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Thursday, January 12th, 2012

The Shifting Landscape of Diversity in Metro America

Black Only Population, Change in Location Quotient, 2000-2010

My latest post is online over at New Geography. It’s called “The Shifting Landscape of Diversity in Metro America.” In it I use location quotients to track which metros have boosted their concentration in various ethnic groups, and also for children. It’s kind of an experimental analysis but I hope you enjoy it.

Thursday, January 12th, 2012

Indiana’s Bridge Deal Boondoggle, Part 4 – A Better Plan

In the first three parts of this series, I discussed how Indiana so badly botched its negotiation with Kentucky on the Louisville bridges project that its share of the project went up by $200 million at the same time the total project declined in cost by $1.5 billion, how this will result in $432 million being drained out of regular highway funds to cover a resulting tolling gap, how tolling likely results in Indiana paying even more, and the significant risks Indiana has taken on by agreeing to build a tunnel in Kentucky. Amazing as it sounds, Indiana’s biggest road project is now a $795 million, 1.4 mile highway in the state of Kentucky.

But just because I believe this deal is bad doesn’t mean I think the project itself is all bad. Indeed, I’m a strong supporter of the East End bridge, which is a generational investment for that part of the state. I also think the $1.5 billion in savings identified so far are great and a good start at getting costs under control on this project. But there’s still more we can do. So with that in mind, I’ll outline the changes I’d make to move the project forward:

#1 – Kill the Drumanard Tunnel

The first step is to kill the ludicrous $261 million “tunnel under the trees” in Prospect. I can’t speak to the veracity of this site since I haven’t investigated the matter personally, but a local named Denis Frankenberger recently filed a petition with the federal government to remove the expanded historic designation of the Drumanard estate. He alleges that Kentucky officials acted unethically in undertaking the proposed listing specifically to stop the East End bridge, and that there are numerous factual errors in the original filing that should result in it being withdrawn. He includes a pile of documentary evidence on this.

Delisting the woods and cancelling the tunnel makes a ton of sense, especially since no buildings would be touched in any case. Also, it isn’t necessarily true that a historically significant property can’t be affected by a highway in any case.

Regardless, where there’s a will, there’s a way. Kill the tunnel and save some more bucks. And even beyond that there’s probably still more savings to be had on the Kentucky approach.

#2 – Adopt 8664

I will only briefly cover this here since I’ve written about it extensively before, but 8664 is a plan to build the East End bridge, re-route I-64 through traffic across the resulting beltway, and tear down the I-64 Riverfront Parkway in downtown Louisville, reconnecting downtown to the river in the process. As a side benefit, Spaghetti Junction would be greatly simplified. Riverfront Parkway would be reconstructed as a surface boulevard, and I-64 outside of downtown would be re-signed as I-164, providing continued freeway access from Indiana and the East End to downtown on all existing routes. The proposed new downtown bridge would not be built.

This would save a ton of money – big money – and be much better for downtown Louisville to boot. What’s not to love? Better and cheaper is my ultimate combo.

You can read a much more comprehensive account of my take on 8664 in “The Case for 8664.”

You might also enjoy this recent NYT piece, “Parks Like Madrid Rio Stand Where Freeways Once Did.” (Big differences between Louisville and Madrid though: in Louisville there is no tunneling and the park option actually saves a boatload of money).

#3 – Revisit the Cost and Toll Revenue Allocations

With the above two items implemented, I think there’s a good chance this thing could be completely toll funded. This would be nothing but good news. I think it’s important to go back and re-establish key principles around how the project costs and revenues are divided. This might include something like:

• Neither state will construct anything in the other state.
• Reversion to the status quo ante on the cost allocation: Indiana pays 100% for everything on the Indiana side, Kentucky 100% of everything on the Kentucky side, and the two states split the bridge itself 50/50.
• Allocation of revenue on a similar model: 100% of all Hoosier motorist tolls to Indiana, 100% of all Kentucky motorist tolls to Kentucky, all other tolls split 50/50.

I think this is fair. I think there are potentially other fair ways to do too. The key is to have something that is prima facie fair, and above all is fully vetted with the citizens and leadership of each state in a public way, not done in a backroom deal and announced via a press release.

To show the size of the impact we are talking here, if we just did one thing – revert to the original cost split deal, Indiana’s cost would decline from $1.3B to $839M – a savings of $514M to Indiana alone. This means Indiana wouldn’t have to take $432M away from other projects to cover a funding gap on this one. And guess what? Kentucky still would get the lion’s share of the savings, which is only fair since the big item in the savings was reducing the scope of the Spaghetti Junction interchange on that side of the river. Still, $839M is a huge amount of money, no two ways about it. And getting back down to this would be all for nothing if the toll revenue split ends up sending a bunch of Hoosier money across the river to finance Kentucky’s share.

