Tuesday, March 24th, 2015
[ As part of highlighting some of what you’ll find in City Journal, where I’m a contributing editor, I’m presenting this piece from last spring’s issue by Nicole Gelinas, in which she argues that De Blasio’s Vision Zero is nothing less than a new public safety revolution – Aaron. ]
Belkys Rivera wept as her English translator conveyed her words to the New York City Council in February. “I remember my heart breaking when hearing the news. The last day I saw my son alive was December 25, 2011.” Josbel was 23, starting a new store-management job. Belkys worried when he didn’t come home. “Nunca,” she responded when asked if she had expected to see two detectives on her doorstep at dawn. “The police asked me to get my other children nearby, and that’s when I began to realize that something had happened. The detectives were heartbroken as well, and they were explaining through [my] younger children what happened.” Josbel was dead—killed by a hit-and-run driver while crossing the Bronx’s Mosholu Parkway. “The driver . . . left the scene and burned the car,” she said. “I did my job as a mother,” she added, but “because of an atrocity committed by a man who should not have been driving”—the driver’s license had been suspended—“the world will be denied Josbel’s contribution.”
Amy Tam’s story was just as wrenching. She told the council about her three-year-old daughter, Allison Liao, who sang “The Wheels on the Bus Go Round and Round” as she rode the Q44 bus and who loved “using upside-down laundry baskets as drums”—and who died last fall, “holding Grandma’s hand,” after “a huge SUV” abruptly turned into a Main Street crosswalk in Flushing, Queens, and struck her. “We are never going to see her start kindergarten,” Tam lamented.
Too many New Yorkers die every year because of reckless drivers. Thankfully, new New York mayor Bill de Blasio has shown leadership in this area, unveiling an ambitious and workable plan to make traffic safer. Backed strongly by New York Police Department chief William Bratton and the city council, the mayor’s multiagency initiative, called Vision Zero, will seek to reduce traffic deaths in the city to zero, just as the police try to cut murders to zero. The inspiration behind the plan, which reinforces and expands on efforts by Michael Bloomberg’s administration, comes from Sweden’s use of innovative road design and smart law enforcement, which has reduced overall traffic fatalities in Stockholm by 45 percent—and pedestrian fatalities by 31 percent—over the last 15 years. When a child runs after a bouncing ball into a residential street and a speeding car strikes and kills him, the Vision Zero philosophy maintains, the death shouldn’t be seen as an unavoidable tragedy but as the result of an error of road design or behavioral reinforcement, or both. We already think this way about mass transit and aviation. These days, a plane crash or a train derailment is never solely explained by human error (a train conductor falling asleep, say); it also is a failure of a system that allowed a mistake to culminate in disaster. Of course, engineers and regulators can’t eliminate all injuries and deaths; but by applying rigorous, data-based methods, they can cut down on them dramatically.
Nobody favors road deaths, but Vision Zero won’t be an easy sell. Implementing it will require working out complex power issues between city hall and Albany, as well as transforming public attitudes. Even in New York, teeming with pedestrians and traffic, many still view speedy driving as an entitlement. Drivers will need to realize—and here, better engineering, law enforcement, and education will be crucial—that getting behind the wheel in a dense urban environment is very different from seizing liberty on the open road.
New York City has already come a long way in reducing traffic fatalities, it’s important to recognize. Last year, New York suffered 288 crash deaths, including 170 pedestrians. That sounds bad, and it is, but in 1990, New York had 701 traffic deaths, with 366 pedestrians killed. And 20 years before that, the city saw nearly 1,000 traffic deaths in a single year; it wasn’t unusual to lose 500 pedestrians annually. New York’s current traffic-fatality numbers compare favorably with other American big cities. An Atlanta resident is more than three times more likely to die in a traffic crash (adjusted for population); a Los Angeleno faces twice the risk. But New York remains behind—in some cases, far behind—other global cities in this area of public safety: Paris, London, Hong Kong, and Tokyo are all less dangerous. A citizen of Stockholm—the gold-standard metropolis for traffic safety—faces just a third of a New Yorker’s risk in dying by vehicle. Last year, the Swedish city, with a population of 900,000, suffered only six traffic deaths. The Gotham equivalent would be 60 such fatalities—not nearly five times that number.
New York City’s improved numbers have resulted in part from state-level policy reforms. New York was the first state to get a seat-belt law, in 1984, a controversial measure at the time—the governor of Maine vetoed a similar bill, saying that it “crosse[d] the line between public interest and personal choice”—but a major lifesaver. New York was also a pioneer in fighting drunk driving. More than half a century ago, everyone, including most public officials, thought it was perfectly okay for people to drink and drive. The legal limit for blood-alcohol content was 0.15 percent, nearly twice today’s limit, and enforcement was nonexistent. A handful of New York State leaders—above all, health chief William Haddon, Jr.—sought to change this blasé attitude. As Barron Lerner, author of One for the Road, a history of drunk driving, recounts, Haddon headed the first state health department driver-research center, in 1954, and it soon found that half the drivers involved in single-car crashes in New York’s Westchester County had blood-alcohol levels above the 0.15 limit, and another 20 percent had levels of at least 0.05 percent. By 1960, thanks in part to Haddon’s visionary work, New York lowered the legal limit to 0.10 percent (it’s now 0.08). During this same period, New York also became the first state to enact an “implied consent law,” which revoked the licenses of drivers who refused to submit to alcohol tests. And police stepped up enforcement while numerous public campaigns targeted drunk driving.
Countless lives have been saved. In Mississippi or Louisiana, you’re two and a half to three and a half times more likely to die in a car crash than in New York State, in part because it’s still more culturally acceptable in those Southern states to get plastered and hit the road. Nationwide, 13 percent of drivers are drunk when they kill a pedestrian. In New York City, 8 percent of vehicular killers are inebriated.
Haddon, it’s worth noting, was one of the first public-health researchers to think of auto crashes as predictable and preventable rather than as random tragedies. “Haddon had come to deplore the use of the word accident, which he believed made automobile crashes sound inevitable, and, by implication, not preventable,” writes Lerner. His approach was to figure out who—and what—was causing deaths on the road, and then work to prevent the fatalities.
