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Thursday, May 27th, 2010

FTA Administrator Peter Rogoff Delivers Tough Love to Transit Advocates

FTA Administrator Peter Rogoff, in a recent address that drew heated debate, gave some tough love to transit advocates by telling them to get over their infatuation with rail, and to focus on maintaining and operating the system we’ve got vs. expanding it.

Rail vs. Bus

Here’s Rogoff on rail:

Supporters of public transit must be willing to share some simple truths that folks don’t want to hear. One is this — Paint is cheap, rails systems are extremely expensive. Yes, transit riders often want to go by rail. But it turns out you can entice even diehard rail riders onto a bus, if you call it a “special” bus and just paint it a different color than the rest of the fleet. Once you’ve got special buses, it turns out that busways are cheap. Take that paint can and paint a designated bus lane on the street system. Throw in signal preemption, and you can move a lot of people at very little cost compared to rail.

A little honesty about the differences between bus and rail can have some profound effects. Earlier I pointed out that our new estimate for the deferred maintenance backlog for the entire transit universe is roughly $78 billion. But you should know that fully 75 percent of that figure is to replace rail assets….. Communities deciding between bus and rail investments need to stare those numbers in the face. Some communities might be tempted to pay the extra cost for shiny new rails now. But they need to be mindful of the costs they are teeing up for future generations.

Rogoff made an overly-glib remark about painting buses that some have pounced on. Clearly, Bus Rapid Transit is more than just a different color paint. But Rogoff is right on that BRT can provide much better service levels than POBS (Plain Old Bus Service) at a fraction of the cost of rail.

And actually, POBS service can be very attractive to riders too, when it operates on appropriately chosen routings, at good frequency and reliability. The Chicago Transit Authority is famed for its ‘L’ system, but it’s a little known fact that its bus network far outdraws rail – to the tune of 100+ million riders per year.

Even New York City, the ultimate appropriate American market for rail transit, is looking to do a lot more with bus. I was privileged to see NYC DOT Commissioner Janette Sadik-Kahn speak recently, and when someone asked her about bus vs. rail, she pretty much said you’ve got to a hard look at bus service because rail timeframes are very long and the costs are very high. Her department doesn’t run transit, but they are doing street projects to make buses operate better. If NYC is making a big bus push, there’s no reason most other places shouldn’t.

Which reminds me that most of the stridently anti-bus positions seem to come from smaller cities, not the biggest cities like NYC, Chicago, or SF where almost everyone rides the bus. But those smaller places are precisely the cities that are least suited to rail. I wrote the reasons why in my 2007 piece, “Why Rail Transit Is a Bad Idea for Indianapolis.”

Of course there are good candidate corridors for rail. New York has several of those underway too. And Rogoff said that as well. But clearly as advocates we need to get over the “bus bad, rail good” mentality that is too often prevalent and take a hard look at what the most appropriate and cost effective way is to make transit happen fast – and to keep is sustainable for the long haul.

New vs. Existing

Here’s Rogoff on the matter of running what we’ve got vs. building new:

I meet with a great many transit general managers. While these meetings are all different, they often follow a certain pattern. I start off the meeting by asking how things are going. They express gratitude for the new Recovery Act funds but then go on to explain that the downturn in municipal revenues, the downturn in sales tax receipts, the cutbacks in the city and state levels, has necessitated service cuts. Sometimes we talk about serious service cuts of 20 percent or more. We talk about: route reductions, layoffs, furloughs, significant chunks of capital reinvestment being deferred as they use Federal capital dollars for preventive maintenance to close operating gaps. It’s all very grim.

But then we get to the second part of the meeting. The consultants start to get excited and the glossy brochures come out. And the next thing you know, the general manager wants to talk about their new plans for expansion — the spanking new rail service to communities not yet served….At times like these, it’s more important than ever to have the courage to ask a hard question: if you can’t afford to operate the system you have, why does it make sense for us to partner in your expansion? If you can’t afford your current footprint, does expanding that underfunded footprint really advance the President’s goals for cutting oil use and greenhouse gases? Does it really advance our economic goals in any sustainable way? Are we at risk of just helping communities dig a deeper hole for our children and our grandchildren? Might it make more sense for us to put down the glossy brochures, roll up our sleeves, and target our resources on repairing the system we have?

Again, some pounced on the point that the feds don’t fund operations, only capital, so there are separate buckets, etc., etc. True – and that’s one reason I wanted to quote the extended passage where he does talk about diverting capital funds to operations. Also, local dollars are fungible and many cities have significant tax levies earmarked for expansion, and/or never established appropriate operating reserves.

Still, I think the critics have a point. Want agencies to stop coming to the FTA with requests for new rail lines when the existing system is collapsing? Stop encouraging that bad behavior. It just so happens one of the major funding programs is called “New Starts.” As the name implies, it can only be used for new service, not for rehabbing existing. If there is money available earmarked solely for expansion, don’t be surprised if people go after it. It’s not like forgoing the application will reduce the deficit. Somebody’s going to get that money.

Interestingly, fully $50B of the nation’s entire $78B repair backlog is accounted for by only the top seven rail operators. The other 690 rail and bus operators combined only add up to $28B, showing how concentrated transit system intensity is in the nation’s largest cities – a political problem right there. Most places don’t have aging rail systems to repair – hence the built in bias for New Starts type programs.

The federal transit funding is extraordinarily baroque. I feel like I’ve got a pretty good handle on the various pots of highway-related money, but transit is a labyrinth of Section 2FX38S-SubchapterJ9 type funding programs, all set aside for different stuff. I know one particular small transit agency that recently spent $300,000 on a study to ask its riders what they wanted while it was gearing up for a major service reduction, and which has a bus fleet with numerous problems like broken air conditioners – just because it could get a federal grant to pay for it. I can tell you want riders want. They want buses…clean, well maintained buses…that come…on time. The money this agency frittered away on a survey would have bought a new bus. What a waste.