Conclusion

As a blogger with limited resources, I was only able to do a preliminary investigation here based on publicly available documents. But it seems pretty clear that this deal has a whole lot of bad elements about it. Again, Indiana’s cost went up by $200 million at the same time the total project cost went down by $1.5 billion. This poor renegotiation of the cost split means that Indiana will now have to use $432 million of regular highway funds instead of fully delivering the project via a public-private partnership and tolling. The use of tolls puts Indiana at severe risk of paying still more for the project – and Kentuckians see this as a big advantage. And Indiana has agreed to built a grossly overpriced $795 million 1.4 approach highway in Kentucky with a risky $261 million tunnel under some trees.

I’d certainly encourage the traditional media to step up and do a more thorough investigation than I’m able to on my own, though I realize they are also under tremendous pressure, financial and otherwise. There is a huge amount of money at stake and a whole boatload of critical unanswered questions.

Indiana’s Bridge Deal Boondoggle
Part One: A Financial Fiasco
Part Two: Hoosiers to Pay Even More With Tolling
Part Three: INDOT’s Mini-Big Dig
Part Four: A Better Way (this article)

Wednesday, January 11th, 2012

Murmansk in Motion

Here’s one that just goes to prove you don’t have to be a tier one uber-famous global city to have a really awesome time lapse video. Here’s one of Murmansk, Russia. (If the video doesn’t display, click here).

And as a reminder, at reader request, I added a special tag for all my posts with cool city videos in them, so if you are interested in checking out the archives, click here.

Wednesday, January 11th, 2012

Detroit: A City on the Move

Apparently this has been floating out there for a while, but architectural and cultural commentator Edward Lifson posted this fascinating 1965 Detroit promotional video called “A City on the Move.”

Update: Commenter Jim Meredith passed along a like to this Design Observer piece called The Forgetting Machine: A History of Detroit that you might find of interest too. And also a great photo essay of then and now photos called Detroit Re-Photography.

Part One (if the video doesn’t display for you, click here):

Part Two (if the video doesn’t display for you, click here):

I thought maybe I had posted this in this past, but couldn’t find it if I did. Apologies if this is a duplicate for you.

Wednesday, January 11th, 2012

Indiana’s Bridge Deal Boondoggle, Part 3 – INDOT’s Mini-Big Dig

In previous installments in this series I highlighted how Indiana managed to increase its share of the Louisville bridges project by $200 million even as it bragged that the total price tag had gone down by $1.5 billion, how this led directly to Indiana having to allocate $432 million in regular highway funds to the project, and how tolling puts Indiana at significant risk of paying an even greater share of the project.

Today I’ll highlight how Indiana is stepping into a potential quagmire by agreeing to take responsibility for building a high-risk mini-Big Dig tunnel under a portion of Louisville’s most affluent community.

The Background Story

Plans for an East End bridge date back to at least 1969. Part of the problem with building it has long been that the Kentucky approach to this bridge would pass through the town Prospect, arguably the Louisville area’s most affluent and influential suburb. (For readers in Central Indiana, think “Zionsville” or Southwest Clay Township in Carmel and you’ll have the picture). The wealthy and influential residents there were long able to stymie progress on the East End bridge. They also had an ally in Louisville major Jerry Abramson, who greatly feared a beltway connection that would allow traffic to bypass downtown Louisville. He promoted a new downtown bridge instead.

In the grand tradition of political compromise, Indiana and Kentucky agreed to build both bridges. This was in part possible because of a city-county merger in Louisville, which reduced the fear of downtown lobby because they would still control revenues from any East End growth the bridge might spawn. Hence was born the fiction of “two bridges, one project” even though there is no real transportation necessity to link the two and either one has independent utility.

But the Prospect residents were never going to give up. As part of their plan to kill the East End bridge, they managed to get the Dumanard Estate put onto the National Register of Historic Places to make it much more difficult to route a roadway through it. After the original listing that included the home and gardens, the listing was later expanded to include the entire 55-acre grounds.

If you are wondering how building two bridges got to be $4.1 billion in the first place, this is an example of how. To avoid impacting this single historic property, Kentucky agreed to build a $261 million tunnel underneath the estate. (LEO Weekly discussed this in an article called “The $260 Million Home.”)

The stunning thing about this tunnel is that the path of the road doesn’t actually affect any buildings, as this graphic from Broken Sidewalk illustrates:

If spending $260 million on this sounds ludicrous to you, then you are getting a sense of why Indiana shouldn’t be touching it with a ten foot pole.

