Thursday, May 31st, 2012

Infographics of the Week: Underwater Mortgages, NYC Tech

Home prices web site Zillow is out with an interactive map showing the percentage of of the mortgages in America that are believed to be underwater. It’s pretty scary. Here’s a static version:

h/t Atlantic Cities

NYC Tech

Mashable ran a recent article noting that New York City is now America’s fastest growing tech hub that included this infographic:

Richard Florida also chimed in with a follow-up on New York’s tech scene.

Wednesday, May 30th, 2012

L.A.’s Westside Subway is Practically Ready for Construction, But Its Completion Could be 25 Years Off by Yonah Freemark

[ Most of you are probably familiar with Yonah Freemark’s fantastic blog The Transport Politic. If not, I just suggest checking it out right away. Yonah is a strong advocate for progressive urban transportation policy, but not jingoistic about it. He’s willing to ask the tough questions about projects that many advocates often aren’t with an eye towards making rational investments that are all they can be. Here’s a sample of what you’ll find there – Aaron. ]

Of the nation’s public transportation improvement projects, Los Angeles’ Westside Subway is one of the most important: It would offer an alternative option for tens of thousands of daily riders and speed travel times by up to 50% compared to existing transit trips. It would serve one of the nation’s densest and most jobs-rich urban corridors and in doing so take a major step forward towards making L.A. a place where getting around without a car is comfortable.

L.A. County’s transit provider, Metro, released the final environmental impact statement for the 8.9-mile Westside Subway project last week, providing the most up-to-date details on a multi-billion-dollar scheme that is expected to enter the construction phase next year. The project received a positive review by the Federal Transit Administration in the Obama Administration’s FY 2013 budget, and it is likely to receive a full-funding grant agreement from Washington later this year. Local revenue sources generated by taxes authorized over the years by voters will cover the majority of the project’s cost.

But questions about the project’s completion timeline remain unanswered: Will L.A. have to rely on conventional sources of financing, or be able to take advantage of federally-backed loans to speed construction?

In addition, the project’s specific plans for station construction suggest that there are opportunities to improve station layout and do more to develop land around certain stops.

(I) The Project’s Significance

Many of the rail expansion projects being built in the United States today serve corridors with rather limited existing bus service — there are few people who currently take the bus from downtown Washington to Tyson’s Corner or Dulles Airport, for instance, but a huge Metro extension is currently being built to connect the three, fundamentally to build a new market of transit riders.

L.A.’s westside, on the other hand, already has a very large base of transit users, and most of them are concentrated on the Wilshire Boulevard Corridor, which runs from downtown, through Beverly Hills, the Century City business district, and UCLA, before reaching Santa Monica. The three intermediary areas together contain about 150,000 jobs — and most of them are concentrated within a quarter mile of the street. The city’s famed congestion, especially severe in this area, has attracted people to transit: The local and express bus routes along the line — the 20 and 720 — carry about 60,000 daily riders.

It is no surprise, then, that the corridor has been a focus of L.A. transit investment proposals for decades. The Purple Line subway, which currently terminates at the Wilshire and Western station, was supposed to extend much further into the city when it was first designed, but the threat of gas explosions, a lack of adequate funding, and significant political opposition delayed that action. Yet the election of Antonio Villaraigosa to the mayoralty of L.A. City in 2005 altered the situation entirely, as he ran on a platform that explicitly endorsed the project’s completion and he later campaigned for a sales tax increase to pay for the project — 2008′s Measure R — passed by a large majority of voters. An alignment with seven new stations was selected by Metro in Fall 2010 after three years of studies, though final decisions on station locations were not announced until this week.

Estimates released by the agency point to the degree to which the subway will improve the performance of the transit system, whose service to the westside is currently plagued by traffic-induced delays. Trips from downtown’s Pershing Square to UCLA will decline from 55 to 25 minutes. Riders travelling from South L.A. will save 23 minutes on their journeys; those from east L.A. and Pasadena will save 29 minutes (see above image). These travel time savings are enormous — more than almost any other transit project in the country — and will attract a projected 49,300 daily riders to the line.

