Sunday, November 24th, 2013
Well, that’s not exactly the headline on the front page of the Wall Street Journal last week. The actual one was “Drop in Traffic Takes Toll on Investors in Private Roads” (subscription required). The Journal nails that part of the story, but only briefly addresses the way that the private companies that build these roads have already reacted by shifting to more favorable (to them) contracts arrangements that virtually guarantee their profits.
One of the theoretical benefits of privatizing a government asset or service through a lease or equivalent is that it hedges future risk by transferring it to the vendor. That obviously comes with a price tag, but that’s clearly because it has value. It provides predictability to the government.
In practice, these contracts have proven to be so stacked in favor of the vendor that the taxpayer retains most of the risk. For example, in the case of the Chicago parking meter lease, the city retains the risk resulting from any street shutdowns due to construction or events like the NATO summit. They have to pay the vendor compensation if anything impairs the value of the meter system. Pretty much the only risk the vendor took on was whether or not people would continue to put quarters into the machines. Similarly, when the Borman Expressway flooded and Indiana decided to make travel on the Toll Road free until it was drained, the state had to pay compensation to the vendor for this. The flood risk was retained by the state. This doesn’t mean it was a bad deal. In fact, it remains a great deal – one of the best from a taxpayer perspective. But the degree of risk transfer can be overstated. The price to construct and maintain roads is pretty well understood by the people doing these deals, so the main risk to the vendor again was revenue risk – would people keep throwing money in the toll baskets?
Well, apparently even just the revenue risk was significant. The Great Recession, a traffic drop off instead of increases, and prices stoked by irrational exuberance have put many private road operators in financial distress. According to the Journal, one such operator – American Roads, LLC – is already in Chapter 11. Their bond insurer is alleging fraud from deliberately inflated traffic projections. The Indiana Toll Road consortium may file bankruptcy. The Dulles Greenway is struggling.
Across the country, toll roads are carrying less traffic than projected. The Metropolitan Planning Council put together this chart showing the trends (via Streetsblog Chicago):
For toll roads run by the government, this is a real public risk. But for privately run roads like the Indiana Toll Road, it’s the investors problem. That’s the beauty of these deals and shows that privatization can work. As Indiana Gov. Mitch Daniels said of his state’s toll road lease, it was the best deal since Manhattan was sold for beads, only this time the natives won.
Perhaps predictably, the private road industry has responded by changing contract terms. Instead of these leases where revenue risk lies with the vendor, they’ve decided they can’t take on any risk at all, so they are now doing business with states increasingly under what’s called an “availability payments” model. What’s this? Well, according to AASHTO:
Availability payments are a means of compensating a private concessionaire for its responsibility to design, construct, operate, and/or maintain a tolled or non-tolled roadway for a set period of time. These payments are made by a public project sponsor (a state DOT or authority, for example) based on particular project milestones or facility performance standards…..Availability payments are often used for toll facilities that are not expected to generate adequate revenues to pay for their own construction and operation. In this case the project sponsor retains the underlying revenue risk associated with the toll facility rather than the private partner. Also in this manner, there is less overall risk to the private entity than with a full concession. Rather than relying on achieving certain levels of traffic and revenue, the concessionaire receives a predictable, fixed set of payments over the life of the agreement. The concessionaire also can rely on the public agency’s credit to secure financing rather than unpredictable toll revenue.
A couple things jump out immediately. First, if the road can’t pay for itself via tolls, isn’t that a flashing red light that says it doesn’t make economic sense from a transport perspective?
Second, from the standpoint of the private vendor what’s not to love? You basically have a similar deal structure as before, except that now instead of tolls that might not materialize, you have a contractually guaranteed, predictable revenue stream from the state. They’ve converted a variable revenue stream into a fixed one. In effect, these deals hand the only real risk that was outsourced, the revenue risk, right back to the taxpayer.
This immediately raises the question as to what the actual value of this type of deal structure is from a taxpayer and motorist perspective. It seems to be a sort of design/build/maintain contract with a mixture of funding sources all of which ultimately fall back on the state and its availability payments stream. Why resort to this type of structure which greatly adds to the opacity of the transaction and makes it much harder to tell if the public got a good deal or not?
Some people say that one source of value in these transaction is the fact that private entities don’t have to comply with cumbersome government procurement rules. But it took nearly three years for the Port Authority to contract its Goethals Bridge replacement project based on availability payments. And one of the parties is a major construction company so it doesn’t seem like that’s big deal here. Possibly, as with the previous leases, this will generate a bunch of tax deductions that in effect siphon off a subsidy from Uncle Sam. I don’t know.
In the case of the project to build two new Ohio River bridges in Louisville, Indiana is using an availability payments based P3 for its bridge, while Kentucky is using a more traditional toll finance system for its side. There’s been little discussion of the merits of these approaches. There are certainly questions in my mind. For example, Indiana has talked about saving $225 million. But if savings materialize during the project, who actually gets them? If the vendor has their payments stream locked in, any savings would fall straight to their bottom line. The same should be true of overruns (though with the way these contracts are written, I wouldn’t take that to the bank), but given the limited number of competitors for these mega-deals and the general lack of visibility into the transaction, I suspect that these guys know going in where they can save a lot money to juice their profits. State DOTs routinely bid projects that come in well below the engineer’s estimate, as they rightly try to be conservative on costs. But in this case the actual savings might not actually flow to the taxpayer but to the vendor.
Is that actually the case? I don’t know. Nor have I seen much in the way of discussion on this in the mainstream press. Given the huge dollars at stake and the risk in any government contract that the taxpayers might get fleeced, the use of these not very easy to understand and model contracts with non-obvious value propositions to the public makes it hard for a financially challenged media to really provide any sunshine. I’d love to see the Journal do a deep dive on this issue, because somebody needs to really trace through the value, the money flows, and the risks associated with these deals.
In the meantime, specialty sites like Toll Roads News have provided some interesting coverage. It’s clear the use of availability payments is ramping up. Here’s their piece on the Goethals Bridge project. They also note that “Indiana to take traffic and revenue risk from outset of procurement of P3 for Illiana Expressway.” Illinois appears to be gearing up for an availability payments model on their share of the Illiana.
Their piece call “Illiana P3 meaning stretched by availability payments – P3s 101” raises a number of excellent points. Here’s an excerpt:
Boosters of the Illiana Expressway in the empty countryside south out of Chicago are suggesting by their choice of words that the public private partnership (P3) envisaged puts major risk on “investors”. The Northwest Times newspaper for example had a headline that the governors of Indiana and Illinois were in town to “pitch Illiana Expressway to investors.”
However when a P3 is not a toll concession but an availability payments deal (an AP-P3) it is fundamentally different. Now the P3 operator is entitled to be paid for having the highway available to the state regardless of traffic and revenue. The road has only to be operated and maintained – at rather predictable cost – and the payments roll in. They are quite independent of the traffic and revenue. The state may run a toll operation on the road but it assumes the traffic and revenue risk.
The great bulk of the risk – residing in the traffic and revenue forecasts – is assumed by the state and its taxpayers just as surely as if it was a state tollroad operation. AP-P3s then don’t look for real “investors.” They look for contractors, big contractors with a big contract, but a contract all the same..
Bingo. Public officials are using the lingo “investment” when what they are really doing is creating a very complex and opaque construction contract. It’s very misleading. No one should be surprised when down the road we discover the taxpayers got pillaged on these days. Of course, these contracts no doubt have non-disclosure agreements designed to protect the “confidential” information of the vendor that make it unlikely the real financials will ever be fully known by the public.
