Category Archives: Transportation

Even the Washington Post Has Noticed that Metro Is Failing

redlinecrashby James A. Bacon

How bad is the Washington Metro rail system? So bad that only 84% of its trains ran on time, mainly due to poor maintenance. So bad that ridership declined 5% since 2010, even as transit ridership nationally was up. So bad that the system needs an extra $1.3 billion every year to invest in capital projects, and no one knows where the money will come from. The Metro rail system is so bad that even the Washington Post has perked up and taken notice.

The Metro rail system is arguably the most essential piece of transportation infrastructure in the Washington region, and it is engaged in a slow-motion train wreck. If the metro fails, the metropolitan transportation system seizes up and fails.

The Washington Post has detailed the Metro’s failings in a lengthy, front-page article, which shows that shows how deep-rooted the problems are. The original design flaw, write Robert McCartney and Paul Duggan, was the dysfunctional governance system that shares board appointments between Washington, D.C., Virginia, Maryland and the federal government. Responsibility is so divided that no one is held accountable, and nothing important gets done unless the District’s mayor and the governors in Annapolis an Richmond reach a consensus and push an issue forward.

Add to that the political bias toward expanding the Metro over properly maintaining it.

Board members … kept pushing for Metro to grow. The politicians who held the purse strings seemed happy to invest in laying new tracks and opening new stations, where they could tout development at opening ceremonies. But they cared less about spending for maintenance to prevent breakdowns years later, when they might no longer be in office.

In 2006 then-interim general manager Dan Tangherlini urged cost-reduction measures such as replacing short escalators with stairs, selling Metro’s headquarters building, and buying rail cars made from older designs. The board wasn’t interested. After nine months as a fill-in, Tangherlini did not get the top spot, the article says, “because Virginia representatives on the Metro board were worried that his interest in revitalizing existing subway lines would threaten the agency’s commitment to building the Silver Line.”

So, Virginia got its Silver Line to Tysons, but the quality of service is held captive to a dysfunctional organization. Astonishingly, the Silver Line, the newest in the system, is showing the second worst on-time performance of the six lines. According to data cited by the Post, Silver Line on-time performance in 2015 ran under 75%, dropping below 60% in October 2015.

Another original design flaw was a decision to build lines with two tracks, not four as in New York, with the result that crews sometimes must shut down lines to perform routine maintenance. Also consider the dysfunctional unionized workforce which adds to costs. The Post authors glide past union issues with relatively little comment in this article, but the Washington Times produced a devastating series of articles on the topic several years ago.

Bacon’s bottom line: The Metro is so critical to the functioning of the Washington region, including much of Northern Virginia, that it effectively holds the economy hostage. It is the transportation analogue to “Too Big to Fail.”

But no solution is in the offing. Raising the price of Metro tickets, which don’t come close to covering the cost of the service, is not a viable revenue-raising option when riders are already hacked off and inclined to abandon the system. Asking more money from state and local governments is sure to be contentious, especially in Virginia, if bailing out the commuter-rail system means short-changing other regions of funding for their own projects. Taxpayers are not likely to approve dumping more than $500 million a year extra into Metro, especially with no guarantee that the money won’t disappear into a black hole.

Driving Down, Mass Transit Down, Telework Up

telework

Graphic credit: Transportation Planning Board

by James A. Bacon

The trend toward less driving in the Washington metropolitan area has conformed to the devout wishes of greenies and planners alike over the past decade: Average daily vehicle miles driven per capita has declined steadily since 2005 from 25.7 miles to 22.6 miles. (Driving in 2015 showed a 0.1 mile up-tick, not surprising given the plunge in gasoline prices.)

But not because people were shifting to mass transit. Weekday ridership on the Washington Metropolitan Area Transit Authority (WMATA) also declined: from 748,000 per day in 2009 to 701,000 in 2015. More people are biking, but the numbers are so small that biking as a transportation mode can’t move the needle. Something else is going on.

