Category Archives: Transportation

How Walkable Urbanism and the Talent Pipeline Won the Amazon Deal

Conceptual rendering of Virginia Tech’s proposed $1 billion campus in Alexandria near the proposed Amazon campus.

More information is coming out about the wheeling and dealing behind Virginia’s incentive package that coaxed Amazon, Inc., to locate a $2.5 billion campus in Northern Virginia. It turns out that many of the key pieces in Virginia’s incentive package were initiatives that had been in the works for years. Virginia is putting resources into projects that, most likely, it would have funded eventually anyway.

Amazon wanted an urban location and it selected the Crystal City-Potomac Yard area of Arlington and Alexandria, currently being rebranded by the largest property owner, JBG Smith, as National Landing. A decade ago JBG Smith had commenced the yeoman’s work, with no immediate prospect of reward, of winning the local planning and regulatory approvals to re-develop the aging edge city into a walkable, high-density, mixed-use area — just the kind of urbanism Amazon was looking for.

Meanwhile, Virginia Tech had engaged in preliminary planning to build a major academic campus in Northern Virginia. The idea was mainly conceptual when Amazon announced his national HQ2 competition, but Tech had a scaffold upon which to build when the state began scrambling to put a deal together.

It helped that Commonwealth’s point man for selling Amazon, Stephen Moret, was not a conventional economic developer. The Virginia Economic Development Partnership president takes a broad, integrative approach to the profession that transcends the assembly of real estate deals. Having recently earned a Ph.D. from the University of Pennsylvania in higher education management and serving as a member of the State Council of Higher Education for Virginia, Moret is well versed in the critical need to build the talent pipeline. He is also conversant about the connections between land use, workforce, innovation districts and economic development.

I haven’t talked to Moret since the Amazon deal was closed. But I recall a conversation a year-and-a-half ago in which he casually blue-skyed an idea for promoting corporate investment in Southwest Virginia by creating a New Urbanism-style development zone around the campus of the University of Virginia-Wise. In that vision, the real estate was almost incidental. Moret’s idea was to create a knowledge-based community with access to UVa-Wise students and graduates that a corporate investor would find attractive.

It’s not a stretch to say that the Amazon project is the same idea writ large — very large. The $550 million in direct employment subsidies constitutes only a modest piece of the deal. What really sold Amazon on Northern Virginia was the prospect of setting its corporate facility (a) in a walkable urban community, (b) in close proximity to a technology-oriented university campus, (c) in order to create a dynamic innovation ecosystem with Amazon at the center, (d) in a metro area with one of the largest tech-savvy labor pools in the country.

Building the talent pipeline. Both the Roanoke Times and the Washington Post have published articles highlighting how the educational piece of the incentives package came together.

As the Roanoke Times writes, Virginia Tech’s proposal to build a $1 billion, one-million-square-foot campus near the Amazon facility was the cornerstone of the talent-recruitment piece of Virginia’s bid.

Virginia Tech had been planning some sort of campus near the nation’s capital since President Tim Sands arrived at the university four years ago. Tech didn’t have a location in mind or much more than a general sense of what the Innovation Campus could be.

“If the first time we had thought about it had been 14 months ago, this probably wouldn’t be what it is,” Sands said during the gauntlet of interviews after Tuesday’s announcement. “We were ready and the timing was perfect.”

Moret was unaware of Sands’ Northern Virginia ambitions when he first reached out to schedule a conference call with college and university leaders around the state last year.

He discussed the HQ2 bid with everyone and laid out early plans to roughly double the number of computer science graduates the state produced each year as part of the HQ2 bid.

He also asked if anyone was interested in the possibility of opening a campus near Amazon in the Washington, D.C., area.

“Virginia Tech reached out right away and said, ‘Hey, we’ve actually been working on this idea for a few years. And we’re prepared to put in a very large investment to make this happen,’” Moret recalled.

George Mason University also stepped up in a big way with plans to expand its Arlington campus. But the GMU campus will not be tightly integrated geographically with Amazon’s like Tech’s will be.