I’d like to suggest Rogoff make a major push with Congress to radically simplify this. I don’t know if you need to get to one category, but more flexibility is clearly key. Because as it stands now the core competency of some transit agencies appears to be rent seeking, not transportation. It’s like a lot of non-profits that chase project specific grants that distract from their core mission. We’ve got to stop doing that.

Also, if this is what the feds want, there needs to be a clear policy and set of guidelines that favor “fix it first” and “keep it running.” This means money needs to be apportioned this way. It means money for expansion ought to be tied to a credible, long term plan to sustain the system on an operating and capital basis, and the existing system being maintained and operated appropriately.

And I would suggest that the feds establish a “truth in budgeting” rule. Transit agencies, like most government entities, run their books on a cash basis, with an operating budget and a capital budget. But this means non-cash expenses like depreciation – which is huge in a capital intensive business like transit – aren’t appropriately accounted for. The books look balanced every year, right up to the minute the system falls apart.

Transit agencies ought to aggressively publicize financial statements based on private sector GAAP as a supplement to their governmental budgeting. If we took a look at an income statement that recorded depreciation and such, I think we’d find most transit systems operating at a huge loss every year. This is one way to open some eyes.

Lastly, the feds need to make a huge push on bringing down the sky high prices of transit construction and operations in the US. City Journal just did fabulous article on Madrid’s brand new, low cost subway system. Now City Journal is a right leaning publication to be sure, but many have noticed how US costs are far higher than overseas. Frequent blog commenter Alon Levy posted some figures previously on how even in Tokyo deep bore subway construction is cheaper than in New York. Seoul has gotten some very attractive bids on subways recently. Clearly something is wrong here. I previously addressed this matter with regards to Chicago’s overly expensive rail expansion projects in a previous posting.

The State and Local Challenge

Back to this notion that the answer is to have the feds subsidize operations too, a $2 billion bill to do just that was recently introduced in Congress. As much as I think agencies ought to have the flexibility to use federal funds for operations, a federal operating bailout of transit agencies would be a mistake because it would let state and local government off the hook for all the actions they’ve failed to take to make their own systems better and introduce more rational operations.

Yes, transit agencies have experienced funding shortfalls that they cannot be blamed for because of the recession. However, look all over the place and find a litany of governance and other issues that are clearly within the sphere of state and local control. Consider:

  • New York. Mayor Bloomberg put forward a very sensible plan to implement congestion pricing on bridges into Manhattan in order to provide funds for transit, similar to the very successful London congestion charge. It was shot down in Albany due to the vagaries of New York politics. I don’t know all the details, but apparently some people didn’t like the idea of tolls on the East River bridges that are currently free. Now this failure might not be Bloomberg’s fault – he doesn’t even run the city’s transit agency, the state does – but it is hard to see why, if New York won’t implement a solution that is readily at hand, the feds should take action. Or why if New Yorkers don’t want to pay tolls for New York transit, the rest of America should have to pay taxes.
  • Chicago. The state of Illinois has decided that seniors, even multi-millionaires, should ride transit free, a change implemented just recently and one that costs transit agencies tens of millions of dollars per year. The commuter rail agency, Metra, was for the past decade run by an executive director who had his hand in the till. It continues to operate like a 19th century railroad and resists any innovation fiercely. They refused to accept credit cards until the legislature pressured them to do so. They refuse to install wi-fi on their trains even though airlines can do it on planes and MegaBus can do it on their motorcoach fleet. Again, it’s not clear to me why the federal taxpayers should have to ante up so that wealthy Illinois seniors can ride transit for free and to facilitate obsolete business practices.
  • San Francisco Bay Area. The Bay Area has 26+ separate transit agencies, clearly too many. Muni’s drivers have raises written into the city charter and are guaranteed to be the 2nd or 3rd highest paid in the country, no matter what. They also have the right to a number of “unexcused absences” where they can simply not show up for work or even walk off the job without being punished. Muni’s cost per mile of operation is nearly double comparable agencies. Again, this looks like a region that could do a lot for itself before asking everyone else to step up.

I won’t pretend these are easy problems to solve, but if the feds simply hand these agencies money to get them through the recession, rationality will be even harder to achieve. The pressure of this recession is one of the most powerful forces driving for previously unthinkable state and local government reform. If anything, the feds ought to be delivering a tough message to state and local government that reforms need to happen before money is delivered. We’ve got to keep the pressure on for reform.

Conclusion

I for one hope that Rogoff’s speech does prompt a re-examination of these matters. We should be looking at more bus solutions. We should prioritize fixing it first. We’ve also got work to do at the federal level to encourage good behavior by reforming the funding programs, and to bring down costs. And also at the state and local level to reform the way transit is governed and operated to convert it into the essential public service that it clearly is and needs to be.

Other people had different takes on the matter. You might be interested in what Yonah Freemark had to say over at the Transport Politic and Jarret Walker’s take over at Human Transit.

45 Comments
Topics: Public Policy, Transportation

45 Responses to “FTA Administrator Peter Rogoff Delivers Tough Love to Transit Advocates”

  1. Everett says:

    Woot! Great post, Aaron. Sounds like what the bus transit industry needs are its own glossy brochures and pretty pictures. Sign me up.

    Rogoff’s statements about paint could also easily apply to bicycling infrastructure. With the slow growth (or sometimes stagnation or loss) of population in midwest cities, painting in a few bike lanes on roads that are seeing less traffic anyway is a relatively inexpensive measure.