Though the subway’s completion will likely not reduce congestion on the highways (because automobile capacity, it seems, never ceases to be consumed), those who need to travel within the corridor will get a new, much faster travel option that is in many cases faster than that which is offered by private automobile, a remarkable achievement in the realm of public transit.

(II) Questions of Time

Because all of L.A. County’s voters approved the Measure R sales tax increase, it would have been unreasonable to focus all revenues in one corridor (and indeed, one suspects that such a plan would not have been approved). Thus the Westside Subway shares the stage with a blizzard of other transit projects being funded over the next twenty years, including the Regional Connector, Crenshaw Corridor, Exposition Line, Gold Line Extensions, South Bay Green Line Extension, and Orange Line Extensions, among others. The large quantity of funds being consumed to build these lines mean that under conventional financing techniques, the Westside Subway will not be completed to its proposed terminus at the V.A. Medical Center until 2036. Only the first phase — a 3.9-mile link to the intersection of Wilshire and La Cienega — would be done by 2020.

For Mayor Villaraigosa and much of the L.A. community, this timeline is unacceptable: To have to wait almost twenty-five years to see a long-planned project completed is scary. Yet the Westside Subway’s $4.4 billion cost (in 2011 terms) is too large for the county to raise money for in a short time period.

Thus L.A. proposed its 30/10 initiative — later renamed America Fast Forward — to use federal loan guarantees to reduce the cost of borrowing and essentially use tax revenues expected to be raised in the future to pay for projects today. This proposal, concretized in the expansion of TIFIA proposed by the U.S. Senate in its transportation reauthorization bill earlier this month, would make it possible for L.A. to build its full subway line by 2022, fourteen years ahead of schedule. Advancing the project’s completion would reduce year-of-expenditure costs for the project from $6.29 billion in the 2036 completion date scheme to $5.66 billion in the sped-up scheme. And it would do it without increasing the level of federal grant commitments to the project, just by reducing borrowing costs for the local agency. Because future residents of L.A. will benefit from transit expansion now, it does not seem unreasonable to use future revenues to pay for the project.

Yet there remains a possibility that the U.S. House, controlled by a GOP delegation that has opposed practically all legislation that Democrats have proposed, will decide not to pass the Senate’s bill and therefore prevent the expansion of the TIFIA program. This would put the timely completion of the Westside Subway in serious doubt.

(III) Station Location

Whatever the Westside Subway’s overall merits in terms of travel time improvements, there remain significant questions about how exactly the line will be constructed. After all, a well-designed transit project is not only one that moves people quickly from station to station but also one that cultivates dense, pedestrian-friendly neighborhoods.

Though for the most part the project’s construction has been welcomed by affected neighborhoods, the Century City station — about halfway down the line — has undergone significant opposition because of the proposed alignment. Metro supports the construction of a stop under Constellation Avenue, in the heart of the Century City business district, compared to an alternative under Santa Monica Boulevard, about two blocks north. This is the reasonable choice as the latter alignment runs through an earthquake-prone zone, faces a golf course, has half as many jobs within a quarter mile (10,000 versus 20,000), and would see a third fewer daily boardings according to current estimates (5,500 versus 8,600). Though some locals have complained that the Constellation routing would run under Beverly Hills High School and therefore put students in danger, those concerns are hyperbolic considering precedent in other cities and the obvious advantages of that alignment.

Although most of the stations on the proposed line will have entrances at street intersections in relatively dense, urban areas,* the stop at the end of the line, at Westwood/V.A. Hospital, is an exception. The station exit as proposed would deposit people onto a series of winding paths just adjacent to a parking lot and a section of Wilshire Boulevard that is effectively an expressway (at the intersection with Bonsall), about 1,200 feet away from the entrance to the V.A. Medical Center (see above image). The situation is made worse by the parkland just adjacent to the stop and the impassable barrier of I-405 northeast of the stop. This is a pedestrian-hostile environment that will offer a disincentive to taking the train.

As Metro’s Steve Hymon notes, the V.A. Hospital stop will play an important role in serving the region’s veterans, but terminating the line there misses tens of thousands more people living further southwest along Wilshire in dense neighborhoods. They, too, should be provided improved transit service, but they will have to wait until 2036 or later to see another subway extension because of budget limitations. Many of them will likely want to drive to the station in order to take the subway because of the significant time savings offered, but Metro proposes no park-and-ride facilities there. Though bus connections will be important, the agency is effectively losing out on potential passengers by not providing for that need.