The Washington Post‘s Dr. Gridlock, Robert Thomson, thinks that telecommuting might explain the difference. He cites a 2013 State of the Commute study that says more than half of commuters either can or could telework. As it turns out, the percentage of telecommuters is highest among those who also rely on rail transit, as shown in the chart above.

I find that counter intuitive. All other things being equal, I would expect commuters with the longest, most grueling ride to the office would have the greatest incentive to work at home. For whatever reason, that doesn’t seem to be the case. Why not? Perhaps commuters consider mass transit even more unpleasant or unreliable than spending time behind the wheel — not implausible, given the widely publicized safety, maintenance and reliability issues plaguing WMATA.

Whatever the reason, the phenomenon is worth exploring. We’re spending billions of dollars patching up Northern Virginia’s transportation infrastructure. There’s got to be a better way.

Reader Alert: Another Jeremiad about Debt and Risk

Richmond Fed "Bailout Barometer" -- federal backing of total U.S. debt   increased another 0.7% in 2015 to reach almost 61%.

Richmond Fed “Bailout Barometer” — federal backing of total U.S. debt increased another 0.7% in 2015 to reach almost 61%.

Holman W. Jenkins, Jr., at the Wall Street Journal reminds us how countries around the world, including the United States, are doubling down on debt to stave off recession:

The Richmond Fed’s “bailout barometer” shows that, since the 2008 crisis, 61% of all liabilities in the U.S. financial system are now implicitly or explicitly guaranteed by government, up from 45% in 1999.

Citigroup estimates that the top 20 advanced industrial economies, in addition to their enormous, recognized public debts, also face unrecorded additional debts of $78 trillion for their unfunded pension systems.

Six years after a crisis caused by excessive borrowing, McKinsey estimates that even visible global debt has increased by $57 trillion, while in the U.S., Europe, Japan and China growth to pay back these liabilities has been slowing or absent.

No one likes recessions but they serve a useful purpose — they wring bad investments out of the economy and reallocate resources to more productive uses. But that’s not much consolation to a laid off Intel employee in the U.S. or a laid off cement-plant worker in China. So, politicians and central bankers around the world are doubling down on variations of the same strategy of spending, borrowing and financial repression (driving down interest rates to transfer wealth from savers to debtors) to perpetuate economic growth. When countries start experimenting with negative interest rates, the consequences of which no one can predict, you know that policy makers are desperate.

The global economy is entering a new phase: the end game in which democratic welfare states struggle to maintain massive entitlements in the face of aging populations and slowing economic growth. The United States is not as far down this road as some other countries, but absent major policy changes, deficits and the national debt are heading inexorably higher. Don’t believe me — believe the Congressional Budget Office.

Meanwhile, the four leading contenders for U.S. president are advancing platforms totally disconnected from reality. The cost of Bernie Sanders’ programs, if implemented, would cost $18 trillion over ten years, estimates the Wall Street Journal. Donald Trump’s tax-cut plan would cost $9.5 trillion over 10 years, says the Urban-Brookings Tax Policy Center, while the Ted Cruz tax plan would cost $8.5 trillion, according to the same group. The least fiscally irresponsible candidate, Hillary Clinton, would expand government spending by a mere $1 trillion over ten years, according to the McClatchy news organization

We can argue about the biases of the groups crunching these numbers, but that would miss the point. The odds are overwhelming that the next president of the United State will not be remotely serious about balancing the budget. Liberals argue that bigger spending can be paid for with taxes on the rich with little or no adverse impact on the economy, and conservatives can argue that the “dynamic” effects of tax cuts will stimulate economic growth and bring in more revenue than static models would indicate. Yeah, right.

Hither Virginia? There is little that Virginia can do to buffer its economy from these national and international trends, nor can state and local governments insulate themselves from collapsing tax revenue in the next recession. But they can protect themselves by maintaining AAA bond ratings and putting their public pensions on a sound footing so that when the crunch does come, they will be better positioned to meet long-term obligations without debilitating tax increases.