In any event, this is emerging area clearly needs much more public scrutiny than it has gotten to date.
Sunday, November 10th, 2013
I was surprised to see that last Wednesday’s post on Cincinnati’s culture of self-sabotage received such a huge response. In light of that, I want to circle back and more fully address the idea of cancelling projects.
What I do not want you to take away from that is that once started, projects should never be stopped on account of the money spent. That’s called the sunk cost fallacy. Money that’s been spent has been spent. One needs to look forward to the future expected benefits and costs. There are certainly many cases in which pulling the plug can be a good idea. For example, Indiana Gov. Mitch Daniels reversed the privatization of certain social services functions after he determined it was unlikely the contract would ever work out like originally envisioned. This an example of someone taking a risk, trying to make it work, then acknowledging it didn’t rather than continuing to double down on a mistake.
On the other hand, I do not see the majority of these rail cancellations as having anything to do with benefit/cost analysis. You may notice, it’s only transit projects that ever seem to get the ax. Since the era of the freeway revolts, it’s tough to name any governor or mayor that has ever sent back earmarks on a highway project, or ever cancelled any road project they could actually get money to build on the grounds that it’s a boondoggle. (My hypothesis continues to be that there’s no highway boondoggle big enough that even the most fiscally conservative governor is willing to kill it). Clearly, the cancellations in these cases is based on an ideological animus to transit specifically.
That is, unless it is baser motivations at play. Chris Christie’s cancellation of the ARC tunnel project enabled him to use the funds New Jersey had pledged to the project to bailout the state’s bankrupt highway fund. He’s not demonstrated any hesitancy to push even questionable and expensive transit projects when they involve Somebody Else’s Money. For example, he wants the Port Authority to spend a billion dollars on an extension of PATH service to Newark Airport, which many consider an inappropriate use of funds. Christie’s motivation appears to be bribing United Airlines to add flights to Atlantic City, whose gambling market is imploding. (Read up on the Revel Casino deal if you want to know more about this sordid story).
Meanwhile, many of these cancellations are proving to be costly in their own right. I noted before how Cincinnati had already let $95 million in contracts out the total $133 million cost of the streetcar, how it will have to repay federal grants that were going to pay for a big slug of the project, and likely end up with at best a minor financial win and potentially a loss.
It’s the same in Wisconsin. Gov. Scott Walker trumpeted that he was returning an $810 million stimulus grant for rail upgrades between Madison and Milwaukee. Apparently although the federal government was going to pay 100% of the construction costs through the stimulus bill, he didn’t want the state to have to pick up the estimated $7.5 million in annual operating costs. (How much the state actually would have had to pay incrementally is a an open point. The existing Hiawatha operating costs were being 90% paid for by federal funds. It’s by no means clear that the state would have been on the hook for the full amount anyway). The feds were actually generous enough to reimburse Wisconsin for money it had spent on the rail line it decided not to build. However, that did not prove to be the end of the matter. Train maker Talgo is planning to sue the state of Wisconsin for $66 million for breach of contract. Given that it actually built trainsets for the state, this seems like a strong case. Also, if the state does lose, it might also be forced to immediately repay an additional $70 million in loans. The state could have paid operating costs for a long time for that kind of money – and it would actually having something to show for it other than a hole in its bank account.
So from a financial perspective, it’s not even clear cancelling these projects was a good move – even if you look solely at costs and ignore benefits.
But beyond the financials, these types of things also show communities that have deep internal divides, and which as a result require businesses and residents to apply an additional uncertainty premium into investment business cases there to account for the likelihood that a) promised actions by the government may not actually occur, even if they are in flight and b) that the community may not be able to muster the staying power to make the kind of long term investments that are necessary for any community to retain marketplace relevance. Though hardly immune to infrastructure drama, New York City just put water tunnel #3 into service for Manhattan. This is a project that was started in the 1970s. That’s the type of long term thinking that has kept a place like New York on top. In short, credibility counts for something, and places like Cincinnati and Wisconsin have damaged theirs.
I want to contrast this with one of the legendary stories of Indianapolis. In the late 1980s it embarked on construction of a downtown mall. Maybe that wasn’t the best idea in the world. The city definitely didn’t have its act fully together. Two entire city blocks had been excavated and were literally holes in the ground. No anchor stores had been signed and it wasn’t clear if the project would or even could be finished. A lot of the public suggested scrapping the project. Some suggested turning the empty blocks into ice rinks. Others trying to bring in a Wal-Mart. Instead, city leaders across the board came together to commit to the project, including many of the downtown corporations investing in the project. It got built. While generally successful, the mall has certainly had its share of troubles over the years and may not even survive over the long term given the disfavor of the mall format. However, one thing that project demonstrated is that Indianapolis finishes what it starts. In short, they have credibility and an ability to execute that’s simply better than most places. I suspect that’s one of the reasons metro Indy has so outperformed Cincinnati in population, job, and reputational growth, despite having far, far fewer natural assets to start with. They aren’t constantly shooting themselves in the foot.
This is also why even though there are road projects out there I did not think were a wise use of funds – say I-69 in Indiana, to pick one I’ve criticized – once they are being built I’m all in favor of getting them done as quickly and cheaply as possible. And then letting the communities in question live with the consequences of making that choice, for good or ill. Again, that doesn’t mean no project should ever be cancelled, but you need to pick your battles. Communities are not well served when project debates turn into endless years of scorched earth politics, litigation, etc. in which neither side will ever given an inch on anything.
Friday, November 8th, 2013
Clark Williams-Derry, a blogger with the Sightline Institute, has been running a blog series called “Dude, Where Are My Cars?” which examines the increasing disconnect between traffic projections and traffic reality. The Sightline Institute is into sustainability advocacy, so would naturally have an anti-car POV, but there’s some interesting stuff in there. I was particularly struck by this graphic that’s been making the rounds:
In other words, the Washington DOT continues to use basically the same upward slope for future traffic predictions despite the fact that traffic has been on a steady downward slope since 1996. They just slide the origin point down the actual curve. Williams-Derry straightforwardly calls this “B.S.” He then proceeds to give a point by point rebuttal of the DOT’s claims regarding their projection.
He has strong words and in my experience they are somewhat justified. I try to give people the benefit of the doubt, but that’s becoming harder and harder to do in these cases. However, lest we be too harsh, keep in mind that transport is highly politicized, and staff bureaucrats, many of whom are no doubt not particularly well-paid, are under enormous pressure to toe the party line set by the political overlords. It’s not realistic to expect most of them to stick their necks out, particularly when there’s so little chance it would actually affect the outcome in any case. Like with Jay Carney, the job of a spokesman is to aggressively promote and defend the boss and his policies, not to go on some Socratic quest for the truth.
This also shows how incredibly difficult it can be refute DOT claims. Their traffic models are basically black boxes. As we all know, garbage in, garbage out. It’s very easy to tweak parameters in any model to get the results you want. Also, it’s not always obvious what the parameters in fact are. While some items like population and job growth can be fairly easily analyzed and critiqued, it’s usually hard to get a grip on much of the model. If they say the number in 2040 is X, how do you know if it’s too high or too low? Most of the time you don’t.
Thus the person who wants to try to understand if these are legitimate versus manufactured numbers has to read through reams of dry, technical material to accomplish one or both of two things (assuming there’s a problem): show inconsistency between numbers, or draw an easy to understand picture for the public of what the numbers actually imply if you believe them. One the latter point, much like some companies that disclose troubling information right in the prospectus on the assumption no one who happens to read it will notice or care, sometimes the dirt is right there for anyone who wants to read through some material. I’d put the recent Louisville bridge study into that category.