It would make sense for Metro to consider working with the V.A. Hospital to develop the parking lot directly abutting the stop into a high-density residential or office use, considering the significant demand likely to be spurred on by the completion of the subway.

* With stations spaced at about one station per mile, the argument could be made that these neighborhoods are not being served well enough, especially the community situated between the proposed UCLA and Century City stations, which would be about two miles apart.

See the project’s Final Environmental Impact Statement, Final Environmental Impact Statement Executive Summary and Accelerated Financial Plan.

Images above: from L.A. Metro’s The Source and FEIS Executive Summary

This post originally appeared in The Transport Politic on March 25, 2012.

Sunday, May 27th, 2012

Replay: Minneapolis-St. Paul – White, Liberal, Cold

Note: This post originally ran on December 12, 2010.

As we are experiencing an early winter storm here in the Midwest, one that is particularly slamming the Twin Cities – the Metrodome roof just collapsed – perhaps it is time for a brief look at the Twin Cities.

Minneapolis-St. Paul has always been a bit of an outlier in the Midwest. Its economy was originally based around grains and such, not the auto and metals axes that supported the rest of the Midwest. So it had a very different trajectory than most other regional cities. The economy, along with its location far to the north, meant that it experienced the Great Migration to an extent far less than other cities. Today, the Twin Cities are among the least diverse in the Midwest. The black population of Hennepin County is only 11% and Ramsey County 10%, compared to 26% for Cook County, Illinois, which is more representative of Midwest industrial cities. This, along with its Scandinavian demographics, give the Twin Cities a not entirely undeserved reputation as white cities, though there has been significant international immigration of late.

Minnesota is also famously liberal. Home to politicians like Hubert Humphrey and Walter Mondale, Minnesota has long been known as a progressive bastion, something perhaps related to its Scandinavian heritage. Richard Longworth, for example, noted that in 1978 33 of the 37 corportations that donated 5% of profits to charity were located in Minnesota. The Twin Cities have a large gay population and it is among the most gay-friendly locales in the country. Yet the picture is more nuanced than that. Republicans have often been elected there. The current governor is a fairly conservative Republican. And as immigrants have moved in and the economy changed, state politics have shifted to the right and now more closely resemble American than previously.

And of course there is the weather. It gets cold in Minnesota, making Minneapolis perhaps one of the few cities that can justify its downtown skywalk system. Unlike places like Chicago, however, where people hunker down for the winter or migrate to warmer climates, Minnesotans embrace the winter and winter sports. Their love of the outdoors doesn’t stop in December, and many people enjoy outdoor winter activities.

White, liberal, cold. In my view that sums up the easy popular outside stereotype of the Twin Cities. And like many, it is not without its grain of truth.

Interestingly, that rep is not that different, except for the cold part, from places like Portland and Seattle, places to which the Twin Cities are sometimes compared. Indeed, we see that it is similarly very educated, with a metro area college degree attainment of 37.6%, #8 in the country among metro areas with more than one million people. There’s also a surprisingly strong biking community. The city of Minneapolis has 3.9% of all workers commuting by bicycle, which is #7 out of all cities in the US, trailing only Portland among larger cities. They built a light rail line. The Twin Cities clearly deserve a place in the top ranks of urban progressivist cities.

Indeed, despite the weather and lack of diversity (the political climate’s affect depends on one’s own orientation), the Twin Cities enjoy a strong reputation, especially regionally. Interestingly, when I visited there last spring, a lot of the locals were concerned that, like many other Midwest cities, they have low brand awareness in the marketplace and are often a cipher to people out there in the world. That may be true to some extent, but I can tell you that they are far ahead of most Midwest cities in this arena. Especially within the region, people clearly know the Twin Cities and hold them in very high regard, even if they don’t think a comparison is necessarily fair. One example, an uber-hip person in Indianapolis was talking about some aspect of that city he felt was particularly strong compared to the rest of the Midwest. When I brought up the example of Minneapolis, he said, “Yeah, but everything about that city is just cool.”