Crystal City rendering by Torti Gallas + Partners

Investing in walkable urbanism. Writing for the Congress for the New Urbanism’s Public Square Journal,  Robert Steuteville provides background on the urban planning piece of the deal.

Crystal City can be thought of as a large suburban retrofit—guided by a plan and form-based code that won a 2009 CNU Charter Award for Torti Gallas + Partners and Kimley-Horn and Associates. That plan and code, adopted by the county in 2010, entitled the new, higher-density development and put in place a framework to create a more walkable urban neighborhood over time.  …

The area was originally built without a master plan, and that changed with the recent master plan. “It’s high-rise suburban. It wants to be higher density, with a more urban mentality— away from cars and with retail on the street that is accessible to people,” says John Torti of Torti Gallas. “It has the potential of becoming a wonderful place.”

Steuteville’s article provides the following graphic comparing a mile-long segment of Rt. 1 as it looks now with the plan transform it into a more walkable, urban boulevard:

Continue reading

Decriminalizing Metro Fare Jumping

Wow. Just as a white knight in the form of Amazon, Inc., rides in to help salvage the floundering Washington Metro mass transit system, Washington, D.C., City Council pulls a bone-headed move that could undo everything.

Amazon HQ2 will plop down a massive activity center near the Crystal City and Potomac Yard Metro stations, catalyze the development of walkable urbanism in the neighborhood, and throw in money to add new entrances to each station. Amazon anticipates that half of its expected 2,500 employees will ride the Metro, and it is logical to think that employees of the companies that grow up around Amazon will do so, too, eventually adding thousands of new riders to the system. What a life saver!

But in an 11 to 2 vote Tuesday, Washington City Council voted to decriminalize Metro fare evasion on the grounds that the use of criminal sanctions to collect fares… what else… disproportionately impacts African-Americans.

Data show fare evasion arrests, citations and warnings have risen dramatically — from 4,000 in 2013 to 15,000 in 2017, reports the Washington Post. Council member Charles Allen contends that police disproportionately target African Americans, citing the fact that 91 percent of Metro Transit Police citations and summons for fare evasion from January 2016 to February 2018 were issued to African-Americans. Metro estimates that it loses $25 million annually to fare evasion.

The Washington Post article mentioned no evidence presented by anyone, other than the raw statistics, to suggest that police were unfairly singling out African-Americans for enforcement.

City Councilman Jack Evans, who happens to be Metro Board Chairman, cast one of the two dissenting votes. He stated the obvious: “By decriminalizing fare evasion we are only encouraging people to not pay their fare. Because there is absolutely no mechanism to collect from a civil infraction. … You cannot steal from Metro. You can’t steal period. And if we get to a point where we say it’s okay to steal, I’m not sure where we are at this point in time.”

If curtailing sanctions leads to a surge in fare skipping and a decline in revenue, Metro will have to make up the balance from someone. And we all know who that will be — the taxpayers. Not just Washington taxpayers but Virginia and Maryland taxpayers, who subsidize Metro operations. Perhaps Governor Ralph Northam should issue a declaration to the D.C. City Council: Do what you want, but if the Metro suffers a decline in ridership revenue, you can make up the difference. Don’t come to us!

(Hat tip: Rob Whitfield)

Dissecting Virginia’s Amazon Deal

Source: PROJECT COOPER: BRIEFING FOR THE
HOUSE APPROPRIATIONS COMMITTEE

Virginia has committed to investing a sum unprecedented for an economic development deal in the Commonwealth — roughly $2.5 billion in state and local dollars to bring Amazon, Inc. to Northern Virginia. In a presentation to the House Appropriations Committee yesterday, Stephen Moret, CEO of the Virginia Economic Development Partnership (VEDP) provided a detailed account of the incentives. Now that the numbers are out, the public has an opportunity to review the deal. At Bacon’s Rebellion, we love critiquing things, so here goes…

Cash flow positive for the state. The first point to note is that, while Virginia is making a massive public investment to the project, it will be cash-flow positive for the Commonwealth from Year One. If Amazon pays its projected 2,500 employees an average of $150,000 a year — the target number to qualify for state subsidies — the company’s Virginia workforce will generate a lot of new income taxes and sales tax revenue. By Year Ten, added state revenue from direct, indirect and induced employment will amount to $209 million. The sum could grow to $364 million within 30 years. That compares to a General Fund revenue forecast of about $20 billion in Fiscal Year 2019.

