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Sunday, November 16th, 2014

The Ideology Driven Privatization Backlash

A couple of incidents recently highlight how many communities have taken a sharply negative turn when it comes to privatization. A look at the cases in question however, shows that the objections to it appear to be as much ideological as performance based.

In Indiana, a group of seven counties through which the Indiana Toll Road passes want to buy it themselves from the bankrupt operator and its bankers.

The Indiana Toll Road lease was an unambiguous win for the state of Indiana. Was it perfect? Of course not. But those seeking to portray it as a bad decision always have to cite some peripheral defect. They can’t talk about core matters like the roadway condition, which is in better shape than ever and now with electronic toll collection, nor its operations, which are solid. Nor have I ever seen a critical financial analysis that was remotely credible. (One study in an academic journal that got a lot of airplay used ridiculous discount rates in their analysis, including literally 0% in one of their primary scenarios. This is what they are reduced to in trying to undermine the deal’s logic).

The bid by these counties seems motivated more hostility than logic. La Porte County Commissioner David Decker says, “The nonprofit would not be beholden to shareholders who siphon all the money off. We want to put money back into the road.”

Let’s analyze this a bit. The road is bankrupt, so the shareholders aren’t “siphoning” anything off at this point. I suspect that Cintra and Macquarie (the original lessees) protected themselves well in this deal, however. I’m not crying for them. But the concessionaire did go belly up.

Then there’s the idea of putting the money back into the road. Where were these counties when the state was running the road and letting it deteriorate so badly? There were some truly decrepit stretches of highway, especially in Lake County. Where were all these counties back then? If the public sector is so much more responsive and attentive to public needs, why didn’t the state ever fix this when it owned it? Why didn’t the state ever install electronic toll collection? I started telling INDOT they should install this as far back as the O’Bannon administration, but nothing ever happened. It wasn’t until the privatization deal that money did indeed start getting invested back into improving the road.

Then there’s the counties’ proposed financial structure. The private company paid $3.9 billion and went broke. These counties think that they can pay $3.7-4.1 billion for it, and make a profit of $38-50 million per year even after they – get this – pay a private company to operate the road anyway. How is that supposed to work? Yes, they can issue tax exempt bonds at a lower interest rate. But they want to limit repayment only to the toll road revenues, so that will limit their rate savings. Also, they won’t be able to take advantage of the huge tax write-offs from depreciation and such that the private company had available. I’d have to see the details on this, but it’s quite a financial claim they are making. They are basically saying that they can buy the road back from the bankers and run it at a profit of $50M higher than the bankers could. (Remember, any profits the banks might actually make would surely factor into their sale price). That seems a bit dubious. If it’s really true, every county in American ought to think about turning themselves into a private equity fund to invest in infrastructure assets.

Then there was an article in the Guardian talking about Hamburg voters approving a measure to buy back their electric and gas utilities that were privatized a few years back, or reclaim them when the contracts end.

Again, let’s ask what the problem is. Has the private operator breached its covenants? Have they provided poor service? Have the prices been at issue? No, no, and no. The article talks about pricing as a factor in some “remunicipalizations” of utility service, but not here. Instead what we see is that the real driver is political:

In Hamburg, activists launched the Unser Hamburg, Unser Netz (Our Hamburg, Our Networks) campaign in 2010 after noticing that the city’s existing contracts with Vattenfall and E.On were set to expire. The campaign brought out a wide range of supporters: environmental groups said buying back the grids would give Hamburg more control over its energy systems, and make it possible to really drive the city’s Energiewende transition away from coal and nuclear power and towards renewable energy.
….
The motorways running in and out of Hamburg are lined with giant windmills, slowly churning the air, constant reminders of the country’s ambitious green goals. Shifting the city’s energy transition into higher gear was one of the key promises of remunicipalisation.

The referendum ballot proposed not only to take back the city’s energy grids, but to institute as a binding target “a socially just, democratically controlled and climate-friendly energy supply from renewable sources”.

It seems pretty obvious that the drive to buy back the utility was driven by greens, who hope to use political control to implement their preferred energy generation schemes. In short, it’s about ideology. The article quotes a professor saying that privatization itself is promoted for ideological reasons, but here we see de-privatization happening in the same way. A touch of the increasingly anti-infrastructure bias of the German electorate comes through as another ideological factor.

Lest you say “it’s about climate change, not ideology,” the policy response to climate change very much falls within the political and ideological sphere. The German greens are, as the article notes, anti-nuclear. The Green Party driven, legally mandated decommissioning of Germany’s zero emissions nuclear infrastructure is a big reason why the country is still constructing coal plants in the first place. That doesn’t seem very green to me.

I’ve not hesitated to rake bad privatization deals like the various parking meter leases over the coals as bad public policy. But in these cases we see moves to cancel privatization deals coming from a root of ideological bias, not the public interest.

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Topics: Public Policy, Transportation

Tuesday, November 4th, 2014

Investing Cheap Money by Charles Marohn

[ Many of you have probably heard of the web site Strong Towns. If not, you should definitely check it out. They focus on the long term financial consequences of current development and transportation investment patterns. They also publish their content under a Creative Commons Attribution-Sharealike License. So I’m taking advantage of that to repost this piece by Strong Towns front man Charles Marohn – Aaron ]

Interest rates are at historically low levels while local governments have a huge backlog of infrastructure needs to address. It seems logical that this presents an opportunity for earnest city officials.

Yesterday’s post on domain dependence was a prelude to answering the question posed me last week on Facebook.

How can we best invest cheap money to sustain growth in the future and not squander this opportunity?

There are two types of transactions where cities are justified in taking on debt. The first I will call a “true investment” and the second I will call “legitimate cash flow”. This is true regardless of how cheap money is.

True Investment

In the public realm, we call a lot of things investments that really are not, a lot of things assets that are really liabilities. So when I say a “true investment” I am referring to an expenditure that has the following properties.

  1. The expenditure has the potential to lead to an improvement of the city’s financial position.
  2. That improvement is measurable in terms of dollars.
  3. The actual return in dollars is measured, accounted for and used to inform subsequent investments.