The Financial Quagmire

The cost of the tunnel is pretty ludicrous by itself. But the entire Kentucky approach is grossly overpriced. According to the Supplemental Environmental Impact Statement, the cost of the Kentucky approach to the East End bridge is $795 million. As advocacy web site No 2 Bridge Tolls put noted, this is a staggering $100,000 per foot. The approach on the Indiana side of the bridge plus the entire bridge itself is only $558 million combined.

This chart easily explains why the facile logic of the 50/50 cost split is crazy. Even if the cost split were reversed, it’s still ridiculous. Influential Kentuckians, attempting to insert a poison pill into the East End bridge (by killing the entire project if necessary), managed to grossly inflate the cost of construction on their side of the river with things like the ludicrous Drumanard tunnel that have no relevance or benefit to Indiana (or arguably even Kentucky). If Kentuckians want a $261 million tunnel under some trees, they ought to pay for it.

Call me crazy, but at $795 million for 1.4 miles of road, I think there just might be a little gold plating in this segment. That’s more money than it cost Indiana to build a brand new 10 mile freeway bypass around Kokomo. Heck, it’s more than Indiana is spending to convert 12 miles of US 31 to a freeway through Carmel and Westfield, right in the middle of some of the state’s most expensive real estate. Indiana would never build a road this crazy expensive for actual Hoosiers. I can only imagine the look on Mitch Daniels’ face if a Hoosier town asked him for something like this.

In any event, Indiana has agreed to pay for and construct this tunnel and very overpriced piece of Kentucky roadway. Which raises additional questions about the project. For example, does INDOT have the expertise to build a such a tunnel? I am not aware of a single genuine highway tunnel anywhere in the state of Indiana. I don’t believe INDOT has ever built one before, much less a complicated tunnel adjacent to a river with obvious potential for ground water problems. Kentucky may not be expert at tunneling either, but they’ve built at least two, including one in Louisville itself on I-64.

As anyone who’s read anything about the Big Dig should know, tunneling is frequently plagued with construction problems and cost overruns. After construction the tunnels leaked, and part of one tunnel collapsed on top of a car, killing someone. While this isn’t the Big Dig exactly, similar risks apply. Gov. Daniels can ask Mitt Romney for some tips on the risks associated with tunneling.

Indeed, we already know that the Drumanard tunnel itself has been plagued with problems. The price has already nearly tripled since its original estimate of $96.5 million, which augurs further cost escalations. The Kentucky Transportation Cabinet originally estimated a test tunnel, needed to determine soil and rock conditions so that the actual roadway tunnels could be designed, to cost $14 million. Actual bids came in between $19.1 million and $28.5 million, causing the KYTC to rebid the contract. (“Kentucky must get new bids on test tunnel”, C-J, Jan. 1, 2008 – not available free online). I’m not sure that they were ever able to get that test tunnel actually built. But problems just bidding that small test bore suggest further problems are likely. In fact, the Federal Highway Administration suggested Kentucky consider scrapping the tunnel, with the C-J noting, “High costs of sampling the geology along the proposed tunnel path and contractors’ concerns about the data’s reliability prompted talks of possibly building the approach on the surface rather than under a 50-acre estate listed on the National Register of Historic Places.” (“Bridge tunnel reconsidered”, C-J, August 23, 2008 – not available free online).

Given the risks here, it’s worth asking another question I didn’t see answered in any of the documents: who is responsible for any cost overruns on the project? If Indiana and Kentucky are each responsible for any overruns on their own sections of the project, Indiana would be stepping into a potential huge financial quagmire by taking on construction of a high risk tunnel without any experience in tunnel building.

Political Risk

Another key risk is political risk. One clear benefit of the current arrangement to the states from a purely tactical perspective is that Kentucky is outsourcing the construction of the most controversial segment to Indiana. While Prospect residents have huge influence in Kentucky, I think it’s safe to say that they have zero in Indiana. Their screams aren’t likely to impress anyone at the Indiana State House or at INDOT HQ. Also, this puts the segment Indiana most cares about entirely under Indiana’s control.

If I were one of those Prospect NIMBY’s, I’d be none too pleased with this arrangement, in which Indiana builds a road through their town. There’s actually a point to be made there, as people should operate under the auspices of a government which at least nominally accountable to them at the ballot box.

The bridge moves forward and controversy erupts. There’s an eminent domain dispute (highly likely – and who is doing the land acquisition anyway? I didn’t read anything about that). Or there are complaints about contractors. Again, Indiana readers can imagine what might happen if INDOT sub-contracted a freeway through Zionsville to the Ohio Department of Transportation. It would be Armageddon.

When the inevitable disputes arise, who has the final say, Indiana or Kentucky? And who bears the cost?