Over the past half-decade, New York City has pursued that vision aggressively, seeking to determine who and what continues to kill on the road. Despite media focus on taxi crashes, the city found, 79 percent of New York’s killer drivers are behind the wheel of their own private car or truck, not a commercial vehicle. Most of the drivers are male. In pedestrian deaths, vehicle speed and driver inattention are major culprits. As a recent analysis of five years’ worth of crashes by the city’s department of transportation concludes, “in 53 percent of pedestrian fatalities . . . dangerous driver choices—such as inattention, speeding, failure to yield—are the main causes of the crash. The pedestrians in these cases were following the law.” Three-year-old Allison Liao’s grandmother was following the law when the SUV killed the little girl. The MTA bus driver who hit and killed 23-year-old Ella Bandes on January 31 “was looking in the mirror to try to avoid a taxi at this complicated, pedestrian-unfriendly intersection,” her father, Kenneth Bandes, told the city council; his daughter wasn’t “texting or talking on her phone,” as some people often assume of crash victims. In another 17 percent of pedestrian deaths, a driver error—often excessive speed—made a pedestrian’s mistake a death sentence.
Make no mistake: speed is lethal. Someone hit by a car going 20 mph will live, 90 percent of the time; someone hit at 40 mph has only a 30 percent chance of surviving. Speeding distorts the judgment of both driver and potential victim. “Drivers overestimate their own ability to stop” and “underestimate the impact” of a crash, says Rune Elvik, a civil-engineering professor at Denmark’s Aalborg University. Drivers wrongly think that they’ll save a lot of time by speeding on free stretches of otherwise clogged roads (lights or traffic eventually slow them down). And a child crossing the street has difficulty judging a fast-moving vehicle’s distance. A 2010 paper by the University of London’s John P. Wann and colleagues found that “children . . . could not reliably detect a vehicle approaching at speeds higher than approximately 25 mph.”
Mayor Bloomberg’s transportation commissioner, Janette Sadik-Khan, used her authority over street design to try to reduce speeds and sharpen driver attention. Times Square’s now famous pedestrian island, filled with tables and chairs, and similar islands and protected bike lanes that Sadik-Khan set up across the city give drivers something to notice, reminding them that people live and work where they’re zooming along. Streetscape changes like these often narrow traffic lanes, as well, which tends to make drivers more careful and makes it less likely that pedestrians will get stuck in oncoming traffic as they rush to cross a street—they can now can take refuge on the islands. Other Sadik-Khan changes included “countdown clocks,” which show crossing pedestrians how many seconds they have before a light turns green, and “split-phase” green lights, which let pedestrians cross before cars and trucks get to turn—a response to the fact that left-turning drivers disproportionately kill.
The numbers show the effectiveness of the design changes. At modified intersections, fatalities have fallen by a third since 2005, twice the city rate. Redesigning Jackson Avenue in Long Island City, Queens—a very dangerous road—by extending medians, painting new crosswalks, and delaying turns cut crashes with injuries by 63 percent. Building a pedestrian island and adding crosswalks on Macombs Road in the Bronx reduced deadly crashes by 41 percent. “Pedestrian-oriented designs save lives,” says Polly Trottenberg, de Blasio’s transportation commissioner.
De Blasio’s Vision Zero project will keep up the Bloomberg-era engineering efforts to change driver behavior, focusing on 25 key “arterial” streets, wide avenues like Queens Boulevard (long called the “Boulevard of Death” for its many traffic fatalities) and the Bronx’s Mosholu Parkway, where Josbel Rivera died. These roadways make up just 15 percent of Gotham’s streets—but 60 percent of the city’s traffic-related fatalities occur on them. The arteries “were designed for the fast movement of cars and trucks,” says Trottenberg, and making them look less like highways will slow drivers. To get the job done, though, de Blasio must be willing to take the heat, as Bloomberg did, for imposing changes that a vocal minority will strongly resist. It’s not a good sign that the mayor, in his February press conference on Vision Zero, wouldn’t say whether he thought that redesigning Times Square had been a good idea.
The smart use of data is a second crucial component of Vision Zero. De Blasio is directing his taxi regulators to explore outfitting taxis with “black boxes,” which can record data and sound warnings when drivers go too fast. The devices could not only deter drivers from breaking the law but could also give the city more data on who speeds, and where. The police could use the information to deploy manpower and the transportation department to redesign dangerous intersections. And Commissioner Bratton says that improved data collection and presentation in all areas of NYPD activity, including traffic enforcement, will be a major goal of his second term as the city’s top cop. That Bratton’s NYPD takes traffic safety seriously was evident in its recent flyers warning drivers that illegal double parking, by reducing visibility and forcing bicyclists into traffic lanes, put innocent people in harm’s way. In March, police officers were out in force ticketing drivers who had parked in bike lanes, pleasing street-safety advocates who had long complained of lax enforcement.
In addition to road design and data crunching, the de Blasio administration will take a more traditional approach to combating speeding: reducing city speed limits. Lowering limits was “the most important” step that Sweden took two decades ago in its traffic-safety turnaround, says Stockholm mayor Sten Nordin, whose city helped pioneer Vision Zero. New York will ask Albany, which controls many of the city’s laws, to let it cut the city’s default speed limit—the maximum speed that drivers can move when they’re not on a highway—from 30 mph to 25 mph. And the city wants to set up more “slow zones,” where 20 mph is the top speed. “The standard in densely populated cities where Vision Zero has been implemented around the world” is 20 mph, Amy Cohen, whose son, Sammy Cohen Eckstein, died on Prospect Park West last year, reminded the city council.
The real challenge will be enforcement. “His memorial is still up,” says Cohen of the site where her son died, yet people still speed there. Deterring such lawbreaking will mean ticketing speeders more aggressively, as well as revoking recidivist speeders’ licenses. After a series of high-profile traffic deaths this winter, the NYPD has been nabbing more speeders and other reckless drivers. The police wrote 7,648 speeding tickets in January, up 20 percent from last year.
An NYPD-led traffic-ticketing blitz runs into problems as a permanent strategy, though. As City Council Member James Vacca notes, “Since 2001, the highway division has been cut by 50 percent. Local resources are stretched.” De Blasio is adding some officers but not nearly enough to make up for past cuts. Moreover, enforcement is inconsistent and incomplete. Thus, Elvik argues, “there are advantages in using automated enforcement”: speed cameras. “There is a much higher risk of detection” with cameras, he adds, and they make for “a fairer system. Speed cameras treat all drivers equally”—even drivers with public-sector union stickers on their cars, for example, whom police tend to treat leniently. The unpredictability of “ticket blitzes” also angers the public. Over time, people appreciate consistency and predictability. If you know that you will always pay a price for driving 10 miles over the speed limit, you probably won’t speed.