Unfortunately, few people have the time or inclination to do this. And with the state of newspapers as they are, there are very few transport reporters who are able to do a real analysis. This means that when you read the average article about transportation in the newspaper, it’s usually little more than a re-written DOT press release. Given that the papers will print whatever the DOT spokesman tells them uncritically, why not take advantage of that to the max? No surprise, that’s exactly what they do.
Thursday, November 7th, 2013
Perhaps the most interesting urbanist election Tuesday was in Cincinnati, where the main issue in the campaign seems to have been the under-construction streetcar project. John Cranley, a Democrat who vowed to halt construction, as well as to cancel a pending parking privatization contract, was elected by a significant margin over Roxanne Qualls. Given that an anti-streetcar city council was elected as well, it seems likely Cincinnati will halt the project.
Let me stipulate that I was never really that big a fan of the streetcar. Not evil, but certainly not at the top of what I’d see as the priority list for Cincinnati. And I’m a resolute opponent of parking meter privatizations as most of you know. Yet I can’t help but see this as a perfect example of why Cincinnati, a city that has more assets than any comparable sized place in America, has long been a national laggard.
The New Republican Strategy: Cancelling In-Flight Projects
But before that, I’d like to highlight this as part of a national trend. As with Chris Christie and the ARC tunnel project in New York, Cranley (a Democrat backed by the Tea Party) has vowed to stop the streetcar project, even though $22 million has already been spent on it and another $71.4 million has already been obligated through contracts and is underway. (To put it in perspective, this is $95 million out of the total $133 million cost, a total that while, not cheap, certainly is nowhere near say stadium or major highway projects). Streetcar supporters say that it will cost more to stop the project than finish it. The project manager disputes that but admits the cancellation cost is unknown. I suspect the cancellation costs will be pretty steep, and local government will take a bath on it since there are a huge amount of federal grants on the project that can’t be used and would even have to be paid back. This will no doubt also tarnish Cincinnati’s reputation with the US DOT, and I wouldn’t expect any discretionary grants to be becoming their way anytime soon.
Christie and Cranley aren’t the only ones. Several Republican governors also turned back grants and cancelled projects approved by their predecessors. It’s worth mentioning that none of these guys ever turns back a highway grant, no matter how big the boondoggle. This belies the notion that Republican these politicians are actually fiscal conservatives.
This seems to be the new normal, and it’s going to increasingly make doing anything difficult. A city or state can spend untold years on a project and actually spend a boatload of money, only to have one election result in everything being thrown into the trash, even if construction is half over. (In fairness, the Democrats have uncorked what I believe to be an even more toxic dynamic, namely refusing to enforce laws their politicians don’t like. I already see state level Republicans nibbling at this in response, and I think it is going to get very, very ugly).
Why Cincinnati Has Struggled
This also illustrates perfectly why Cincinnati has struggled for so long. It’s a city with deep and toxic public divides, maybe the worst I’ve ever seen in America. Until this is overcome, which seems unlikely, don’t expect Cincinnati to be reaching its potential anytime soon.
As for Cranley, he says “we want to move the city forward.” However, his entire campaign was premised on stopping the city from moving forward in a direction he didn’t like. He may have said some things I’ve missed, but in the coverage I’ve seen of this, he hasn’t put forth any alternative vision, merely typical election-cycle bromides about balancing budgets and more cops and firefighters. It’s difficult for me to believe that a guy who ran for office to stop stuff will suddenly morph into a someone with a positive agenda, but we shall see.
In that Enquirer article, a commenter named Mark Miller (which a commenter suggests may be a pseudonymous account named after a local Tea Party leader) said, “Today is a very sad day for Cincinnati. Not only are we going back four years, we are setting this city back 50 years or more. One only has to look at the Cincinnati subway to see what small thinking brings to this city. Once we were Chicago. Post subway we could only hope to be Indy or Toledo.” That’s revealing of the extraordinary regard in which it holds itself. It’s also not strictly true. But it does get at something, namely that Cincinnati has squandered advantages most places would kill to have while other cities that started without much have actually gone on to build things.
It just goes to show that the real measure of a city isn’t in the stuff it has, but in the culture of its people. I know many incredible people in Cincinnati, but the cold reality is that the culture of the city is one of smug self-regard and self-sabotage. Until that changes, don’t expect Cincinnati to achieve the greatness of which it is manifestly so capable.
Thursday, October 31st, 2013
The nearly empty Intercounty Connector in Maryland. Coming soon to a bridge near you in Louisville or Portland? Source: Bethesda Magazine
I’ve recently reported on a couple of mega-bridge mega-boondoggles in progress in Louisville and Portland. But if you want to see a preview of how this might play out in real life when and if they are built, an example of this is in progress in the Maryland suburbs of Washington, DC with the Intercounty Connector.
Betheseda Magazine has the gory details in their September-October issue. And while this is a highway, not a bridge, there are an eerie number of similarities between this and the bridge projects in Louisville and Portland. The fate of the Intercounty Connector should be giving DOT officials in Oregon, Indiana, and Kentucky nightmares. Here’s what Bethesda Magazine had to say:
Driven on the Intercounty Connector lately? No? You’re not alone. Many haven’t. The 18.8-mile highway—the first stretch of which opened two and a half years ago after great hype and amid great controversy—is the road less traveled. Traffic counts are well below early projections, and revenue from tolls—needed to pay off the bonds that were sold to build the road—is far less than originally anticipated….The story of the ICC is a bit like the invasion of Iraq, a march to war in which the highway hawks—developers, development lawyers and contractors—held sway while critics were ridiculed as knee-jerk tree huggers and opponents of economic growth….The ICC is the Pac-Man of roads, critics charge, eating up all the transportation dollars in sight, now and for years to come.
Some troubling elements of this project that are similar to aspects of the Louisville and Portland examples:
- Been desired for decades? Check. “first conceived 50 years ago”
- Stunning cost increases? Check. “The initial estimated cost of $1 billion has ballooned to $2.4 billion—or as much as $4 billion if you include interest payments.”
- Tolls as an afterthought? Check. “Tolls were barely discussed. And hypothetical figures buried in a 2004 state consultant’s report marked ‘confidential’ are lower than tolls currently being charged.”
- Use of GARVEE bonds (a way to spend tomorrow’s federal transportation grants today) for financing (I’m looking at you, Kentucky)? Check. “The largest chunk, $750 million, comes from so-called GARVEE bonds.”
- Amazingly declining traffic projections? Check. “The Maryland Transportation Authority issued a press release asserting that ICC usage was ‘consistent with our projections,’ with 35,000 vehicles daily using the westernmost segment and 26,000 the eastern segment. Unmentioned was that the numbers were consistent with 2009 projections, which were significantly lower than earlier forecasts.”
- Two sets of books, er, traffic projections? Check. “The state developed two sets of projections, both higher than actual usage so far. The higher numbers were in official documents presented to the public, bolstering the case for the highway and implying greater environmental impact with higher volumes. More conservative numbers were used for the bond rating agencies.”
- Massive funds diverted from more worthy projects? Check. “To pay for other road improvements the state cannot afford—thanks largely, critics say, to the ICC—the Maryland General Assembly this year pumped $880 million more into the depleted Transportation Trust Fund by increasing the gasoline tax for the first time in 21 years.”