As Steve Haner explained in the previous post, the deal will have a minimal impact on the current budget cycle, and future expenditures on higher education, transportation and direct subsidies to Amazon will be phased in over time. The project is designed to ensure that new General Fund revenues will exceed project-related outlays. In other words, according to Moret’s numbers, the state will make a “profit” on the deal from which the entire state benefits.

Investing in competitiveness. A second key point is that 60% of the incentives will be invested in infrastructure and educational programs that don’t go into Amazon’s pocket. I have a huge philosophical problem with the state giving $550 million in Phase One (and another $200 million in a potential Phase Two) to one of the world’s richest companies. Talk about welfare capitalism! But Amazon could have located in Dallas, Texas, or a handful of other cities, so it has the power to play off one location against another. I don’t like it, but that’s the way the world works. The question for Virginians is whether or not the state comes out ahead.

Critical to the deal, Virginia will invest heavily in building its tech talent pipeline. According to Moret’s presentation, the state envisions producing approximately 25,000-35,000 new degrees (over and above baseline levels) in computer science and related programs over the next 20 years. That’s more than Amazon will require. So, labor-starved tech companies other than Amazon will benefit from the investment.

In an earlier post, I had expressed concern that the state would be subsidizing Amazon’s employee recruitment efforts to the tune of $22,000 per employee, giving the company an immense advantage over other Northern Virginia companies competing for talent. In his presentation, Moret acknowledged that there would be “short-term pressure” on Northern Virginia job markets, but that NoVa executives were mostly positive about the deal. His presentation includes a sampling of reactions back in February:

“The economic lift that we get in Virginia, the branding part of it, would be a strong positive for our recruiting efforts. Clearly we will be competing for talent, but that’s fine,” said a Fortune 500 CEO. “I think it’s important for regions to have a diversity of employment options. The economic lift and intellectual lift for the region is a strong, strong positive. I would like to see us get selected.”

“It would be a double-edged sword. Great for the economy. Great for the brand,” said the CEO of a successful tech company. “Long-term it would be good, but it’s another competitor to deal with for talent. … It would give cachet to our area.”

Said the C-level exec of a Fortune 500 company: “In the short run, it will entail some competition for talent. But it’s very powerful for the region for the long term. We’ve made Virginia our hub. The fastest growing part of our ecosystem
is tech – we hire thousands of associates [every year]. We want to have an ecosystem where new tech grads stay here and where there is a desire of folks from around the country to move here.”

The workforce worries are real. But the Virginia’s higher-ed investments will expand the local talent pipeline, Moret argues, while the presence of Amazon will help give the Northern Virginia tech sector a more positive brand nationally, aiding recruitment from other labor markets.

Meanwhile, the state, Arlington County, and the City of Alexandria will spend hundreds of millions of dollars building out transportation infrastructure serving the Crystal City/Potomac Yard area. The transportation initiatives, designed to complement walkable urbanism in the region’s urban core, will accommodate business and residential growth for more than just Amazon. The Metro bus and rail system is operating at significantly below capacity, notes Moret. This deal could boost ridership and revenues for the troubled mass transit system.

Projected share of Amazon commuters by transportation mode.