Speed cameras are common in cities with better safety records than New York’s. A decade ago, London was only 29 percent safer than New York for pedestrians, relative to population size; now, with lots of cameras in place, it’s twice as safe. “London has a pretty decent network of speed cameras,” says Bruce McVean of Movement for Liveable London. “It makes it a lot easier for local authorities.” London’s transport authority estimates that the cameras help save 500 people annually from death or severe injury. And after New York City started ticketing red-light runners two decades ago, serious injuries at the targeted intersections fell 25 percent; more red-light cameras would improve on those safety gains.
New York politics have made speed-camera use tricky, though. Albany, not city hall, controls the number and placement of the city’s speed cameras, just as it controls the speed limit. Last year, the city won the right to install 20 speed cameras only after a protracted campaign, which benefited from then-mayor Bloomberg’s support, including his shaming of three state senators who had stalled legislation. “Maybe you want to give [their] phone numbers to the parents of the child when a child is killed . . . so that the parents can know exactly who’s to blame,” the mayor said. This year, Mayor de Blasio secured Albany approval for an additional 120 cameras. The power the mayors won is limited, though. The city can only use the cameras to enforce the law on roads that run past schools, and during school hours, though drivers have the most opportunity to speed at night, when there is less traffic congestion. The fine for exceeding the speed limit by at least 10 mph isn’t high: $50. And speed-camera tickets don’t result in penalty “points” on a lawbreaker’s driver’s license—a significant omission, since drivers with too many points for violations can temporarily lose their licenses. As part of Vision Zero, de Blasio wants Albany to relinquish its right to dictate the number, placement, and use of cameras.
Albany will probably resist. First, police unions hate cameras, fearing that they will make human officers redundant. “Ridiculous,” says Paul Steely White of the Transportation Alternatives advocacy group. There would still be plenty for cops to do in traffic enforcement—stopping drivers and levying fines and points for failing to yield to a pedestrian, say, or for texting behind the wheel. Another, more reasonable, charge is that cameras will just become another way for the government to shake people down for revenue. The city and state must combat this perception. “The sole purpose of traffic law should be to prevent harm,” says Leonard Evans, a research veteran of the auto industry and author of the book Traffic Safety. As a way of easing concerns, the city and state could announce that they would split camera-ticket money equally among all New Yorkers via a rebate on their tax return. Expanded camera use should actually shrink revenue over time, as drivers learn to obey the rules. Privacy is a third concern. As Evans notes, though, driving is a public activity, monitored by police for a century now, and traffic cameras “record only people who are breaking the law.” Anyone who uses an E-ZPass already has his movements tracked. A fourth obstacle is the state’s dislike of “home rule.” New York governor Andrew Cuomo isn’t known for giving up power, and de Blasio is pushing for home rule on multiple fronts, from the minimum wage to rent regulation. De Blasio would be wise not to take an all-or-nothing approach, as he did for a time in his battle with Cuomo over a proposed city income-tax surcharge to fund a prekindergarten program.
When a cabdriver runs over a little boy in a crosswalk, or an SUV driver mounts a sidewalk and plows into someone, the public reaction is: the driver should be behind bars. But he’s not. As Karen Friedman Agnifilo, chief assistant district attorney in Manhattan DA Cyrus Vance, Jr.’s office, says: “It can be difficult for people to understand why a crash is not always a crime.” For one thing, in 1990, the state’s appeals court ruled that, as Agnifilo puts it, “an unexplained failure to perceive” on the part of a driver—absent some outrageous conduct—“is not a crime.” In other words, a driver really can say “I didn’t see him” and walk free under the law, even if he had been driving irresponsibly.
New York law currently limits vehicular homicide or assault charges to drunk-driving cases. Several states, though, including Illinois and Florida, now make it possible to charge sober drivers with homicide if they kill. New York does let prosecutors charge for criminal recklessness. Vance is willing to use this law aggressively, as he did in charging Adam Tang, who allegedly videotaped himself trying to break the speed record for motoring around Manhattan. The question is whether juries will accept that driving dangerously is similar to driving drunk.
New York unquestionably needs tougher penalties for deadly driving. “Look at these sentences,” says Agnifilo, pointing to two 2013 vehicular-homicide cases in the city. One defendant got a maximum of four years; the other, six. “Do these sentences seem long enough to you?” Without stiffer punishments for drunk offenders like these, it’s hard to justify longer sentences for other forms of careless driving; the maximum penalty for criminal recklessness is a year. State Senator Mike Gianaris and Assemblywoman Marge Markey of Queens have introduced a bill that makes it a felony if someone with a revoked or suspended license injures or kills someone with a vehicle. Senator Joseph Addabbo, Jr., a cosponsor, observes that, over the last five years, license-less drivers have killed 181 people in New York City crashes—and largely gotten away with it. Under the bill, they could face four years in prison. The measure not only targets a particularly lethal set of drivers; it also could help change public attitudes by making it clear that operating a potentially deadly machine on roadways is a privilege. A related proposal empowers police and prosecutors to seize the plates from a car or truck operated by a driver without a license before he crashes. City hall, backed by several local lawmakers, is asking Albany for several other legal changes, including increasing the punishment for fleeing a crash—one year in prison—so that it’s equivalent to the four-year penalty, practically speaking, for inflicting a drunk-driving injury or death. As Juan Martinez, general counsel at Transportation Alternatives, explains, the driver who hit Josbel Rivera faced a more serious charge (arson) for torching his car than he did for leaving Rivera to die.
Agnifilo says that the NYPD’s “crash investigation squad” now responds to crashes that result in death or “critical” injury. That’s an improvement over two years ago, when the police investigated crashes only when victims were “likely to die.” She would like to see them respond to crashes that cause “serious” injury, the standard for criminal charges. In that case, “district attorneys would be called to more crash scenes, allowing prosecutors to make more appropriate charging decisions,” she says.
To prepare cases, the DA relies on witness testimony as well as subpoenaed cell-phone and text records and, increasingly, thanks to a new federal law, on black-box evidence from cars. Agnifilo wants some straightforward changes from Albany to give prosecutors more resources to prepare their cases. Prosecutors need the right to draw blood at the scene of a serious crash without a warrant, which can take hours to secure—while the driver detoxes. The DA’s office would like more time, under “speedy trial” requirements, to prepare vehicular-homicide cases—as it gets for other homicide cases.
