Building Connectivity in Suburbia

Building Connectivity in Suburbia

Sunnyvale, Calif., wants to reinvent a 60's-era industrial office park as an innovation district. It's making progress but suburban sprawl is not an easy habit to break.

Read More

The Great U.S. 460 Swamp

The Great U.S. 460 Swamp

VDOT had loads of warning that wetlands could kill the U.S. 460 project but the state charged ahead with a design-build contract that everyone knew could explode.

Read More

Coming up: Car-Lite Burbs

Coming up: Car-Lite Burbs

A California developer is teaming with Daimler AG to bring buses, shuttles and ride sharing to an Orange County community -- with no government subsidies.

Read More

Putting the “Garden” in Rain Garden

Putting the Garden in Rain Garden

Soon Virginians will start spending billions to meet tough storm-water regs. Lewis Ginter Botanical Garden wants to show how we can save the bay – and look really good doing it.

Read More

Tech Insurrection

Tech Insurrection

Smart cities, says Anthony Townsend, will be forged by geeks, activists and civic hackers through bottom-up technological innovation.

Read More

Yes, Virginia, Culture Does Matter in School Performance

by James A. Bacon

I was planning to give readers a break today from graphs and scatter charts relating to Virginia’s 2014 Standards of Learning tests. Then I read a quote in the Times-Dispatch this morning by Michel Zajur, CEO of the Virginia Hispanic Chamber of Commerce. Zajur was lamenting the high Hispanic drop-out rate from schools which, at 11.7%, exceeds the rate for blacks (8.7%), whites (4%) and Asian (3%).

“Zajur and others attribute the high dropout rate to the cultural pressures felt by Hispanic students, the article states. “While other cultures focus on education, Hispanic youths are more often pushed to enter the workforce as early as possible to help support their families.”

Hmmm… Here is a clear example of how culture affects educational achievement, a fact that some readers are determined to deny. Hispanic civic leaders, not right-wing conservatives, believe that their culture pressures young people to drop out of school early, and they’re trying to do something to change it. The article profiles the Passport to Education program in three Richmond-area schools that matches students with mentors and provides a bilingual Website to help families navigate the school system.

So, I began wondering, how are Hispanic students performing in their SOL tests? And could Hispanic culture influence the outcome? While acknowledging the hazards of generalizing about “Hispanic culture” when Virginia Hispanics originate from divers countries across Latin America, I think the answer is a resounding yes — but not in a way that people will expect.

Percentage of students passing 2014 SOLs, contrasting Hispanic students proficient in English, Hispanics not proficient in English, and whites.

Percentage of students passing 2014 SOLs, contrasting Hispanic students proficient in English, Hispanics not proficient in English, and whites.

Overall, Hispanics score significantly lower pass rates than whites. But that generality is deceptive. Utilizing the Virginia Department of Education SOL Assessment Build-a-Table tool, I found a huge gulf between Hispanic students who are proficient in English and those who are not. But, as seen in the chart above, when you compare English-proficient students, nine-tenths of the gap between Hispanics and whites disappears .

That would seem to confirm the idea that culture doesn’t matter. But let’s dig a little deeper. We also know that educational achievement is correlated with socio-economic status. What would happen, I wondered, if we compared apples with apples — disadvantaged but English-proficient Hispanics with disadvantaged white and black students? The results, I suspect, will startle many readers.

english_proficient

Disadvantaged Hispanic kids whose families have lived in the U.S. long enough to acquire English proficiency pass SOLs at a higher rate than disadvantaged whites by non-trivial margins, and blow the socks off the pass rates of black students.  To what factor do we attribute this superior performance? Do Hispanic kids attend schools with superior financial resources? Do they get the more experienced teachers? Does institutional racism favor poor Hispanic kids over poor white and black kids? That’s going to be a hard case to make.

Conversely, could there be a cultural difference? Is it possible that, as first- and second-generation immigrants, Hispanic students have a stronger work ethic than their disadvantaged peers in white and black communities? It is possible that they feel less entitled and more impelled to work hard?