    I’m not sure what the percentages are, but I thought most of the rail service in the US (as measured per mile) was devoted to freight and not passengers. How much of that $78B transit backlog is for lines that are majority freight and not passenger?

  2. I don’t know for sure, but I believe Rogoff was referring only to rail transit operators. Having said that, some commuter agencies run on shared freight trackage, so I’m not sure how the maintenance breaks down there. I’d assume that the vast bulk if not all of the money is for passenger transit (and excludes Amtrak)

  3. John Morris says:

    Whatever, the logic of BRT vs rail, his comment about saving the systems we have is absurd and points to the core issue. A lot of our current lines should be killed.

    Aside from the old systems that were designed very long ago, what one has is route structures kept alive by political rather than rational economic logic. How many systems change route structures to meet actual demand?

    Many of the new rail projects involve ideas to reconnect rail with transit oriented development and that’s the only thing that will work.

    To be very honest, we have got to get the government or at least the federal government out of this business. Here we have the worst of all possible worlds, a twilight zone, in which socialist/statist medling has now convinced people that no market based system can exist.

  4. David says:

    love Rogoff’s point about painting buses a different color, in DC we have “the Circulator” which attracts tourists, businesspeople, and others who would never ride a Metrobus

    -it has a bike rack in front, which usually goes empty, but looks like it’s there for the targeted demographic

    -the maps use color coded routes, like a subway, not letter-number combos of the traditional bus service

    -the paint scheme is fun with lots of squiggly lines and bright colors, far different than the straight lines and drab color scheme of the metrobus

    -all the routes go in circles, so if you miss your stop, you don’t have to worry about ending up in the ‘hood

    Rogoff’s points might not be very PC, but they are very true

  5. David says:

    “Clearly something is wrong here.”

    Have you ever seen a capital budget for a tunneling project?

    Most of the cost is labor. The excavation equipment costs the same around the world, and has gotten very advanced over the years. But the cap labor costs in the U.S. are much higher than anywhere else, and only rising due to health benefits and increasing market wages for sub-specialties within civil engineering.

    If you could build a Chicago tunnel while paying Manila’s market wages, you would have all kinds of CTA extensions already up and running.

  6. David, from what I’ve seen, only the UK outpaces us on price. Is labor in Tokyo really that much less expensive than the US? Given that our general labor costs are not out of line with the rest of the developed world, often less, the labor issue needs to be addressed – both on the operations and capital side. There’s no reason each commuter train needs three conductors, for example.

    I did not mention Manila, but I should tell you that the CTA’s projects are for elevated sections, not subway. They are still higher on a cost per mile basis than fully bored tunnels in Madrid and Seoul – doesn’t seem right to me. Seoul may have cheaper labor, but Madrid prices are not that much different.

  7. John Morris says:

    “If you could build a Chicago tunnel while paying Manila’s market wages, you would have all kinds of CTA extensions already up and running.”

    The comparison was to places like Madrid and Tokyo not Manila.

    “And I would suggest that the feds establish a “truth in budgeting” rule. Transit agencies, like most government entities, run their books on a cash basis, with an operating budget and a capital budget. But this means non-cash expenses like depreciation – which is huge in a capital intensive business like transit – aren’t appropriately accounted for. The books look balanced every year, right up to the minute the system falls apart.

    Transit agencies ought to aggressively publicize financial statements based on private sector GAAP as a supplement to their governmental budgeting. If we took a look at an income statement that recorded depreciation and such, I think we’d find most transit systems operating at a huge loss every year. This is one way to open some eyes.”

    Dude, my eyes are open and they tell me the entire foundation under our feet, that most people take for granted cannot survive. That’s right, the books look balanced right up until the system falls apart.

    What’s good is that at this point, I think a lot of people see it. My guess is that the next few years will be a great time to build business plans for new fully private operators.

    Two or three years ago, the question “what’s it cost?” or “Why are we doing this?” were only raised at the margins.

    God speed to the Bond Market Vigilantes!

  8. David says:

    “If we took a look at an income statement that recorded depreciation and such, I think we’d find most transit systems operating at a huge loss every year”

    This is a really good point.

    However, the issue isn’t how they’re booking depreciation, but their capex/revenue ratios, which no accounting change can fix. Few private sector businesses can make it if they have to reinvest 30% of revenue on capital expenditures. Large telcos hit 40-50% ten years ago and nearly went bankrupt in the process. Meanwhile, many transit agencies spend around 100% of revenue on capex. Cash accounting reflects this situation well, and the useful lives for many of transit agency assets exceed 30 years, so they depreciate slowly.

    If capex/revenue ratios could ever drop to 20%, you’d have a good argument to bring back privately-owned lines, but that is not going to happen with railcars getting even more expensive, and limited ways to apply mass production techniques to bus and railcar manufacturing like you can do with automobiles.

    WMATA (Wash Metro Area Transit Authority) has an annual capital budget that was cut during the recession to about 80% of revenue – 40% of the cap budget goes to new buses and railcars. Much of the balance is stations, station improvements, maintenance facilities, and signaling/technology.

    The MBTA in Boston spends less on technology, but numbers look similar – 90% of revenue for capex, about 40% of that for rolling stock, with stations and maintenance facilities being the next largest items.

    The economics of transit are remarkably poor, and no politician can change this. These systems are a public good, and I live in a city that has benefited dramatically by building a modern subway that allowed relatively few freeways to built near downtown or major residential neighborhoods. Nonetheless, these fantasy lines out to distant suburbs or underserved neighborhoods would be an excessive drain on taxpayers, and no city councilman is about to come up with a way to mass produce a railcar.