Note that this doesn’t preclude speculative investments, and I’ve indicated that I support a certain level of speculation. My public project portfolio for nearly every American city in 2014 would include many small projects spread out over a large area as opposed to one, two or a handful or large projects. I would also never borrow more money – in terms of term and payment amount – than my current cash flow could cover if the investment went bad.

I would never take on debt speculating on future growth if the repayment of that debt depended on the growth. Never. Cities are not private businesses, property owners aren’t shareholders. The local government has a responsibility to be prudent stewards of the public purse, not gamblers at the casino, regardless of how confident they are that the slots are loose.

Should we be using cheap money to make a true investment? I wouldn’t necessarily have a problem with that, and the cheapness of the money certainly lowers the threshold for success. I would be extra careful, however, to fight the impulse to ignore the need for a return on the investment simply because the money is cheap.

Legitimate Cash Flow

Most cities borrow money for cash flow purposes. In doing so, they are mistaking their insolvency problem for a simple cash flow problem.

Let me give an example. Let’s say a city has four streets. Each street lasts four years before it needs to be repaired. One street was built each year and so they are on a nice four-year maintenance rotation. If the city is solvent – if there is enough wealth in the community where the tax revenue can cover the city’s long term obligations – then there should never be a need for debt. Each year, each street produces 1/4 of the tax revenue needed to fix the street and after four years every street is fixed and the process starts over.

Cities don’t generally have their maintenance obligations so nicely staggered. Often they come in bunches, an echo of the hasty timeframe in which they were originally built. Let’s say that all four streets need to be maintained in the first year. In that case, the city could tax four times the normal amount the first year and nothing the last four OR they could take on debt in the first year to cover the project and then pay it back in the next three. (Note: Obviously this is very simplified and so I’ve not bothered with interest.)

That is a legitimate cash flow problem that the local government can solve with a judicious use of debt. I fully support it.

Let’s say, however, that all four streets need to be maintained in the first year but the city’s tax rate is only half of the prior example. In other words, the city is not collecting enough money from each street – there is not enough wealth there to collect – to cover the cost of maintenance. As in the second scenario, the city takes on debt to cover the maintenance cost but, when we get to the end of the fourth year and need to fix the streets again, they have not been able to pay off all that debt.

Scenario 3 is a case of confusing insolvency with a cash flow problem. The local government believes they have a cash flow problem – there’s plenty of wealth there, just not right now – but what they really have is an insolvency problem. They don’t have the money to maintain everything they’ve taken on. By taking on debt at this point (good interest rates or not), they are piling more obligations on top of the unfunded liabilities they already have. This is a recipe for disaster.

Here’s the scary thing: all cities that take on debt for infrastructure maintenance believe they have a cash flow problem. They believe this despite not having the actual analysis to determine whether or not this is true. My example is four streets over four years. Cities sometimes have hundreds of miles of streets with maintenance occurring over decades. You have to be pretty intentional, organized and disciplined if you want to discern your true financial status.

Most cities don’t. They want to believe they have a cash flow problem because it is convenient, because insolvency is too difficult to fathom, especially when everyone else appears to be doing the exact same thing. Could everyone be wrong? Could we all be insolvent? These two questions probably cost me a total of six years in the intellectual wilderness as I clung to the notion that what I was seeing and measuring could not possibly be true, that a wisdom greater than mine had to be at work that I hadn’t perceived.

While I’m not going to say that low interest rates are a bad thing (they absolutely wouldn’t be if they were real, not artificial), they have the desired effect when it comes to local governments: it induces them to borrow and spend more. This is my primary critique of our current monetary policy, and Federal Reserve intervention, in general: it assumes an underlying economic model that is functioning. When the economy slows or stalls, the theory says to create the liquidity needed to get it back going again. What if it is stalling because it’s broken? What if it shouldn’t go on? Short of total collapse, where is the painful financial feedback that is going to force a change?

Some would argue that this is why we need good policy. Sure, but the smartest minds at the time – from both sides of the political spectrum – believed that suburbanization was a good thing. Same with urban renewal. Same with the nationalization of automobile transport policy. What is a good policy and how can we ever have the confidence to put the overpowering weight of the U.S. economy behind what we think it is? And what if it is a good policy, but only to a degree? Is local nuance even possible with such a highly centralized approach?

The Growth Ponzi scheme has three predictable phases: growth, stagnation and then decline. During the growth phase, everyone is a genius as the new revenue pour in and all the maintenance liabilities are decades away. During stagnation, the debt climbs as we fail to deal with the insolvency problem, mistaking it for simple cash flow. When we are finally forced to deal with insolvency in the decline phase, we have to do it with a crushing debt burden already in hand. Unfortunately, this fate awaits a great number of our places.

So, how can we best invest cheap money? With a Strong Towns approach to debt centered on true investments which pay a measurable return and legitimate cash flow in a city that understands its true balance sheet.

This post originally appeared at Strong Towns on September 9, 2014.

Sunday, November 2nd, 2014

The Urbanophile Interview: Portland Mayor Charlie Hales

I was out in Portland, Oregon last week and while there I sat down for an interview with Mayor Charlie Hales. We talked about the real Portland vs. the idea of Portland, the city’s industrial base, retrofitting suburban infrastructure, and a lot more. If the audio doesn’t display for you, click over to Soundcloud.

Mayor Charlie Hales. Image via Wikipedia

Here are some edited highlights of our conversation. For those who prefer reading to listening, a complete transcript is available.

Mayor Hales rejects the idea that we will have to strategically abandon infrastructure because the finances don’t add up:

My point here is that this is about political will. It is not inevitable or immutable that America is going watch its infrastructure decline. It’s a choice. It’s a bad choice to dither and do nothing. And it’s a good choice to step up and do something. And I think you’ll see more cities doing what we’re doing here in Portland. Which is to say, we’re going act locally, and then keep the pressure on Congress and the State House to do their part too.