What happened? Traffic is far short of projections. Tolls are falling massively short of projections: “The total revenue in the fiscal year that ended June 30, 2012: $19.73 million—a third of the low-end projection of a decade ago.” Yikes! That’s a little bit more than an “Oops” to say the least. The state is being forced to bail out the bonds with regular transport funds: “$180 million is coming out of the state’s Transportation Trust Fund to pay bondholders.” Holy Financial Disaster, Batman!
Adding to these woes, people who drive the road without a transponder (likely many of them from out of state), aren’t paying up: “34.2 percent of drivers using the ICC without an E-ZPass transponder weren’t paying the bills they later received in the mail.” Presumably the rental car companies and such included in this will eventually fork over what they owe, but it looks like this thing is going to generate significant bad debt expense.
And let me put this one in a separate paragraph so you don’t miss it: building the Intercounty Connector caused the state to have to raise the gas tax. I repeat from the article: “increasing the gasoline tax.”
The Washington area is famous for extreme traffic congestion. It’s growing rapidly in population. It’s also the most affluent major metro area in the United States. Yet amazingly, people still aren’t willing to pay to use this thing. Admittedly, the tolls will be lower (though still not cheap), but I wonder how many people in much lower congestion and lower income Portland and Louisville will be similarly unwilling to pay?
Adding to the financial disaster is some fallout that I wasn’t necessarily thinking about, but is obvious in retrospect. Namely, recriminations and finger pointing about who is to blame for this fiasco. What’s that song by Shaggy again? It’s not just about the cost either. The highway has not spawned the type of development that was projected when it opened. Whose fault is that, you might ask? Well according to Doug Duncan, one of the politicians who pushed this debacle, it’s the local government. He claims that they have created an “anti-business climate.”
So head’s up to local leaders everywhere. If the DOT and its allies cram a mega-boondoggle road or bridge down your throats, it’s your fault if it doesn’t produce the economic benefits they projected. Better buckle up. Because apparently being a boondoggler means you never have to say you’re sorry.
I’m sure traffic levels will eventually improve and that there will be more development in the future. But this thing is clearly no where near what was promised by its backers. Sadly, Maryland motorists and taxpayers will be paying the price for years to come. Let that be a warning to would-be boondogglers everywhere. The hangover from overspending can be long and painful indeed.
Update: A commenter requested a map of the highway, so here it is via Wikipedia:
Also nice to see Business Insider pick up the story. The public needs to know how much risk their wallets are exposed to on these things.
Tuesday, October 29th, 2013
Grand Central Terminal And Penn Station: Will The Beauty and The Beast Ever Get Married? by Robert Munson
This post is part of a series by Robert Munson called North America’s Train Stations: What Makes Them Sustainable – or Not? See the series introduction for more.
Photo by the author to celebrate GCT’s 100th anniversary
In today’s tale, Grand Central Terminal is The Beauty. Admired also for her goodness, she touches souls in ways most civic buildings cannot. Many souls, such as this author, find her exquisite. So when our mid-Century trend of destroying beautiful buildings put GCT on the demolition list, the public’s stored-up admiration stopped her assailants. And this inspired a preservation movement across the nation. Better yet, her Beauty also runs deep with a brilliant design that faithfully works 100 years later; distributing people better and seemingly with social graces that other hubs can only wonder how she does it.
However, our storyline has a dark side. For the past century, suburban passengers — who prefer her east-side location — have been forced to ride past her to the west-side Penn Station; often adding 30 minutes to the daily commute and congesting Midtown surface traffic further.
Who would conspire this denial? As in our tale, it is Beauty’s mean sisters who run the Metropolitan Transportation Authority and the Long Island Railroad. And like Beauty’s sisters, these bureaucracies seemingly are statues who — to have life again and solve this problem — merely had to admit their mistakes.
Photo of Penn’s main concourse, taken by the author while waiting for gate posting for his LIRR train
Of course, today’s Penn Station is The Beast. Its ugliness is visceral and personal; defying description. Most who enter its maw sense what true ugliness does; instinctually aware of the cramped quarters and negative energy generated by masses of irritated humans. To manage their discomfort, most learn how to get out as quickly as possible. It is hard to imagine how this guy can become Beauty’s Prince.
The fable’s richest lesson tells us that transformation only happens if one changes one’s ways. Today’s real life Beast cannot transform because the governments of New Jersey and New York have self-interested priorities; unconcerned with the collaboration required for the region to benefit from sustainable solutions. Yet, some agent of the public must have the authority to bring transit into the next era.The consequences of not creating suitable authority are immediate and darken the mid-term.
As an immediate (and recurring) problem, Midtown has hellish crosstown traffic. Because trains do not connect both stations, too many commuters surface and add unnecessary street congestion. While surface congestion was reduced by making subway trains interconnect six decades ago, that vital lesson still has not been applied to interconnect suburban service.
Similarly a result of ineffective regional authority, through-routing New York suburbanites to New Jersey (and vice versa) will benefit commuters and employers. Yet, this mid-term economic collaboration is a pipedream. Analyzing each station objectively gives us reasoned premises from which to shape solutions. Let’s start with Her, the fun one.
Poster artistically depicting the glamor of Grand Central, photo by the author while riding the subway
Grand Central Terminal: The Beauty As Secular Cement
Score: 81 (see full scorecard)
Category: Likely Sustainables
When GCT was threatened, prominent architect Phillip Johnson joined the civic movement to protect it with this statement: “Europe has its cathedrals and we have Grand Central.”
Also active in the movement to save GCT, the prestige lent by Jackie Kennedy Onassis helped revive the glamor of trains as GCT established a national standard that stations could be great again. After the nation’s Supreme Court decided in favor of GCT in 1977, the preservation movement had an icon and the law to grow its success.
More inspiring and exhilarating than the finest 21st Century airports (yet without the technological building advances of the past 80 years), it is hard to understand how GCT touches the human soul while smoothly handling its daily flurry of 1 million people hurriedly going places. As a museum piece, elegant shopping mall and transit’s single most efficient infrastructure piece, GCT’s magic is completed by generating constant fascination; serving as the sixth most visited tourist attraction with 21,600,000 visitors annually.
Grand Central sets this standard for every station: to serve as a complete destination, somewhere for tourist and commuter alike to benefit and enjoy travel again.
Now celebrating its 100th year, GCT’s excellent design remains an engineering marvel; flexible enough to accommodate ten times more people today than when it was completed at the start of World War One.
Track entrance, photo by author
Excellence starts in the basement with gates to the tracks that are welcoming, elegant and functional; all promising a pleasant commute. To accommodate rush hour traffic, platforms are wide; certainly the widest I’ve seen for a large terminus. Since platforms easily become choke-points as ridership grows, this shows GCT’s capacity to adapt.
Strolling down the ramp from the dining concourse to lower tracks, photo by author
Also adding to more fluid flow, ramps move people between the main, dining and lower concourses. The walk is far more spacious and pleasant than the usual cramped escalators… and wondrously less expensive to maintain or make handicap accessible.
Great design also helps GCT fulfill retail’s formula of location, location, location. Accommodating a variety of retail shops, GCT is unmatched perhaps anywhere; possibly except Tokyo hubs that have Macys-like department stores. But no where are shopping choices more elegantly arranged than GCT. Ranging from a cool Apple Store to upscale specialty boutiques to even a store for the New York Transit Museum to fascinate the inner subway rider of people like this author. And the shopping tour is not complete without a visit to the vast Grand Central Market (below) that ranks near the top of anyone’s list of gourmet cornucopias.
