within the eye for stimulus and variation. For beware: the ultimate promise of modern architecture is collective sightlessness for the species. Blindness is the fruit of your design.

Friday, November 16th, 2007

Super-70 Completed

The Super-70 project in Indianapolis has been completed. This was the largest single year reconstruction project in Indiana history at a cost of $175 million. It basically replaced the pavement on I-70 from downtown Indianapolis east to I-465.

I really think highly of this project. So often these projects can drag out year after year, running up the cost in pain to the motoring public. But Super 70 took an entire logical corridor and rebuilt it at once, in a single year. Now the public will enjoy new, smooth pavement and a safer roadway without having to endure any more significant construction.

Projects like Super-70, where things get done in a compressed timeframe, are the way to go. INDOT has done them multiple times now for reconstructions. I’d like to see them take the next step and bring the same approach to expansions and major new builds.

Speaking of reconstruction, this project should bring to a close the era of reconstruction in Indianapolis. Other than the section of I-65 through Eagle Creek Park, and I-865, there should not be any more reconstruction projects in the Indianapolis freeway system that do not add sigifnicant new capacity.

Congratulations to INDOT and Walsh Construction on a superb project.

Sunday, November 11th, 2007

Why Rail Transit Is a Bad Idea for Indianapolis

Update: You can find an overview of a more recent commuter rail proposal here. You can also see a list of pro-transit suggestions here.

[My thinking has evolved since writing this article. I would probably no longer call fixed rail transit a “bad idea”. The question isn’t whether it would be good or bad. Of course it would do good things. The question is, in a city facing enormous problems, is there where you would spend your limited funds? I would probably not do so absent the ability to leverage significant outside financing. Also, I remain skeptical that Indianapolis will ever embrace the land use changes that would be required make transit really work. That is actually the more important part to get right. If Indy make a big commitment to more dense development in a serious way, I’d be more supportive of rail transit. But my first priority would be to create a first class bus system for the core city. I think there are many ways to start doing this right now.]

It pains to me to write this article because I am such a huge fan of public transit and because I know it will put me at odds with many folks I’d normally agree with. Nevertheless, one thing I promised when I started this blog was not to just regurgitate the conventional wisdom, but to call them like I see them. Please note that everything I say here applies to essentially every other similar sized Midwest city.

There has been a lot of hand wringing lately about the impact that the election of Greg Ballard, a noted transit skeptic, as mayor of Indianapolis would have on the prospects for light rail. I’m actually with Ballard on this one. The case for rail transit is dubious at best.

The first thing to consider is the notion of “public transit” itself. What does that mean? If you ask me, it means exactly what it says: transportation for the public. That is, its goal is moving the general public – not just the poor, minorities, the disabled, etc. – from place to place. So many critics of public transit critique it simply because they don’t believe it is a public service but a social service. I do not agree.

But while critics miss on the “public” part, proponents are often equally as wide of the mark on the “transit” side of the equation. If you listen to almost any public transit advocate, the list of outcomes they give for a light rail system has little to do with actually meeting the mobility needs of people. Rather, there is a list of consequential effects that are touted as the real benefit of rail: reducing automobile congestion, renewal of inner city neighborhoods, transformation of suburban development, and helping the environment by reducing air pollution. In effect, rail transit is a means to an end, not an end in and of itself. This immediately puts me on heightened alert.

As someone who actually rode transit almost exclusively for years – I even published a transit newsletter for three years in a previous life – I firmly believe that transit is and should be for riders, full stop, not for all these extraneous outside reasons. I am convinced transit can be justified on that basis alone, even in Indianapolis, but certainly not an expensive rail transit system.

Given the dubious rationales for transit in the first place, it should come as no surprise that the case for it implodes after even a modest amount of thought.

1. Indianapolis follows a highly decentralized development pattern and very dispersed origins and destinations. This makes it a very bad for the point to point or hub and spoke model used by effectively all US rail transit systems and which is proposed in Indianapolis. A rail line from Noblesville to downtown would serve an incredibly limited market: peak period commuters from the northeast corridor to downtown Indianapolis. It would not help someone get from Greenwood to Park 100, for example. It would not link someone from 30th and MLK to the warehouse complexes at the Airport and Plainfield. It would serve Keystone Crossing (including the new Venu development) at all, nor would it cover the Meridian St. corridor in Carmel, which has the second largest office space market in Indiana, accounting for over 50% of growth. In fact, the list of places it would not serve is nearly infinite. The potential market a northeast corridor light rail line could serve would be very small relative to Indianapolis as a whole. Even if it were extended to other spoke lines – say, Franklin to downtown Indy – this would still serve only the downtown market.