So I think the Twin Cities have a positive brand image, from an urbanist perspective at least. And I can tell you from my time visiting and working there that it’s a great city. I could definitely enjoy living there, though there are some caveats I’ll get to in a minute. And it’s not just cool living either. The city is home to many corporations like Best Buy, Target, and 3M as well as a major hub for Oracle and a large American Express facility. There are tons of white collar, knowledge industry type jobs there. Its per capita income is well above the US average, as is its per capita GDP. This is a city that appears to have transitioned well to the new economy, even if employment is a challenge and it has experienced some serious housing bust issues.

The other advantage it has is the the metro area has the trifecta of being the largest metro in the state, the state capital, and home to the main state university. It also has a large share of the state’s population, giving it influence in the statehouse that a Columbus or Indianapolis could only dream of. The geographic downside is that it is remote, and geographically located near the fringe of the US, though it does have good air connectivity.

There are some caveats for outsiders, however. Although the region is below my large Midwest metro average for percentage of residents who were born in their current state of residence (possibly also affected by being a bi-state metro), I definitely get the impression of lots of Minnesotans every time I go there. That’s not necessarily bad, but as with many Midwest towns, it reinforces the feeling of being an outsider if you aren’t one, at least to me.

Possibly that’s a bit because the Twin Cities is a bit of an isolate in the Midwest. In Chicago, you always run into people from where ever it is you are from, especially if that’s in the Midwest. I don’t experience that in the Twin Cities. Indeed, looking at the numbers, other than Chicago and Wisconsin, the Twin Cities do not appear to draw a major number of migrants from other Midwest cities. Denver, San Diego, and Seattle send more people to the Twin Cities than do Detroit, Kansas City or St. Louis. It gets more people from Portland than from Columbus or Indianapolis. The Twin Cities seem more connected to other talent hubs than the rest of the Midwest.

The other thing I notice about the Twin Cities is a very old money feel to it. Perhaps it is just the local style, but the natives I know there often seem to have a somewhat patrician bearing and speaking style. Virtually everyone I’ve met who is a native whose origins I can conclusively identify is somehow connected to money or power. And even for those I can’t, there are strongly indicative things, like a stray mention that, “I grew up in a house along the other side of the lake.” Perhaps because I grew up in a poor rural area, I notice that stuff more, and it’s a little disconcerting. It gives off the impression that there’s a club, and you’re not ever going to get to be a member.

In short, while I really like the city and think I might enjoy living in it, I’m not entirely comfortable there. And I know I’m not the only one. I know multiple people who moved to Minneapolis and left it because of difficulty fitting in or penetrating the social structures there. This might be one cultural weakness of the city. In the type of dynamic, diverse world we live in, cities that turn off a significant number of people can be limited on the talent front. Also, the fact that I’ve heard reports of difficult to penetrate and navigate social structures is also not a good thing.

Nevertheless, given the strong structural advantages of the region, its educated workforce, its air connections, the strong and diverse base of employers, and its ability to attract immigrants, Minneapolis-St. Paul looks to be a successful place going forward, unless they screw it up somehow. What I don’t see yet is a catalyst for turning the region into a real economic dynamo that would strongly grow employment, population, etc. It strikes me that the most likely course is a more restrained and stable path into the future. Regardless, the economic state of the Twin Cities is one which many Midwest towns would dearly love to have.

PS: Here’s a video of the collapse of the Metrodome roof from the inside (if the video doesn’t display, click here):

Wednesday, May 23rd, 2012

Downtown Cincinnati on the Rise

I just got back from the CEOs for Cities spring meeting in Cincinnati. It was the first time I got to spend any time there in a couple of years. But even in that short span of time in a bad economy, downtown Cincinnati and Over the Rhine have really boomed in a way that was beyond even what I expected. Reputedly there are still over 500 vacant buildings in OTR, so everything isn’t great, but I noticed a lot more vitality in the central area than even a short time ago.