  9. David says:

    “Is labor in Tokyo really that much less expensive than the US?”

    In our area, they’re building an $85 million, 1/2 mile tunnel right now in suburban Tysons Corner, Va as part of the Metro extension to Dulles airport. It took 3 months to go the first 18 feet and they have 70 workers dedicated to just the tunnel. The engineers work for Bechtel, who is the subcontractor on the project. And they are not the Salvadoran day laborers who are building new homes in this area, but experienced civil engineers and construction workers. With benefits, I’m sure they’re easily averaging $100k.

  10. Really well-written article Aaron. Difficult issues with no clear-cut solution for everything.

    Labor costs for construction definitely need to be dealt with. In Milwaukee, you’ll notice the per-mile cost for the streetcar line is going to come in pretty high, a large part of that is going to be because the Department of Public Works is added a lot of work to the line’s construction. That might make some sense given that if you’re going to put the track in and close the street, you might as well fix everything around it. At the same time, those added costs make it hard to evaluate the real cost of the streetcar line.

    Labor costs are still something that amazes me. Recently ran into someone that works for Union Pacific at a bar, and he detailed how each grade-crossing costs $250k to put in. There are 25 crossings on the way into the proposed train station in Madison. That’s going to be some expensive signage.

    Milwaukee is the perfect model for a region that is adding new lines while the bus system crumbles (at least for now). There are proposals to fund transit with a sales tax instead of property tax, we just haven’t been able to win the final state legislative battle yet. At the same time though we can’t stop planning for the future (or the past) to link up the region, while we wait to save what we have. The FTA has instructed planners in SE Wisconsin that the KRM commuter rail line won’t go forward until the bus systems are in order locally. The FTA seems to have the their priorities straight (whether Congress does is another story).

  11. David says:

    “Is labor in Tokyo really that much less expensive than the US?”

    The second leg of Tokyo’s Fukutoshin (I believe that’s foo-kootoshin, not something else, Cubs fans know how say it right) line opened in 2008. It cost 250 billion yen for 10 km, this works out to 25 billion yen per km, 280 million dollars per km, or about 450 million dollars per mile. Dulles Rail Phase 1 here is going in for 2.7 billion dollars over 11 miles, or just over half the per mile cost.

    This does not suggest it’s any cheaper in Japan.

  12. Everett says:

    So, I think everyone here is familiar with Spain’s success with rail and Portland’s success with bicycling. Are there any equivalent cities that have well-run bus transit systems that are worth bragging about? Maybe something air-conditioned, environmentally friendly, vaguely stylish with wi-fi?

  13. David says:

    “the labor issue needs to be addressed – both on the operations and capital side”

    here’s the problem, rail is terrible from a capital cost standpoint, bus from an operational cost standpoint

    the capital cost estimates for the 2nd Avenue subway line in NY have risen 7% a year since the late 30s, way ahead of inflation – the problem is capital labor cannot be automated like operating labor has been, so you get the same number of people but with higher wages for specialized knowledge

    I recently did a study of power plant construction, and it takes about the same number of workers per megawatt now to build a power plant as it did to build Hoover Dam 80 years ago, where workers were paid a few bucks a day. Hoover Dam had a capital cost of 24 dollars per kilowatt, a modern plant costs about 2500 dollars per kilowatt, about the same 7-8% annual increase seen in capital costs for subway construction and well ahead of inflation. This economic challenge confronts not just rail, but road construction as well.

    So while rail is rough on capital budgets, buses are rough on operating budgets. In DC, WMATA handles 800,000 metrorail pax a day with 500 drivers, so that’s 1,600 daily riders per rail driver. Metrobus handles 450,000 riders a day with 2,000 drivers, or just 225 daily riders per driver. Farebox revenue on the bus doesn’t even cover the drivers’ compensation, never mind cost of the bus, maintenance, etc.

    In most cases, the alternative to bus service is not rail, but welfare payments to the bus riders who can’t afford cars to get to work. So it’s a subsidy most governments and taxpayers are willing to pay. And a different paint color is pulling in a different demographic to the bus here in the DC area. But cap labor construction costs are going to continue to outpace inflation, because many of the specialized engineering skills are scarce resources, and growing more so over time. Therefore, both new highway and heavy rail construction will be limited over the next few decades, and there is no political way, left or right, to get around this economic reality.

  14. A couple of comments here that I’ve made on other sites.

    1. This type of thinking can not be done in a vacuum. I think its a terrible mistake to have transit agencies alone be thinking about how they can do more with less. I think regional transportation systems have to think this way. And that is the rub. Rogoff can control who comes to him with money, but he doesn’t have control over highway spending or local road construction or utilities management that deals with land use decisions. There are a lot of flex funds that the MPO has control over that only go to roads. Sometimes we blame the feds, but the locals can be worse with their money in terms of multi-modal thinking. But ultimately my belief is not that Rogoff is wrong in some senses, but rather that he is just passing the buck. The federal government should be more involved in helping regions (the nation’s largest generator of economic output) find solutions to major network issues. By telling everyone they can run buses instead he’s just switching the funding onus locally and ignoring the transit hierarchy and differences in modes that contribute to development patterns and regional transportation patterns. Build less (or even more) capital intensive bus systems and you get higher operating costs which exacerbate the local funding issues that agencies are complaining about. Hartford’s new BRT line is going to cost $65M a mile. Portland managers have told me on many occasions that they were able to expand bus service (before the downturn) because of the amount of money they saved on operating from the light rail trunk lines. I’m completely with Jarrett on this one that you have to fit the transit mode to the need. There are needs for buses, but if anything Rogoff is perpetuating this bus vs rail mentality that I’ll admit I’ve been guilty of in the past.