As Arlington and Alexandria re-develop the region as a walkable mixed-use community, Arlington projects that 77% of Amazon’s workers will walk, bike, car-share or take mass transit to work. That number, if accurate, is phenomenal. By creating a new template for Crystal City/Potomac Yard, Amazon could catalyze the development of even more transportation-efficient walkable urbanism that can soak up a lot of future transportation demand. Continue reading

Scooter Dudes

My wife and I visited downtown Washington, D.C., over the weekend and marveled at the sight of so many people using scooters. Nearly all of them were young men. When young men are involved, it should come as no surprise that some traveled at what struck me as excessive rates of speed. Scooters are too slow to travel with traffic in streets but can move too fast to travel safely on sidewalks. I can understand why city officials in Richmond and Norfolk might want to regulate scooter speeds. Hopefully, they will make up their minds and end their scooter embargoes quickly because, if D.C. is any example, they will prove to be a popular mode of conveyance.

Bacon Bits: Rails, Roads, Hurricanes and Rainbows

Still off the tracks. Despite promising efforts by top-level management, the Washington Metro corporate culture is still dysfunctional. An audit of $1.9 million in blanket purchase agreements found missing and incomplete documents, reports the Washington Times.

“Auditors found that Metro employees failed to record $845,000 as BPAs in their accounting software, a problem the inspector general attributed to poor controls and lack of staff training,” the newspaper reports. “As a result, $1.8 million of the $1.9 million sampled contained internal control issues.”

Long and winding road. Southwest Virginia’s twisty, windy roads have been long considered a barrier to economic development because they are so inhospitable to commercial trucking. But local promoters in Tazewell County have turned Route 16 into a tourist magnet. The road, dubbed “Back of the Dragon,” provides gut-wrenching turns and spectacular vistas. Last year an estimated 60,000 motorcycle and sports car enthusiasts passed through the nearby 4,240-person town of Tazewell.

Chris Cannon, executive director of Friends of Southwest Virginia, told the New York Times: “We focus on natural and cultural assets” rather than coal, tobacco and lumber. The region has a bluegrass heritage trail, a crafts collective, and outdoor activities like ATV, riding, hiking, mountain biking, and river running. “We as a region are trying to diversify.”

Resiliency reminder. Former Hurricane Michael was only a tropical storm by the time it barreled through Virginia, but it still caused havoc. Some 585,000 customers in Dominion Energy’s Virginia and North Carolina service territory lost their electric power. As of 7 a.m. Friday, nearly 450,000 still had lights out. reported Dominion in a press release this morning:

Early reports of damage include broken poles, cross arms and downed wire in many locations, as well as transmission lines impacted due to tree damage. There were multiple reports of tornadoes within our service territory. In Northern Neck, a tornado touched down and damaged a Dominion Energy substation.

I hope Dominion is keeping good numbers. Legislators and the public will want an after-action report, with a particular focus on the efficacy of the utility’s undergrounding program. How many underground lines experienced disruption compared to the number that would have been predicted before the lines were buried? How much time did Dominion’s repair teams save as a consequence, and how many customer-hours of electric outages were avoided?

Who’s got the brightest rainbow? The city of Richmond scored higher on the Municipal Equality Index, a scorecard measuring municipal policies regarding the LGBTQ community, than the People’s Republic of Arlington and the People’s Republic of Charlottesville — and Mayor Levar Stoney is darn proud of it. “I am delighted that Richmond is able to progress at this level,” said Stoney in a recent press release drawing attention to the ranking.

“Diversity and inclusion are … cornerstones for attracting and retaining residents, top talent, and industry,” wrote Richard Florida, author of “The Rise of the Creative Class,” in a letter published in the MEI study. “Cities that do not guarantee equal rights to LGBTQ send a strong unwelcoming message to potential visitors, residents, and investors, stymying their potential for economic advancement. In short, many businesses and top talent consider LGBTQ discrimination a deal breaker. … It pays to prioritize inclusion.”

Bacon Bits: As Virginia Slowly Unravels

Yes, it’s OK to panic. Norfolk Southern Corp., the beneficiary of local incentives a year or two ago when it moved jobs from Roanoke to Norfolk, now is said to be close to announcing the relocation of its headquarters to Atlanta.  “A deal has already been struck,” Norfolk Mayor Kenny Alexander told the Virginian-Pilot. It appears that a decision is “going to be made and made soon.”