I am particularly worried about two categories of state-local debt. The first category is university debt backed by revenue from students. The higher ed bubble is unsustainable even during a period of modest economic growth. A recession will leave many institutions destitute, and a Boomergeddon-scale calamity could leave the entire industry in a shambles. A second category is debt taken on for “economic development” projects like sports stadiums, convention centers, golf courses, and other glittering objects that are best paid for by private investors trained in analyzing risk.

You can add a third category of long-term obligation: maintaining transportation services such as Washington-area metro, Virginia Beach light rail, Richmond bus rapid transit, and the like, which will require government subsidies in perpetuity. Could local governments support those services in a severe revenue downturn? Doubtful. Likewise, I am suspicious of toll-backed highway bonds assuming long-term traffic growth even as the evolution to more dense, mixed-use communities scrambles traditional commuting patterns, and as Uber, Lyft, Bridj, transportation-as-a-service enterprises, and self-driving cars seem destined to radically alter Americans’ driving habits.

Nassim Nicholas Taleb writes about building “anti-fragile” enterprises and institutions — entities that are not merely resilient in the face of massive adversity but can thrive in adversity. Virginia can become anti-fragile if state and local governments, in the face of a global economic meltdown, can maintain the ability to provide core government services while other states and metros are falling apart. Talent and capital will migrate to the oases of stability. A handful of states will prosper. Will ours be one of them?

Somehow, This Comes as No Surprise

Photo credit: Richmond.com

Photo credit: Richmond.com

Here’s the latest news about the proposed Richmond Pulse project: The expected cost of the project, which would extend Bus Rapid Transit service along 7.6 miles of Richmond’s Broad Street, has just increased by $11 million.

In other words, the contract to design and build the project came in 32% higher than estimated. “Unfortunately, there are estimates, and then there’s the market,” remarked Jennifer Mitchell, director of the Virginia Department of Rail and Public Transportation, according to Robert Zullo writing in the Richmond Times-Dispatch. The price does include a $3.5 million bonus for completing the project on time.

It’s not clear where the state will find the extra money. But it’s clear from Zullo’s article that the money will be found, and that the state will cover it. The federal government has promised $25 million, the city $7.6 million and Henrico County $400,000. The total project, which includes the purchase of natural gas-powered buses and the removal of 300 parking spaces, originally had been estimated to cost $50 million.

Bacon’s bottom line: This sort of thing happens with such regularity that it is entirely predictable.

Step 1: Create a low ball estimate for a transportation project.

Step 2: Generate a lot of support based on that low ball estimate, and work the project through the elaborate, years-long approval process, creating enough commitment and buy-in from stakeholders that backing out would seem unthinkable.

Step 3: Put out the project for bids, discover the real price of the project, and fund the inevitable shortfall with money from somewhere.

Step 4: Never, ever admit to taxpayers the way the game works.

I support mass transit (though only under the right conditions, not as a universal proposition) as an integral part of a well-functioning transportation system. I have seen this Lucy-pulling-away-the-football-from-Charlie-Brown scenario play out so many times now that I have no faith whatsoever in official cost estimates. If mass transit advocates want to win the trust of taxpayers and gain broader political support, they need to stop this travesty.

I have reached the point where I assume cost estimates are low, the only question being by how much and whether the underestimate was the result of deliberate subterfuge — nod, nod, wink, wink, Mr. Consultant, give us an estimate we can sell to the public — or just systemic incompetence.

Once upon a time, road-and-highway cost projections were equally unreliable, but the Virginia Department of Transportation has done a better job of delivering projects on budget and on time in recent years. As for ridership and traffic projects, I distrust them all equally, whether for roads or transit. Political elites and business leaders continually lament the sorry state of Virginia’s infrastructure. Maybe they could gain political support for more investment if they did a better job of winning the public’s trust.

— JAB

Making NIT More Productive, More Resilient

NIT

Norfolk International Terminal (NIT)

by James A. Bacon

For the millions of Virginians living above the fall line, the struggle that Hampton Roads has with rising sea levels and increasing flooding may seem remote and far away. Why should we care? After all, does anybody in Hampton Roads give a hoot about our problems?