    2. While it’s easy to pick on politics as the reason some of these systems are inefficient and have too many lines. People vote for representatives and those folks represent their constituents interests. It happens for roads with suburban developers and it happens for transit agencies who have bus lines (or stops in the case of SF) that if they cut them, they will get major heat. This is a product of our democracy. Again, the vacuum thinking is somewhat naive.

    3. When was the last time you saw a highway go through as many hoops to get funding as a rail line? Never. Because the funding for new highways is 80/20 and it’s like free candy. Make those hoops the same and we’ll see more balance in funding.

    There’s a lot to think about from your comments Aaron but here’s a link you’d probably want to see. I also want to say that I enjoy the ability to have a real discussion about these issues on the blogosphere. This is something the traditional media would never dive into in depth.

    http://www.fta.dot.gov/funding/grants_financing_263.html

  15. John Morris says:

    I went to the Rebuilding the Cities That Built America Conference in Youngstown and the honest comments from the Federal Highway Administration, HUD, and EPA folks were like an ad for the Glenn Beck show. “We never talked to each other before.”; “We are now having staff input in our meetings.” “Highway, never knew what housing was planning_ and the like.

    Seriously, I do think we are reaching a moment at which some comprehensive dialog could be happening and the government going broke has got to be the main reason. More projects are going to need higher levels of private money, local tax revenues, fare revenues and thus a higher level of input.

    The problem now is that the base of knowledge about real rational urban development and urban economics is now so shallow in the U.S.

    The bullish thing is that as bad as transit economics can be, highways usually are worse. Sooner or later this will matter.

  16. David says:

    “When was the last time you saw a highway go through as many hoops to get funding as a rail line?”

    It’s worse for highways. Dulles rail sailed through compared to the DC Beltway expansion, which is being financed privately and will be heavily tolled. Same for the Maryland ICC.

    Dulles rail itself is partially financed through revenue bonds tied to toll collections on the roadway which runs adjacent to the planned rail line.

    Also, regarding the blogosphere. The level of conversation here beats any National Building Museum discussion, DoT seminar, PBS documentary (ok, just about anything beats those) or otherwise. Someday I hope to update my blog as frequently as you and Aaron do!

  17. Roland S says:

    Okay… in the 95% of the country that isn’t immediately around DC, highways are easier to build than transit lines. I admire the capital region’s commitment to good bus service, rail service, bike lanes, and other sustainable infrastructure – they would rather see the Purple Line built than solve the region’s biggest highway bottleneck (the American Legion Bridge).

  18. the urban politician says:

    Great post, Aaron.

    I couldn’t agree more.

    I would also like to add, since it wasn’t mentioned here (although you have discussed this extensively) that funding for maintenance of transit systems should also be accompanied by promoting density along transportation corridors.

  19. John Morris says:

    Um, well hello–that’s what I’ve been saying. By the way, this is not something highways can do. Transit when done right is the gift that keeps on giving in terms of maximizing revenue and useability per square foot. With highways, the road is just the start of your problem. But we are dumb enough to build subways to stadiums or limit the heights of buildings along a line to 3 stories or keep the vast parking mandates.

    How many cities have “invested” (check out poor Flint, Michigan) hundreds of millions in subsidised parking garages”. Now a lot of these are for sale.

    It would be pretty easy to construct profitable concepts, after the statist parking/road system collapses.

    The cutting edge of transit is more about land use and less about capital investments.

  20. Kyle Davis says:

    Hmmm…
    A few things:
    Inter-Urban. Not too many have remembered this phenomenon, but basically cheap, efficient, passenger rails between many different cities in the states. However; those that don’t remember them are taught about them in school, so of course, people will want to hearken back to cheap, dependable, reliable mass transportation. The only thing is, those lines have been paved over or dug up for bike trails.

    Bike trails-I bike everyday to work, rain or shine. Bicycling is a good, one-person, no freight sort of travel. I do carry all of my freight (laptops, some heavier than others) on my back. However; I can’t justify bicycling all the way from my home to where I work, for it is too far, and we have winters here that can be harsh at times.

    Busses-, more specifically, busses that had replaced the inter-urban lines.

    The local bus company is inept, and too top-heavy. Might I suggest to you, in areas with really reliable bus transportation, that there are at least 10 bus drivers, and 10 busses per every 1 administrator that does not drive a bus, but drives a desk.

    I can’t tell you how many vehicles are owned by the local bus company that AREN’T BUSSES. NOR ARE THEY EVER MEANT TO PROVIDE MORE THAN 4 PEOPLE A TRIP!

    Unfortunately, it is becoming too common-place in American society today. Everybody wants to be a manager and drive a desk. NOBODY wants to be a bus driver and drive a bus. So, yeah, I guess you could say, I am for bus drivers themselves getting cost of living raises, and performance bonuses for punctuality, etc. I will steadfastly argue AGAINST upper echelon administrators who make six figures running quasi-governmental agencies like public transportation ones into the ground at getting cost of living increases OR performance bonuses.

    Unfortunately, when more money gets spent on nbp (non bus personnel) the busses start to deteriorate, along with the quality of the bus service provided. Then, the public starts to equate bus transportation with something of a “third world” feel, instead of it’s rightful place in polite and decent society, and want to replace it with the glitz and glamor of new light rail, or mono rails, or what have you, instead of looking too closely at the ultimate cause of the problem, and that would be administrative greed.

  21. Thanks for the great comments, everyone.

    David, I had in mind for example the 7 line extension in New York as one that is much higher in cost per mile than the Tokyo extension.