Whatever the answer, it is very encouraging. The SOL data gives us every reason to believe that Hispanic kids in Virginia are assimilating very well once they master the English language.

Richmond’s Tech Star in Kickback Scheme?

HDL LogoBy Peter Galuszka

Critics of the American healthcare system have long cited hidden charges as one reason why costs are so high and why reform is needed.

So, it is disturbing to read a report on the front page of today’s Wall Street Journal that Health Diagnostic Laboratory, arguably the most successful of the biotechnology firms to come out of a much-touted research park in Richmond, is implicated in a possible scheme to pay kickbacks to doctors who use its blood testing services.

The Journal reports:

Until late June, HDL paid $20 per blood sample to most doctors ordering its tests — more than other labs paid. For some physician practices, payments totaled several thousand dollars a week, says a former company employee.

HDL says it stopped those payments after a Special Fraud Alert on June 25 from the Department of Health and Human Services, which warned that such remittances presented “substantial risk of fraud and abuse under the anti-kickback statute.

HDL Chief Executive Tonya Mallory told the Journal that her firm “rejects any assertion” that the company grew as fast as it did “as a result of anything other than proper business practices.”

Meanwhile, HDL has sent Bacon Rebellion this updated response.

Others say that paying doctors fees sets up the chances for fraud, especially in Medicare, one of HDL’s biggest markets, the Journal reports. Other testing firms, the Journal reports, pay doctors nothing for using their services.

This is bad news for what was Richmond’s Poster Child of successful high tech startups after years of flops at the Virginia Biotechnology Research Park. Founded in 2008 under Mallory’s leadership, HDL zipped up to $383 million in revenues with 41 percent of that coming from Medicare,” the Journal says.

Much of the issue seems to be related to how accurately and fairly to define what is merely drawing a patient’s blood and how much goes for “P&H” or processing and handling. A problem is that Medicare doesn’t pay any more than $3 for merely drawing blood. HDL has estimated that the “P&H” part is worth about $17. The firm claims it has special proprietary methods that give it an edge.

According to Virginia Business magazine, which named Mallory its person of the year last year:

Mallory, 48, founded HDL in the summer of 2009. Since then, it has grown from a kitchen-table business plan to a corporation earning more than $420 million in annual revenue, employing 750 people, processing 4,000 lab samples and running more than 60,000 lab tests each day. HDL has driven near constant construction at its home in downtown Richmond’s Virginia BioTechnology Research Park, where a $68.5 million expansion soon will triple the company’s footprint to 280,000 square feet.

Last year Mallory received the Ernst & Young National Entrepreneur of the Year award in the Emerging Company category. One of the country’s most prestigious business awards for entrepreneurs, it recognizes leaders who demonstrate innovation, financial success and personal commitment as they build their businesses.

The Journal, however, quotes several disgruntled employees and notes that Mallory had worked for a California firm called “Berkeley Heart Lab Inc,.” which began using tests called “biomarkers” which can predict future health problems by analyzing blood.

Mallory, who was raised in Hanover County and attended Virginia Commonwealth University, was senior lab-operations manager at Berkeley until she left for Richmond in 2008, the Journal says. Two Berkeley sales executives went with her and formed a company that ended up marketing HDL’s products.
Berkeley sued HDL, accusing it of stealing its business. HDL denied the allegations. HDL settled one case for $7 million, the Journal says, but other cases are pending.

Update on the Debate over SOL Performance

top_school_divisionsby James A. Bacon

There has been a lively discussion in the comments section of previous blog posts regarding the interpretation of the 2014 Standards of Learning (SOL) data. The debate has largely focused on explaining the gap in the average SOL pass rate between white students and black students.

Broadly speaking, there are two schools of thought reflected in the comments. The first school blames the lower black SOL pass rates on unequal access to resources, most notably access to experienced teachers. For simplicity’s sake, I call this the “structural” school of thought. The second school attributes black under-performance to cultural factors, such as peer pressure to avoid “acting white” by pursuing academic achievement. For simplicity’s sake, I call this the “cultural” school of thought.