Grand Central Market, photo courtesy of Wikipedia Commons
Unlike any station in the western world, GCT’s 40 stores for shopping exceeds the 36 for dining. GCT’s Dining Concourse and famed Oyster Bar plus the upper level lounges and dining rooms all combine to rival any station on the planet for quality. Also unlike the fast food dominance of other stations, GCT finds ways to offer a more healthful “grab ‘n go.” (GCT’s leasing decisions should be compared to Penn Station’s whose criteria seem to heavily favor impulse-buy foods that are fattening and, generally, lack intrinsic nutritional value; all consistent with the quality of Penn’s public service.)
Shifting from destination-making-made-easier to the general genius of Grand Central’s original design, its long-term value must be compared to today’s addition when the government builds stations. Here is the MTA’s schematic for the East Side Access project.
It will take a century to correct the obvious mistake of bringing all LIRR passengers to Penn Station and their surfacing and over-crowding Manhattan’s streets for the last leg of a commute. But, government finally is making progress. This MTA project will bring about 20% of weekday LIRR passengers into GCT. As the immediate area redevelops under new zoning laws, the influx of new pedestrians and taxi-users probably will compound today’s congestion; in some ways, defeating the purpose of the East Side Access… and causing its expense, in the judgment of history, to eventually appear as unproductive.
I offer two items as a half-time critique of the East Side Access.
First, ridiculous cost-overruns clearly make the MTA inappropriate to direct future improvements. This project to serve the public is starting to look more like a perversion of tax dollars. The 1999 federal budget had the price at $2.2 billion. Functioning as a slow motion lure that promises the public a solution, it took eight long eight years until ground-breaking; creating lots of opportunities for the politically connected to get their piece of the public’s treasury and for bureaucratic battles to work their woe.
By the time digging started, the project cost almost tripled to $6.4B and completion was projected to end this year. Now in 2013, completion has been bumped to 2019 and tagged at $8.4B, a 382% increase since politics got involved. With a performance like this, intuition tells me that we have not seen the end of this fiscal travesty.
There are acceptable explanations for some cost-overruns. But, there are no excuses as far as the taxpayers’ bottom-line is concerned. If the MTA cannot protect its funding source, the MTA should be replaced with an authority that has a core financial discipline.
If there is to be any accountability moving forward to complete the East Side Access or any current MTA project (or any future project such as remaking Penn Station), the accountability process should start this year with inspector generals of New York City, New York State, Connecticut and, possibly, the federal government making an expanded report. Better yet, a joint report will help taxpayers understand what has happened to their money and suggest ways to help restore the public’s trust.
It will be curious to see if reports indicate the lack of cooperation between MTA subsidiaries (LIRR and Metro-North) led to these ridiculous cost-over-runs. For example, why did the LIRR platforms have to go 91 feet under Metro-North’s?
As a separate item, how are these cost-overruns related to the shared tunnel on 63rd Street ? (See map below.) Didn’t that two decade construction project — starting in 1969 — also end in a fiasco in which it wasn’t useful until the 21st Century when subway connections were made ?
From this tunnel fiasco that so far spans half a century, what are the lessons from this overall lack of authority so that taxpayers can be protected in the future?
And in the Big Picture, would a through-routing strategy have made a lot of these costs unnecessary and still improve the chances to achieve the objective of reducing congestion?
But alas, all this money does not contribute to the strategic solution of through-routing. (Don’t forget, the “marriage” in this piece’s title refers, in part, to the sustainable benefits of through-routing.) Future capacity of Penn and Grand Central can be increased by trains running through it. Yet, the East Side Access project terminates these LIRR trains along with GCT’s 67+ other tracks. The future needs through-routes to contribute to sustainable regional solutions.
Drawing courtesy of Foster + Partners prepared for MAS competition and its website
Easier to grasp than this mind-boggling waste of tax dollars, my second criticism starts more micro. The East Side addition is too far below the standard of GCT’s elegant design; largely resulting from an inability to reconcile differing systems. While more passengers will be able to enjoy GCT (an improvement over Penn’s discomfort), they first get pinched (as in the red pressure points above.) There appears to be a poorly designed exit from the the East Side Access into GCT’s lower level concourse.
There is an even more serious constriction of customers seeking to transfer to the subway, the primary solution to Midtown’s street congestion. MTA also supposedly has authority to manage the subways. (On page 51 of the Foster proposal’s link above, a solution is offered; but, of course, the MTA has no money given its cost-overruns.)
So, we see yet again the weakness of MTA’s authority upon entering the subway system. Lines 4 and 5 (in the lower right corner) already are the nation’s most over-burdened. The ESA will bring some 12,000 more riders from the LIRR. And if the MTA plans to relieve this congestion by finishing the 2nd Avenue subway one long block away, I remind everyone that the Elevated was torn down and used as scrap in the war against facism… and east-side Manhattan riders have been waiting ever since.
Back to belief in today, these problematic transit connections are reviewed starting on page 31 of a study released for GCT’s 100th anniversary, A Bold Vision for Midtown. Prepared by the Municipal Arts Society, MAS has served as the primary civic organization and Guardian Angel throughout Beauty’s life. Opening yet another chapter of great public service, this excellent 65-page publication analyzes GCT. Particular attention is paid to public spaces and mobility within its original surrounds that sprung up in the 1920s. Known as the Terminal City, it remains NYC’s best contribution to the City Beautiful movement. Terminal City also is the original application of the “value capture” concept being talked about by cities today. For a relevant primer on value capture, refer to this 2012 post in “Urbanophile.” And for a longer discussion, see this recent post.
Using the rezoning of GCT’s surrounds, “Bold Vision” turns the coming redevelopment into an opportunity to evolve East Midtown. (The booklet also is a bit of a pre-emptive strike to prevent the surrounds from further reducing Beauty’s prominence.) I certainly hope MAS successfully guides and monitors deals between developers and City planning agencies to improve public spaces, streets and sidewalks to cope better with Midtown’s congestion.
But, all of these real estate updates beg several questions. First of all, why focus municipal attention on a center that, on a relative basis, works pretty well now? Instead, shouldn’t all these plans of increasing density be preceded by solving the congestion caused when commuters surface to get to their destinations?
And given that the MTA will be ridiculously over-budget and decades late in getting the LIRR to stop at GCT, should it be the agency to through-route GCT’s trains? Through-routing makes several contributions to regional sustainability. For GCT to advance in that direction, some lines need to go through.
Photo taken by author while riding the Lexington Ave subway
It is not my intent to challenge MTA’s competence. Per the photo above as an example of many improved efforts to serve the public, MTA is trying. (And relative to Chicagoland’s agencies, MTA gets an “A”.) But, here is the real question: is MTA the correct agent to solve problems economically?
Here also follow bigger questions for the sustainable era; most are so far beyond MTA’s purview that a true authority will be needed if the future is to look better than today.
But….. As beautiful as GCT is and as positive as the MAS influence on land use agencies and developers seems to be, how does remaking a 21st Century Terminal City fit into a strategy for regional redevelopment? Offering the more objective perspective of someone who lives in the nation’s second densest city, I ask: isn’t Manhattan’s problem really that it has too many people? Don’t Midtown’s insanely high land costs drive even more density that we currently cannot afford infrastructure for?
Let’s face the Big Picture. Manhattan bound trains serve its CBDs, but also congest these districts. Terminating commuter lines merely compounds connections to other transit and, thereby, raises the cost for everyone.