    I think there are two other things that drives costs higher in the US:

    1. Standards are set without regards to cost.

    2. The US ecosystem of rail contractors is very small and they have a structural incentive to keep costs high. In particular, there is one engineering/consulting company that dominates large scale rail planning and design. We should look at ways to bring in more foreign expertise and bidders to inject competition.

  22. Adrian says:

    Buses are cheap because the road has already been built and paid for by some other agency. That doesn’t mean that buses really are cheap, it means the accounting system can’t deal with the cost-shifting involved in providing roads.

    Bus advocates should be forced to include a proportion of the road-building and maintenance budget in their proposals.

  23. Alon Levy says:

    David: the Fukutoshin Line had to go more than 100 feet underground, crossing under multiple older subway lines in a dense urban environment. The appropriate US comparison is Second Avenue Subway, whose current budget is $1.7 billion/km (=$2.7 billion/mile), or perhaps San Francisco’s Central Subway, at $1 billion/mile.

    Outbound extensions like Washington’s Silver Line do not have to cross under as much infrastructure, and are therefore much cheaper to build. Brussels, Paris, and Madrid have all built such lines in recent years, in denser areas than Fairfax County, for costs ranging from $90 to $200 million per underground route-mile.

    Aaron: part of Rogoff’s argument about depreciation and capex backlog is made moot by the way buses get other agencies to pay. The damage buses do to the pavement is significant. A 20-ton bus causes about the same road wear as 10,000 2-ton cars; some cities have begun replacing asphalt with more resistant concrete at bus stops, in order to reduce maintenance costs. This is different from the situation with rail, where all maintenance costs are on the agency’s books. Effectively, what Rogoff is saying is that the current accounting rules make bus improvements look more cost-effective.

  24. Wad says:

    As I’ve said on other sites that touched Rogoff’s topic, his finger-wagging is misdirected.

    The problem isn’t transit agencies getting in over their heads. The transit agencies are responding to the incentives given.

    When FTA makes any kind of funding available, just about every transit agency declares a need for that money. If a need didn’t exist for the grant money available, the need will be created.

    The FTA itself reduces transit agencies to circus seals.

    To change this attitude, the process must be reformed.

    The capital chase could be reformed through a national infrastructure bank. Right now, an FTA New Starts grant is framed as “free money” to bring in a project. The consequence is that the least cost-effective projects are in the areas that would generate the highest ridership and lowest operating and life cycle costs (places like New York, Los Angeles, Chicago and San Francisco). For the grant winners, the problem becomes integrating the existing systems around the grant rather than the other way around.

    Second, for vehicles, FTA should move to a leasing system rather than making grants for agencies to buy vehicles. Offloading heavy assets has become the norm in the private sector. This takes the depreciation off the transit agency’s books and puts it on the fleet owner’s. This provision applies more to buses; with rail systems, it makes less sense since rail systems are custom-built and there would be no secondary market for railcars.

  25. anonymouse says:

    FTA-organized leasing sounds like a bad idea: it discourages agencies from trying something new or different, like different fuels or propulsion technologies (CNG, LNG, fuel cells, hybrids) or trolleybuses.

  26. Leasing is often done for financial statement engineering reasons and doesn’t necessarily deliver any real value. The real question is whether you could generate actual economic value from the transaction. For example, does the lease include outsourced maintenance at a lower cost? Can the lessor depreciate the asset on its taxes? The latter used to a reason transit agencies did sale/leaseback transactions on their capital stock, but I believe the feds have cracked down on this practice.

  27. carphobe says:

    Rogoff’s second statement here could be stated identically about roads/DOTs.

    Unfortunately, transit system costs and efficiencies are more easily scrutinized than the public and private costs of roads, driving, parking, oil spills, sprawl, wars, and all the other costly externalities our car-culture actually causes.

  28. Steve Yaffe says:

    My take is that Ronald Reagan deformed transit funding to shift the focus to politician photo-ops every time a new service opened. The thrust became oriented only toward capital funding – new buses, replacement buses, gifts from the great Patron, which led to Earmarks and New Starts. The Reagan administration tried to cut out operating subsidies entirely.

    If I were President Pickwick, the feds would partially support transit operations and New Starts (when the need and logic was proven), but most capital support would be folded into operating. Operating budgets would be required to amortize new and replacement bus purchases and anticipated bus rehabs. Transit capital budgets would be for facilities and system rehabs, either based on bonding (pay subsequent) or investments (pay in advance).

  29. John Morris says:

    “The FTA itself reduces transit agencies to circus seals.”

    Who could turn down a pile of “Other People’s Money”, especialy if you know other people are grabbing for yours.

    Look at Pittsburgh’s North Shore Connector,(It’s a bad investment now because of the stadiums and other single use facilities) a project that almost nobody thought was the best use of resources. The bottom line was it was about the only thing that the Feds would fund.

    With help like this, it really might be best if they got lost.

  30. M1EK says:

    Awful post, and awful sentiment, especially the “small cities want rail – look how stupid they are!” thread.

    Those small cities (i.e. Not New York Or Chicago) are trying to get people to get out of their cars. The population of involuntarily transit-dependent commuters is small and powerless; and there are effectively no voluntarily transit-dependent urbanites to help fill the gap.

    And, no, a better-bus solution doesn’t help one bit in getting people to leave their car in the driveway – because that better-bus isn’t going to have its own lane (this is the US, not Brazil); and even when it does, it’s going to be its own lane in a useless part of town (i.e. the South Dade Busway); not where people actually want to go.

    There’s a reason cities that built good light-rail lines got voter support for massive expansions of their transit systems – the Dallases and Houstons and Portlands are now having a GOOD problem – how to pay for the transit the population has decided they want, rather than the typical Sunbelt problem of defending a weak bus system from voters that never use it and could never see themselves using it.