Again, we don’t know the answers to all these questions. But it’s easy to see how they could be bad.

Litigation Risk

Litigation risk is another major concern. An East End group called River Fields is already suing over the project. That lawsuit, which hinges on historic preservation issues, is still pending.

Don’t expect the East End crew to go quietly into the night on this thing. I’d certainly anticipate additional litigation from them over any and every aspect of the project. Indiana should clearly understand the risks here, since it has already lived them. It had to scrap one EIS for the I-69 project after its deficiencies were exposed, crafting a second lawsuit-proof one with the help of a high priced DC law firm. This cost a lot of money and resulted in significant project delay. The bridges project is very similar to I-69 in that the preferred outcome of locals was already known prior to the EIS. This can lead to the temptation to do sloppy work in the EIS, treating it as a mere hoop to jump through rather than dotting all the i’s and crossing all the t’s. This renders the EIS vulnerable to lawsuits from project opponents who scan the document looking for any weakness to glom onto. (This is one reason it’s so ridiculously hard to get anything built in America these days).

Beyond EIS litigation, you can expect further lawsuits over Indiana building a road in Kentucky. I noted the political risk, but why wouldn’t wealthy project opponents in prospect sue claiming that their rights are being violated because another state is constructing a road in their neighborhood?

Also, Southern Indiana resident Denis Frankenberger retained attorneys in Indianapolis who advised him that the Indiana constitution prohibits Indiana from building a road in another state. So this is another potential source of project litigation.

Now the entire project is subject to lawsuit risk, but the Kentucky approach segment that goes through Prospect is the part that has the most local opponents, and ones with money to indulge themselves in lawsuits. Thus I’d categorize as by far the highest risk segment. Again, legal fees and delays could add to Indiana’s cost here, even if any potential claims were judged to be without merit. This is America, and people will sue over anything and everything.

Update: Just today (1/11/12), Kentucky state senate president David Williams criticized the division of the bridges projects, saying that having each state takes one bridge opens the door to lawsuits over whether or not there is really one project or two.

At the end of the day, I’m not sure that INDOT really knows what it’s getting into with this tunnel and this project segment.

Next up, a better approach.

Indiana’s Bridge Deal Boondoggle
Part One: A Financial Fiasco
Part Two: Hoosiers to Pay Even More With Tolling
Part Three: INDOT’s Mini-Big Dig (this article)
Part Four: A Better Way

Tuesday, January 10th, 2012

How Demolition Came to Mean Stabilization by Rob Pitingolo

[ Since I know the bulk of my readers have no interest in a bridge project in Louisville, I'm also running a full slate of regular articles this week, making this perhaps the biggest week ever at the Urbanophile.

This one is a follow-up to the 60 Minutes segment on demolitions in Cleveland by urbanist blogger Rob Pitingolo - Aaron. ]

Yesterday’s lead story on 60 Minutes was about vacancy and abandonment in Cleveland. This is an issue that hits close to home for me.

I started studying the problem in 2008. Back then the pressing question was how to target HUD money to strategically knock down blighted houses. The amount of money that HUD had to distribute wasn’t nearly enough to take down all the vacant and abandoned houses, so using it wisely was key, and it still is.

I want to emphasize that even though 60 minutes may have opened a lot of eyes to demolition in Cleveland, it’s not something that’s new. The idea of knocking down houses as the means to saving neighborhoods may seem counter-intuitive, but it’s been the prevailing strategy for several years now. Detroit has been following a similar strategy as well.

I do want to add something to the 60 Minutes analysis – a piece of the story that I don’t always feel gets told. Foreclosures may have fueled vacancy in Cleveland, but foreclosure is not the only reason why it’s such a big problem.

When homes go into foreclosure, they should get taken by banks and sold at auction for the price they’re worth, allowing investors to pick them up and rehabilitate, or allowing new buyers to own a home for a price they can afford. But banks themselves are walking away from these homes, because they’re literally worth zero dollars. When you look at it at the scale of the metro area, you realize that there is a big glut of housing supply on the market that’s driving down prices across the board, and in these extreme cases, all the way down to zero.

Believe it or not, the house I lived in before I moved to DC went through foreclosure. In 2008, the bank holding the delinquent mortgage sold it for $23,500 to an owner who rehabbed it, and then sold it the following spring for $96,000 (these numbers are all public record, in case you were curious). This is what should happen in a healthy market. Foreclosure shouldn’t necessarily mean vacancy, but too often in Cleveland, it does.

The Cleveland metro area is made up of the five counties around Cleveland – Cuyahoga, Lake, Geauga, Lorain and Medina. Between 2000 and 2010, two important but divergent trends emerged:

• The population of the Cleveland metro area fell roughly 3 percent.
• The number of housing units in the 4 counties excluding Cuyahoga grew more than 13 percent.