If our governments cannot follow a de-congestion strategy such as through-routing that European cities solve almost as a matter of course, then how can current agencies ever guide something as complex as the much talked-about goal of economically rational regional redevelopment? Fundamental to our economic competitiveness, this topic is explored in later articles. But for now, truly sustainable stations — of which GCT could lead the way — must also contribute to systems that guide rational redevelopment.
To end where we began our story….. In my personal opinion, The Beauty is doing just fine. She can age more gracefully with better streets and sidewalks. But giving her implants in the form of bigger buildings will just make her sag… or at least cause her to lose her shape… if you don’t mind my metaphor.
As for marrying her off to a Beast… we have to believe in miracles. Specifically, New York must try through-routing and other transit connection methods to relieve congestion… or else the marriage fails to improve the household’s economics. These methods are explored in the remake of Penn Station… the next article in this series on how stations can support truly sustainable transit.
Thursday, October 24th, 2013
A friend of mine recently summed up the mindset of all too many when it comes to economic development:
This bunch loves casinos and highways and bridges and hates mass transit. Highways and bridges and casinos are their answer to every problem: Tax base eroding? Build a casino. Urban congestion? Build a highway. Can’t get to casinos? Built a bridge. Undeveloped backwoods counties? Build a highway AND a casino AND more bridges. Jobs recovery slow? Build a highway.
This is on display yet again in Indiana. Politicians in southwest Indiana spent three decades agitating for a new freeway called I-69 linking Evansville and Indianapolis. Gov. Mitch Daniels finally started construction and the first segment is almost done. This will probably be a $2-3 billion expenditure by the time it’s all over.
What do you think the reaction of Southwest Indiana leaders would be now that they are getting the road of their dreams? Maybe open the champagne bottle? Start putting together economic development plans to leverage this new road?
Well, maybe some of them are, but a number of them are already organizing to start agitating for their next new highway demand, their so-called I-67:
When I-69 opened last year Daviess County got its first link into the nation’s interstate system. Now, a proposal is being discussed that would add yet another interstate link to the county.
Business leaders in Owensboro, Kentucky and Dubois County have built a coalition to build what they call I-67. The road would link into I-69 near Washington, extend south through Jasper and Owensboro and eventually link up with I-65 at Bowling Green, Ky.
Coalition members are excited about the proposal and want to see it become a reality. “We’ve been working on this for a number of years,” said coalition member Hank Menke.
The Evansville Courier, the top supporter of I-69, labeled the I-67 campaign “a worthy mission.” (Incidentally, Evansville got their casino and their highway, now they want a $1 billion bridge so they can have the trifecta. On a per capita basis, that might even be a bigger financial boondoggle than the bridges project in Louisville).
One might perhaps justify I-69 on the simple matter of fairness. Look at a map and see freeway spokes radiating from Indianapolis to the rest of the state, with the southwest link missing. But it certainly wasn’t justified economically. The existing interstate rolling through Southern Indiana, I-64, is the least traveled in the state despite linking St. Louis and Louisville, and has not spawned much in the way of economic development. There’s little prospect for I-69 doing much better, at least south of Bloomington. If you wanted to build it to try to save the Crane Naval Warfare Center from closure then fine, but at least say that’s why you’re building it.
What this actually shows is that for a lot of people, building highways is an end itself. There will never be a day when people aren’t pushing some sort of massive boondoggle. It may well be that the state hasn’t agreed to build this road. But it’s also early. Few of Indiana’s major projects, whether that be the Illiana Expressway, I-69, or the Ohio River Bridges, were cooked up by the engineers in INDOT’s planning department. Instead, they were local priorities that over time became “high priority” projects for the state.
Without much else to offer economic hope to fading rural areas, small towns, and old small industrial cities, highway construction is easy snake oil solution. No amount of highway construction will ever satiate this never-ending demand for yet more mega-roads.
Sunday, October 20th, 2013
A couple weeks ago I outline how the Ohio River Bridges Project in Louisville had gone from tragedy to farce. Basically none of the traffic assumptions from the Environmental Impact Statements that got the project approved are true anymore. According to the investment grade toll study recently performed to set toll rates and sell bonds, total cross river traffic will be 78,000 cars (21.5%) less than projected in the original FEIS. What’s more, tolls badly distort the distribution of traffic that will come such that the I-65 downtown bridge, which is being doubled in capacity, will never carry just what the existing bridge carries right now anytime during the study period, and won’t exceed the design capacity even slightly until 2050. Meanwhile, the I-64 bridge that will remain free will grow in traffic by 55% by 2030, when it will be 34% over capacity.
A nearly identical scenario is playing out in Portland with the $2.75 billion I-5 Columbia River Crossing. Joe Cortright of Impresa consulting unearthed the information through freedom of information requests looking into the investment grade toll study on that is being conducted for that bridge. You can see his report here (there’s also a summary available).
I’ll highlight some of his truly eye-popping findings. Traffic forecasts are inflated, of course. The toll study is suggesting traffic increases of 1.1% to 1.2% per year when over the last decade traffic has actually declined by 0.2% per year on average even though there are no tolls. But it’s the addition of tolls that badly distort cross-river traffic and make a mockery out of the EIS. Here’s the money chart for the I-5 bridge itself:
How is it possible that after building a gigantic multi-billion dollar bridge traffic declines? For the same reason as Louisville: tolling will cause huge amounts of traffic to divert to the I-205 free bridge. By 2016 traffic on I-205 would rise from 140,000 per day to 188,000 – and up to 210,000 by 2022 (full capacity).
This is so eerily similar to the Louisville situation, that someone suggested, only half in jest I suspect, that they must be having “how to” training sessions on this stuff over at AASHTO HQ.
Unlike Louisville, where a docile press is basically in cahoots with the state DOTs pushing the project, Portland’s media started asking questions. And one local paper even caught a civil engineering professor from Georgia serving on the independent review board for the project labeling the tolling scheme “stupid.” (Louisvillians take note).
Oregon DOT director Matt Garrett released a letter in response in which he says, “This work is fundamentally different than the traffic analysis completed for the Final Environmental Impact Statement, and with very different goals in mind.” I agree. The FEIS was performed with the goal of getting this bridge the DOT wanted built approved. The toll study was designed to withstand financial scrutiny on Wall Street and be relied on in selling securities. I’ll let you be the judge of which is more likely to be closer to the truth. What’s more, Cortright addresses this very issue by saying in his report, “Neither federal highway regulations nor federal environmental regulations authorize or direct using multiple, conflicting forecasts for a single project, or using one set of traffic numbers for one purpose, and a different set for another.” I might also add that the DOTs in Louisville have not to the best of my knowledge made similar claims to explain away an identical discrepancy there. Nevertheless, the rest of Garrett’s letter acknowledges that I-5 will see a big traffic drop and there will be diversion from tolling. So he appears to just be doing the bureaucratic equivalent of “pay no attention to that man behind the curtain.”
Again, want to know how it is that we spend so much money on transport infrastructure and get so little value? It’s because far too many of our highway dollars go into boondoggle mega-projects ginned up through political pressure (watch this space as I have another example coming soon) instead of into projects that make transportation sense. It may well be that there are legitimate problems with the existing I-5 river crossing, but these numbers give no confidence that the Oregon DOT has come up with a good or cost-effective plan for dealing with them. Unlike some, I do think we need to build more roads in America. Unfortunately our system is set up to ensure the survival of the unfittest instead of projects that make actual transportation and economic sense.