Kit Chope, vice president of sustainability for the Virginia Port Authority, gave a pretty darn good reason this morning for why Virginians across the Commonwealth should take an interest in the region’s increasing vulnerability to storm surges and flooding: Anything that disrupts port operations disrupts the economy of the state. Some 530,000 jobs and 10% of the state’s gross domestic product are tied to port activities, he said.

“What affects the port affects the state,” said Chope in a panel discussion of the 2016 Resilient Virginia Conference, during which a major theme was the long-term threat that sea level rise and flooding poses to Hampton Roads.

Upstream Virginia has gotten the message. Included in the $2 billion bond package approved by the General Assembly in the 2016 session is $350 million to upgrade cargo-handling cranes at Norfolk International Terminal (NIT). The capital investment has been billed primarily as a response to growing cargo traffic and the need to expand capacity. But there’s more to it than that, said Chope. Modernization also will provide more protection from hurricane storm surges that could inundate the facility and knock it out of operation.

The Port of New York and New Jersey, the third largest port in the country, got a taste of what could go wrong during superstorm Sandy. A nine-foot storm surge inundated the portsm washing hazmat materials and other debris into the water channels and rendering electrical power unreliable. Flooded terminals closed for a week, leading to the diversion of 25,000 shipping containers and 58 vessels (some to Hampton Roads). Another 15,000 containers were lost, along with 9,000 automobiles and 4,500 trucks and vehicles.

The ports of Virginia, the nation’s fifth largest port complex, are determined to avoid a similar capacity, Chope said.

Thanks to the bond package, new electricity-powered, rail-mounted gantries will replace the existing diesel-powered straddle cranes. The investment will make possible a 50% increase in the number of containers to be loaded and unloaded. Getting less attention is the fact that the Virginia Port Authority is studying how to protect the terminal from disruption. “Where are we most at risk? Where are our critical nodes? What are the potential points of failure?”

For example, electric vaults at ground level will be elevated above projected storm surge levels. Buildings will be hardened to protect IT systems used to track cargo and communicate with shippers. “Data is king,” Chope said. It must be protected.

The VPA’s resilience efforts have been internally focused mostly, but the port relies upon utilities, especially electricity, and is inextricably tied to the network of railroads, highways and local roads that link the terminals to major markets. If local roads flood, as they are prone to do in the City of Norfolk, that could hinder trucks driving in and out with containers. Everything is interconnected. “What’s good for the city is good for the port,” he said. “What’s good for the port is good for the state.”

How Not to Think about Mass Transit

GRTC_Chesterfield

GRTC bus bound for Chesterfield Plaza. Photo credit: Richmond Times-Dispatch

by James A. Bacon

Michael Paul Williams, a feature columnist for the Richmond Times-Dispatch, takes a dim view of a decision by the Chesterfield County Board of Supervisors to discontinue a subsidized bus route between downtown Richmond and Chesterfield Plaza. “Chesterfield, despite its dramatic demographic shifts and an increasing poverty rate, continues to turn a blind eye to residents who don’t own cars due to choice, age, disability or the inability to afford one,” he writes in his column today.

He indicts Chesterfield’s decision without ever revealing (a) how much it costs to maintain the service, (b) how many passengers used the service, or (c) how much the subsidies amount to per passenger, much less asking (d) how such a sum might be spent more beneficially in other ways.

The prospect of such reasoning taking hold in the Richmond region and driving the expenditure of real money should be terrifying in the extreme to anyone who objects to the squandering of tax dollars on symbolic gestures rather than on remedies that actually work. Walk with me through his column and despair.

Williams writes:

The supervisors gutted the budget of the Route 81 Express, creating the ridership decline they used to justify killing it. What exactly did the board expect from a route that offered one round-trip in the morning and a single one-way trip from downtown Richmond to Chesterfield in the afternoon with no stops in between? The board couldn’t have undermined the bus route more effectively if it had let the air out of the tires.