This will be a huge morale blow to Hampton Roads. Norfolk Southern is one of only two Fortune 500 company in the Norfolk-Virginia Beach side of the metropolitan area. (The other is Dollar Tree. Huntington Ingalls is located north of the James River.) Let’s hope the City of Norfolk can claw back every dime it gave away.

Spend money to make money? The Washington Metro’s executive and board leadership are in a quandary on how to reverse the decline in ridership. The Washington Post quotes an internal study that proffers some answers: Increase the frequency of service and extend hours, thus reversing the decline in so-called “super riders” who use the heavy rail service 40 or more times per month. Metro has cut back its service in recent years as its financial situation has deteriorated.

But the WaPo article is unclear about whether a restoration of service would pay for itself. The article quotes a lot of numbers, but none answer the essential question of whether the ridership revenue generated would equal or exceed the added expense — a critical issue, one would think, for an organization that (a) operates at a loss, and (b) still faces unfunded capital needs and pension liabilities.

Is it “stop and frisk”  or “investigative detention?” The latest uproar in the People’s Republic of Charlottesville is over the alleged police practice of stop-and-frisk, which allegedly disproportionately targets minorities. Roiling the waters even more, Charlottesville’s Police Chief RaShall Brackney said yesterday that data on the city’s policy — whatever you call it — will be unavailable until it is extracted from a new software system, reports the Daily Progress.

Community activists note that African-Americans made up 122 of the 173 people stopped for what the police calls “investigative detention.” Fifty-five of the stops happened after police were dispatched to an area, whereas 118 of those stops were officer-initiated.

Brackney, who is female and black, disputed the stop-and-frisk label. “We don’t do stop and frisk,” she said. “We do either a mere encounter or we engage a person [in] which we may have a warrantless search and seizure. I will not, I will not, label what we do based on some national trends or what New York has decided to do.”

Boomergeddon watch: From Government Executive: The United States Postal Service retirement health fund will run out of money in 12 years if Congress does not act. Approximately 500,000 retirees rely upon the program. The Postal Service has missed $38 billion in required prefunding payments into the retiree health fund since 2010. Either way, someone is screwed. Either postal retirees see major cuts to their pensions or the taxpayers pick up the multibillion-dollar tab.

Shocker: Positive Signs from Washington Metro

I have relentlessly criticized the Washington Metro system for years, but I have to give credit to management under General Manager Paul J. Wiedefeld for trying to steer the dysfunctional mass transit system in a fiscally sustainable direction. Today’s media reports highlight two straws in the wind.

First, the Washington Metropolitan Area Transit Authority (MWATA) is trying to revive a plan to redevelop portions of the Huntington Metro campus in Fairfax County, according to the Washington Business Journal. An effort to redevelop a 1.15-acre parcel failed four years ago. But Metro has expanded the project scope to 12 acres.

The selected developer for this larger project would not only design the 12-acre site but also help WMATA determine the need for replacement transit facilities — the three parking garages at Huntington Metro Station had a combined usage rate of 61 percent for fiscal year 2018. WMATA recently closed an 885-space garage on 6 acres located on the south side of the station, where it sees an opportunity for redevelopment if parking demand doesn’t merit replacing.

Heavy-rail transit stations significantly increase the value of adjacent properties. Mass transit systems in other countries employ “value capture” strategies to extract some of that increased value to defray the cost of building and operating their stations. For the most part, Washington’s Metro system has failed to do that. Rather, property owners reaped windfall gains from the public’s massive investment. (A partial exception is taxation of property owners in Tysons to pay for a modest portion of the cost of building the Silver Line extension.) However, Metro frequently did build parking structures around its stations, some of which may be severely under-utilized. The potential exists to redevelop that property in light of market conditions that favor dense, mixed-use development around Metro stations.

Although the WBJ doesn’t frame the story this way, it appears that Wiedefeld is trying to extract maximum value from the limited property Metro does own around the Huntington station. If this redevelopment project is successful, it might be a template for extracting value from other Metro parking lots and garages.