Prosecution of smaller infractions can serve as another deterrent. Thanks to better police enforcement, the Manhattan DA received 2,556 drunk-driving cases last year, up 18 percent from 2009. Though the charge is only a misdemeanor, it can mean thousands of dollars in legal costs and a license suspension, as a current public-service advertisement reminds potential drunk drivers. Here, too, tighter laws could complement better police enforcement and prosecution. Currently, if you rack up two DUI convictions in five years, you lose your license for six months. Cuomo wants anyone convicted of drunk driving twice in three years to lose his license for five years. “Three strikes, and you’re out and you are off the road, period,” the governor said this winter.
The most potent factor in making Gotham traffic safer is that citizens and lawmakers are starting to demand change. “We’re reaching a point of critical mass on the pedestrian safety issue,” says Gianaris. The senator says that after two Queens deaths—eight-year-old Noshat Nahian and Angela Hurtado, an older woman on her way to play bingo—caused by drivers with suspended licenses, he grew angry. “This should be a felony.”
New York is a city made up of powerful special interests, and now a grim new lobby has organized itself: family members of crash victims. Parents, including Amy Cohen and Amy Tam, have helped create Families for Safe Streets, encouraging the public to push for speed cameras and other traffic-safety measures. Lerner, the historian of drunk driving, whose own nephew, Cooper Stock, died on the Upper West Side in January after a cabdriver struck him in a crosswalk, says that the movement is similar to the early movement against drunk driving. “Angry parents and relatives” highlighted “the absurdity of a society” that looked the other way as drunk drivers killed. Just as you now know that you shouldn’t drink and drive, texting and driving should be equally taboo. “As more and more potential distractions for drivers emerge, we should be less—not more—tolerant of a mind-set that excuses such behaviors because ‘everybody does them,’ ” says Lerner. The politically active New Yorkers who show up to community meetings to pressure city council members and Albany legislators on bread-and-butter issues are starting to view dangerous driving as one of those issues. Parents want their kids to get to school safely; elderly people perceive themselves as vulnerable.
Those demanding safer streets expect local government to use better data and smarter engineering and enforcement to achieve that end. Many observers once contended that the murder rate would never fall, but thanks largely to smart policing, it is down 85 percent since 1990—nearly twice as big a drop as traffic deaths. New Yorkers are thus likely to hold de Blasio to his stated goal: a quick and marked reduction in traffic deaths. “We are thrilled that the mayor is so supportive,” says Amy Cohen. But she and her fellow grieving parents, grandparents, siblings, uncles, and aunts will be “a public force” if “things aren’t moving along as expected.”
This post originally appeared in the Spring 2014 issue of City Journal.
Thursday, February 19th, 2015
Interior of the Palladium concert hall in Carmel, Indiana. Photo by Zach Dobson
My latest post is online at New Geography and is called “The Emerging New Aspirational Suburb” and is about how upscale business suburbs are reinventing themselves as sub-regional centers in their own right, including more urban nodes and amenities like arts facilities and events. In part this is exploiting their strong market position, but it’s also a response to the now evident challenges that face many suburbs as they reach maturity. The piece focuses on Carmel, Indiana, which as more of the pieces put together than anyplace else I know of currently, but the same approach is being pursued elsewhere.
It’s a longform piece, but here are some excerpts:
Beyond the historic downtown, Carmel has also implemented multiple New Urbanist style zoning overlays, including on Old Meridian St. and Range Line Rd. (the city’s original suburban commercial strip). These promote mixed use development, buildings that front the street, and multi-story structures. Infrastructure improvements and TIF have been used in these areas as well. There’s also a major New Urbanist type subdivision in western Carmel called the Village of West Clay.
[Mayor Jim Brainard] also keenly aware of global economic competition and the fact that Indiana lacks the type of geographic and weather amenities of other places. He frequently uses slides to illustrate this point. In one talk he said, “Now this picture, guess what, that’s not Carmel; but this picture is the picture of some of our competition. Mountains – that’s San Diego of course, mountains, beautiful weather, you know I think they have sunshine what, 362 days out of the 365…. What we’ve tried to do is to design a city that can compete with the most beautiful places on earth. We’ve tried to do it through the built environment because we don’t have the natural amenities.” While the claims to want to equal the most beautiful places in the world may be grandiose, the key is that mayor believes Carmel’s undistinguished natural setting and climate requires a focus on creating aesthetics through the built environment.
The city’s demographics have also expanded to become much more diverse. The minority population grew 295% between 2000 and 2010, adding 9,630 people and growing minority population share from 8.7% to 16.3%. 12% of the city’s households speak a language other than English at home. Many of these are highly skilled Chinese and Indian immigrants working for companies like pharmaceutical giant Lilly. Even black professionals are increasingly moving to Carmel, with the black population growing 324% in the 2000s and black population share doubling to 3%. Carmel is not a polyglot city today, but it’s far more diverse than in the past.
Critics also pointed to state figures showing Carmel with nearly $900 million in total debt. While it is a wealthy community that can afford the payments, in a conservative state like Indiana, a suburb accumulating nearly a billion dollars in debt raises eyebrows.
Click through to read the whole thing.
I should note that the mayor of Carmel disputes media accounts about cost overruns on various projects that I cite in the piece. He attributes these to other explanations, such as deliberate decisions to increase scope.
Thursday, February 5th, 2015
[ Alon Levy’s Pedestrian Observations site is a great look at public transit for those seriously interested in the subject. He’s lived in many countries and has studied systems around the world, bringing a global perspective to local projects. And he takes an analytical, “good government” approach of proposing systems that both produce high value and are cost effective. Here’s his take on what’s need at the New York MTA – Aaron. ]
In the last few years New York’s MTA has gone through multiple cycles in which a new head talks of far-reaching reform, while only small incremental steps are taken. The latest is the MTA Transportation Reinvention Commission, which has just released a report detailing all the way the MTA could move forward. Capital New York has covered it and hosts the report in three parts. Despite the florid rhetoric of reinvention, the proposals contained in the report are small-scale, such as reducing waste heat in the tunnels and at the stations on PDF-pp. 43-44 of the first part. At first glance they seem interesting; they are also very far from the reinvention the MTA both needs and claims to be engaging in.