In other words, homes kept getting built between 2000 and 2010, even as people were fleeing the metro area. And most of these new houses were getting built in the suburban fringe counties. If you want to understand why there’s an oversupply of housing in the Cleveland area, look no further than these counties.

The fact that there were more houses but fewer potential buyers created an imbalance. When houses started to go vacant, no potential buyers stepped up because there were no potential buyers out there. If there had been potential buyers, houses might have gone through the process that my former house did. Many instead became vacant, because folks looking to buy a house had plenty of areas to look, and the weakest neighborhoods were obviously the first to go rotten.

But there’s more. Now that the bulldozers are starting to demolish houses and even entire blocks in the name of stabilization, it’s creating a metro area where tons of vacant undeveloped land is being created in the urban core, while developers are simultaneously building on greenfields in the fringe counties. Slowly but surely, it’s creating a “donut hole” that will make the entire metro area weaker.

Getting urban neighborhoods stabilized should rightly be the top priority, and Cleveland has decided that demolition is the best way to accomplish it. Unfortunately, years or sprawl and overbuilding, fueled by a foreclosure crisis, has created this reality. Further sprawl isn’t going to make the situation on the ground any better.

This post originally appeared in Extraordinary Observations on December 19, 2011.

Tuesday, January 10th, 2012

Indiana’s Bridge Deal Boondoggle, Part 2: Hoosiers to Pay Even More With Tolling

In part one of this series I examined how Indiana managed to give away $1.7 billion to the state of Kentucky in renegotiating the project cost split for the Ohio River Bridges Project at Louisville. Despite a series of scope changes that reduced total cost by $1.5 billion, Indiana’s share of the cost actually went up by nearly $200 million.

Some might object that the project cost split is essentially meaningless because the project will be funded via tolling in a public-private partnership like the Toll Road deal. Unfortunately, this is not correct.

In part one we dealt in the realm of concrete black and white numbers from the two states’ own documents. Because there are so many open questions about tolling (itself a major concern given the headlong rush to make things happen), it can be difficult to definitively draw conclusions here. But the implications are certainly troubling and definitely the questions need to be answered so the public can properly assess this project.

Tolling Won’t Pay for the Whole Project

The first thing to note is that tolling will not pay for the project. According to the News-Tribune, no decisions have been made on toll locations or prices. However, Indiana is already projecting that it will have to spend $432 million out of its regular highway funds to complete the project.

If this number is correct, this would put the project among the most expensive in the state. With Major Moves already significantly over budget such that projects have been kicked out of it to balance the books, and a projected significant decline in available highway funds after Major Moves expires in 2015, this project will clearly impact other projects throughout the state. This is money that can’t be spent on any other projects – in effect it is a diversion of funds from other projects to cover a gap in this one.

That’s not to say it wouldn’t be a worthwhile investment. I’m a Southern Indiana native who strongly supports the construction of the East End bridge. But there are two points on which to be clear as things stand today:

• This is not going to be an “other people’s money” deal like Major Moves. Regular highway funds will be dedicated to the project by both Indiana and Kentucky – lots of them.
• Given the $1.7 billion gift to Kentucky I outlined in part one, it’s pretty obvious that with better negotiation Indiana could have easily financed the $432 million it is now paying out of its regular highway funds out of savings from the scope reductions. With even a reasonable deal on the cost split, Indiana would need to spend $0 out of its regular highway funds and could have 100% toll financed its share instead of having to rob Peter (other projects around the state) to pay Paul (this bridge).

Tolling Means Indiana Pays – Again

Paying for the bridges project via tolls doesn’t necessarily mean that Indiana and Kentucky won’t be paying a huge amount of the cost since a large number of the cars driving back and forth will be local residents.

Given that, one would think that a few questions would be of paramount importance to answer. First, what is the breakdown of projected cross-river traffic on the bridges in terms of Hoosiers vs. Kentuckians vs. those from neither state?

I have spent a lot of time searching the internet for the answer of that question, including looking at the documents on the web site of the Kentucky-Indiana Bridges Authority (a bi-state commission looking at financing) and asking various people I know in the Louisville area. I was unable to find any answer to this question.

I find it very surprising that this isn’t front and center. Because if tolling is supposed to fund the bridge, then who is paying those tolls is really the primary determinant of which state is paying the for the bridge.