I have presented evidence in previous posts suggesting that cultural factors play a big role in explaining the SOL performance gap. But the case is hardly a slam-dunk (at least not as I have presented it.) The Blogger who goes by “Life on the Fall Line” makes an interesting argument. Schools with the smallest gaps between white and black performance happen to be among the smaller school systems in the state. When there’s only one elementary school, one middle school and one high school in a jurisdiction, he says, all the white kids and all the black kids in a jurisdiction get thrown in together.

When white parents don’t have a choice but to send their children to schools with black children the racial gap looks like it shrinks. … Broadly speaking, when the chance to discriminate does not present itself as an option, the racial gap closes. Or at least that’s how it appears.

The correlation between small school systems and higher black SOL performance is far from perfect, he concedes, but he thinks the relationship is strong. (It should not be difficult to test his hypothesis. We’ve got data on black SOL performance, and we’ve got data on the number of schools per school district.)

Larry Gross advances a different argument. He points to large variations in the black pass rate from school to school.

There are 45 elementary schools in Henrico with only 10 showing significant percentages of blacks – and the reading scores of the 10 schools vary from 40% pass to 75% pass. Now if “culture” is the cause of the state-level black scores, please explain why “culture” is not being reflecting pretty much the same across different elementary school districts. Why is there a 35% disparity in black pass rates depending on school?

One reason for the variation may be that the percentage of “economically disadvantaged” black students is higher in some school districts than others. The data exists to take that variable into account. My hunch is that the variability would shrink but still persist, and Larry’s question still would need to be answered.

Larry and Life on the Fall Line both make interesting points. Anyone who embraces the “cultural” school of thought needs to address their arguments.

There is a third basket of explanations, which I call the “institutional” school of thought, that remains to be explored here. That line of thinking would attribute some of the gap in student performance to varying quality of administration at different schools and school systems. Arguably, some schools and entire school divisions are just better managed or have more inspired teachers.

Along those lines, instead of chastising failing school systems, perhaps we should be rewarding — or at least recognizing — exceptional school systems. Hill City Jim has ranked Virginia’s school divisions by the average SOL pass rate for black students. The top-performing school systems — all divisions with a pass rate of 70% or higher — appear at the top of this post. Are administrators of those school divisions doing something right, or does superior black student performance reflect lower poverty rates or other factors over which schools have no control?

I’m not sure we’ll find any definitive answers, but we’ll keep asking the questions.

Shedding More Light on Black SOL Performance

black_SOL_pass_rate
by James A. Bacon

After a brief hiatus, we’re back to analyzing the 2013-2014 Standards of Learning results… Hill City Jim provided another data set that’s worth looking at — correlating the relationship between the percentage of black students in Virginia school divisions and the percentage of blacks that pass the SOLs. Why would anyone conduct that exercise? Because there is a body of thought, mainly in the liberal-progressive camp, that a significant factor explaining poor black academic performance is the segregation of black kids in under-resourced black-dominated school divisions.

The chart above shows the distribution of school divisions with a measurable black student population (leaving out 14 school divisions in Western and Southwestern Virginia). The vertical axis shows the SOL pass rate, the horizontal axis the percentage of blacks in the school system. An illustration: The red diamond, representing our old friend West Point, has a 9% black student body and a black pass rate of nearly 94% (the highest pass rate for blacks of any school system in Virginia, incidentally).

The black line shows an R² of o.o704, which (according to my primitive understanding of statistics) suggests that only 7% of the variation in black SOL performance can be attributed to the relative concentration of blacks in the school division.

Bacon’s bottom line: The school division data gives some credence to the liberal-progressive idea that putting black children in a school division with more white children will boost their academic performance. But the correlation is a weak one. And as a practical matter, what can Virginia state and local governments do with this information anyway? Implement school busing across school divisions? The resulting expense and furor would be hugely counter productive.