Construction costs are not addressed in the report. On PDF-p. 53 of the first part, it talks about the far-reaching suburban Grand Paris Express project for providing suburb-to-suburb rapid transit. It says nothing of the fact that this 200-km project is scheduled to cost about 27 billion euros in what appears to be today’s money, which is not much more than $150 million per km, about a tenth as much as New York’s subway construction. (Grand Paris Express is either mostly or fully underground, I am not sure.) The worst problem for transit in the New York area is that its construction costs are an order of magnitude too high, but this is not addressed in the report.
Instead of tackling this question, the report prefers to dwell on how to raise money. As is increasingly common in American cities, it proposes creative funding streams, on the last page of the first part and the first six pages of the second part: congestion pricing, cap-and-trade, parking fees, a development fund, value capture. With the exception of congestion pricing, an externality tax for which it makes sense for revenues to go to mitigation of congestion via alternative transportation, all of these suffer from the same problem: they are opaque and narrowly targeted, which turns them into slush funds for power brokers. It’s the same problem as the use of cap-and-trade in California.
One of the most fundamental inventions of modern government is the broad-based tax, on income or consumption. Premodern governments funded themselves out of tariffs and dedicated taxes on specific activities (as do third-world governments today), and this created a lot of economic distortion, since not all activities were equally taxed, and politically powerful actors could influence the system to not tax them. The transparent broad-based tax, deeded to general revenue through a democratic process, has to be spent efficiently, because there are many government departments that are looking for more money and have to argue why they should get it. Moreover, the tax affects nearly all voters, so that cutting the tax is another option the spending programs must compete with. The dedicated fund does neither. If the broad-based tax is the equivalent of market competition, a system of dedicated funds for various government programs is the equivalent of a cartel that divides the market into zones, with each cartel member enjoying a local monopoly. In this way there’s a difference between the hodgepodge of taxes the MTA levies and wants to levy and Ile-de-France’s dedicated 1.4-2.6% payroll tax: the payroll tax directly affects all Francilien workers and employers, and were it wasted, a right-wing liberal politician could win accolades by proposing to cut it, the way New York Republicans are attacking the smaller payroll tax used to fund the MTA.
The proposals of where to spend the money to be raised so opaquely are problematic as well. There is a set of reforms, based on best practices in Continental Europe and Japan, that every urban transit system in the first world should pursue, including in their original countries, where often only some of those aspects happen. These include proof-of-payment fare collection on buses, commuter trains, and all but the busiest subway systems; all-door boarding on buses; mode-neutral fares with free transfers; signal priority and bus lanes on all major bus routes, with physically separated lanes in the most congested parts; a coherent frequent bus network, and high off-peak frequency on all trains; and through-service on commuter rail lines that can be joined to create a coherent S-Bahn or RER system. As far as I can tell, the report ignores all of these, with the exception of the vague sentence, “outfitting local bus routes with SBS features,” which features are unspecified. Instead, new buzzwords like resiliency and redundancy appear throughout the report. Redundancy in particular is a substitute for reliability: the world’s busiest train lines are generally not redundant: if they have parallel alternatives those are relief lines or slower options, and a shutdown would result in a major disruption. Amtrak, too, looks for redundancy, even as the busiest intercity rail line in the world, the Tokaido Shinkansen, has no redundancy, and is only about to get some in the next few decades as JR Central builds the Chuo Shinkansen for relief and for higher speeds.
The only foreigners on the Commission are British, Canadian, and Colombian, which may have something to do with the indifference to best industry practices. Bogota is famous for its BRT system, leveraging its wide roads and low labor costs, and Canada and to a lesser extent the UK have the same problems as the US in terms of best industry practices. Swiss, French, German, Japanese, Spanish, and Korean members might have known better, and might also have been useful in understanding where exactly the cost problems of the US in general and New York in particular come from.
The final major problem with the report, in addition to the indifference to cost, the proposal for reactionary funding sources, and the ignorance of best industry practices, is the continued emphasis on a state of good repair. While a logical goal in the 1980s and 90s, when the MTA was coming off of decades of deferred maintenance, the continued pursuit of the maintenance backlog today raises questions of whether maintenance has been deferred more recently, and whether it is still deferred. More oversight of the MTA is needed, for which the best idea I can think of is changing the cycles of maintenance capital funding from five years, like the rest of the capital plan, to one year. Long-term investment should still be funded over the long term, but maintenance should be funded more regularly, and the backlog should be clarified each year, so that the public can see how each year the backlog is steadily filled while normal replacement continues. This makes it more difficult for MTA chiefs to propose a bold program, fund it by skimping on maintenance, and leave for their next job before the ruse is discovered.
I tag this post under both good categories (“good transit” and “good/interesting studies”) and bad ones (“incompetence” and “shoddy studies”) because there are a lot of good ideas in the report. But none of them rises to the level of reinvention, and even collectively, they represent incremental improvement, of the sort I’d expect of a city with a vigorous capital investment program and industry practices near the world’s cutting edge. New York has neither, and right now it needs to imitate the best performers first.
This post originally appeared at Pedestrian Observations on November 25, 2014.
Sunday, January 11th, 2015
[ Contributor Robert Munson sent me the below as his take on how Chicago should reform its transportation governance structure. Comments will be enabled on this post and you can email Robert at firstname.lastname@example.org – Aaron.}
Photo by NASA
Night-time shows Chicagoland’s transportation corridors radiating from its center, but does not reveal their weakness: corridors don’t connect well to one another, adding to congestion and time wastage. Many connection improvements proposed in the region’s 2040 Plan are being failed by our politics. As an attempted remedy, the Chicago Metropolitan Agency for Planning (CMAP) is offering a proposal for a sales tax increase.
But before we try to fix the financials, we first must fix the region’s politics. Illinois’ insolvency and behind-the-scene manipulations make CMAP, a state agency, poorly suited to invest new funds. CMAP suffers under the political confusion created by having two Boards. This article looks at how each represents different levels of government and how both restrain regional progress.
CMAP’s proposal is an opportunity to shape a new, suitable regional funding authority that gives taxpayers better value and serves commuters far more effectively. If this new authority is elected directly, it then will have the legitimacy to achieve these three ingredients of sustainable transportation.
1) Balance taxes and usage fees so households have economical options.
2) Invest with greater return for public goals and private interests. And,
3) Minimize confusion caused by a deteriorated state and institute suitable regional governance.