Second, Metro is looking at the potential for privatizing operations of the Silver Line extension encompassing six new stations in the high-tech corridor between Tysons and Dulles International Airport, and beyond. Reports the Washington Post:

On Tuesday, the transit agency issued a request for proposals from private companies willing to perform maintenance and operations on the line extension, which is under construction by the Metropolitan Washington Airports Authority. …

Metro has hinted for the past two years that its intention was to outsource the Silver Line service, suggesting that such a decision could save taxpayers millions of dollars in the long run. In January, the agency issued a “request for information” from potential contractors interested in the job.

Now, Metro says that hiring a private company to fill new Silver Line jobs, rather than adding to the ranks of unionized employees, will help control operating and maintenance costs, “including future pension costs, which have grown to unsustainable levels.”

Paul J. Wiedefeld

Wiedefeld said the effort is intended to help the transit agency start “living within our means.” “Competitive contracting is one tool to hold down pension cost growth, while providing quality service for customers.” Laughably, Amalgamated Transit Union Local 689 responded that outsourcing services would result in poor service for riders and subpar maintenance of infrastructure. Worse than the service and maintenance provided by the union workforce? That would be something!

Virginia has boosted its financial commitment to Metro to reduce a massive capital spending shortfall on the understanding that the mass transit authority would undertake meaningful reforms. Wiedefeld is making an honest effort to deliver on that promise, pursuing strategies that were never part of Metro’s past playbook. Whether he succeeds or not is a different question — that depends in large measure upon market conditions and cooperation from Metro’s labor unions. But he’s giving it his best shot.

Looks like a Taking, Feels like a Taking

Bike valet parking outside the Northside Richmond bike lane briefing.

The parallel struck me early in the meeting – this is like the pipeline process.  The people who want this bike lane are not deterred by what it does to the people and businesses directly on the route and disregard all concerns as unfounded.

Of course, the property owners along Richmond’s Brook Road do not actually own any of the pavement which would be converted from multi-vehicle use and dedicated to bicycles only. This may not qualify as a taking. But as they try to maneuver out of their driveways through the bike lane, see the one remaining travel lane occasionally blocked by emergency or service vehicles, and wonder if anybody will ever buy their house in the future, they will feel like they lost something.

Some of them came out to a community meeting Tuesday night to say so but found themselves up against the same kind of organizational techniques so effectively used in favor of the pipelines. The proponents had turned out their crowd and had people there to park their bikes and hand out shirt stickers.  When the moderator asked for questions, proponents instead made statements of strong support. It was a while before an opposing view was heard.

Joe Citizen just walking into a neighborhood meeting these days without planning and preparation and inclined to politely follow the rules is going to a gun fight with a pen knife.

The Experts were all for it, of course – city engineers and planners.  They’ve done their studies, thank you very much, and don’t need any more.  The “road diet” concept is Settled Science.  There is a consensus among 92.3 percent of traffic engineers (I made that number up) that adding bike lanes by eliminating car lanes stops speeding and saves lives (I didn’t make that up, that got said several times.)

It was just eerie how easily you could have substituted the Atlantic Coast Pipeline for the Brook Road bike lanes and little else said would have changed.  The bike lanes have federal agency blessing!  There is even federal funding!  Anybody who doesn’t fall in line is just not rational and need not be taken seriously (which explains the rude behavior poured on the Doubting Thomases who did speak).

The Richmond Times-Dispatch story on the meeting was abysmal, just rotten reporting. I don’t know the reporter, but he missed half the story. He implied all 250 people came to speak up in favor of the bike lanes, but plenty in the crowd did not join in the applause for statements of support and several made excellent point in opposition.

My bet is the reporter didn’t even know one of the speakers with concerns was former Secretary of Transportation Pierce Homer, and not quoting any of the many others raising questions was just shameful bias. On the other hand, the paper’s photo essay included several shots of skeptics, including Homer. But that didn’t tell the reader what was being said.