Of course, there is a deeper level of analysis that we have not performed. One could argue that the percentage of black kids in a school division is less relevant than the percentage of blacks kids in a particular school, on the assumption either (a) that predominantly black schools receive less adequate resources than their predominantly white counterparts, even within the same school division, or (b) that the proximity to white students has a beneficial effect. Unfortunately, analysis of the first proposition is exceedingly difficult to perform — at least it is in Henrico County, which I have delved into in the past. Amazingly, Virginia school districts do not break down spending by individual schools. As for the second proposition, that proximity to white children has some magical effect on blacks, that strikes me as borderline racist. It amazes me that any liberal or progressive would ever advance such an argument.

In the final analysis, this chart, while interesting, does not settle anything. Hill City Jim has some more suggestions for SOL analysis, so, we may be back soon.

Download spreadsheet, “Black students percentage of division.”

Whatever Happened to Ken Cuccinelli?

cooch.pixBy Peter Galuszka

During the grueling, nearly-six-week-long trial of former Gov. Robert F. and Maureen McDonnell that ended Thursday, one prominent political figure seemed oddly absent – former Atty. Gen. Kenneth Cuccinelli.

The firebrand conservative who lost last year’s gubernatorial contest to Democrat Terry McAuliffe was a significant player in the McDonnell scandal. He took favors from prosecution witness and businessman Jonnie R. Williams Sr., such as enjoying airplane rides to New York and Thanksgiving and summer vacations at Williams’ Smith Mountain Lake house.

Like McDonnell, he didn’t initially report Williams’ presents on state disclosure forms and was later cleared by a state prosecutor of any wrong doing. He was placed on the potential witness list by McDonnell’s lawyers but was never called.

Yet Cuccinelli played an early and much-unreported role in the case. Todd Schneider, the governor’s chef who plead guilty to some misdemeanors for stealing food, was apparently first confronted by State Police and the FBI on Feb. 10, 2012. Shortly afterwards, that March, Schneider had long chats with Cuccinelli and his staff about the wrong doing involving Williams and the McDonnells.

Cuccinelli was oddly quiet about the matter until the following November of that year when he further involved the state police and FBI. What took so long? No one seems to know.

There’s no uncertainty about Cuccinelli’s involvement with Williams, however. In the early days of his term as attorney general, some of his staffers were put up at Williams’ 29-acre estate in Goochland County while they found lodging in Richmond. Cuccinelli was reported to have visited the home.

His ties with Williams caused some problems. Cuccinelli had to recuse himself from representing the state in a long-standing lawsuit involving the taxation of some building’s owned by Star Scientific, Williams former company. Other representation was produced at taxpayers’ expense.

During their four years in office, it seemed clear that McDonnell and Cuccinelli disliked each other and often worked at cross purposes. Cuccinelli was a polarizing element on such issues as hounding a former University of Virginia professor on climate change, covering up the lactation gland of the woman on the seal of Virginia, and pushing stringent anti-abortion policies that led to the shutdown of many legal abortion clinics. McDonnell did some of the same but tried a bigger tent approach on his marquee legislation on funding transportation.

Todd Schneider, the chef who lives in Fort Lauderdale, Fla., doesn’t care for Cuccinelli much either. “He’s got the personality of a stone, and he talks forever. I’d sit there and I’d be like, ‘Oh, my God—will you just be quiet?,’ ” Schneider told the Washingtonian.

Tension between McDonnell and Cuccinelli was clearly visible to the staff. “They wouldn’t talk to each other,” Schneider says. “As soon as they took a picture together, they would take off to opposite places in the room.”

Since losing the gubernatorial election and leaving office, Cuccinelli has headed the Senate Conservatives fund. According to the Washington Times, his organization has blown several elections.

The Emerging Exurban Dead Zone

Hope Plantation, Bertie County, N.C., circa 1800. The McMansion of its day.