  31. M1EK says:

    OK, I was too tough; most of the post and discussion is OK; but the “cities are bad for wanting rail unless they’re New York” thing really bugs me. You can ask suburbanites to ride the bus until you’re blue in the face, but it’s Not Gonna Happen. The environment you build your assumptions on (very expensive parking, some old urban development inertia to support voluntary urbanists) does not match reality in most cities now exploring rail transit.

  32. David says:

    “a better-bus solution doesn’t help one bit in getting people to leave their car in the driveway”

    the bus does not replace driving, it replaces unemployment

    25% of Atlanta residents don’t own a car, and their bus system carries 225k people a day – more than twice the ridership of the vaunted Portland light rail system. The purpose of the bus is to get low wage workers to their jobs, not to make James Kunstler and critics of the suburbs happy.

    “Better Bus” on the other hand does get people out of their cars. Minneapolis found that half of its regular bus riders don’t own cars, but that just 4% of its Premium Express riders didn’t own them.

    With light rail construction costs surpassing $100 million per mile, “better bus” is a cost-effective way of getting desk jockeys to work, without asking them to get on the standard bus – which many are not going to ride whether you want them to or not.

  33. David says:

    “Outbound extensions like Washington’s Silver Line do not have to cross under as much infrastructure”

    Drive by the construction of this thing almost every day. Cost for Phase 1 has doubled, and it’s not steel, concrete that’s causing the problem, but cap labor costs, including health benefits, and were only made worse when Bechtel agreed to a Project Labor Agreement for the construction phase.

    Re: Japan the Oedo Line went in for about $600 million per mile, and they’ve got the same issues over there with rising costs for cap labor, which are independent of any union issues

    With NY’s 2nd Ave project, there already have been criminal investigations into the cement subcontractors, in addition to the usual cost increases for cap labor. Also doubt if all 4 phases get built that it comes in at current estimates of $16 billion, be lucky to get in under 20.

  34. Portland’s bus system also carries 200k per day, or did before the recession turned many employed riders into unemployed no-need-to-rides.

    Lots of people in Portland are unhappy with the simultaneous service cuts to the bus system, and rail expansion–it looks really bad. It wasn’t likely planned that way–Portland’s MAX expansion has been in the works for years, and MAX isn’t one of those cute suburban systems that hardly anyone rides–but the optics, as they say, are terrible.

    One interesting question: The recession (and outsourcing) have been putting steady downward pressure on wages, and economists such as Krugman have been warning about deflation for a while–yet we haven’t seen a decline in wages in the transit industry (either on the construction side, or on the operations side). Obviously, local construction jobs can’t be outsourced, and neither can (at this time) bus or train driving jobs–but at some point, one would think something will give.

  35. David’s comments on the value of buses in getting low-wage workers to work is right on — and is backed by an interesting paper by two Ball State professors, Dagney Faulk and Michael Hicks, entitled “Bus Transit in Small Cities: Economic Development Strategy and/or Social Service?” (March 25, 2009). They looked at 50 small cities in six Great Lakes states. Some were in counties with transit systems, mostly buses. Others were in counties without transit systems.

    What they found is that counties with buses had higher labor force participation rates, higher growth in total employment, lower unemploynment rates, slower growth in unemployment payments and food stamp payments, and higher population growth. On the other hand, counties with buses also had lower growth in per capita income and higher poverty rates.

    What this proves is that, as David says, buses get poor people to jobs — indeed, enable them to have jobs. Anyone without a car in a town without buses is probably going to be unemployed. Give him a bus, and he has a shot at a job. Hence job rates go up and public poverty payments go down.

    Policy implication: public subsidization of bus lines pays for itself, by reducing public expenditure on the poor. As the figures indicate, it doesn’t do much for overall poverty rates, since the riders are going to jobs that don’t pay much. But it gets them off the public payroll, justifying the subsidies.

  36. Jim Russell says:

    Much smarter to subsidize geographic mobility than to subsidize efforts to keep people stuck in place. Captive labor markets help neither workers nor the community.

  37. M1EK says:

    The past few commenters need to realize that a transit system which ONLY serves the desperate will always struggle against efforts to de-fund it at the ballot box.

    The problems Portland is having now are much better than the problems it would be having if a bunch of middle-class suburbanites weren’t riding the train every day.

  38. M1EK says:

    ‘“Better Bus” on the other hand does get people out of their cars. Minneapolis found that half of its regular bus riders don’t own cars, but that just 4% of its Premium Express riders didn’t own them.’

    Not enough data, and not ‘better bus’ (express buses are old news). In Austin, for instance, our express buses do carry a lot of people who have cars, but only to the small number of employers where parking is difficult and/or expensive. In the Chicagos and New Yorks, of course, EVERYBODY has difficult and expensive parking.

    In other cities, light rail has proven able to garner riders who were not taking the bus before – not even express buses – it wins on reliability and speed (or at least gets close enough on speed to let reliability and comfort carry the day). Better bus has not shown that kind of ability, because, frankly, it rarely ends up that much ‘better’; it almost always devolves into just rebranded express service, except with stops all along the trip instead of at just one end.

  39. John Morris says:

    “Much smarter to subsidize geographic mobility than to subsidize efforts to keep people stuck in place. Captive labor markets help neither workers nor the community.”

    That’s pretty much what the current bus service in places like Pittsburgh, Cleveland and many other cities is doing.

    It’s a bone thrown at the isolated poor to keep them living in often non viable communities. The key way to help them and everyone else would be to do the blocking and tackling to make more neighborhoods viable for everyone.