Perhaps there’s a reason for that. As I Southern Indiana resident, I can tell you anecdotally that far more Hoosiers drive back and forth across the bridges than Kentuckians. The lion’s share of the regional jobs are in Kentucky. The key regional attractions are almost all on the Kentucky side of the river (the key exception being the Horseshoe Casino, generally accessed via the Sherman-Minton Bridge, which is currently not supposed to be tolled), as are things such as the regional airport, etc. In the absence of data to the contrary (and I’d appreciate a pointer to anything should somebody have one), I would hypothesize that there are indeed more Hoosiers driving across the bridges, which means toll financing is just another term for “Hoosiers pay.” (There may be many more Kentuckians driving through a redesigned and reconstructed Spaghetti Junction, but this interchange itself won’t be tolled).

As a commenter noted, Kentuckians seem already convinced that Hoosiers will have to pay most of the tolls. One Kentucky state senator, Dan Seum, is so enamored of the prospect of grabbing Hoosier money that he wants to toll the Sherman Minton Bridge as well. He’s apparently so convinced that Hoosiers are chumps that he didn’t mind bragging about this to the News and Tribune:

Seum admitted that Indiana residents will be among those bearing the majority of the costs. “Being from Jefferson County, remember that I think that most of the tolls would get paid by folks over in Indiana and our tourism and our big trucks,” he said in the report. “So it won’t be as onerous I guess to the average person out there but that’s the reality of it.”

Now, one could argue that if more Hoosiers are driving across the bridges, they are getting more benefits and thus should pay more. From a user benefit perspective, I actually agree. But user benefits are only one impact of the bridge. For example, those Hoosiers who drive to work in Kentucky pay occupational taxes, which are basically a local income tax, to Louisville already. And the regional economy is heavily skewed towards the Kentucky side of the river, so to the extent that the regional economy grows as bridge boosters claim, this will likely accrue principally to Kentucky.

Which brings us to the second question we need answered: what is the breakdown of economic benefits of the bridges project by state? It’s another question I’ve never seen the answer to. (Again, if someone has this, let me know).

Also, the fact that Hoosiers would pay more under a toll scenario wouldn’t necessarily be unfair if that money went to Indiana to offset its share of the bridge costs. However, according to the Courier-Journal, no decision has been made on how to divide the toll money.

A funding split where Indiana received the money from Hoosier motorists, Kentucky received the money from Kentucky motorists, and the two states split 50/50 revenue from motorists of other states might potentially alleviate the subsidy issue. However, given how the crack negotiators at INDOT gave away $1.7B to Kentucky and actually increased Indiana’s share of the cost of the project while the total cost went down by $1.5B, I’m not optimistic they’d do any better job negotiating this. Indeed, it’s easy to see how they might give even more away, such as by apportioning the toll revenue the same way that bridge responsibilities were allocated, having Kentucky keep all the downtown toll money and Indiana all the East End toll money. Since the downtown bridge is projected to generate twice the toll revenue of the East End bridge, this would be yet another gigantic financial giveaway to Kentucky.

It’s worth noting that the Bridges Authority, which is exploring toll financing, doesn’t even include a fair and equitable distribution of toll revenues as one of its strategic objectives. (All they talk about is a fair and equitable distribution of the costs, not the revenues. And in any case, we’ve already established that the cost distribution is suspect).

In short, we don’t know exactly how tolling would affect who pays for the bridge, but it’s easy to see scenarios of how Indiana could end up paying for way more than half of the bridges. As one Louisvillian close to the projects told me, “It’s pretty clear that Indiana is going to end up paying the bill. Tolls or otherwise.”

To assess the fairness of any toll solution, we need the answer to three key questions:

• What the breakdown by state of people driving across the bridges?
• What is the breakdown by state of the total economic benefits of the bridges?
• How is the toll money going to be divided between the states?

It’s very important that these be answered honestly and clearly vetted with the public and political leaders in both states prior to making any financial decisions. Right now I’m not seeing that. As Tyler Allen of 8664 noted in the CJ piece linked above:

I don’t seem to hear that they know yet where the money is going to come from. There is still a question over how much tolling, what’s going to get tolled and, as a citizen I’m very concerned if they don’t lay that out on the table for us to respond to, then it could just happen to us — and that would be very bad public policy.

Tomorrow I’ll provide a look at how Indiana is taking on a potentially huge risk by agreeing to build a “mini-Big Dig” in Kentucky.

Indiana’s Bridge Deal Boondoggle
Part One: A Financial Fiasco
Part Two: Hoosiers to Pay Even More With Tolling (this article)
Part Three: INDOT’s Mini-Big Dig
Part Four: A Better Way

Monday, January 9th, 2012

Indiana’s Bridge Deal Boondoggle, Part 1: A Financial Fiasco

I’ve noted before how the Indiana Toll Road lease was a stroke of genius (see “Foreign Investors Hurting, Hoosier Taxpayers Smiling” and “Major Moves Is Majorly Great“) I attribute a lot of it to Gov. Mitch Daniels shrewd assessment of the competitive landscape (see “The Shrewdness of Mitch Daniels.”) As Daniels is fond of saying, “It was the best deal since Manhattan was sold for beads – only this time the natives won.”