He has a point. Sort of. True, the route structure was idiotic. From Williams’s account, it sounds like the Chesterfield supervisors were trying to provide mass transit on the cheap and the route was doomed to fail. The obvious solution, however, is to pull the plug on the project before wasting any more money — just what the board did. The alternative is to double up on a bad situation, spending money to beef up the schedule or add interconnecting lines in the hope of creating critical mass. But what would such an arrangement look like, how much money would it cost, and how many people would be likely to ride that route? Just how much money does Williams propose throwing at the problem?He doesn’t say. He just wants more.

Williams brushes close to enlightenment when he quotes Jesse W. Smith, Chesterfield’s transportation director: “The county really doesn’t have the density to support traditional bus service.”

Bingo. The rule of thumb is that people are willing to walk 1/4 mile to avail themselves of mass transit. If 500 people live within a 1/4-mile radius of a bus stop, that represents far fewer potential customers than if, say, 2,500 people live within a 1/4-mile radius.  It also matters how walkable the streetscapes are. Are there sidewalks? If so, are they set away from streets with cars whizzing by at 45 miles per hour? When pedestrians cross the street, do they feel like they’re taking their lives into their hands? Is the walk visually interesting or is the view monotonous and undifferentiated?

Chesterfield is the epitome of the autocentric suburb. Given decades of low-density, hop-scotch, pedestrian-unfriendly development, Chesterfield County has a pattern of land use that is totally hostile to walkability and inappropriate for transit. Trying to implant mass transit in such an environment would be like planing a banana tree in Alaska: It can’t possibly thrive.

Chesterfield fully deserves criticism for its horrendous land use decisions, but that is no reason to compound the error by superimposing an unsuitable mass transit system. If Williams would like to spark a useful discussion, he could start by suggesting which transportation corridors might lend themselves to mixed-use development at higher densities that might one day, given sufficient redevelopment, support a bus line at reasonable cost.

“They’re shooting themselves in the foot,” Williams then quotes my old friend Stewart Schwartz, executive director of the Coalition for Smarter Growth, as saying. Williams summarizes Schwartz as making a point similar to one that I have often made on this blog:

In today’s competitive marketplace for corporations and employees, the suburban office park model of the late 20th Century is fading fast as companies seek to appeal to a millennial workforce that increasingly eschews the automobile and would rather walk, bike or ride mass transit to work. From Charlotte to Phoenix to Denver to Cleveland, “elected officials and business leaders recognize that transit provides a competitive edge,” Schwartz said.

That’s all very true. But it’s also totally irrelevant to Chesterfield. The transit systems he mentions serve areas that have far more people within walking distance of their bus stops than Chesterfield can ever think to have. Buses and Bus Rapid Transit might make sense in Richmond’s urban core (assuming City Council enacts appropriate zoning and invests in walkable streetscapes) but none at all in Chesterfield.

Williams then quotes former Sen. John Watkins, a Republican who represented Chesterfield County, who “was a lonely voice in the wilderness on the need for mass transit” (and who also was a prime mover behind the Rt. 288 corridor that opened up vast new swaths of the county to autocentric development). When he joined the legislature in the 1980s, Watkins observed, Fairfax County was adamant about not wanting buses, “and how they’re the biggest user of transit dollars in the state.”

Here’s the flaw with that comparison: Fairfax County had a population density of 2,862 inhabitants per square mile in 2014; Chesterfield had a population density of 742. Fairfax had nearly four times the population density! Moreover, there are sections of Fairfax that have far higher density than the average, while population in Chesterfield is smeared uniformly across the landscape. Buses make far more economic sense in Fairfax than Chesterfield.

Yes, Chesterfield has made a mess of itself. Yes, Chesterfield has created a land use pattern that makes life difficult for poor people lacking access to automobiles. But, no, compounding one folly with another is not an answer. Chesterfield needs to develop corridors of high-density, mixed-use development capable of supporting mass transit before adding new bus routes. Only then will the cost-benefit ratios look remotely favorable.

Gramercy District a Game Changer

Rendering of the Gramercy project.