Hope Plantation, Bertie County, N.C., circa 1800. The McMansion of its day.

by James A. Bacon

The Northern Virginia exurbs, like exurbs across the country, are cruising for a bruising. EM Risse would never express himself so inelegantly or imprecisely but that’s the thrust, in colloquial terms, of a new essay, “The Great Submergence,” he has posted on his website.

The United States economy, argues Risse, a former Bacon’s Rebellion contributor, is in the midst of a profound shift — what he calls the U Turn — away from the scattered, low-density pattern of growth widely referred to as “suburban sprawl” (a label he avoids as a “core confusing word”) toward infill and re-development of the nation’s urban cores. This trend, which is taking place for reasons amply documented on this blog, has profound implications for homeowners and political jurisdictions on the metropolitan edge where landowners, developers and speculators valued land with the expectation that it would be developed some day into shopping centers, office parks and residential subdivisions.

Given the cost of providing transportation, utilities and municipal services, the logical limit for development in the Washington metropolitan region is about 20 to 35 miles from the metropolitan center in Washington, D.C., Risse writes. Land beyond that limit, he contends, is experiencing collapsing demand as people seek to live closer to the metropolitan core, closer to jobs and amenities in walkable communities with more transportation options. That collapse he calls “the Great Submergence.”

Some clusters of development may adapt and survive but others will be economically unsustainable and wilt away. Another phrase for “wilt away” would be “dry up and blow away,” just like western mining towns when the claims ran dry, just like Great Plains farming towns during the Dust Bowl and Depression. Risse’s home town of Warrenton, he warns, is the “bulls eye of the danger zone.”

As demand evaporates for single-family dwellings on large lots in remote locations, land and housing prices will fall. Every new single-family dwelling built in Greater Warrenton-Fauquier (and other communities situated more 25 to 30 miles from the metropolitan center) will serve to drive down the value of existing properties. Writes Risse:

The downward trend will be exacerbated by the fact that there are dwellings selling BELOW their replacement cost. Further, there will be many scattered Units that have not been maintained, which will further deflate the market via assessment / appraisal “comparables.”

Declining land and improvement values, he says, will have a devastating impact on municipal tax bases in this exurban dead zone as well as household net worth, much of which is composed of housing equity.

Bacon’s bottom line: I’m in 95% agreement with Risse. The reason I hesitate to say 100% is that there are powerful forces at work to sustain “sprawl,” the most important of which is the slow pace, due to zoning restrictions, at which urbanized jurisdictions close to the Washington metropolitan core can free more land for more compact, higher-density development. If demand for housing exceeds supply in Washington’s urban core, growth will default to exurban communities (beyond the 25-mile radius) planned and approved in the 2000s simply because there is nowhere else to build.

With that caveat aside, I share Risse’s larger concern. A dozen or more exurban counties on the metropolitan fringe of Washington, Richmond and Hampton Roads are likely to experience deflating land values, shrinking real estate property revenues and chronic fiscal stress. Their scattered, low-density settlement patterns have high embedded costs and local governments will be hard-pressed to maintain the supporting services and infrastructure. Once the newness wears off and depreciation sets in, these places will become worn, shabby and dilapidated.

Driving back from vacation on the North Carolina coast a couple of weeks ago, I passed through a dozen hamlets and crossroads in farming communities. I was shocked to see so many boarded up and tumble-down buildings that property owners had simply abandoned. The knowledge economy has passed these inland communities by. Sure, the real estate is cheap but no one wants to live there anymore. The houses don’t even have for-sale signs on them. The price of better houses is so low that it’s not even worth patching up the decaying ones. Virginia’s exurbs have not reached that stage yet. But give them time. Let the shiny newness wear off. In 20 years, we could see the same thing.

Those who miss Risse’s writing on Bacon’s Rebellion should check out the “Current Perspectives” on his website.

Update: Ed Risse has responded to Larry Gross’ comments on this post in the form of an essay, “Blogging, Geographical Illiteracy and the Great Submergence.”