Regarding how hard it really is to find a job in Portland:

Not hard. In fact, I think it’s 4.8% – the unemployment rate – among 25-34 year olds here – lower than New York, lower than a lot of places. We’re the 3rd greatest city in terms of college educated immigrants moving here deliberately. They move here, and then not long after, they find work. Or they create work by starting their own business because we’re a very entrepreneurial city as well. I did this in 1979. It’s not an original thing for Portland. In fact you could say it’s been happening since Lewis and Clark that we – that people immigrated here from elsewhere because they saw some opportunity here. We’ve been absorbing those people as they come to Portland. They find work. But that’s the value set of that 25-34 year old cohort. They care about quality of place, quality of life, and what they’re going do when they’re not working. And that doesn’t include, say, sitting in traffic in suburbia. So they like the idea of living in Portland, and they come here and try to make it work. And most of them do. Again, we have a better employment situation for those folks than New York City does. So it’s not true that young people come here and are stuck in jobs that they’re way over qualified for indefinitely.

About how the real Portland differs from the idea of Portland people have from the media:

Like all good caricatures, Portlandia makes fun of some things about us that are true. I mean, we do love localism, so Colin the Chicken is somebody that we would care about here in Portland. And we are relentlessly earnest about our values.

There some other ways that we don’t. We’re still an industrial city. We’re a big hands, port industrial city. We build boxcars and barges. We just cut the ribbon on the biggest dry dock in North America last weekend. So we employ a lot of welders and steel fitters and plumbers and pipe fitters, and all those hands-on trades. We build trucks here. We build boxcars. We make steel pipe. There’s a lot of traditional “old economy” industry here.

Another part of Portland that doesn’t show up in the caricature is…the other half of the neighborhoods that were half-baked suburbia when they got annexed into the city. And we’re trying to make them complete communities with a local economy in that neighborhood and those kind of services that you can walk to. And, oh yeah, in many cases, there aren’t even sidewalks, and there’s no neighborhood park. So, we’re spending a lot of effort and money on trying to retrofit those suburban parts of Portland, to not be physically identical to the old neighborhoods, but have those ingredients of a complete neighborhood that Portlanders like to see.

Wednesday, October 22nd, 2014

Talking Transit

This week I want to share a couple of urban podcasts. The first is another installment in Carol Coletta’s Knight Cities program, this one featuring Vin Cipolla, President of the Municipal Art Society in New York. I should note that the MAS Summit for New York City is actually tomorrow and Friday. If you aren’t attending in person, previous ones were live-streamed I believe, so my assumption is that this one will be too.

Cipolla talks infrastructure, density, entrepreneurship, civic leadership, and outer boroughs in a talk focused on New York City but relevant to other places. If the audio player doesn’t display for you, click over to Soundcloud.

The second is a radio segment in Kansas City featuring Jarrett Walker talking about public transit. As always, this is fantastic, must-listen stuff. If the audio embed doesn’t display, click for the MP3.

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Topics: Transportation
Cities: New York

Tuesday, October 21st, 2014

Chicago’s Secondary Stations: Little Engines That Could…And Should by Robert Munson

This is part of the series North America’s Train Stations: What Makes Them Sustainable or Not?

To describe how central stations can help us evolve toward sustainable transportation, this series uses a middle category called “Economic Engines.” This category stimulates its surrounds. These three Chicago stations do that job well.

Category: Economic Engines (click for all currently reviewed stations)
Consolidated Scorecard: Click to view full scorecard
Scorecard Summary:

max pnts = 100 80 Ogilvie Transportation Center     (OTC) 75 Millennium Station (MS) 70 Lasalle Street Station (LSS)
  1. A) Function & Flow
18 17.0 While OTC gets busy at rush hour, good design made this Chicago’s best functioning station. 14.0 Despite two decades of missteps between agencies of two states, the station turned out OK … except for cost overruns. 13.0 Chicago’s smallest terminus works well and METRA plans to add about 15% more passengers by adding a second line.
  1. B) Efficient Connections
32 27 It connects just OK to other transit as well over half choose to walk. 23.5 Most walk to destination or one block to “Elevated.” Bus connections are slighted; crowded at street level. 23 The building is less ped-friendly than OTC, but connects best to transit with the “El”, a subway and has a protected bus station.
  1. C) Station Synergies  
50 36 For redeveloping its surrounds, OTC is in America’s Top 5. 37.5 Surrounds are the tops; one of the world’s great urban park destinations, many office buildings and lots of mixed uses. 34.0 Surrounds to the south and west have not redeveloped as fast; being separated by expressway traffic.

Chicagoland’s twelve commuter lines constitute a system that is nearly the nation’s largest. (New York’s LIRR is slightly larger; while Metro North and New Jersey Transit, respectively, run a close third and fourth). But if we bite-size Chicagoland, we see an analogy to mid-sized cities. The first bite is that six lines terminate at Union Station, leaving six more at these three stations. Here are their counterparts in other cities.

1) Ogilvie Transportation Center (OTC) terminates three lines with commuter volume slightly more than Boston’s South Station.

2) Millennium Station ends two lines from different states, as does DC’s Union Station with similar suburban volume.

3) Lasalle Street Station terminates one large line with passenger visits at just under 30,000 daily, similar to San Francisco’s Caltrain terminus.

Also strengthening comparison to other cities, Chicago’s secondary stations connect poorly to one another, creating, essentially, three mid-sized rail systems. Comparing Chicago’s three smaller stations shows other regions how to develop better stations and strengthen the national trend to improve suburban rail. Today, eleven systems in North America carry more than 41,000 passengers daily. Some 15 more fledgling lines are trying to catchup. Highlighting central stations’ future importance, there are 28 new lines in various stages of construction and engineering.

In studying some three dozen central stations, I see many similarities to these three in Chicago and hope you find the analogy useful as well.

What Do These Three Stations Have In Common?

These stations were key parts of the eleven decade transformation from a filthy, industrial downtown to a global center today. In 1900, downtown’s chaotic streets were surrounded by rail yards and warehouses. These stations’ predecessors muted this roughness and provided orderly centers. But as private passenger rail collapsed during the 1960s, Chicago’s downtown also lost its balance. Yet, plans boldly were made to rebuild all three stations. The new ones served as leverage for Chicago’s revival from the 1980s through the 2006 real estate crash and were key to transforming the downtown. A century after Burnham’s fantastic depiction in “A Plan For Chicago,” today’s downtown has a different beauty… but arguably, an equal of those drawings.