Rendering of the Gramercy District project.

by James A. Bacon

Northern Virginia technologist and developer Minh Le is partnering with Microsoft Inc. to build Gramercy District, a $500 million “smart city” development adjacent to the planned Ashburn Metro station on the Silver Line, reports the Washington Business Journal. Not only will Microsoft contribute technology it will participate as an investor. (Details on Microsoft’s exact involvement are sketchy.)

“We believe that technology is going to be a major force and driver in the way people live, the way people learn, the way people socialize,” says Le, a former managing director with Accenture who has delved into predictive data analytics, big data management and software development. “What we’re looking to do is build the next great tech real estate company.”

The WBJ describes the vision:

Key to the project is the marriage of real estate and technology, Le said. Gramercy District will be a “smart city,” baking technology into every aspect of the project, from the building systems to the parking to the retail to the Internet of Things — essentially device-to-device communication. The development will be ideal for tech companies and startups, he said, as the IT systems will be in place before the first building even comes online.

Gramercy District, to be built on 16 acres, ultimately will comprise 2.5 million square feet of development. The property fronts the Dulles Greenway and is adjacent to the Ashburn Metro station, which is scheduled to open in 2018/2019. Le’s company, 22 Capital Partners, is billing the project as the Loudoun County gateway, connecting all major employment centers by Metrorail, international businesses via Dulles Airport, and visitors and tourists to Loudoun’ s wineries,farms, and equestrian events.

The site is zoned for high-density, mixed-use, transit-oriented development. The project is expected to unfold over multiple phases. The first calls for a 268-unit, seven-story luxury apartment building, 26,000 square feet of retail, rooftop amenities and structured parking. A second phase calls for more mid-rise residential as well as retail and a high-tech business center.

Bacon’s bottom line: All I can say is, “About time!” The rest of the world is barreling ahead with smart city initiatives, leaving Virginia in the dust. That’s no surprise for Richmond, Norfolk, Roanoke and other downstate metros but quite a disappointment for tech-savvy Northern Virginia. If smart cities would take root anywhere in the state, one would expect it to be in NoVa. Sadly, while NoVa’s IT industry is tech savvy, its skill sets do not appear to have migrated to the real estate community.

But it always takes someone to be first, and from the brief description I have of him, Le seems to be the logical candidate. He has a strong IT background and he obviously sees an opportunity to embed technology into a real estate development in a way that no one else in Virginia, or even the Mid-Atlantic, has done before. What’s especially interesting about the Gramercy project is that it is driven entirely by the private sector. Most smart city initiatives in Europe are government backed, as is the smart city thrust in Dubai. The only global analogue I can think of is the high-tech Sangdo business district built from scratch on the outskirts of Seoul, Korea. If Le can create a replicable business model, Gramercy is potentially a very big deal. It could be the most transformative event in real estate since the invention of the skyscraper.

What “smart city” technologies would apply? The WBJ article mentions parking — presumably, this would be dynamically priced parking designed to limit and optimize the space dedicated to parking spaces. The article also mentions building systems — that would be primarily things like energy management (HVAC and lighting), water management, security and employee access. Also mentioned is the Internet of Things. That is an exceedingly broad and vague category, but it conceivably could include such things as measuring traffic loads on Gramercy District streets to coordinate with stop lights, parking and mass transit.

It is highly encouraging that Le will be applying the “smart city” technologies in a “smart growth” district of mid-rise, mixed-use buildings with Metro access. I will be especially keen to see if he develops a “mobility as a service” application like the projects being pioneered in California that, as a substitute for car ownership, would provide subscribers access to an array of transportation options from Metro rail, commuter buses, vans, Uber-like ride-hailing services, and automobile rentals. That, I believe, is the future of transportation and a far more likely savior of Northern Virginia from its traffic congestion headaches than anything the state has planned.

I may be reading too much into a single news article, but I feel safe in predicting that Gramercy will be the most significant real estate project in Virginia announced this year, if not this decade… if not so far in the 21st century.