2. Transit and the automobile are not good substitutes. Transit works best where autos work worst and vice versa. In fact, good transit adoption almost always requires an auto-hostile environment with extreme congestion, high density, high tolls, and expensive parking. Indianapolis is comparatively lacking in all of these, though congestion is on the increase. However, far from decreasing congestion, it would actually take increased congestion to drive people to transit.

This tension between autos and transit means there is also an inherent conflict between maximizing transit ridership and encouraging people to come downtown. For example, people take trains to downtown New York, Boston, Chicago, etc. because not only is traffic horrible, but it costs $20 to park. Office buildings in Manhattan are built without parking because it is assumed everyone will take the train. In Indianapolis, it has been a city goal to maintain cheap and plentiful parking downtown, including, for example, subsidized parking as low as $1 for Circle Centre Mall, and easy navigation in and out of downtown in order to make people want to come there. Unlike NYC, downtown Indy can’t rely on a mass influx of suburbanites and tourists despite huge inconveniences. Also, even if the city decided it wanted to drive up the cost of parking to make transit more attractive, this would really hurt downtown because even in the best-case scenario there would only be a limited number of rail corridors with service to downtown, unlike those other cities which enjoy 360 degree access to downtown.

3. Rail transit, especially on street light rail, despite the claims of its proponents, typically has very low average operating speeds and longer journey times than commuting by car. Check the Census Bureau stats if you don’t believe me. People look at top operating speeds but forget that a train is stopping frequently, dropping to a speed of zero, which greatly reduces average speed. That’s why commuters in New York and Chicago like to get on express trains and avoid the “milk runs” at all cost – but that usually requires a three or four track mainline to make work, and none of the Indy proposals includes that.

People also make the mistake of judging the speed of rail transit based solely on the time spent on the train. But that’s like saying it takes 45 minutes to fly from Indy to Chicago. That’s only the time in the air. It doesn’t include driving to the airport, parking, taking a shuttle to the terminal, checking in, going through security, waiting around the gate, delays, followed by a similar situation in reverse on landing. Add it all up and it is often faster to drive to downtown Chicago from Indy than it is to fly, because the 3 hour drive time is much closer to the real door to door time for the auto journey. Similarily for transit, you’ve got to get to the train station with some time to spare, then get from your stop to where ever it is you are going. This can often be lengthy. Even a five minute walk to a station – which is extremely close, btw – is about four and a half minutes longer than the walk out to your garage.

4. There is no political will for transit oriented development in Indianapolis. Transit typically best serves dense development within easy walking distance – one quarter to one half mile – of a station. Also, much of the touted neighborhood renewal benefit come from developments near the station. Yet Indianapolis is an extremely low density, auto oriented city. It is predominantly single family homes, with few of the traditional urban storefront districts found in larger cities. That’s not necessarily a bad thing. But it does mean there aren’t ready-made “mini-downtowns” near stations waiting to be redeveloped, thus it would require deliberate densification near stations. I do not believe there is any political will for this. Nothing inspires more fear and loathing in Indianapolis than even modest density. The record of neighborhood opposition to even small scale apartment and condo buildings, even in neighborhoods such as Broad Ripple, suggests neighbors will fight any densification tooth and nail. Even downtown itself, a large and influential segment of the population believes that even much of the regional center should be devoted only to single family homes. To date, these groups have largely gotten various city agencies like the IHPC to go along with their demands, either by rejecting developments outright or mandating reduced density.

Interestingly, the only place where significant densification is occuring is in central Carmel, where Mayor Brainard has withstood enormous heat to see through the approval of projects like the City Center and Gramercy. He believed that the extreme vocal complaining was from a minority, and was willing to bet his future at the ballot box that this was the case. Fortunately for him, and Carmel, he was right. However, Mayor Brainard appears to be alone in being willing to take the heat for something like this.

