Here’s a Novel Idea: Base Billion-Dollar Investment Decisions on Latest Data, Not Decade-Old Data

by James A. Bacon

In the 2000s, Loudoun County grew at a prodigious rate, averaging 6,000 housing starts yearly before the Great Recession. Construction took a dive during the recession and continues at only half the pace of a decade ago, contends Rob Whitfield with the Dulles Corridor Users Group and a long-time foe of the project. Those numbers should matter not only to home builders and local planners, he says, but to the commonwealth of Virginia, which is helping bankroll construction of Phase 2 of the Rail-to-Dulles project.

While Phase 1 would extend the Metro Silver line to just beyond Tysons Corner, Phase 2 would run it to Loudoun County beyond Washington Dulles International Airport. The economic viability of the second leg depends in part upon continued residential development in southern Loudoun. If the anticipated number of passengers doesn’t materialize, revenues could come up short — requiring even greater subsidies than acknowledged at present.

Whitfield makes a modest suggestion: Before committing an additional $300 million in state funds on top of $150 million already granted, as Governor Bob McDonnell has proposed, the state should conduct an economic analysis of the project based on current economic conditions. That is the impetus behind a bill submitted by Sen. Dick Black, R-Leesburg. SB 1361 would add a paragraph to the section of state code outlining the responsibilities of the Department of Rail and Public Transit (DRPT). Prior to funding any rail or transit project, the DRPT should provide to the General Assembly an economic and financial analysis of the proposed project:

This analysis shall include an evaluation of feasible alternatives and projected transit service demand over a Twenty year term. The analysis shall demonstrate the reasonableness of all assumptions made and provide an analysis of the impact of variables such as inflation and other economic conditions. The analyses shall be based on current market conditions and projected operating revenues, costs and replacement costs for the rail or other proposed transit project based on data prepared during the preceding three years.

As I have documented endlessly on this blog, population growth and housing development hit an inflection point during the 2007-2008 recession. In metropolitan regions across the country, growth is gravitating back toward the urban core. Moreover, growth in the Washington metropolitan region, including communities in Fairfax and Loudoun counties served by the Silver Line, are slowing. After fueling the 2000s boom in defense, intelligence and homeland security spending, Pentagon spending will level off and possibly decline outright. Population and growth forecasts for Northern Virginia have been dramatically downgraded.

The double whammy of unfavorable national and local trends will devastate population projections underpinning mega-projects from Dulles Rail to the proposed north-south corridor west of Dulles.

The only complaint I have with Black’s bill is that it applies only to rail and transit. Every mega-project should be based upon reasonably recent data. Indeed, the Commonwealth Transportation Board and NoVa regional planning authorities should go back and take a fresh look at every major transportation project, whether rail or road, slated for state funding. But, without outside prodding, they won’t. Projects build up enormous bureaucratic inertia. As a consequence, Virginia will spend billions building a transportation system for the 20th century, not the 21st.

Update: Whoops. Looks like Black withdrew his bill today! Oh, well. My logic still applies. The bill never had a chance of passing, but it would have been nice if it had inspired a little debate.

7 Responses to Here’s a Novel Idea: Base Billion-Dollar Investment Decisions on Latest Data, Not Decade-Old Data

  1. How do we figure the fact Reagan Airport is not enough to serve the needs of the Washington Area?

    Of course now that the HOT lanes are a reality running shuttle buses to Dulles should be no problem and probably faster than a METRO that stops at stations on the way.

  2. You’re right Jim – The Whitfield / Black proposal is a wise one.

    Regional planners need to take a longer view framed in a wiser perspective. Their current methodologies do not work. They fail to measure, appreciate, and account for current dynamics.

    The explosive outward ring growth latter 20th century were fueled by needs, demands, and supplies, that are no longer in play. Nor are they, or anywhere near similar mixes, on the horizon.

    Indeed, expect the reverse – contraction. Efforts to push different results likely will end in wasteful failure. Regional planners need to reinvent their situational awareness. Be mindful of larger, broader and deeper trends.

    To every thing there is a season, and a time to every purpose under the heaven: a time to be born, and a time to die; a time to plant, and a time to pluck up …

  3. while I agree that using past growth data to predict future growth is no longer as reliable, it never was that great beyond large scale regional areas. They never were very good at predicting how growth would allocate itself geographically especially in sub-regional scales.