Sunday, October 13th, 2013
The urbanist internet has been a ga ga over an article by artist and musician David Byrne (photo credit: Wikipedia) called “If the 1% stifles New York’s creative talent, I’m out of here.” Now David Byrne himself is at least a cultural 1%er, and at with a reported net worth of $45 million, isn’t exactly hurting for cash. In fairness to him, he forthrightly admits he’s rich. He also is bullish on the positive changes in New York in areas like public safety, transportation, and parks, and does not fall prey to romanticizing the bad old days of the 70s and 80s. However, in his assigning blame for New York’s affordability, he points the finger squarely at Wall Street, neglecting the role he himself played in bringing about the changes he decries, changes in which he was more than a passive participant.
Back in the early 90s I liked to hang out in a neighborhood called Fountain Square in Indianapolis, a down at the heels commercial district near downtown largely populated by people from Appalachia. I enjoyed browsing the low end, marginal shops and eating at diners where the food was mediocre and the waitresses sassy but not all that attractive (not that I let that stop me from flirting with them). Today, Fountain Square is not exactly gentrified, but is seeing a lot of investment and new residential construction. It’s a long way from unaffordable, but it isn’t impossible to conceive of a day when it features almost entirely higher prices (by Indianapolis standards) in the way some other zones downtown do.
About that time I also liked to drive around the city and take pictures of various neighborhoods in the inner city. One time I was on the East Side and was walking around taking snaps of streetscapes. I apparently pointed my camera too close in the direction of a white minivan whose owner took umbrage. The driver, who was white, long-haired, with a bit of a redneck air about him, circled the block and pulled up next to me to berate me in a semi-menacing way, alternately demanding to know why I was taking pictures of his van and warning me I should never do it again. (I generally take pains to try to avoid including people in my photographs when possible, and things like this are one reason why).
I’m not going to claim there was any hidden agenda here other than this guy being directly suspicious of my pointing a camera his way. But I can’t help but wonder if subconsciously he was aware of a more subtle but potentially more dangerous threat that I posed to his neighborhood and way of life.
I’m not taking credit or blame for neighborhood change in Indianapolis. But I do know that I’m part of the dynamic of the city I’m in. And when I guy like me walks into a neighborhood, my mere presence can be a provocation. Cities are inherently dynamic places, and we are agents of the forces of change whether we want to be or not. (Which is as true for the poor as for the one percent, we just label it “fair housing” when poor people move into rich neighborhoods, but “gentrification” when the reverse occurs).
While I am a writer and observer on cities, I’m an endogenous not exogenous observer. All of us are players in the development of the places we live and visit, event if only bit players in some cases. And oftimes in the complex world of the city, our actions are part of forces or trends we are not event aware of, ones that may have consequences we would never have desired. That does not absolve us of our role.
As for David Byrne, the role of artists and musicians in paving the way for gentrification is so well known as to be conventional wisdom. Similarly today the hipster. And what’s one of the original signature markers of the hipster? The fixed-gear bicycle.
Just as reductions in crime obviously have an effect of dramatically raising property values (and thus rents) in a place as intrinsically attractive as New York, so do other quality of life improvements such as bicycle infrastructure. By making New York an even more desirable place to live, these improvements, wonderful as they may be and which I would heartily endorse, clearly attract more well-off residents and drive up prices.
Byrne has even taken a direct role in this. He created a series of nine public art type back racks from the city, all but one of which is in Manhattan, and which even includes this delightful example from Wall Street:
Photo Credit: Flickr/zombiete
These racks and his activism with regards to bicycles are what give Bryne his standing an urban commentator.
I for one am glad he made the bike racks as they are fantastic and I’m a fan of New York’s improved cycling infrastructure. But I also recognize that this sort of quality of life improvement contributes towards New York’s attractiveness to the wealthy. It’s just not realistic to think one can clean up the crime, the parks, improve infrastructure, etc. and then expect that prices will remain what they were back in the 70s when Bryne moved to the city. Rather than pointing the finger at the Other, the finance industry in this case, it would be more helpful if those of us who advocate for better urban environments would recognize the inevitable side effects many of our proposed policies would produce, and our own role in bringing them about.
Tuesday, October 8th, 2013
This post is part of a series called North America’s Train Stations: What Makes Them Sustainable – or Not? See the series introduction for more.
Photo from City of Newark website
Photo by Robert Munson
Score: 79 (see full scorecard)
Category: Economic Engine
Overview: Stations in this series’ third category, Economic Engine, perform perhaps the key function of daily urban life: facilitate transit systems that give a competitive edge to downtown employers and retail. This strategic goal helps explain why so many cities recently want to redevelop their central stations and, in the last third of the 20th Century, why preservationists succeeded so often in keeping alive their civic centerpieces.
To distinguish Economic Engines from the highest category (called the Sustainables), a related theory assumes that stations centering well their mobility networks also boost property values with more Transit Oriented Development. This creates a happy economic cycle for a growing middle class that uses transit more; raising both tax and farebox revenue, while creating savings from lowered household transportation costs and government road maintenance. This combination puts a network on the road to fiscal sustainability; particularly as discussed in this series’ earlier article on Philadelphia’s growing middle class that resides downtown. We should expect more of these more complete downtowns as the sustainable era emerges.
Usually with too little residential, Economic Engines are less complete and only stimulate the commercial downtown; but should improve the network as steps toward our more robust category. (While most of these correlations are good, causation is still squishy.)
Newark’s Penn Station is a good test of this TOD theory that transit is an economic enabler and stimulant. In my opinion, Newark potentially centers the nation’s largest suburban operator. (This assumes two combinations under good governance: PATH and NJ Transit technically count as one integrated system; and, Newark’s Penn and Broad Street stations are essentially one station with eight lines connected by a one mile light rail.) Yet, Newark is only a small, mid-sized city with 278,000 residents while Long Island’s railroad (currently the nation’s largest) can serve some 7.7 million.
Photo Credit: Flickr/Dougtone
Newark’s relatively successful commercial downtown looks like a much larger city. But its chief obstacle is the City’s middle class is way too small. While having some diverse neighborhoods, Newark still has the highest poverty rate (25%) of any American city. So if Newark turns around that statistic by using its transit advantage to rebuild its middle class, it further makes the social argument for every other city to invest in its station and reinvent its mobility network. Until that happy day, other cites can be well served by this analysis of Newark’s main station and how it encourages one of the nation’s better transit systems.
How The Economic Multiplier Works At Newark Penn
This station has two key factors in its equation: design; and transit as a top priority.
A great design may not be mandatory for success, but it sure helps. If a station is designed well, its functions fall into place easier and are less costly to update. If a station functions well, it gets used more and it is more possible for a downtown to flourish. Newark proves these operational and capital efficiencies. Twice. Most improbable was the second time; occurring now.
The first time, of course, was when Penn Station was built. With a 1935 ribbon-cutting and carefully orchestrated promotion, this equal investment from the City and Pennsylvania RR promised to work well for everyone. And it still does.
The station functions well. Integrating its three levels, one walks down from the almost airy platforms into a concourse with a relatively high ceiling so it doesn’t seem as if eight tracks could have trains rumbling above you. The concourse then smoothly distributes passengers to parking, taxis, buses or the exquisite Art Deco detail of the waiting room pictured above all on the street level. The basement is a light-rail subway; a short ride connecting to universities, medical centers and the Broad Street Station. Here is the agency’s recent blueprint. (The extensive local bus station is unmarked, but adjoins Penn Station’s north wall.)