Unfortunately, in the case of Indiana’s recent agreement with Kentucky on a pair of new bridges across the Ohio River at Louisville, this time it’s Indiana taxpayers and motorists who are back in the role of the Indians. I’m a big fan of Indiana Gov. Mitch Daniels, but this is a very bad deal for the state. In a four part series that starts today, I’ll document the reasons why, explaining how:

• Indiana has trumpeted that the cost of the project has declined by $1.5 billion. But in fact Indiana’s share of the cost has actually gone up by nearly $200 million. Kentucky has pocketed more than 100% of the savings – a massive $1.7 billion giveaway by Indiana. (today)
• Indiana’s botched negotiating means $432 million in state highway funds will have to be diverted from other projects around the state in order to cover a funding gap in the project. (Tuesday)
• Tolling won’t pay for the bridges, and in any case tolling is likely just another word for “Hoosiers pay.” (Tuesday)
• Indiana is potentially exposed to huge financial and political risk because it is agreeing to take on a $261 million “mini-Big Dig” tunnel in Louisville’s most affluent community. From an Indiana perspective this is like having the state outsource a freeway through Zionsville to Ohio. (Wednesday)
• The are superior alternatives to the project as a whole that are cheaper too and promise major additional savings on top of the $1.5 billion Indiana and Kentucky have already found. (Thursday)

Today I’ll examine what’s clearly the most incredible piece of the puzzle – how Indiana gave so much money away to Kentucky.

As recently as one year ago in December 2010, the Ohio River Bridges Project – which consists of a new East End Bridge, a new downtown bridge, and a reconfiguration or new construction of the approaches and connecting interchanges – was projected to cost $4.1 billion according to the project financial plan. Given the high cost of the bridge, the two states started looking for ways to save money. In November 2011, INDOT announced a series of design changes that reduced the total project cost by $1.2 billion. In late December 2011, INDOT announced that further changes had raised the total savings to $1.5 billion and also announced that Indiana and Kentucky had reached a new deal on how to split the cost. This reduced the total project cost to a “mere” $2.6 billion.

But while the total project cost declined by $1.5 billion because of these changes, Indiana’s cost actually went up by almost $200 million. That’s right, while taking $1.5 billion in total cost out of the project, Indiana managed to make its share of the project actually go up in cost. Kentucky’s cost, by contrast, declined by almost $1.7 billion. Indiana gave away more than 100% of the cost savings achieved by the project design changes.

This is truly stunning. We’re talking huge money here – more than INDOT is spending on I-69 under Major Moves, the state’s flagship project.

How is this possible? It’s pretty simple. In addition to changing the project to reduce the cost, Indiana also agreed to change the way the two states split the cost of the project. Previously, it was a pretty simple cost exercise: Indiana paid 100% of everything on its side of the border, Kentucky paid for 100% of everything on its side of the border, and the two states would split 50/50 the cost of the bridges themselves. I might quibble with this. For one thing, as Kentucky is always fond of pointing out, it owns the Ohio River. I would have thought that would be a negotiating point. There are also other approaches I might prefer on efficiency grounds, but at least this makes sense and is intuitively fair. Because there were two major pieces of construction exclusively in Kentucky – the reconstruction of Spaghetti Junction and a dubious $261 million tunnel on the East End approach (more on that later) – Kentucky’s share of the cost, as it should have been under any reasonable scenario, was higher than Indiana’s – 73% vs. 27%.

In the new agreement, Indiana and Kentucky agreed to split the cost 50/50. Indiana would be responsible for the East End bridge and the approach work in both states, while Kentucky would be responsible for the downtown bridge and the approach work in both states.

Why would Indiana agree to this? I’m not sure, but I can’t think of anything it actually got in return for it. 50/50 has some intuitive appeal, but as I said before, there’s a lot of work on the Kentucky side of the river that benefits exclusively Kentucky (such as the aforementioned tunnel). It’s not clear why Indiana should pay for that. The original deal concept was basically fair. The lion’s share of the regional population, and likely of the economic benefits of the bridge, is in Kentucky. It’s hard to think of anything where the numbers suggest anything close to an equal split of the cost, except perhaps the makeup of traffic on the bridge. And when it comes to that, Indiana is already going to more than pay thanks to the toll financing (see part two).