How Two Heads Are Worse Than One
Chicagoland’s obstacles are captured in a helpful history of our region’s planning, “Beyond Burnham.” This book’s concluding chapter summarizes three strategic problems in Chicagoland’s 20th Century planning. Two problems are manageable today. First, the separation of land use and transportation planning has been merged into CMAP; so most players, at least, know the benefits of tightly integrating the two functions. Second, CMAP has helped stabilize the historic tensions between Chicago and its suburbs.
The third problem blocks progress: the region’s lack of an organized constituency. My analysis concludes there is no constituency because there is no elected regional body. This was intentional by two powers-that-be: chiefly, the state’s Department of Transportation; and suburban mayors. Each has its own Board to govern CMAP. (If this seems confusing, link to CMAP’s org chart and you will see why.)
CMAP formed after a compromise ten years ago to merge two agencies. Each intended to protect its turf. Today that compromise — and the power politics behind it — blocks us from the adequate regional governance required to build economically the next generation of infrastructure.
The ultimately powerful Board is the Policy Committee of the Metropolitan Planning Organization (MPO). Mandated to spend Uncle Sam’s money, the MPO is controlled by the Governor through Illinois’ Department of Transportation, a singularly backwards bureaucracy restraining the nation’s key hub from updating itself. While allowing the region’s planning process to show trappings of democratic participation, the MPO can pull the levers of power… much like the man-behind-the-curtain.
The poster-child example is the Illiana Expressway. Unjustified by rational criteria, the Illiana’s approval was strong-armed by the MPO and symbolizes the current regime’s failings. The MPO recently reversed CMAP’s other Board that had clearly decided the Illiana should be a privately funded road in the “2040 Plan” that was produced by an open, public process and was published back in 2010. I call this reversal the “Illiana Incident.” The Incident shows signs that interest group machinations got to the Governor and turned this un-needed expense into a regional taxpayer priority.
I served on CMAP’s Citizen Advisory Committee (CAC) from 2008 through 2010. I did not fully understand the MPO’s power. I could not penetrate its opacity. Its “Memo Of Understanding” is cryptic, not showing the ruling hand. I observed two MPO meetings… and got no further feeling. But during 2010, subtle signs indicated road-building constituencies were asserting themselves. When the Illiana was forced back on to taxpayers in 2014, my naiveté vanished. It became clear that the man-behind-the-curtain also had a hammer that shattered illusions of democratic planning.
That hammer must be laid to rest permanently before taxpayers agree to a new tax. The Illiana Incident is a lesson to taxpayers about how new taxes will be wasted. With the highway largely unpopular and hugely ineffective at resolving the region’s transportation needs, reaction to the MPO’s 2014 reversal spread like a media wildfire. Here is a synopsis of editorials. While that website has an anti-sprawl agenda, the media’s complaints echo a brazen affront to our emerging sense of regional sovereignty.
The Illiana Incident also offers a window into how MPO spending decisions perpetuate the monopolies of the 20th Century agencies that sit on the MPO’s Policy Committee. These agencies tend to give short shrift to the innovations proposed by CMAP staff. In the big picture, a narrow-minded MPO lost us the decades when infrastructure was cheaper and makes today’s investment much larger.
Wasting taxes is condemnation enough. But… the MPO’s authority also is not justifiable when you consider that Uncle Sam is retreating from transportation funding relative to when he mandated MPOs to protect his 80% of capital to Illinois’ historical 20% match. But with a broke state, few expect Illinois to make its match.
We see other signs of the MPO’s lack of accountability. Consider the top five priorities listed in the consensus “2040 Plan,” three were road projects and two were rails. As 2015 ends, the three road improvements (plus Chicago interchanges not even listed) will be nearly complete. The two rail projects are mere plans sitting on a shelf without funding. With the region’s passenger rail plan again sacrificed, a balanced plan can only be executed if there is autonomy from the state’s apparatus. Controlled by the man behind-the-curtain, CMAP cannot invest new regional funds to achieve benefits for the greatest number.
So, how legitimate is it for a state DOT-controlled MPO to exercise ‘de facto’ veto power on Chicagoland’s transportation spending? Not very.
To be direct, Illinois uses the MPO and federal power to thwart regional initiative. The MPO looks like a dinosaur perpetuating 20th Century sprawl and cannot direct the next generation of transportation investments. Any new tax money should be protected from the MPO, which would just build more business-as-usual boondoggles like the Illiana.
Without enough autonomy, CMAP will continue to be burdened by its poor parent. Illinois’ de facto insolvency emerged after decades of short-term decisions and recurring corruptions. To understand taxpayer’s likely resistance to CMAP’s proposed new sales tax, let’s see what debt has wrought. Bad state governance saddles each Illinois citizen with a cumulative debt of $21,130. This same opinion piece in “The Wall Street Journal” references also the Cook County Treasurer’s report in which this debt is much larger and close to unbearable for Chicago residents.
While these numbers are not widely known among the electorate, they are clearly felt. Rapidly being shaped is a citizens’ consensus that their state cannot solve problems merely with more money. The proverbial “throwing good money after bad” now eats food from too many families’ tables. Although still largely a public intuition that voices itself in gutter-low approval ratings for legislators and knee-jerk reactions to tax increases, the public’s distrust makes approval of CMAP’s tax unlikely.
Simply put: Illinois has abused the public’s trust and, quite reasonably, they won’t willingly give the state controlled MPO more money.
CMAP’s Second Head Lacks Authority… Intentionally
While the hidden and more powerful Board undermines legitimacy, CMAP’s other Board is visible but minimizes regional coordination. Controlled by suburban mayors, this visible Board does a good job synthesizing the needs of a diverse region. But to protect their turf back in 2005, suburban mayors insisted that CMAP plans were to be “advisory.” While politically necessary a decade ago to merge the region’s dueling agencies, that compromise holds us back from the path we need to travel as a region. The state’s insolvency forces taxpayers to demand results…not advisory plans that gather dust on the shelf. Mayoral restrictions on CMAP are fundamental to how it is not suited to produce the higher level of results required to invest new taxes.
Consider the commonly held planning principle: the closer transit investments are aligned to compact and mixed uses, the higher the ridership and higher return on investment. This alignment increases transit’s operating revenues. Suburban downtowns prosper and property tax revenues increase. Everyone scores.