Transportation established Chicago as central to the nation’s economy. A recent book, Terminal Town, reviews how Chicago used rails. In today’s economy in which people are a key asset, ownership of passenger rails and terminals, again, is strategic.

Unfortunately, all three stations are owned by Metra; the beleaguered state agency. This challenge to Chicago’s future cannot be ignored much longer. While Illinois has fiddled away the last five decades without a management scheme capable of remaking the system into a future regional asset, all three termini, somehow, got updated.

When you consider that the 1970s and 1980s saw Chicago battling its suburbs, redeveloping these stations seems amazing. That storm and fury was transcended by a simple deal; the suburbs knew these rail lines were their assets also and, as Chicago did, that they could use the rails to revitalize every municipality’s downtown. For the last three decades, Chicago leveraged its land use authority well and turned eyesore rail yards and warehouses into vibrant blocks around all three stations; improving nearby real estate values in ways that only ambitious cities do.

Impressively, all three stations work well and OTC is close to great. Here’s how.

Ogilvie Transportation Center (OTC): How Excellence Redevelops Surrounds


Main concourse adjoining tracks. Photo by the author.

Few stations treat the eye better. Also true of its predecessor, Chicago & Northwestern’s grand concourse evoked the glories of rail travel. But, it was demolished and the new concourse adjoining a 42 story tower was completed in 1984. The new concourse spaciously evokes rail glories in a post-modern setting. Reminiscent of United’s hub terminal at O’Hare Airport, OTC’s main concourse also was designed by the same starchitectural firm. But OTC makes a more important statement on a daily basis: traveling with others in efficient modes makes a better future.

Also, few stations better flow during rush hour’s crush. On the photo’s left, 16 tracks end. In the middle (not pictured to the right) are 6 escalators eventually connecting to four street exits. Also not pictured to the left, each train shed platform has stairs so commuters have the option to exit down to a retail concourse (called MetraMarket) with two more street exits. While neither concourse has a suitable waiting area, one can while away time at some 60+ stores in three distinct malls that seem to thrive on the station’s high traffic.

OTC was named for Governor Ogilvie. His leadership and staff cobbled together the deals that saved a world-class set of commuter rails while places such as St. Louis let their systems die. The Governor’s public service and this station’s quality explains why Chicago’s downtown revival has been so much faster.

A three block radial walk (map below) depicts how a 42 story tower and tracks have leveraged redevelopment ever since. Large warehouses were converted and old low-lying railroad shacks were demolished and rebuilt into a dense urban neighborhood; mixing office and residential high-rises. To address the retail shortage, the station’s ground level under the tracks was converted into the Metramarket complex (see black rectangle) and includes the destination-like French Market with two dozen gourmet food shops; making dinner easier for suburbanites and nearby urbanites alike. The French Market is not New York’s Grand Central Market, but it is America’s stations’ second best.

OTC’s scorecard rating of 80 indicates how well OTC works during its rush hour detraining of passengers to platforms and sorting them to six exits and on paths to their final destination. And OTC does all this while feeding suburbanites slices of 21st Century urban life; hopefully, so they move and add to Chicago’s downtown population which has grown by over 500% since the station was built.

Millennium Station: Destination Made, But No Second Act


Millennium’s main concourse. Photo by the author.

As this station’s metaphor, the center-point above is where the two state agencies and their separate lines meet. Follow those lines and you get to their underground tracks. Yet, redeveloping the Illinois Central rail yard and depots into Millennium Station was not simple for several reasons; a primary one being how cost over-runs of Millennium Park, its above-ground neighbor, affected this station’s construction.

More important, the station required Illinois and Indiana agencies to act like partners and mesh different rolling stock, albeit both electric since they run underground for three blocks. (Metra’s other ten lines are diesel). These and other complications created a construction zone for two decades; instead of a station that welcomed suburbanites. Eventually, the collaboration got OK and passenger levels returned after completion.

Indiana’s South Shore line has six tracks that terminate at the south end and Metra’s former Illinois Central line terminates on five tracks at the station’s north. Both sets of passengers merge into a concourse with ticketing, a decent waiting area and food shops. Efficiently, passengers distribute into three exits of Chicago’s extensive underground Pedway; allowing them to escape bad weather or connect to transit.


Millennium Station’s main entrance comes from the underground Pedway and contains most of the station’s 10 store retail corridor. Photo by the author.

An underground station, it can look like a fancy subway stop. Serving one of the city’s most intense urban areas, the station still is pleasant enough to begin one’s workday and, hopefully, make it less of a grind. With limited room for growth at rush hour, this station is what it is. The scorecard rates it at 75.

Lasalle Street Station: Some Room To Grow


On the far right of this photo of the Chicago Architecture Foundation’s model, you see the train shed leading into Lasalle Station and its adjoining tall Stock Exchange Building. To its left is an expressway and considerable undeveloped land. (The other two stations have almost none). Photo by the author.

This fourth remake of Lasalle Street Station had a relatively simple deal. It involved only one bankrupt line (the Rock Island) and Metra also bought the tracks; giving it more control. Much like OTC, the main entrance depends on collaboration with one large building owner. But in Lasalle’s case, the Chicago Stock Exchange was not as accommodating. It is an over-imposing host and unwelcoming to pedestrians. While airy and utilitarian, the station itself works well enough to earn an overall rating of 70.

Lasalle does have excess capacity at rush hour and Metra plans to shift the Southwest Service and its 10,000 daily passengers from Union Station to Lasalle, increasing the station’s usage by almost one-third.


Entrance and exit to the east-west Congress Expressway. Photo by the author.

The station’s only major weakness is an east-west expressway ends under it. Eager to reach high-speeds or slow to slow down, eight lanes of traffic make it harder for urban and pedestrian life to develop. This division makes the station’s south side less desirable to live and work in and has been much slower to develop. This is changing as its parking lots are being built into condos and apartments. While Chicago is adding streetscapes for urban fabric, the expressway is hard to hide.