The pedestrian, bicycle and trails coordinator for the city staff, Jakob Helmbolt, made some telling statements. Most of the opposition flows from concerns the lanes will disappear just as surge of growth is expected. But when somebody asked about the huge open tract at the north end of the route near Azalea Avenue, ripe for commercial development and traffic growth, Helmbolt said he would consider that “at the time of development – that’s when the traffic impact study occurs.”

This 301-unit complex going up on Brook Road has proper zoning to expand.

Of course, once Brook is on its “diet” any developer may go elsewhere. Proponents even claimed that cutting down the road to a single lane each way will stop future apartment development. If they made that official with zoning changes, some of the opposition would melt.  But tell me again why that would not be a taking?

Somebody asked about turning right across the bike lines and Helmbolt dismissed that with: “The signalized intersections will have dedicated right turn lanes which will be shared,” he said. But there are scores of intersections without signals and all those private driveways. That’s the problem.

Big property owners on the route who were represented in the room but said nothing included Virginia Union University, a rapidly-growing private school, the Virginia Commonwealth University Children’s Hospital and CSX, which has a major gated crossing at the southern end of the bike lane route. A woman representing the industrial properties near those tracks, who will see their freight trucks restricted to that single lane and forced to turn across the bike lane, expressed strong opposition.

The meeting was all sparked by a proposed ordinance seeking to block the bike lanes, reversing earlier votes of support from City Council with less attention paid. Just when that ordinance might be taken up for a vote, or when the bike lanes will be created if it fails, never came up. I’m sure many are hoping that once the work is done and gas starts flowing, oops, I mean the bikes start using their protected lanes, things will quickly be forgotten.

Metro’s Other Funding Crisis

Washingtonians are finally showing top-of-mind awareness of the looming pension crisis at the Washington Metropolitan Area Transit Authority. The Metro’s nearly $3 billion in unfunded retirement and health care costs “threaten its future operating position, potentially hampering its ability to provide service,” reports the Washington Post, citing a Government Accountability Organization report.

Coverage of the Metro’s financial condition to date has focused mainly on the political drama associated with finding funding to meet the bus and heavy-rail system’s long-term capital spending needs. Far less attention has been given to the reckless underfunding of the employees’ retirement benefits.

Metro’s annual pension costs grew by an average of nearly 19 percent from 2006 to 2017, the federal report said, making pensions the agency’s fastest-growing workforce cost as its total labor costs grew about 3 percent a year.

With the scale of the obligations, the report posits that in the event of an unfavorable financial market, Metro could be backed into a corner to cover its obligations. The scale of the pension liabilities means that a drop of less than one percentage point in Metro’s investment return on its pension fund could squeeze its operating budget to the point that the agency would need to reduce service or ask the jurisdictions that fund it to cover the shortfall.

“Due to their relative size, proportion of retirees compared to active members, and investment decisions, these pension plans pose significant risk to [the Washington Metropolitan Area Transit Authority’s] financial operations, yet WMATA has not fully assessed the risks,” the GAO concluded. … WMATA may not be prepared for economic scenarios that could increase its required contributions to an extent that might jeopardize its ability to provide some transit service.”

One of the easiest ways ever invented to buy labor peace is to pump up retirement benefits, incurring future liabilities, in exchange for wage moderation today. Metro’s current management does deserve credit for at least trying to address the issue. Leadership tried to engineer a shift from a defined benefit plan to a less expensive defined contribution plan, but an arbitration panel rejected the agency’s proposal last month.

“I’ve been telling you guys this since I became chairman 2½ years ago,” Metro chairman Evans Jack Evans said. “In five to 10 years, the amount of money that we have to pay out of the operating budget to fund the pension will be so high that we won’t be able to run the system.”

Bacon’s bottom line: It is all but pre-ordained that Metro will be back in a few years begging for another bail-out, this time to cover its retirement obligations. Virginians, prepare to open up your pocketbooks yet again for the mass transit system that never stops taking.