At the end of the day, INDOT cut a simply horrible deal, giving away $1.7 billion to Kentucky (or at a minimum its $850M share) in return for nothing. If you are Evansville and wondering how the state will ever finish I-69, or Northwest Indiana wondering why the state doesn’t have the cash to replace the Cline Ave bridge, or Indianapolis wondering why the state booted an upgrade of the state’s most congested corridor out of Major Moves, or Fort Wayne wondering why so many of your important projects have gotten pushed out, I suggest looking no further than this lousy deal for answers.

I’m sure Gov. Daniels is very eager to get this project started as yet another building block in his strong legacy around transport infrastructure. But he shouldn’t be this eager. I can’t help but wonder who he had doing the negotiation on Indiana’s behalf, because he’s way too smart to have cut a deal this bad himself.

The revised cost split is the worst, though hardly the only, problem with this agreement. Tomorrow in part two I’ll examine how toll funding shifts even further financing to the Hoosier State.

Indiana’s Bridge Deal Boondoggle
Part One: A Financial Fiasco (this article)
Part Two: Hoosiers to Pay Even More With Tolling
Part Three: INDOT’s Mini-Big Dig
Part Four: A Better Way

Friday, January 6th, 2012

Faith and City Planning

Polis, a secular urbanist blog, recently put out a fascinating podcast on faith and city planning. It’s a discussion between two MIT urban planning professors, Annette Kim and Phil Thompson. It’s really great listen. As Polis notes:

The connections between faith and city planning are undeniable. Faith-based groups rebuild areas after disasters, they develop affordable housing plans, and they help the poor. Additionally, the social movements that have most profoundly changed society, like the Civil Rights Movement, were guided by faith.

Yet planning education generally does not deal with faith. “It’s this whole realm, and we come up against it all the time, but we keep ignoring it,” said Annette Kim, a professor at MIT. This podcast is a conversation between Kim and her colleague, Professor Phil Thompson, on the relationship between faith and planning. Should the study of faith traditions and values be part of a planning education?

If the podcast doesn’t display for you, please click here.

The original Polis blog post for this was tiny, and I basically quoted the whole thing, so let me make it up to them by encouraging you to check out the blog. What I like about this blog is how it covers a very different territory than I do, and notably has a very global flavor. This makes it very enlightening for me personally. Give them a look.

Related:
Religion and the City
Will Sagrada Família Be Mankind’s Last Ever Great Artistic Statement for God?
Desolation Angel

Thursday, January 5th, 2012

The Urbanophile 2011 Year in Review

Another year is in the books. As the new year dawned, The Urbanophile turned five years old. I continue to be amazed that what started as nothing has grown into the platform that it is today. Thanks to all of my readers for being a part of it. I greatly value your readership, participation, and feedback. I’m going to keep plugging away at my goal of creating America’s premier place for serious, in depth, non-partisan, and non-dogmatic discussion of the issues facing our urban areas as long as I’m able.

As we kick of 2012, I’d like to recap some of the highlights of last year on the blog.

January
I wrote a major expose on the culture of clout in Chicago, showing how it cripples that cities ability to achieve its ambition.
I made the contrarian claim that We Do Need to Build More Roads. (Posted at New Geography).
And Jim Griffioen shared a great piece blowing up the myth of no grocery stores in Detroit in Yes, There Are Grocery Stores in Detroit.

February
Here is a piece on the real problem of innovation. Hint: it’s not a lack of innovative ideas.

March
Will Wiles reconsiders Jane Jacobs.
Chicago’s city flag as a great example of civic iconography.

April
Chuck Banas examines the sprawl bubble.
And I examine how sprawl is a reason why we’re broke.

May
I look at why Chicago needs to look beyond just the Loop for economic development (posted to New Geography).

June
Why the central business districts of smaller cities face challenges far different from larger ones.

July
A look at some of the best city videos out there on the internet.
A point/counter-point series examining why states are anachronisms and why states still matter.
I tell transport advocates that they should face up to the fact that high speed rail is dead. (Posted to New Geography).

August
Angie Schmitt discusses the problem with boosterism.
I declare Megabus King of the Road.
A two part series on the so-called “programmer drought”: part one and part two.

September
I ask whether Sagrada Família will be mankind’s last ever great artistic statement for God.

October
A look at the aerotropolis concept.
Marcus Westbury examines the city as software.

November
A review of the film Urbanized
Angie Schmitt asks whether food deserts are exaggerated.

December
Coverage of a cool project in Indy to repurpose stadium seats at bus stops.

Additionally this year two of the community development projects I worked on for Indianapolis came to fruition. The first was the first ever comprehensive Indianapolis Neighborhood Map and the other was the self-guided Walk Indianapolis Architecture Tours project.

Thank you so much again for reading.

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Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker, and writer on a mission to help America’s cities thrive and find sustainable success in the 21st century.

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