How Can These Good Stations Contribute In the Future?

Each should connect better to transit. While they average about 44% of their passengers who walk to their destinations, the finite number of jobs in each station’s pedestrian shed means that most new commuters are more likely to first want improved transit connectivity. This is more true at OTC, where only 33% of riders walk. To encourage transit transfers, OTC passengers should be able to enter the ‘L’ at the same level they detrain. But with ceaseless inter-agency bickering, de-trainers must go down to the street and up to the ‘L’ whereas a simple passage on the same level would encourage train passengers to use rapid transit.

Also, all stations could improve transfers to standard buses in little ways… if some agency had the authority to force Metra to obey the law and participate in the CTA’s Ventra universal card. (An agency with a future would even subsidize the transfer of train passengers to CTA buses and ‘L’).

When the downtown Bus Rapid Transit starts in 2015, lousy transfer policies start getting better. BRT ties together Union Station, OTC and Millennium with several other key stops downtown. To visualize how the BRT works, here is a downtown map with rail termini as the large blue blocks and BRT as the double-red line.

As big an improvement as this promises to be, BRT in a congested downtown such as Chicago will only provide temporary relief. BRT is no replacement for an integrated system. (Chicago has twice failed to build an urban circulator). Agencies that squandered time and taxpayer goodwill, now, must resort to the BRT stopgap.

Even if achieved, improved connections only will cause the rush hour crush to grow. Now near capacity, the quality of two station’s commute deteriorates with increased ridership. Often touted as panacea, a West Loop Transportation Center (WLTC) that through-routes Union Station and OTC will make greater efficiencies, improve rush hour capacity and speed travel between suburbs. But, a WLTC is highly improbable under Metra’s regime and its poor supervision by Illinois’ RTA.

Besides, the WLTC only marginally helps the core problem: Chicagoland’s lines are radial and bring everyone downtown; causing congestion. So a strategic solution would use rails to bring commuters to Chicago’s employment centers that are not downtown.

For example, many south-side Chicagoans and suburbanites work at the west-side medical district, one of the world’s largest collection of hospitals. The former Rock Island line easily can be connected to a new medical district station two miles west of Lasalle. If successful, that train eventually could be connected to O’Hare Airport; also a non-9-to-5 employment center that requires better train service. And with service in-between the medical district and the airport, other employment centers will be stimulated.

If Metra cannot start this strategy quickly, we should organize a way around it.

Chicagoland should consider how trains increase service and stimulate redevelopment in other global cities. London’s Thameslink started in the late 20th Century. It was so successful that redevelopment around its stations now stretches from the once run-down St. Pancras area for three miles through London’s center and across the river (follow the yellow line) to the much more forlorn surrounds of Elephant & Castle. While hard to see in my photo, the six stations in this three miles, on average, have redeveloped over 50% of their surrounds. (The St. Pancras foreground shows new construction as the lighter shade, whereas renovations remain the darker shade).


Model is in the lobby of the London Building Centre.

As further proof of how trains stimulate redevelopment, note the purple through-line running left to right. The purple is Crossrail; still only mid-way dug. Thameslink’s success signaled to developers that the surrounds of Crossrail stations also are sound investments. Both through-lines have stimulated London’s building boom; one that rarely has been seen by a western city since the industrial era. Such is the leverage generated when suburban rail through-routes and becomes urban rail.

On a relative basis, Britain’s passenger rail system seems flexible; being nationalized, ossified and, now, has had operations privatized. Unfortunately, we live under Uncle Sam’s feeble, federated and seemingly unresponsive transportation laws. This allows Metra to be controlled by suburban mayors who tend not to view rails as a metropolitan asset. Stopped by this regime, Chicago needs a new strategy before it can benefit from London’s example. However given that Illinois laws recently allow public-private partnerships (which have similarities to London’s laws), we should explore how trains can redevelop urban areas. Using an asset to metropolitan benefit leads to sustainable transportation.

Getting To “Should”: Lessons for Sustainability

Mid-sized American cities want what these three stations have. All three stations function well at peak hours and help redevelop their surrounds, the key goals of this series’ Economic Engines category.

But, all three have limited potential to serve as a symbol that pulls their train system into a sustainable future. Chicago’s “little engines that could” — owned by Metra — might improve service with a few small steps, such as improving connectivity to transit. But even if Metra were to be reformed into an adequate agency, these improvements only push the stations past their rush-hour capacity and, thus, still are not on a path for sustainable transportation.

To maximize trains’ potential, strategies must increase off-peak travel and serve employment centers other than downtown. Through-routing can increase ridership and stimulate redevelopment outside of downtown. But these strategies are unlikely to emerge under an outdated, scandal-riddled agency that appears to have lost its social contract with passengers and taxpayers.

So that trains can help inspire the confidence needed to attract new public and private capital to redevelop targeted areas, this series in 2016 will explore how Chicagoland’s agent for sustainable transportation “should” operate.

Robert Munson lives in Chicago and can be reached at robertmunson@earthlink.net.

Thursday, September 25th, 2014

Highway Boondoggles

US PIRG, a left oriented activist group, last week released a report called “Highway Boondoggles,” examining eleven highway projects they say are unneeded and will cost $13 billion.

Highway spending is clearly a blind spot for conservatives, who often otherwise decry excessive government spending. But as I’ve observed for some time, there’s basically no highway boondoggle big enough that even the most fiscally conservative governor is willing to kill it.

I happen to think we do need to invest in roads, but there are a lot of massively unneeded projects. I’m not familiar with all of the eleven projects in question, but of those I’ve looked into at all, they do indeed seem dubious. The Opportunity Corridor in Cleveland being one. Double decking I-94 in Milwaukee also seems of doubtful value given that metro Milwaukee has long been one of the slowest growing large regions in the country in terms of population, and both the city and county of Milwaukee don’t want it.

Check the whole thing out.