    Nice how things are working out. The used to be a Lower Hill, and a Manchester that linked to the river, and an East Ohio Street and Troy Hill that were not divided. They were torn down by people who said they were trying to “help”.

    Now, the communities they were shoved into seem to being torn down every 30 years or less. Here’s Saint Clair Village, which was a pretty typical example.

    http://en.wikipedia.org/wiki/St._Clair_(Pittsburgh)

    “There are no stores or other commercial businesses in St. Clair, it is a strictly residential community. There is, however, one church, Lighthouse Cathedral, serving the community as well as various social service agencies at work in St. Clair for the largely poor population.”

  40. Alon Levy says:

    David: first, slightly more than half of MARTA’s ridership is on the subway. The rest is on buses. Atlanta is somewhat unique in that the white-majority suburbs view even the subway as a threat, so they prevent it from reaching them. In other Sunbelt cities, where city-suburb relations are less toxic, suburbs are often more supportive of rail.

    And second, going under a lot of old infrastructure requires more labor, not just more steel and concrete. It requires tunneling much more delicately, which means less automation. Paris’s $400 million/mile Line 14 required tunneling through the city’s pre-revolutionary era catacombs. It had to tunnel at a much greater depth than previous lines, again requiring more workers to dig the shafts and line the tunnels; in New York, such projects would also require more skilled sandhogs. The outbound extensions don’t have to contend with any of that, so their cost estimates are closer to $100-200 million/mile.

    Yes, Japan is facing the same cost escalations as the US. Tokyo Metro said that as the cost of future infill subway construction is going to be $800 million/mile, it will not build more subway lines. London and Amsterdam have both built projects for not much less money, creating similar attitudes toward future expansion. However, this is still less than what Chicago plans to spend on the elevated portions of the Circle Line, and less than a third what New York is spending on SAS and the 7 extension.

  41. Wad says:

    John Morris wrote:

    Who could turn down a pile of “Other People’s Money”, especialy if you know other people are grabbing for yours.

    The granting process doesn’t work that way.

    Transit agencies don’t turn down piles of money. They must go through planning and documentation, which takes years to conduct, as part of their application process.

    Then they wait to hear back from the FTA, which evaluates these applications.

    By definition, there will always be more circus seals than fish to feed them.

    Grants are also not “free” money. Think of the money required to rope in the grant. You have the salaries of in-house staff and/or consultants who conduct the feasibility studies. Ultimately, the study cost could be, say, 5 percent of the total project cost. So, if you’re looking for a $500 million federal match, you could spend $25 million just to gauge fitness to apply for $500 million!

    You run the risk of your planners saying that a major investment would not be feasible, or have your planners say that it is feasible only to have the FTA ashcan your application because it’s not cost-effective.

    Poof! You just lost $25 million and have nothing to show for it.

    Or, you could have it locally feasible, and cost-effective by FTA standards. Then another city proposes a project that has even better metrics than your project. Well, there’s good news and bad news. The good news is that FTA gives you a grant. The bad news is that it’s only $400 million of the $500 million you requested.

    Your whole project hangs on the prospect of $500 million in federal funding, but you are now $100 million short. You have one year to come up with the money locally or forefit the FTA share. Good luck going to your state legislature or your local electorate and telling them you need more money out of them.

    In this scenario, you’d have a better project and manage to lose $425 million!

    So there is this self-limiting factor that doesn’t make it a complete feeding frenzy. Yet it does happen for those cities that can afford to play this game.

  42. Chris Stefan says:

    Wad,
    Don’t forget the value of having a powerful member of Congress pushing for your project.

    Sound Transit (Seattle, WA area) has benefited greatly from earmarks by Rep. Dicks and especially Sen. Murray who also happens to be chair of the Transportation Subcommittee of the Senate Appropriations Committee.

    I’m not saying Sound Transit’s New Starts applications didn’t have merit, just that I’m pretty sure they got much more money than they would have without help from the Washington Congressional delegation.

  43. Larry Williams says:

    Good post. Rail transit in Indianapolis might be even a potentially bigger boondoogle than Lucas and Conseco. It should be a non-starter.

  44. Wad says:

    Chris Stefan, you’re right in how a little help from Congress can go a long way. And there’s no shame in that.

    It could be worse. Houston, for instance, had the opposite problem. The maniacal Tom DeLay went to extraordinary lengths to punish Harris County MTA. DeLay, who barely had any MTA service in his district, essentially stripped it of all its light rail funding and then threatened to withhold all federal transit funding if it didn’t withdraw its application. Houston then had to complete its Main Street line with zero federal funds — and happened to build the most productive light rail line in the U.S. (40,000 boardings on a 7.5-mile line).

    Congress can cook up pork in two delicious ways: bacon and sausage. Bacon is where your elected representative uses his or her influence to pull money regardless of the project’s merit.

    Sausage is a little more subtle. What Congress does here is rewrite the rules to favor their own districts. They tweak what metrics to use to fund MIS projects. The FTA must then rerank each of these projects unless an ironclad funding formula was obtained.

    Ironically, you end up having Congress decide the technical merits of a project while the FTA sorts out the politics!

  45. cdc guy says:

    Richard Longworth wrote (above): “Policy implication: public subsidization of bus lines pays for itself, by reducing public expenditure on the poor. As the figures indicate, it doesn’t do much for overall poverty rates, since the riders are going to jobs that don’t pay much. But it gets them off the public payroll, justifying the subsidies.”

    It’s a little more subtle: some of the subsidy shifts from direct welfare (subsidized housing, subsidized food, EITC) to indirect (subsidized transit).

    From where I sit, it’s always better to give indirect subsidies to support people working than direct subsidies to those sitting home who are otherwise able to work.

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