By the way, if you think Metro is uniquely irresponsible in its pension policies, think again. Pension underfunding is widespread in governmental and quasi-governmental agencies across Virginia. Virginia Retirement System liabilities of about $20 billion may be the tip of the iceberg. Perhaps Secretary of Finance Aubrey Layne, a voice of fiscal probity, could assign one of his minions to compile a list of all public pension funds in the Commonwealth and tote up their unfunded liabilities.

Bacon Bits: A.P. Hill R.I.P., Tax Cuts, Bike Lanes

General Hill holds his ground and blocks driver’s views at Laburnum and Hermitage. Source: WTVR Richmond

This statue does have to go

The tomb of Confederate General A.P. Hill in Northside Richmond is the latest to be vandalized by red paint or some similar substance, but in this case the argument to move the statute and the grave beneath it should focus on its status as a major traffic hazard.

The vehicles in the intersection at Laburnum Avenue and Hermitage Road look very different than when the body was interred in 1891, and the plants around the base are seldom properly trimmed.  Richmond loves traffic circles and intersections with monuments but Richmond drivers simply cannot seem to negotiate them, even with clear visibility (which this location lacks.)

This apparently is the only such statute in a public location that doubles as the honoree’s tomb. Hill’s remains belong in Hollywood Cemetery, with so many other of victims of that tragic war, and the statute can go there or to Fort A.P. Hill (although how much longer active military bases will be named for dead Confederates is also an open question.)  Sadly, a debate over safety once started will take on a whole different tenor very quickly.

The Showstopper? Northam Administration’s own data demonstrates federal tax benefits

Tax Cuts and Jobs Act impact on federal taxes paid by Virginia individuals. Source: Chainbridge Software LLC, Virginia Secretary of Finance

Defenders of the recent federal tax changes, a kept campaign promise by President Donald Trump and the GOP Congress that remains controversial, need look no farther than a chart distributed on August 17 by Democratic Governor Ralph Northam.  It should be particularly useful against Democratic complaints about the tax bill, given the source.

Chainbridge Software LLC, the financial consulting firm selected by the administration to evaluate the impact of the federal tax cuts on Virginia, seems to work mostly in states where Democrats are in control, and the tone of its report is about “revenue lost” or “revenue gained” – in other words, the point of view of the tax collector and not the taxpayer.

Yet its chart shows 1) federal tax reductions across the board starting with the lowest-income workers, 2) double-digit tax cuts on average for taxpayers with $150,000 in taxable income or less (certainly middle class in many parts of Virginia, and 3) tax cuts averaging less than 5 percent for the richest taxpayers.

At the individual level the situation is complicated and uneven, and Chainbridge also concludes (correctly) many people will not see much if any tax cut and some will pay more.  But in general, it concludes Virginia residents’ federal bite goes down almost $4 billion, or 9 percent, and in some income brackets drops 17 percent.  Can a White House tweet be far behind?

Back to Richmond traffic:  The Brook Road bike lanes

Richmond City Council President Chris Hilbert and Councilor Kimberly Gray have assembled a four-page list of questions (Brook Road Bike Lane Concerns)for the city’s Department of Public Works and are asking they be answered in time for a September 11 community meeting on a proposed dedicated bicycle lane along Brook Road.   They are also demanding an updated formal traffic study, arguing new development coming in the area has made the one used in the earlier bike lane decision obsolete.

The plan – previously approved by City Council – remains to take Brook Road down to one lane for motor vehicles in both directions with an entire lane for bikes on both sides. The questions focus on how that will work for homeowners who have delivery trucks coming to their houses, driveways where they back out, or need their trash picked up. They ask what the impact will be on days of heavy activity around Virginia Union University.  When the city cuts grass in the median now it temporarily blocks one lane for safety, but that won’t be possible if there is only one lane.

Hilbert and Gray are taking a huge amount of heat from the bike enthusiasts, and the debate started by posts on Bacon’s Rebellion is raging.  Whatever the outcome now it won’t be a decision made without some visibility (although the Richmond Times-Dispatch remains oblivious.)