Sunday, September 21st, 2014

Indiana Toll Road Lease Vindicated As Win For Hoosiers As Private Operator Goes Bankrupt

The genius of the Indiana Toll Road lease is now on display again as its private operator is declaring bankruptcy. Mitch Daniels once said that it was “the best deal since Manhattan was sold for beads – only this time the natives won.” We now have the proof on display.

I continue to be mystified that people can still claim this was a bad deal for the state (see former Indiana House Minority Leader Pat Bauer and this Shaw Friedman guy). Hello? If the operator is going bankrupt, it’s because they overpaid. The revenue projections they made were so inflated that the tolls couldn’t even cover the debt service. That means Indiana got way, way more than the road was actually worth.

It may well be that you can have various objections to the deal. Maybe the state should have better anticipated some compensation events. Maybe you don’t like some of the projects the proceeds were spent on (there are a few I think are dubious). But just because the deal might fall short of some theoretically perfect ideal that nothing ever achieves doesn’t mean it wasn’t a massive win for the state overall – especially financially.

Those who claim that the state could have better monetized the highway itself beyond stretch credulity. After all, the state never made a material profit on the highway in the 50 years it owned it and it had badly deteriorated in many places. To think that state would have been able to generate more than the private concessionaire paid ($3.9 billion in cash and upgrades) with a revenue stream that has proven manifestly inadequate to even keep the private firm afloat is, shall we say, a bridge too far. (You might be able to try a Laffer Curve type argument, but I’ve never heard anyone actually make it. And if cutting tolls would have optimized revenues, you can believe the private operator would have tried it).

Daniels did once say that the state would retake responsibility for the road back if the vendor declared bankruptcy. He clearly misspoke on that. The state won’t get the road back until the lease expires (though still has and never did lose ownership). But if the bankrupt or restructured entity defaults on its obligations under the lease, the state very much can take it back. So the state is protected. Who care’s who the operating entity is as long as it’s delivering on the contract?

I don’t think that government should try to sign “gotcha” deals with private parties that sends them into bankruptcy. Ideally such deals would be win-win. But given how many terrible deals have been signed with cronies and such out there, it’s good to see one where the public gets a clear win. Cintra and Macquarie are big boys who surely already protected themselves (and have a large portfolio which likely includes some big winners for them). Though a new operator may try, and they’d be crazy not to, there’s no reason for the state to renegotiate on this one.

Wednesday, July 30th, 2014

Urban TED Talks

This week I want to feature a couple of urban related TED Talks for you.

First, because this never gets old, former New York City Transportation Commissioner Janette Sadik-Khan talks about transforming New York’s streets.

Second, if you don’t know the story, Oklahoma City Mayor Mick Cornett challenged his city – and himself – to lose weight. The result was over a million pounds lost. He tells the tale in his talk.

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Topics: Transportation

Tuesday, July 29th, 2014

Why Do We Care About Mode Share? by Daniel Hertz

[ Daniel Hertz of City Notes fame takes a look at the debate over mode share – Aaron. ]

The New York Times ran an op-ed the other day that helpfully demonstrated the pitfalls of lifestyle arguments in favor of urbanism, namely that they are annoying to everyone but the people making the argument.

The boys, like their father, are lean, strong and healthy. Their parents chose to live in New York, where their legs and public transit enable them to go from place to place efficiently, at low cost and with little stress (usually). They own a car but use it almost exclusively for vacations.

“Green” commuting is a priority in my family. I use a bicycle for most shopping and errands in the neighborhood, and I just bought my grandsons new bicycles for their trips to and from soccer games, accompanied by their cycling father.

These arguments – whether they’re about physical health, or “diverse” or “vibrant” or “creative” communities, or whatever else – are, at bottom, about telling people that they are lacking, and that in order to improve themselves they should become more like the author. In the 1970s, when city dwellers felt superior mainly because of their supposed cultural capital and were telling middle-class suburbanites to loosen up a little, that might have been obnoxious but harmless. In our current situation – when the city dwellers making these arguments are the economic elite (the author of this particular piece, Jane Brody, lives in gentrified brownstone Brooklyn, I believe) – it’s a lot more sinister. Brody talks about commutes as if their length and form were something that most people could freely choose, rather than something imposed upon them by their wages and the price of housing and form of development of their metropolitan area. She makes this a story about personal morality, rather than the constraints we choose to put on people through public policy.

This is related, I think, to the study about mode share in U.S. cities that got passed around the urbanist blogosphere recently. In virtually every instance, the study was presented like a sports power ranking, with the winning cities being those with the least travel by car (“city of Chicago ranks sixth among large U.S. cities for percentage of people either biking, walking, or riding transit,” is a typical formulation of the lede).

But why, exactly, do we care about mode share? The pettiest possible answer is that we do conceive of cars v. transit/biking as a sort of culture war, just like many committed drivers have alleged, and what percentage of people choose to drive or do something else is how we measure whether or not we are winning. This, clearly, is not a particularly edifying possibility. A better answer might be that we really do want everyone else to be more like us – to reap the benefits of non-car commuting, from being healthier (although, contra Brody, I spent my subway commute today scarfing down a pound of spaghetti) to polluting less – and this tells us how many people are enjoying those perks.

That’s much more reasonable, but still problematic in that, like the Times piece, it strongly implies that the issue is individual choice, rather than the circumstances that constrain that choice. The people who write for places like Streetsblog know that circumstances matter, but for the casual reader, articles about mode share makes those issues a sort of specialists’ background.

That’s too bad, because mode share does convey some important information about constraints. If we assume that, allowing for some cultural margin of error, most people will choose to get to work via whatever method they find most efficient and comfortable, then we can determine roughly what percentage of people in any given city have decent access to transit – access that’s at least in the same ballpark of convenience as driving – just by looking at what percentage of people actually use it. Obviously there are complications to this: since one major inconvenience of driving is cost, cities with high poverty rates may have mode shares that exaggerate their transit’s effectiveness, for example. And since transportation choice is basically zero-sum on an individual basis – that is, all that matters is the relative efficiency of each mode – you could get a lot of people on transit by making driving truly hellish, without providing decent service. (Although in the American context, I think there are vanishingly few places where that would be an issue.)