Even the local TV news has picked up on this. Here’s a segment WCPO did on what’s happening downtown. (If the video doesn’t display for you, click here). It’s a good story, but the way the anchors approach the story tells you a lot about what smaller city downtowns have to put up with.

h/t Randy Simes

Tuesday, May 22nd, 2012

Can Liverpool Win a Place Back on the Global Stage? by Tim Clark

[ I write a lot about Rust Belt type cities in the US, but America is hardly alone in being home to former industrial towns that are struggling to reinvent themselves. Tim Clark takes a brief look at Liverpool and what it is up to – Aaron. ]

Mayors, city planners, and business leaders from around the world were joined by a surprise last-minute delegate at the New Cities Summit in Paris last week. The delegates, who had gathered to tackle some of the greatest challenges of modern times, were joined by the UK’s newest city mayor – Liverpool’s Joe Anderson.

With the election papers barely counted Labour Mayor Anderson was whisked to France to join Conservative Cities Minister Greg Clark at the summit. Key to Anderson’s trip has been to learn how to help regenerate Liverpool into the thriving city which it was once known.

For this reason Anderson cuts a strange figure at a summit which focuses on global mega-cities of China or the gleaming science parks being built in Russia or India. He has however attracted the attention of the world’s media in Paris, all keen to ask Anderson about his new role as a regional city mayor, and met with fellow world leaders including the Deputy Mayor of Paris.

“It has been interesting to compare what they [Paris] are doing and what we are doing, and how to get through austere times.” Anderson said. “In a way we are very similar, though Paris is on a different scale to what we are doing in Liverpool.”

Paris, like Liverpool, has areas which have suffered from neglect, however the problem in Paris is particularly acute. The French capital’s famous ‘red belt’ of suburbs has been confined to the edges of popular French culture and imagination since the impressionists scorned it in the 1900s. Yet however much maligned the suburbs are, they are now home to over one in every nine of the French population.

Paris is now looking to turn these forgotten districts into clusters for industries and attract global businesses. Though Liverpool may not have the same global clout as Paris, the ideas have had an impact on Anderson.

“Being here [at the World Cities Summit] is two fold, one is to raise Liverpool’s profile as a major city in the UK, and the other is to pick up and share some good practices.

“We’re looking to learn from Paris what we can do to build on what Liverpool naturally has,” Anderson says. “Paris setting up areas of specific opportunities for growth, such as the creative industries and bio-sciences.

“We’ve negotiated with the government to have an enterprise zone and five mayoral development zones. Liverpool is currently the only city outside London to have these powers. It looks like we will develop a relationship with Paris which is mutually beneficial about sharing good practice, so we can learn from what they’ve done and what we’ve done.”

The devolution of power from central government has been key to Cities Minister Greg Clark’s policy of allowing cities to both borrow to build infrastructure to attract businesses and also keep the extra income they generate.

It has been muted that Liverpool will gain extra powers including running key transport services if the city can make the economic case.

“We want to grow the city again, Liverpool has just under 450,000 people, but at one time it was over 800,000 and the infrastructure to cope with that size population is still there. That is a challenge alone, how to maintain infrastructure built for a large metropolis in the face of dwindling income from taxes and a smaller population.

“It’s not just a case of growing and strengthening the city economically, but growing the population as well and sustaining it, and that is why we’ve got to create opportunities to convince people to stay.

Among the gleaming visions on the future on offer at the New Cities Summit it is difficult to imagine Liverpool’s place among them. Liverpool is a city which lives on the glories of it’s past. As Second city of the Empire the port grew to become one of the world’s biggest trade centres, handling over 40 per cent of world trade. It was the Shanghai of Victorian Britain, but it has long since been left bereft of civic pride and the steep decline in fortunes since the Second World War has meant it’s place on the world stage has similarly suffered.

“We have 18,000 people on the housing waiting list and that is a problem. I’ve pledged to build 5,000 houses a year. We need quality affordable homes for sale and in the rental sector, and we have to do that if we want to halt the fact that people are leaving to places where they can find accommodation and jobs.”

One of the plans which is central to job creation is the Peel Holdings Liverpool Waters Development. With an estimated £5.5 billion in investment it is according to Anderson key to bringing Liverpool back to the level of it’s industrial past.

The project has been controversial, with Unesco delegation report stating that the scheme could cause ‘irreversible damage’ to the city’s heritage-listed waterfront. This is something

“It can be as good as Canary Wharf in my view,” Anderson says. “It will bring in businesses, especially in the financial sector. What we want to offer is a brand which is world renowned and that comes down to leadership, so I am ready for that.”