If the city is going to implement light rail, it must include overlay zoning to mandate transit oriented development – meaning medium to high density, pedestrian oriented development – along the route, with an extended transition area back to low density. I don’t know all the specifics of this, but I believe Charlotte was able to pull something like this off with its light rail line.

5. Indianapolis is not Portland – thank goodness. Much has been made of the Portland experience with light rail. Keep in mind that anything transit advocates believe Portland has accomplished has been done so at the cost of decades of nearly dictatorial government control, including urban growth boundaries, huge subsidies to transit, starvation of road funding, and subsidies to developers who engage in the city’s favored vision. The net result of this is that traffic is worse than in Indianapolis. Portland has come to terms with this and actually wants bad traffic in order to drive people into transit, but this is not the story being sold in Indianapolis. What’s more, Portland is expensive – very expensive. In fact, as far as I’ve been able to identify, it is by far the most expensive small city in the United States in which to live. Much of the highly touted liveability of Portland has come at the expense of making it unliveable, that is, unaffordable, to anyone without a six figure income. The creative and professional classes thrive in Portland because they are the only ones who can afford it, and they are the ones who appreciate the development style the city has tried to mandate. But what about the broad working class? Is there a role for the warehouse or factory worker in this city model? One of the great things about Indianapolis is its affordability to people with a wide range of incomes, and it would a shame to see that lost in a wave of transit oriented gentrification.

6. Indianapolis is not New York, Boston, Chicago, etc. Hoosiers visit Chicago and ooh and ahh the L train. But there area many, many differences between Indianapolis and places like that.

  • Downtown Chicago has well over 100 million square feet of office space, dwarfing downtown Indianapolis in its based of employees and visitors.
  • It is served by the L from all areas of the city, as well as commuter rail lines from all directions into the suburbs. You can safely assume anyone in the metro area can get downtown by transit, something that will not be true in Indianapolis unless 6-8 radial lines were built.
  • The rail lines of Chicago were largely built 100 years ago, when labor was cheap, the ADA didn’t exist, and you didn’t have to spend years creating environmental impact statements. They just went out and built the things. In fact, much of it was built by private money from real estate developmers who wanted their new “sprawl” developments on the fringe opened to transport access. This system could never be replicated today.
  • Office buildings in downtown Chicago are built without parking since it is assumed everyone rides transit. Much commercial development likewise lacks onsite parking, and even residential has fewer parking spots that Indianapolis would feature.
  • Chicago has horrific traffic congestion and expensive downtown parking – and parking tickets.
  • Chicago’s transit system, like that of many other cities, is operationally a shambles and in a perpetual state of crisis. As I write this, the CTA has announced yet another “doomsday” scenario if it doesn’t get more state funding.
  • Chicago is exceptionally dense compared to Indianapolis, and has many neighborhoods that are highly transit oriented, including many where owning a car is almost prohibitive because of the difficulty of parking.
  • Excellent transit service makes it in fact easy to live without a car at all in many places, or for a family to have just one car, saving thousands of dollars per year. Without convenient, walkable neighborhood services – grocery, drugstore, hardware store, etc – the likelihood of this happening in Indianapolis is far less.
  • Notwithstanding its famed L system, more people actually ride city buses than the L, a little known fact.

Also, those citing the South Shore Line as a reason Hoosiers will take transit should keep in mind that the destination of almost all of these people is downtown Chicago. This is not Indiana to Indiana commuting.

7. Effectively anything that can be accomplished through rail transit could be accomplished better, faster, easier, and cheaper through buses. Note how quickly express bus service from Fishers to downtown started up. If it succeeds, it can easily be expanded. If it fails, it can be shut down with little financial loss. Note that the Fishers bus is an express service, something rail would not be able to provide.

Buses do not require the massive up front capital cost of rail. Operating costs of buses are higher, but not as much as you might expect because rail lines require a large number of track and signal maintenance people, etc. that aren’t necessarily visible to the rider. Buses are strategically flexible. If a new development like Venu pops up, or a new area of town starts seeing development, you can easily adjust routes to compensate. That’s almost impossible with rail. They are also operationally flexible. If the bus ahead of you breaks down, your bus can easily navigate around. Or re-route to avoid a construction zone. These are difficult to do with rail lines. It is easier to flex capacity with bus than rail.