The Day The Guilty Verdicts Came In

mcd convictedBy Peter Galuszka

Day Three of waiting. The jokes in the tiny seventh floor media room of the U.S. District Court Building have grown stale.

We’d discuss what the jury ate for lunch (Padows? Jimmie Johns?) which we could see as the trolley rolled through the security doors. We were amusing ourselves by reading a hilarious underground Website (yoflo.net) about the McDonnell trial called “You’re Only First Lady Once,” replete with haikus such as “Empty beach house/A greedy wife and five kids/ jail will not be fun.”

Suddenly, one of the Post reporters blurts out from her screen, “Verdict.”

We rush out to assume our positions at the courtroom down the hall. My mission and goal, as explained by my Bloomberg News editors, is speed. First guilty verdict, fly out of there and either call or tweet or email. Go back. Detail can come later.

It took some time for the intellectual rights trial over patents to clear up before we could go in to the courtroom where we’d spent the better part of six weeks. There was an air of excitement in the first corruption trial ever of a Virginia governor. It is truly as heart-pounding moment, a coiled spring kind of thing. And once it finally starts, it has own unique swiftness.

Jury’s in — seven men and five women after 17 hours of deliberating. “Have you reached a verdict?” Then, “Guilty on Count One of Conspiracy to Commit Honest Services Wire Fraud.”

My cue. I duck past the U.S. Marshals at the door and get in a sprinting race with a young Post reporter. Make the curve by the elevators but she’s gaining and gets first to the media room, the only place we’re allowed to have the electronics that let us do our jobs. I fumble with my cell and finally get the number of Joe, my rewrite editor in New York. The goal is to beat the Associated Press. Did we? Joe doesn’t know yet.

I report, and according to plan, go to the sixth floor overflow room with remote television access to the courtroom, since it will be impossible to get back into the room where the action is. By now they are on Count Nine: Obtaining Property Under Color of Official Right.

I hear what sounds like sobbing. Then wailing, rising in a crescendo with each stab of a guilty verdict. It is a weird reality TV show kind of audio. Both Robert F. McDonnell and his wife are crying although I can’t see them. The wailing is from one of their daughters. It’s hard to describe emotions at such times. It’s like watching a bad car wreck. It is not funny.

The reporters form up, true to pack etiquette, and make sure we all have the right verdicts. Then it’s down to the street where the chum of photographers awaits. There is an emotional electricity on the streets, sort of like being in a hospital corridor when a relative finally dies.

The U.S. Attorney and the FBI are speaking into a mass of microphones maybe 50 feet away. Most, however, are waiting for the McDonnells. Ashen faced, the former Governor leaves the building in a mass of people. He thanks the press for how it handled things. He is pushed into a grey Mercedes. Then Maureen, wearing a brown suit, slips past with one of her daughters, and enters into a grey Infinity Q50, which speeds after the Mercedes.

Guilty!

So, the jury has convicted Bob McDonnell of 11 of 13 counts and Maureen of nine.

I’m stunned. The prosecution presented no evidence of quid pro quo, and evidence of a conspiracy struck me as weak and circumstantial. But I didn’t attend the trial, I didn’t hear the full testimony, and I didn’t get to appraise the veracity of the witnesses. I can’t help but wonder how much the judge’s instructions to the jury influenced the outcome but I’ll accept the fact that the jury reached the proper verdict.

While I did not regard the McDonnells’ behavior as illegal, I did view it as deplorable. Perhaps jurors were making a statement that they’re sick and tired of the way the political system works, and they’re not going to take it any more. Regardless, it can’t hurt to send a harsh message to the political class.

To borrow a phrase from Henry Howell, a populist Virginia politician of yore, “Keep the big boys honest.” Let’s follow up by fighting for greater transparency and tighter conflict-of-interest rules.