Tim Clark is a freelance journalist based in the U.K. He splits his time between writing about comedy for his website Such Small Portions and writing about travel, architecture and education.

Sunday, May 20th, 2012

New York Considers Parking Meter Privatization

According to the Wall Street Journal, New York City is on the verge of soliciting interest in some form of parking meter privatization.

In considering this, it is important to understand the nature of parking meters. Parking meters aren’t a capital asset like a bridge or highway. Nor are they a real government service like garbage collection or parks. Rather, parking meters are an urban planning tool that cities use to manage access to precious on street real estate for the benefit of the city and neighborhoods. Because neighborhood business conditions are dynamic, and because the best rate to charge and even the best use of that real estate (which may not be parking) change over time, this makes parking meters an extremely bad fit for privatization in the style of Chicago.

Fortunately New York says that they are “not looking to sell the system” and that they will not relinquish control over setting rates. Those are both positives. While Chicago got it wrong, I think there is certainly plenty of scope for involving the private sector in the management of parking. For example, who cares who takes the quarters out of a meter? I sure don’t.

Also, the private sector could potentially implement new technology better and faster. We are on the cusp of a sea change in parking management. One of the key rationales for parking privatization has been the political difficulty of raising rates. But a new system being piloted in San Francisco, embedding ideas from UCLA professor Donald Shoup, points a better way forward. The idea is to bring congestion pricing to parking, by letting the market decide the value of the spot. The computerized meters there dynamically vary parking prices to maintain 80% meter occupancy. People who want and need a spot can then always find one, but spaces don’t go to waste. It gets the city council out of the business of setting parking rates, and depoliticizes them. There could conceivably be many other ways to both more efficiently manage parking and better deploy technology.

However, the devil is in the details. Private companies aren’t in the business of making investments unless they get a return. So what do you promise them to invest in new technology? The WSJ quotes a NYC official as saying, “Our process has been to consider locking in the current performance, and, if it makes sense, transferring the risk to a third party.” This sounds nice in theory, but to get someone to take on risk requires compensating them to do so. I always saw risk transfer as a key benefit of privatization, but through compensation clauses in contracts, it is clear very little risk is often transferred in these deals.

Thus beyond the concept of doing privatization right, there’s the enormous focus that must be brought to bear on contracting. As I’ve come to discover, too many of these agreements are copy/paste jobs with clauses that really disadvantage the public. New York needs to do better. A key is to make sure the term is limited. I’d say anything longer than around seven years is inappropriate.

In that regard I’m sorry that former Deputy Mayor Steve Goldsmith is no longer around. He’s someone who did many privatizations in Indianapolis nearly 20 years ago. While he’s perhaps more favorable to parking meter privatization than I am, I think he appreciated the need to get the details right.

In any case, New York City is probably right to give this a look, but they should realize that they are playing with fire. More than anything else, the most important thing is to make sure the public of New York doesn’t end up getting burned.

Sunday, May 20th, 2012

Correction: OECD Chicago Review

I want to make an important correction to my story on the OECD territorial review of Chicago. Based on previously published reports, I’d said that Indiana had not participated in the study and strongly condemned that. However, it turns out that Indiana did in fact participate in the study, at both the state and local levels. In fact, some Indiana representatives actually traveled to Paris for the initial review of the report. So I’d like to apologize for getting it wrong and set the record straight on this.

Thursday, May 10th, 2012

Will Yet Another Fiasco Finally Convince Rahm Emanuel to Cancel Chicago’s Parking Meter Lease?

Chicago’s parking meter lease is the gift that keeps on giving. Put aside for the moment the fact the parking meters are a bad type of asset for a long term lease in the first place. Even ignoring this, this deal continues to be Exhibit A in What Not to Do for privatization.

Recently the parking meter lessee claimed $13.5 million dollars in compensation for just one year’s worth of allowances for free handicapped parking. Over the course of the lease and with inflation at 3%, that would be over $3.3 billion paid to the vendor just for this!!! Figure in a discount rate of 12%* and that’s a net present value of $173 million. Rahm Emanuel is strongly disputing the payment, but the fact that he’s quietly pushed legislation in Springfield that would end free parking except for the most disabled is almost an implicit admission that the compensation claim is valid.