    But planners ARE using what is available. I know of few if any other methodologies that are better.

    but the same is true of speculation that growth will slow or contract – geographically. Is there anything of a tool that would predict/project/show this or is it just opinion?

    what drives development is demand – and down our way in exurbia, remains strong demand for a conventional home in a “sprawl-type” subdivision – the kind that costs way more than most people can afford in places like NoVa but can be had for 1/3-1/2 for those willing to commute 50 miles.

    And on this point – the current growth models are pretty dismal in predicting where exurbia happens and when and again.. I don’t know any other tools that suggest that exurbia is dead and people abandoning it.

    We have foreclosed homes down my way. Much less than we had before and the pressure for more homes is not near as strong as before, down by half or more BUT, we are STILL building NEW subdivisions – even now.

    What’s going to change the game I suspect (and also not incorporated into growth models) are the HOT lanes down I-95 to Stafford by 2014 and strong talk of extending down to Massaponax in Spotsylvania.

    that may change things. I don’t think it shuts down growth but it may change how it allocates geographically.

  4. I agree to a point – the growth and improvement needs be allocated to the right area, and if Jim is right there are many such areas that can use our limited resource to far better advantage than the hinder-lands.

  5. right – but that’s basically an opinion not really backed up by any real evidence. It’s basically an advocacy to grow a particular way.

    What drives growth is demand. People buy houses in areas where they want to live and businesses build businesses where they think their business will do good.

    You cannot tell developers that they cannot build houses. We learned that lesson years ago. You have a Comp Plan. It lays out supported land uses. You have a water/sewer master plan. It tells you WHERE the infrastructure will be built and it’s driven in large part by what the comp plan designates but sometimes vice-versa.

    No planners down this way think in terms of what we are doing is building exurban homes that people will commute 50 miles to work from.

    All the planners down here know is when a developer comes to them with a plan for a 500-unit subdivision.

    What do we do about it?

    What can we realistically do about it?

    In all fairness – Facquier county decided that they don’t want that kind of growth and in large part have prevented it but every other county in the ring around NoVa is doing pretty much what our county is doing – building houses to meet “demand”.

  6. right – but that’s basically an opinion not really backed up by any real evidence. It’s basically an advocacy to grow a particular way.

    What drives growth is demand. People buy houses in areas where they want to live and businesses build businesses where they think their business will do good.

    You cannot tell developers that they cannot build houses. We learned that lesson years ago. You have a Comp Plan. It lays out supported land uses. You have a water/sewer master plan. It tells you WHERE the infrastructure will be built and it’s driven in large part by what the comp plan designates but sometimes vice-versa.

    No planners down this way think in terms of what we are doing is building exurban homes that people will commute 50 miles to work from.

    All the planners down here know is when a developer comes to them with a plan for a 500-unit subdivision.

    What do we do about it?

    What can we realistically do about it?

    In all fairness – Facquier county decided that they don’t want that kind of growth and in large part have prevented it but every other county in the ring around NoVa is doing pretty much what our county is doing – building houses to meet “demand”.

  7. Yes, using more up to date studies might indeed be a good idea. It’s strange how some people want to resist that.

    Another novel idea would be to actually check the line item prices in these multi-Billion dollar projects. When I did that in the Dulles Rail / Silver Line project, I was shocked by the massive overcharges and the political and news media coverups of anything that even touched on the 100% overcharges that appear to be typical. As but one example – has anyone here heard ANYTHING about the mysterious “Contractor A” that was charging 1.3 to 3.3 times as much as other contractors, and yet was not only getting MWAA contracts for many years, but was actually getting those contracts FUNNELED to it? Heck, does anyone even REMEMBER that? (Yes I know, it was reported way back on November 1, 2012 – almost three months ago! I guess now it is known only to historians.) You know, that sort of pricing could clearly add up to the double-charging that I found – but yet it somehow completely fell off the news media radar, and of course our trusty elected leaders simply whistled and looked the other way. Heck, they hardly ever bother to say the magic words “Oh, we’re looking for ways to lower the tolls” any more.

    So yes, let’s make sure our decisions are based on valid information, including valid information about prices, shall we? We -might- want to see about the WMATA line item prices in their recent $26 billion surprise announcement. Or maybe we don’t. (Funny our leaders haven’t said a word about that, isn’t it.) Who knows, maybe we could start by calling out the cost estimators this time?

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