But because CMAP has only the power of persuasion, its “advisory” plans do not require changes in comprehensive plans as a prerequisite to making a transit investment pay-off sooner. The 2005 scoring area was so large that a municipality still could spend regional money on, say, a new train station without first having a believable plan for compact redevelopment. The scheme with Illinois’ DOT/MPO allows a town merely to wait its turn and it would get its grant for a station or arterial. Protecting this distribution scheme gets played out in the collaborative appointments of County representatives to the MPO and CMAP’s Board.
Too subtle to describe fully in this article, I saw how CMAP’s Board enforced its 2005 deal. Senior staff suggesting tight alignment were forced out. Similarly in early 2011, the CAC that I served on (and also uttered such blasphemies) was replaced by new citizens, hand-picked by CMAP’s Board members.
Uncle Sam’s gradual withdrawal from transit and Illinois’ insolvency make aligned spending even more imperative today. Our multi-decade backlog of maintenance and very little money creates urgency. The policy nexus between transportation and land use must be precise if it is to serve households economically. Instead of merely waiting their turn for grants, towns today must compete for new capital.
As one example, new tax funds should be allocated to communities whose viable TOD plans will increase transit revenue and, thereby turnover that capital for the next town’s station down the line. This accelerates the three decade process that transformed Arlington Heights’ mid-Century downtown into a 21st Century model for its neighbors. Today, quicker returns on investments are how Chicagoland will do more with less capital.
If this basic principle isn’t on the table while discussing new taxes for infrastructure, then taxpayers should end the discussion because they will not get maximum results.
To summarize, we should view CMAP’s two Boards as blocking us from overcoming Chicagoland’s two strategic obstacles: Illinois is losing legitimacy to tax for and approve new initiatives; and, CMAP’s plans lack authority to maximize regional return on investment.
Making The Most Of CMAP’s Proposed Sales Tax Increase
Aside from the MPO’s fatal flaw of not acting in the region’s best future interests, I like CMAP. It certainly is an improvement over two non-communicating agencies. CMAP’s staff is competent. It produced a great long-term plan that won top national awards. Everyone I know who worked on it was gratified to help the undertaking. CMAP transformed a historically fractious region by sketching a potential consensus for progress.
Today, CMAP is on trajectory to win the trust of most jurisdictions. In the four years since the “2040 Plan” was approved, CMAP built productive relations with over 100 jurisdictions to help them plan. Maximizing its power to persuade, CMAP has a convincing Executive Director and a beefed-up communications staff. Most municipalities now understand the regional consequences of their land use. Progress.
But despite its good work in a tough spot, CMAP is not suited to the daily job of reinventing the public’s transportation business. With a narrow skill-set and subjected to vetoes by the state’s road-building agency, CMAP should stick to its knitting as the region’s long-term planning agency. Because it is controlled by a drunkard parent, the state of Illinois, CMAP is unfit to invest public capital well, especially in a time of fiscal constraint.
Here’s how to convert our transportation lemons into some semblance of lemonade.
We start by shifting new funds to a new Board. Consider the Twin Cities; driven by similar political parallels. Their MPO also is controlled by the Governor. Taxpayers of this famously “good government” region viewed their MPO as unworthy of making transit deals that used a new sales tax. So in 2008 they created a Counties Transit Improvement Board. It has revitalized the Twin Cities transit by investing to complete three light rail lines, two central stations and a suburban line. Best yet, Minneapolis and St. Paul seem to have learned faster than pre-2008 practices about how transit investments should be leveraged with land uses to promote economic redevelopment.
Chicagoland’s Board must do the same and also innovate big-time. Because we are broke, we need to develop flexible and entrepreneurial organizations that invest public funds so they employ private sector efficiencies that serve everyone. For this, a Board must isolate itself from the state. Otherwise it will have trouble attracting private capital, since no competent company wants an insolvent partner.
So, an independent Taxpayers Regional Investment Board should be created. TRIB will be substantially more effective by including these three innovations.
- TRIB’s directors will be elected. This shapes a broad regional constituency and helps affirm that taxpayers’ money will be well spent. To protect voters from the cynical distortions of state and federal campaigns, candidates should be non-partisan and only small campaign donations from individuals accepted.
- TRIB’s authorities should include usage fees, not just taxes. The sales tax predominance has proven ineffective at reducing bad transportation habits. TRIB will find the right economic mix of transportation investments (carrots) and usage fees (sticks).
- TRIB will be the taxpayers’ and riders’ advocate. Our monopolistic transportation systems block better returns for new investments. TRIB’s job is to advocate policies that level the playing field for all transportation subsidies so multi-modal, market-based options will emerge faster. TRIB also will respond to rider and commuter complaints and synthesize them to develop solutions. TRIB takes responsibility.
However the new Board emerges, Illinois’ irresponsibility toward transit must be solved. To get perspective on transit’s governance problems, read this study comparing six of the nation’s largest metropolitan areas. Its conclusions for Chicagoland start on page 20. The study serves as a good reference to sharpen our solutions.
For the next six months, CMAP’s sales tax proposal is unlikely to get a fair hearing within the frenzy of every special interest protecting its slice of the Illinois budget. CMAP will alter its strategy for the 2016 session. Supporters should consider tactics that give CMAP more autonomy from an increasingly illegitimate and counter-productive MPO. Good luck!
In the meantime, local progress is possible. We first should take very seriously the Cook County proposal to leverage federal loans, much as Los Angeles has for its transit renaissance. Part of the new County President’s ambition to revitalize transit, this carefully-crafted proposal deserves action. If the Cook County Board shirks this duty during the next few months, then this proposal also should go back to the drawing board so it can win taxpayer support. Since Cook County represents over two-thirds of Chicagoland’s transit trips and most the chronic car congestion, a Cook County adaptation of the TRIB concept can serve as a prototype for the seven-county region’s evolution.
But whatever new tax is proposed, it must offer the public this simple deal: any new tax or usage fee will buy discernible improvements in transportation and increase accountability. If we believably make every initiative work towards a new deal that puts taxpayers and transport users as the head of their systems, then Chicagoland’s connections will be made.
Thursday, December 4th, 2014
My latest post is online over at New Geography and is called “Urbanists Need to Face the Full Implications of Peak Car.” Here’s the opening:
As traffic levels decline nationally in defiance of the usual state DOT forecasts projecting major increases, a number of commentators have claimed that we’ve reached “peak car” – the point at which the seemingly inexorable rise in vehicle miles traveled in America finally comes to an end. But while this has been celebrated, with some justification in the urbanist world as vitiating plans for more roads, the implications for public policy haven’t been fully faced up to.