Now the Sun-Times reports that the vendor is demanding an additional $14 million in compensation for meter closures – and that just for the first nine months of 2011. Just as a refresher, whenever the city closes meters temporarily for construction, a street festival, or a NATO conference, it has to compensate the vendor for lost revenue if the duration exceeds the contractually agreed to closure allowance. Obviously the allowance wasn’t sufficient as this compensation on an annualized basis would be $18.6 million. With 3% inflation over the 72 years left on the contract, that would be $4.6 billion!!! Again, with a 12% discount rate that’s $238 million.

So if these compensation claims hold up, here’s the math for Chicago. The city took an asset that generated $23.8 million in revenue for the city and converted it into one where the city has to pay $32.1 million annual in compensation to the vendor. This is on top of the meter money the vendor gets to collect for the next 72 years.

In return for this, the city got $1.1 billion, which it promptly spent to paper over budget deficits. But even so, given the net present value of $411 million in compensation payments alone to the vendor, the city really only got about $740 million for the meters!

Now the compensation may be adjusted by legislation, arbitration, or negotiation. And these are back of the envelope calculations to be sure. You might prefer different assumptions around inflation and discount rates. But whatever the case, clearly this is a whole huge steaming pile of Bad News for the city.

The Sun-Times also reports that Rahm is talking tough on parking meters and plans to strongly dispute these payments. But they fail to ask the simple and obvious question: Why doesn’t Rahm unwind this disaster of a deal?

Yes, the parking meter deal can’t be cancelled under the terms of the contract. But I’m talking about a negotiated solution, which I’ve written about elsewhere. Whether my plan could work or not, I find it difficult to believe a guy like Rahm, a guy who doesn’t believe in the Can’t Do mindset, who actually is tackling structural problems like the deficit and pensions, couldn’t find a way to get out of this deal if he wanted to.

Why he doesn’t is a complete mystery to me. I’m assuming he must have at least looked at it. But I for one would like to know why he isn’t pursuing it. Especially since the alternative is dealing with the fallout from a disastrous deal for the next 72 years running. Hopefully this latest thorn in his side will convince Rahm to bite the bullet and do the right thing for Chicago by cancelling this lease.

Related:
Can Chicago Get Out of Its Parking Meter Lease?
Yet Another Privatization Debacle in Chicago
Three Years Down, 72 More Years to Go on Chicago’s Parking Meter Lease
Parking Meters and the Perils of Privatization

There is also lots of good parking meter coverage from the Parking Ticket Geek over at The Expired Meter.

* 12% is the mid-point of the range of discount rates suggested by William Blair, the city’s advisor on the parking meter lease, to be applied to meter revenues in valuing the system. So this is a very fair rate to use, though some have argued for a lower discount rate.

Wednesday, May 9th, 2012

Infographics of the Week: Social Media Neighborhoods, Civic Change

For my email subscribers who missed this update, the OECD report on Chicago actually now is available online. Thanks to Jim Russell for pointing this out.

Livehoods

Researchers at Carnegie Mellon University have developed a new way of looking at neighborhood definitions they call livehoods that determines de facto neighborhoods using an algorithm that looks at Foursquare checkins. It’s pretty cool, especially as the maps they generate are interactive. Here’s a static shot of San Francisco though to show you want they look like:

Maps are currently available for San Francisco, New York, and (of course), Pittsburgh, with more to come.

I found this via the excellent Flowing Data blog that I’d encourage any data visualization geeks to check out.

Think, Act, Impact Indianapolis

Another interesting infographic comes to us from the folks at People for Urban Progress. They put together an infographic showing how things get done in Indianapolis city government. If the zoomable image embedded below doesn’t display, click here to check it out on PUP’s site.

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Wednesday, May 9th, 2012

Eduardo Paes on the Four Commandments of Cities

Rio de Janeiro mayor Eduardo Paes gave a TED Talk this year on his “four commandments” of cities, which you can watch below. If you are in Google Reader or similar platform, it won’t display for you, so click here to watch.


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