– JAB

Hope for Small Cities

small_cities

by James A. Bacon

Many economists contend that the economic deck is stacked against America’s small cities. Labor markets in the knowledge economy favor large cities; corporations are drawn to large labor markets where they have a bigger pool of prospective employees to recruit from; employees are drawn to larger labor markets where they have more employers to choose from. By this line of logic, smaller metros suffer an enduring competitive disadvantage. Geographically speaking, the rich get richer and the poor get poorer.

But Joel Kotkin, perhaps America’s most vocal urbanism critic, says decline is not inevitable. While the smallest metropolitan/micropolitan regions (under 100,000 residents) have lost population, a group he classifies as “small cities” (regions between 100,000 and 250,000 residents) actually has seen 13.5% population growth since 2000 — 10% percent faster than the national growth rate, and twice that of New York, Los Angeles or Chicago.

Small cities, Kotkin suggests, are large enough to support the basic infrastructure — hospitals, schools, airports, broadband — critical to economic growth. Not all have prospered, but many have. He categorizes the successful small cities into four categories: (1) Boomer Boomtowns, which are attracting retiring Boomers; (2) Energy Towns, which are benefiting from the fracking revolution, (3) College Towns and (4) Government towns, which benefit from federal and state government spending, typically military spending and state capitals.

Recent performance suggests that small cities have better economic prospects than commonly acknowledged, Kotkin argues, although he quickly adds that declining government spending could hurt the Government Towns and that all small cities face a challenge of attracting young families.

Virginia’s small cities have been fair-to-middling performers in comparison to the 167 cities ranked according to a composite of four metrics: population growth, job growth, real per capita personal income growth, and growth of regional GDP per job, all between 2000 and 2012. Three of Virginia’s “small cities” fall into Kotkin’s category of College Towns. The economies of Charlottesville, Blacksburg and Harrisonburg are dominated by local state universities. (See the list above.)

I have long argued that the challenge of most of Virginia outside the urban crescent is to decline gracefully. In the long run, it is hopeless to prop up every small mill town through economic development subsidies. The best bet for Southside Virginia, Southwest Virginia and the Shenandoah Valley is not to intensify industrial recruitment — it’s to concentrate growth in cities that are large enough to potentially become self-sustaining in the knowledge economy.

I know that’s a hard pill for many to swallow, but if rural Virginians want to create a future for their children anywhere near home, it will most likely be in a city large enough to recruit and retain 21st-century jobs. As a practical matter, that means focusing resources on the five cities listed above, plus Roanoke, Lynchburg, Bristol-Abingdon and Danville.

These regions also can help themselves by embracing the smart-growth and smart-cities strategies advocated on this blog. By keeping the cost of government low, they will have more leeway to provide an attractive trade-off between taxes and urban amenities that creative-class workers are looking for.

A Better Route

Yeah, GRTC buses have bicycle racks now. But bus companies aren't pursuing disruptive innovation.

Yeah, GRTC buses have bicycle racks now. But bus companies aren’t pursuing disruptive innovation.

by James A. Bacon

The GRTC Transit System, like most municipal bus systems, provides a one-size-fits-all transportation service. Whatever the route, time of day and level of demand, GRTC runs a standard city bus capable of carrying nearly 60 seated and standing passengers along fixed routes. Everyone pays the same fare ($1.50 on local routes), regardless of time or distance traveled. We’ve all seen the big GRTC buses driving around with two or three passengers. We all know that, given the cost of paying a driver and operating a vehicle, many if not most bus routes operate at a loss. It would surprise few to hear that GRTC costs U.S., state and local taxpayers $33 million in subsidies to operate in fiscal year 2014.

Many people justify this significant subsidy on the grounds that buses provide a way for car-less poor people to get to their jobs. What the Richmond metropolitan region needs, they say, is more bus service so poor people can reach a broader range of job opportunities. Environmentalists also favor buses on the ground that they generate less pollution and carbon dioxide emissions than automobiles do. Local government officials in Henrico and Chesterfield counties tend to oppose the expansion of bus routes not on grounds of principle but on grounds of economy. Their argument: We just can’t afford it.