Indeed, the “peak car” is antithetical to the reigning urbanist paradigm of highways known as “induced demand.” Induced demand is Say’s Law for roads: supply of lanes creates its own demand by drivers to fill them. Hence building more roads to reduce congestion is pointless. But if we’ve really reached peak car, maybe we really can build our way out of congestion after all.
Read the whole thing.
Sunday, November 30th, 2014
60 Minutes ran a segment last week called “Falling Apart” that was another alarmist take on the state of American infrastructure. I’ll embed here but if it doesn’t display for you, click to CBS News to watch (autoplay link).
We’ve seen this story before. America’s infrastructure is falling apart and we need to spend many billions on upgrades, but politicians won’t agree because they are too craven.
There’s some truth to this point of view. The problem is that it’s oversold using the worst examples. It also gives short shrift to the many infrastructure upgrades that we have been making. And it ignores how people and businesses make capital purchase decisions in the real world.
First, I’m not surprised to see that 60 Minutes spent a lot of time in Pennsylvania. In my experience, Pennsylvania is in a class by itself when it comes to infrastructure. Drive something like I-70 from Washington to the Ohio state line and prepare to be appalled. Pittsburgh legitimately has a massive infrastructure maintenance overhang. Philly too. And much of the infrastructure there was under built to begin with. The Schuylkill Expressway goes down to two lanes each way, for example. Similarly, 60 Minutes is right about some of the obsolete bridges on Amtrak’s Northeast Corridor. They may have easily included other high profile embarrassments like LaGuardia Airport or Penn Station. Or they might have taken a look at state of decay of Rhode Island’s bridges.
There are clearly some high profile legacy items that need to be addressed. But that neglects the other side of the coin, namely that there’s a ton of major infrastructure that has been upgraded.
60 Minutes includes some footage of Chicago. Clearly there’s a need for bigtime investment there. But in the last 20 years or so IDOT reconstructed completely many of the major freeways in the area like the Kennedy and Dan Ryan. The Tollway Authority widened virtually the entire system and implemented open road tolling, vastly reducing congestion. Similarly the CTA opened the brand new Orange Line, did major work to renovate the Green and Pink Lines, just did major infrastructure upgrades on the south branch of the Red Line, and expanded capacity on the Ravenswood. They’ve also gone from tokens and cash to electronic fare collection. At least one new commuter rail line was opened (the North Central line). The O’Hare Modernization program is underway with new runways already online and a significant reduction in congestion there. A new terminal was also built and the existing terminals given some refreshes.
Is there a lot to do in Chicago? Undoubtedly. But let’s give credit for what has already been done.
It’s the same elsewhere. Nicole Gelinas notes that New York has invested $123 billion in the transit system in the last 30 years. That’s not chump change. The third water tunnel is now online there as well. Indianapolis built an ultra-modern airport terminal complex that’s up to international standards. Many other airports like DTW, SJC, SFO, etc. have built major new terminals or seriously upgraded their acts. There have actually been a lot of investments in port infrastructure to get ready for post-Panamax ships.
I’m told even Pennsylvania has done a good job of starting to address its infrastructure problems. The Philadelphia airport is actually quite nice these days, for example.
So we’ve actually done a lot already that 60 Minutes doesn’t give us credit for.
But what’s more, the presence of infrastructure that’s at or near the end of its useful life isn’t necessarily a bad thing anyway. Would it make sense for every single car on the road to be brand new? Of course not. Most cars ultimately end up getting driven till the wheels fall off. And that makes perfect sense. Why would you junk an asset that still has lots of service life left? We reallocate ownership of a lot of those cars during their lifespan, but we try to get the max out of their useful life.
It’s similar in our homes. How many of us replace a furnace at the first sign of rust? Yes, sometimes we do a complete upgrade or refresh of a kitchen or bathroom, but most of the time we don’t replace major household systems like furnaces or roofs until they appear to be at a point where paying for repairs when they break appears to be futile in light of the asset age. It makes sense to pay $400 to replace a starter that fails when the car has 125,000 miles. It’s more questionable when the transmission goes out at 175.
The fact that some issues or incidents with infrastructure can cause temporary closure or disruption is exactly how most personal capital assets work. A part goes out on our car. It needs to be towed and fixed. And it’s out of commission during that period. That’s annoying, disruptive, and costly. But does it mean that we should all go out and buy a brand new car? I don’t think so. And that’s certainly not how people behave in the real world. Obviously you have to build in a margin of safety on items like bridges where a failure would be catastrophic, but the same general principle applies. We shouldn’t wait for them to fail before replacement, but we do and should get the full useful life out of them.
Why would we expect our government to spend our money on its capital assets in a manner differently from how we spend our money on our own personal possessions? This explains why the public is much more skeptical of spending on infrastructure than the infrastructure lobby would like. It’s to be expected that some percentage of our infrastructure will perpetually be at or near end of life, as that’s the nature of the capital asset life cycle.
What’s more, when we replace a furnace or car, most of us don’t go out and buy Cadillacs. We buy something that fits the budget. Unfortunately, this mindset doesn’t seem to penetrate the public sector, where a significant amount of infrastructure is gold plated and priced at a level far out of line with international comparisons. The big problem in New York isn’t a lack of investment in transit. It’s the fact that the region has just about the highest transit capital costs in the world. Wonder why Madrid and Calgary have nice train systems? Among other reasons, they were very cost-efficient in their design and construction. Rather than more money, maybe we should first try some reform in our broken system of building stuff that results in lengthy project timelines and out of control costs.
So there are some things that need to be taken care of and we need to do that. But scaremongering about dangerous bridges isn’t the right answer. And where I see the biggest infrastructure needs are on local streets and bridges, where federal and state dollars are least likely to be applicable. It’s no surprise to me that most of the pothole ridden, bombed out streets we drive on are local city streets, where they are the maintenance responsibility of an entity that lacks the large, dedicated infrastructure revenue streams available to the state and federal governments. But that’s a topic I’ll have to explore in a future post.
Sunday, November 16th, 2014
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.
Tuesday, November 4th, 2014
[ 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.
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.
- The expenditure has the potential to lead to an improvement of the city’s financial position.
- That improvement is measurable in terms of dollars.
- 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
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
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.