Moreover, if we care about mode share as a proxy for service effectiveness, then beyond a certain point – say, a quarter, a third, whatever, of commuters – you’re kind of done. It doesn’t really matter. If New York City, with one of the most comprehensive transit systems in the world, can only get 50% of its commuters on buses and trains, then surely most of the distinction between it and, say, Asian cities with much higher transit mode shares isn’t the quality of their systems (although they may be of higher quality), but the increased misery of driving in ever-denser places. The issue stops being whether we can get from 40% to 45%, but whether subregions of the metropolitan area have strongly varying mode shares, suggesting that you can only get decent access to transit if you live in the right place. And, of course, that is in fact the case.

But if what really matters is service levels and access – if what we’re trying to accomplish is giving everyone a level of service where transit is a viable option, for reasons outlined here – then why not just measure that directly? Why not have widely-disseminated statistics about the percentage of people in every metropolitan region who can walk to a transit stop? Or make a bigger deal about the number of people who can reach some given percentage of metro area jobs via transit in a reasonable time frame? I almost never see those numbers in urbanist conversations, and to the extent that I do, they’re sort of ghettoized into the “social justice” urbanist subculture.

But these seem like relevant numbers for “mainstream” urbanists, too. In fact, they seem a lot better than mode share. Generalized public arguments in favor of transit projects are more likely to benefit from language that suggests they’ll provide options, rather than language that suggests the ultimate goal of the policy is to force people out of their cars. Because, in fact, that’s what public policy should be about: making transportation easier for more people, rather than moralizing about the perfectly legitimate choices that people make, given their circumstances.

This post originally appeared in City Notes on November 11, 2013.

Tuesday, July 22nd, 2014

Incrementally Transforming Kokomo Without Debt by Eric McAfee

[ Kokomo, Indiana is a small industrial city about an hour north of Indianapolis. It is one of the rare ones whose industry remains largely intact, with two large auto-related plants. This makes them different from the type of community that really has deindustrialized. Yet they fret that those who earn decent incomes in their town too often decide to live in the Indianapolis suburbs. Hence a program to upgrade quality of life in the city. It should be noted that while they’ve managed to do this without incurring debt, Kokomo arguably benefited more than any city in America outside Detroit from the massive federal auto bailout. Their civic improvements have in a sense been financed by a unique external windfall unavailable to others. Nevertheless, lots of places have received windfalls and spent them poorly. Cities may not be able to control our circumstances, good and bad, but they at least have some control over how they respond to them. This piece from American Dirt takes a look at Kokomo’s response. Keep in mind it ran in 2012 and there are likely some anachronisms by now – Aaron. ]

Across the country—but particularly in the heavily industrialized Northeast and Midwest—smaller cities have confronted the grim realities of the unflattering “Rust Belt” moniker, and all of its associated characteristics, with varying degrees of success. With an aging work force, difficulty in retaining college graduates, and a frequently decaying building stock, the challenges they face are formidable. Cites from between 30,000 and 80,000 inhabitants typically boomed due to the exponential growth of a single industry, and, in many cases, the bulwark of that industry left the municipality nearly a half century ago, for a location (possibly international) where the cost of doing business is much cheaper. Essentially, everything the smaller Rust Belt cities had to offer is completely tradable in a globalized market; the resources that provided the town’s life blood are either depleted or are simply to expensive to cultivate further.

Reinvention is the only condition likely to save many of these cities from persistent economic contraction, but, with an overabundance of retirees and older workers, these towns lack the collective civic will that could be expected in larger communities with more diversified economies. An absence of young people intensifies (and, to a certain extent, justifies) the low level of civic investment in one’s own community; after all, if a resident is six months from retirement, how likely is it that he or she would support public investments intended to improve quality of life for twenty or thirty years into the future? For that matter, how likely will a population of retirees remain engaged to encourage or challenge major private sector investments as well?

By no means am I intending to denigrate needs and ambitions of the senior population; I’m merely observing that a stagnant Rust Belt city with this demographic profile will demonstrate vastly different priorities from a city rife with young families. While every Rust Belt city large and small must avoid obsolescence that results from the spoils of globalization, the smaller cities—which have tended to be dominated in the past by a single thriving industry—are less likely to claim alternative sectors and labor pools if their primary manufacturing lifeblood fails. A dying city of 80,000 may not exert the same impact within a region (particularly in the densely populated Midwest and Northeast) that a city of 500,000 would, but it is far more of black eye for the state than a town of 2,000 that has lost its raison d’être. This conclusion is obvious.  Many of these small cities must reordering of their economies comprehensively; while the state, the county, or private foundations may offer some outside help, the constituents of these cities themselves are typically the best equipped to understand how their city should evolve. Unfortunately, many of these communities aren’t yet even aware of the need for this reinvention, let alone which avenue to pursue in order to achieve it.

It is with no small amount of reassurance that I can assert that Kokomo, Indiana is not one of these latter cities.

No Rust Belt complacency on display here in the City of Firsts. Though as recently as 2008 it was on Forbes’ list of America’s Fastest Dying Towns, a recent visit shows much more evidence than I’ve seen of some comparably sized cities in the region that the civic culture is neither resting on its laurels nor wringing its hands about how much better things used to be. In fact, one of the Indianapolis Star’s leading editorialists, Erika Smith, recently visited the city, and, after receiving a tour from the Mayor, was pleasantly surprised by how proactive it has been in implementing precisely the type of quality-of-life initiatives largely perceived as necessary to help a historically blue-collar city stave off a brain drain or descend into irrelevancy.