While still working well through the 1970s, Newark’s decline caught up with the Station. It has undergone two decades of updates starting with $41M from NJ Transit in the 1990s. Then in this century and largely using the above drawings, NJT teamed up with federal money (including 31M from the 2009 ARRA stimulus.) All this brought the Station to as good a condition as could be expected; given the economic disaster of many Newark neighborhoods.
For more details on Newark Penn, visit this website sponsored by Amtrak that helps citizens preserve their stations.
Street map posted throughout ped-shed, photographed by the author.
The concourse and connection to other modes are done well (see scorecard details.) As in other good stations, improving passenger convenience and increases ridership. But, the real reward is the economic impact on the downtown. The above map captures this best. Its economic anchors are Prudential (absolutely key) and quasi-government corporations (New Jersey’s largest light and gas company and the state’s Blue Cross/Blue Shield.) Typical of recovering downtowns, it also has government centers.
Overall, Newark’s employers are not much different than you would expect a former industrial and port town to have after four decades of disinvestment preceded by a particularly awful 1967 race riot and very rapid white flight. In brief, the downtown needs more private employers.
But, that problem is being turned around. Of the recent large scale construction in all of New Jersey, one-third is in Newark; despite the City having 4% of the state’s population and the disadvantage of its per household income being 42% less than the state’s.
There is further evidence that Newark’s transit quality is attracting capital. It has combined well with the tax breaks to build a downtown sports arena for its NHL team. (Prudential got naming rights.) Panasonic’s North American HQ was just lured from neighboring, upriver Secaucus and added an attractive high-rise to Newark’s surprising skyline. While lures other than tax breaks are used, transit is the key amenity; and Newark and New Jersey know how to use it.
Many give Prudential credit for saving this downtown. I add that it probably took the largest life insurer (whose portfolio is invested heavily long-term in real estate) to recognize long-term value of a town with a great station and good transit.
Newark equals Chicago’s 26.5% of ridership to work. And transit should help rebuild Newark’s middle class to overcome downtown’s main drawbacks: it has very few residents, sparse retail and partial amenities that residents require.
Before Newark Can Solve Its Poverty Problem, Build Downtown Residential
Newark has good bones for downtown residential. It has the second lowest rate of car ownership, after New York City. In addition to transit, other assets should be leveraged for downtown residential. For example, four major institutions (Rutgers-Newark, NJ Institute of Technology, the nation’s largest health service university and a community college) bring some 50,000 students to downtown’s University Heights. These largely commuter colleges could facilitate more housing for students and staff.
As with many cities revitalizing its downtown using the “eds & meds” strategy, Newark knows it has to diversify; as represented in its 2008 “Living Downtown Plan” that stretches to University Heights on the west and troubled areas around Broad Street Station on the north. (Plan consultants were SOM and Sam Schwartz Engineering).
As Mayor for seven years, Newark’s Cory Booker has done much to refurbish his city’s image. In addition to imprinting many economic deals, he is a public safety champion. During the 1990s, Newark was considered the most dangerous city in America. Mayor Booker, an African-American, has been a frontline advocate for restoring public safety. This needs to continue if the downtown is to attract enough residents. Yet continuation depends on his successor, as Mr. Booker is likely to move up as the next Senator from this state.
The mar on Booker’s legacy is he has done too little for poor neighborhoods. Because some border the downtown and are stigmatized by housing projects, this remains an obstacle. In this series on how stations lead transit systems that support a middle class, I cannot start or finish the argument that we have a welfare regime that perpetuates poor people’s plight. But, we should not forget that transit is one of the easiest ways to reduce household costs; enough so every family can save more and move up the ladder.
Unlikely to get as complete a package as Mr. Booker to serve as its next Mayor, Newark needs a strategy that persists past his dynamic persona and take its currently stymied “Living Downtown Plan” and make it a reality. Let me propose a deal for new methods of regional redevelopment. (This concept will be explored throughout this series.) To encapsulate this strategy, look at this map of the PATH.
The Port Authority Trans Hudson is the nation’s 7th largest subway system by ridership. The four small cities it serves have 620,000 residents for an impressive ratio of 3 residents for every 2 riders, highly concentrated. (The nation’s next largest belongs to Philadelphia’s subway with a ratio of 5 residents to 1 rider.) If you add the four New Jersey Transit commuter lines that connect Newark (Penn and Broad stations) to New York’s Penn Station. Suddenly, poor Newark is a very rich transit connection. As the state’s largest city, Newark should be a natural mega-hub for the New York metropolis.
My future article on New York stations uses two assumptions. First, Midtown Manhattan has too many people for transit improvements to work cost-effectively. Second, there are cheaper places to live than Manhattan. Both proven.
Newark has an under-utilized and effective transit network. And second, Newark is an inexpensive place to live.
This begs a few questions. Wouldn’t the world’s main financial center benefit from a farm team eight miles away that already is the nation’s third largest insurance center? And for the common sense and stability of our financial system, shouldn’t investment banking learn something from the nation’s largest life insurer that required zero public dollars to make it through the worst real estate market since The Great Depression? And besides, didn’t banks just make its “Wall Street West” by bringing many players to Jersey City, Newark’s peer on the PATH? (Jersey City has four PATH stops.) And didn’t this expansion raise Hoboken and Jersey City housing prices to those in many parts of Manhattan? Does this make Newark the next city to expand to?
And because it is in-land, Newark would cost substantially less to bulwark against hurricane flooding; possibly a show-stopping cost for Manhattan and Jersey City?
So if all these assumptions make sense, the clincher is: what agency helps fix this match-made-in-Heaven between the first and second largest cities in the New York metropolitan area? And don’t forget the bride’s dowry: Newark has the metro’s second largest airport and it is the most convenient to Manhattan; plus, it has the largest container port on the East Coast.
I’m not done having fun with this scenario… nor laying out its logic for Newark and, by analogy, how other central stations can serve as Economic Engines. Solving transit’s problems are increasingly expensive and ineffective because of how we govern our urban areas. If we are to compete in an era of sustainability and if that model rebuilds regions with mega-centers (instead of one over-crowded midtown), then the New York metro needs to take advantage of Newark’s assets and Newark needs New York’s investments. In ways politicians obviously don’t understand, cooperation will pay great dividends to everyone. (But first, we must un-employ the turf-fighters).
Newark’s social problems won’t get solved overnight. But over-time, they must be improved as they currently use public monies very ineffectively and these otherwise could get a much higher social and economic return if invested in infrastructure. As a drain, urban poverty is a strategic obstacle that prevents transit systems from getting on a path to fiscal sustainability.
So for today… How can every city’s central station, as an Economic Engine, do preliminary work to overcome this obstacle? Answer: we still are finding out.
But… History gives us more answers than we admit. Consider the exhibit created from a brochure promoting Newark Penn at its 1935 ribbon-cutting. This exhibit fills the waiting room’s far wall. Reading this one panel below, it is clear that the Pennsylvania Railroad saw something worth promoting and, in so doing, defined this Station’s destiny.
Photo by Robert Munson
In 1935, the City of Newark had just split the cost of building the Station. This investment tied New York to Newark’s downtown. Four generations later, it still pays dividends. This is a great public value and should make taxpayers feel good (something that doesn’t happen often enough). Newark’s Station remains a great opportunity for all types of progress. But, it is under-utilized; blocked by out-dated laws for redevelopment.
Newark Penn is an Economic Engine for the downtown that is running at, let’s say, half capacity. Who is failing to use that asset to serve public goals? Let’s show politicians and transit bureaucrats the light. And if that doesn’t work, show them the door.