What buses don’t give you is the sexiness factor. I believe this is actually a lot of what drives the desire for rail transit. It has a lot to make politicians like it. It is a big, splashy, grand projet. There is lots of money to dole out to the connected lawyers, consultants, and contractors. Like actual pro sports teams, it gives an up and coming town the trappings of a big league city. You can be see to be keeping up with the Jones’. Now I’ve advocated that Indianapolis often fails by not looking at the trends going on in the world. But that doesn’t mean I think the city should mindlessly adopt them. Rather, it needs to understand the trend and what is driving it, look at how it applies or doesn’t in its own case, and consciously, deliberately make a decision on which way to go.

8. Rail transit will not reduce traffic congestion. As I’ve said, effective transit often requires bad traffic to make it work. Even without that, the low ridership projections* and high growth in the northeast corridor means that any diversions from auto to rail would end up little more than a rounding error. Things to keep in mind when contrasting rail and road figures are that transit daily ridership is typically stated as the daily individual boardings cumulatively for the entire line whereas AADT measures only vehicles at a single point on the freeway. AADT does not account for there being an average occupancy per vehicle greater than one, nor does it include any car that ever enters or exits the highway at any point, as the comparable transit number does. What’s more, when rail transit is implemented, the existing bus system is often converted into a feeder network for rail (almost all lightrail systems in the depend on good bus feed and distribution), and at least some of the ridership of rail is people who switched from bus, or induced demand, not new ridership resulting from people leaving their cars behind. And while I’d fully expect the majority of light rail demand to be peak period commuters, since that market to downtown is the only one served, there would still be some off-peak ridership, which would probably contribute little to nothing in congestion relief.

Add it all up and the case for rail transit in Indianapolis is very, very weak. It appears to be mostly a political program, not a transportation one. If the city wants to burn up a couple of billion to build a light rail line just to have one, then I guess that is a choice that can be made. But I’d at least like to see people come to grips with the reality of the situation, including the types of changes the city would have be committed to undertaking to even given rail the chance of being successful. I just don’t see any indication of that happening.

As I said, I do believe there could be a bright future for bus service in Indianapolis. In fact, bus would make a nice pilot for rail. I always advise my clients that they should do a small scale pilot of the business change they want to make before making major capital investments in order to prove the business case. If bus is so wildly popular that rail becomes necessary, then it should be no problem getting the justification and funding to build it. I will leave my ideas for bus transit in Indy for a future posting.

* The studies I downloaded showed 17-18,000 boarding per day for a northeast corridor line, but even if double that, the story wouldn’t change.

Sunday, November 11th, 2007

Pretentious Quote of the Day

“Koons’ offering includes an extraordinary 16-page artwork inspired by his passion for legendary rock band Led Zeppelin. He commissioned a leading cultural theorist to deconstruct the Zeppelin myth, and in conversation with Stella McCartney, discusses the nature of fame, becoming a brand, and…vaginas.” – Wallpaper magazine description of a guest-editor feature by Jeff Koons.

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Topics: Urban Culture

Thursday, November 1st, 2007

Does “Smart Growth” Discriminate?

The American Spectator, a conservative opinion paper, has an essay attacking restrictive land development policies in San Jose, and California generally. Apparently San Jose is now the third most dense urbanized area in the United States. Urban growth boundaries have prevented sprawl. However, they’ve also created a housing shortage, which, as anyone who has ever looked at real estate in California can attest, has resulted in some of the nation’s most expensive and least affordable housing.

What has been the practical impact of this? One side-effect has been a steep decline in the number of black families, despite a general population increase. As the Mercury News reports, the number of black children and teenagers in San Jose has fallen by 25% just since 2000. That’s not all due to outmigration, but some of it is.

I would not be surprised to see a wave of challenges to smart growth policies – as well as others that similarly affect minority home affordability, such as historic districts – on fair housing grounds.

I actually support modest densification in many cases, as well as urban area redevelopment, transit, etc. However, we also can’t just convert our cities into playgrounds for the wealthy and yuppies. The broad middle class and lower income people need to be accounted for in the urban vision. I do have my concerns that traditional smart growth policies end up excluding people who shouldn’t be, so we should look at ways to maintain a large stock affordable housing as part of the overall mix.

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Topics: Demographic Analysis, Public Policy


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