If we count on fiscally strapped local governments to loosen up the purse strings to pay GRTC to open new routes, we’ll be waiting a very long time. Maybe it’s time to start thinking differently: how to expand mass transit without GRTC. A free market in transportation services, I contend, would provide superior service to poor people. It would increase shared ridership and reduce pollution emissions. As a bonus, it would save taxpayers millions of dollars in subsidies.

Yes, mass transit in the United States is that bad. GRTC is reasonably well run by the standards of other government-owned monopoly transit systems. Government-owned monopolies worked adequately for decades when innovation in cars and buses was incremental in nature – installing seatbelts or switching from diesel to natural gas. But the traditional model is hopelessly inadequate when the transportation industry stands on the edge of the most momentous transformation since Henry Ford’s invention of the assembly line.

The information technology-communications revolution is sweeping through transportation, just as it is through consumer electronics, building automation, health care, manufacturing and every other sector of the economy. Thanks to smartphones, it is easier than ever for drivers and passengers to locate one another. Thanks to Big Data analytics, it is easier for transportation-service companies to predict where and when transportation demand will occur and to mobilize assets accordingly. New technology is inspiring new business models that literally no one was thinking about 10 years ago.

The heralds of this new wave are Uber and Lyft, Silicon Valley-funded companies that have started competing with taxicab services in many metropolitan regions across the country. These companies are targeting the high end of the transportation services market, charging premium rates for customers willing to pay for a limousine-like ride at a moment’s notice. Predictably, they are getting pushback here in Virginia from taxicab companies. The regulatory future is uncertain. But whatever happens to Uber and Lyft, the new technology is here to stay. Taxi companies are already adopting it themselves.

Bridj, a Boston-area company, charges $6 per ride in comfortable, Wi-Fi- equipped coaches to travel from suburban locations to downtown Cambridge and Boston. Thousands of riders, it appears, are willing to pay a premium price for a premium service that municipal bus companies can’t match with their one-size-fits-all mind-set. As this new industry continues to innovate, it’s just a matter of time before entrepreneurs use the same technologies to serve lower price points. In a free market, there are few barriers to entry; someone will figure out how to serve poor people and do it cheaper than the transit companies can.

Eventually, someone will devise a smartphone driver-rider matching service open to all comers. Anyone with decent credit and a good driving record will be able to fork out $32,000 for a 12-seat van and start his own jitney service. In developing countries around the world – even in countries where $32,000 is a lot of money – jitney service is affordable to poor city dwellers. Surely in America, where we have some of the richest poor people in the world, someone will figure out how to convey them to major employment centers.

The transportation revolution doesn’t end there. Automobile companies are rethinking the idea that everyone needs to own his or her own car. Some think that the future is transportation-as-a-service. Outside San Diego, Calif., real estate developer Rancho Mission Viejo is partnering with Daimler AG, owner of Mercedes Benz, to roll out a service that provides subscribers access to cars, scooters, buses, shuttle vans and car-pooling, primarily for use in its Ladera and Sendero communities. The aim isn’t to persuade residents to go totally car-free, just to go car-lite. The goal is to cut the cost of mobility – $9,000 yearly to own and operate the average car – in half.

Environmentalists and anti-poverty warriors will continue to pressure Henrico and Chesterfield officials to subsidize the expansion of GRTC into the two counties. Given the paucity of walkable, higher-density neighborhoods in suburban Richmond and the lack of congestion – it’s the least congested of America’s 51 largest metros – the economics for mass transit will always be difficult. Rather than throwing money at an antiquated business model, government officials should encourage the emerging free-market alternatives. Roll out the welcome mat to Uber and Lyft. Ask Bridj to check out our market. Sweep away barriers that prevent jitneys from going into business. Beg Daimler AG to bring its transportation-as-a-service to the Richmond region.

We have a choice: Embrace the transportation past or the transportation future. I’ll take the future.

This column was published originally in Henrico Monthly and Chesterfield Monthly this month.