I, too, recently received the Kokomo tour, followed by a meeting with Mayor Greg Goodnight, and I can also recognize some of the city’s most impressive achievements at shaking off the post-industrial malaise that saddled the city with double-digit unemployment rates as recently as a few years ago. Since then, the city has introduced a trolley system at no charge to users; prior to this initiative, the city had had no mass transit for decades. The Mayor pushed successfully to annex 11 square miles in the town’s periphery, therefore elevating the population by about 10,000 people. The Mayor’s team worked to convert all one-way streets in Kokomo’s downtown to two-ways, recognizing that accommodating high-speed automobile traffic in a pedestrian-oriented environment only detracts from the appeal. The team has restriped several miles of urban streets to incorporate bike lanes, and it has converted a segment of an abandoned rail line into a rail-with-trail path, branding it by linking it to the city’s industrial heritage. They have deflected graffiti from several bridges and buildings through an expansive and growing mural project. They have upgraded the riverfront park with an amphitheatre and recreational path. They have introduced several sculptural installations, the most prominent of which is the KokoMantis, a giant praying mantis made entirely of repurposed metal and funded privately. And my personal favorite: with the support of the City, the school superintendent has integrated a prestigious International Baccalaureate (IB) program to the public school system, including an international exchange program for young men from several foreign countries (a girls’ program should arrive in the next year or two) who live in a recently restored historic structure in Kokomo’s walkable downtown, attending demanding courses that bolster their chances of admittance in a coveted American university. Most impressively, the City of Kokomo has achieved all of this without incurring any public debt in the past year.

Obviously the individuals offering me this tour are going to make sure their Cinderella is fully dressed for the ball, and I recognize that not a small amount of the securing of certain infrastructural projects and transportation enhancement grants requires a political savvy that the current civic leadership has in abundance. And I don’t want to rehash Ms. Smith’s article, which more than effectively chronicles this approach at a macro level. In addition, Erika Smith recognizes, as do I, that very few of these initiatives (the IB foreign exchange program notwithstanding) are really particularly earth-shattering. But when most other similarly sized cities in the Midwest seem to be engaged in a race to the bottom, luring new industry through generous tax breaks (often initiated at the state level), Kokomo seems to recognize that a town lacking any amenities outside of low cost of living has to compete with dozens of other cities in Ohio and Michigan and Pennsylvania, and elsewhere in Indiana, that offer the exact same brand. Whether this investment yields a long-term return remains to be seen, but it certainly demonstrates the right gestures necessary to instill civic stewardship in a place whose decades of job loss have seriously scratched its mirror of self-examination.

What ultimately struck me about Kokomo—which Erika Smith only touched upon—was the level of design sophistication evident in some of these civic projects. I need only focus on a single location in the city, in which two particularly laudatory techniques are on display. At the intersection of Markland Avenue and Main Street, just south of downtown, the Industrial Heritage Trail begins its journey southward. Here’s a view as the trail terminates at its junction with those two streets, looking northwestward:

Here is a view in the other direction:

Continuing a bit further in this direction, one encounters this painted wall:

And, pivoting slightly to the left, another mural that is still in progress:

This photo series identifies two amenities that stand out for the astute decision-making that apparently took place during the implementation. The Industrial Heritage Trail clearly operates in a railway corridor, but it is not a rail-trail. Unlike the more common rail-trail conversion, this Kokomo trail did not incorporate the removal of the original rail infrastructure. The Rails to Trails Conservancy would label this approach a rail-with-trail, indicating that the trail shares the railway easement, typically separated by fencing. Rail-trails such as the Monon Trail in metro Indianapolis are still the more common practice. However, a growing number of communities are embracing rail-with-trails, not only because they obviate the need for costly removal of rails, ties, and ballast, but they reserve the rail infrastructure for the possibility that a railroad company may reactivate the line in the future. If the sponsors of Kokomo’s Industrial Heritage Trail had removed the infrastructure, the possibility of ever reintroducing rail along the corridor would be virtually nil. As it stands, the only conceivable disadvantage to rail-with-trails is that, in the event a rail company reintroduces train service, its close proximity to the path may prove hazardous to bicyclists or pedestrians. Otherwise, the decision to retain the railway not only helped to diversify options, it most likely saved a considerable amount of money.

The other smart decision was the site selection for those murals. The ones featured in the photos above are part of a growing mural campaign that the City of Kokomo introduced, and every one that I recall shows real foresight in the locational decisions. What makes them so good? The murals in the photos above front a public right-of-way, minimizing if not completely precluding the chance that later development will conceal them. I blogged a few years ago about an excellent mural in Indianapolis that showed wonderful care and craft in the entire implementation process…except where the conceivers chose to locate it. Not only did they paint on a cheap, cinder-block building that will likely tumble down if market pressures encourage new development in the neighborhood, but the mural also faces a vacant lot which is large enough to host a new structure that would block it completely, no doubt frustrating the community and pitting them against a developer.

Compare this to Kokomo’s murals. Here’s one a little further south on the Industrial Heritage Trail:

Again, it fronts the trail itself—not a chance that a developer will try to block it. And here’s another along a bridge underpass for the recently completed trail along the Wildcat Creek:

The original intention of the mural was to repel vandals at spot that previously suffered from it frequently; this approach has proven successful in locations across the country.  But it also sits in a park along a new greenway, so it should remain in perpetuity. Granted, Indianapolis has plenty of murals along retaining walls and buildings that front the aforementioned Monon Trail. Those, too, should survive far into the future. But in recent years, the City of Indianapolis has encouraged countless murals on the side walls of commercial buildings—sites where a blank wall faces a parking lot, where a building once stood. While these bare walls often scream for some ornamentation to help distract from what used to be there (another adjoining building), in many instances the parking lots will likely fall under increasing development pressure in upcoming years. Will the locals thwart development in order to save the mural? This remains to be seen, and I don’t want to base too much of an analysis on speculation. But it’s hard to deny that these public art investments seem less astute than the once I witnessed in Kokomo.

One could argue that Kokomo is merely taking advantage of the fact that it is jumping into the game relatively late; it benefits by learning from the mistakes of others. But decisions that stand the test of time also contribute their fair share to foster civic goodwill. Taxpayers are rarely too forgiving of poorly conceived projects, and several successive blunders, no matter how small they may be, demonstrate poor accountability. Only time will determine the return on investment, but Kokomo certainly has a leg up on many of its competing small cities. My suspicion is, if these projects stimulate the discussion and enthusiasm for proactive leadership that they suggest (Mayor Goodnight was re-elected last year by a landslide), the citizens of Kokomo are only beginning to stoke the fire.

This post originally ran in American Dirt on November 16, 2012.

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