Bacon's Rebellion

The Kaine administration is blasting the federal administrators who rejected $900 million in federal funding for the Rail-to-Dulles project, complaining that the Federal Transit Administration pulled an unexpected U-Turn. As Amy Gardner sums up the argument in the Washington Post:

Federal transportation officials gave incremental approvals to the proposed Metrorail extension to Dulles International Airport on many of the same issues that they cited in rejecting it this week, according to letters, memos and interviews.

At several points in the past two years, Federal Transit Administration officials said the project was doing fine on cost and construction management, according to the correspondence and phone calls with Virginia officials.

But Thursday, the tone changed. FTA chief James S. Simpson declared the project unfit for federal funding. And he pointed to many of the issues that project officials and Virginia politicians had thought were settled and done with.

FTA officials respond that the project backers misread their comments of encouragement. Furthermore, on the critical issue of the project’s cost, the Kaniacs failed to deliver proof of cost cuts before the FTA’s decision-making deadline. Who’s to blame for the miscommunication? I don’t know.

But it is important to sort out responsibility for this fiasco. Virginia is on the hook for tens of millions of dollars of design and engineering costs that it could have saved had it not jumped the gun. The Kaine administration can’t be blamed for failing to salvage Dulles Rail because the project, under the current funding structure, is inherently unsalvageable. But the Kaniacs should be held to account for wasting those millions of dollars on design costs. How much was that number, by the way? Published figures do not say.

I raised a warning flag back in November. (See “Damn the Torpedos, Full Speed Ahead!”) When it was reported that design work would begin on the project even without formal FTA approval, I asked, “Isn’t that risky? After all, the Federal Transit Administration has expressed significant reservations about the project. Federal funding, which would pay roughly 25 percent of the project cost, is hardly guaranteed.” Somehow, I got the message, and I’m nothing but a two-bit pundit. On the other hand, I was paying attention. Apparently those who were determined to push the project through were not.

At the risk of repeating previous posts, it’s time to stop the finger pointing. This incarnation of Rail to Dulles is dead. The Kaine administration needs to dust itself off and start working on transportation alternatives for Tysons Corner and the Dulles corridor. There are alternatives, and there’s little time to waste.

James Simpson, the Federal Transit Administration honcho who axed federal funding for the Rail-to-Dulles project has explained his thinking to the Washington Examiner. There’s not much in the article that I didn’t cover yesterday in “Rail to Dulles Is Dead. Give It a Pauper’s Burial,” but it hits the highlights with greater clarity than I managed to do.

Plus, Simpson does elaborate on his concerns about the ongoing financial viability of the Washington Metro system. Metro faces a $7 billion backlog of capital and maintenance needs, he says, that remain “unfunded and dire” — even without the additional commitments entailed by extending a heavy rail line to Dulles airport.

That’s what happens to heavy rail systems: They depreciate. It’s not enough to raise the money to build them. It’s not enough to cover the annual operating deficits. You have to continue to invest in them or they fall apart. You can get away with under-funding for a few years, maybe even a couple of decades. But eventually the under-funding catches up with you.

The entire debate over the Rail-to-Dulles revolved around finding the money to build the project. I have neither read nor heard anything about how much it will cost each year to fund the depreciation and operating deficits, much less who would pay for the shortfall. Has anyone made that calculation?

Say what you will about road projects — the process of selecting where to build them is highly politicized, and they often reward developers while promoting dysfunctional human settlement patterns — but at least there is a mechanism in place in Virginia to pay for ongoing maintenance and operations. It’s called the gas tax. The maintenance backlog for Virginia’s roads, highways and bridges is not nearly as bad, apparently, as the backlog for Washington Metro.

Let us hope the Kaine administration has enough sense not to try to revivify the corpse of the Rail-to-Dulles project. Time’s awasting. Traffic congestion in Tysons Corner and the Dulles corridor are only getting worse. It’s time to focus the conversation on what comes next.

Broadly speaking, I see these alternatives:

User Pays. Reconceptualize the Rail-to-Dulles project from scratch. Instead of looking to users of the Dulles Toll Road and the federal government for revenue, reboot the project as a “user/beneficiary pays” system. That means tapping the extraordinary increase in values that would accrue to property around the Metro stations. I laid out a methodology in May 2006: (1) Create Community Development Authorities that will issue bonds to cover the costs of the projects; (2) Pay off the bonds by means of a property tax surcharge in the CDA districts; (3) Recompense property owners for the higher tax by the presence of a Metro station and higher density development rights, both of which would increase the value of their property. (See “Rail Rip-Off” for details.)

Bus Rapid Transit. Alternatively, build a mass transit system around BRT. Buses don’t drive land use changes and they won’t appeal to those who want to rebuild Tysons as a mixed-use, pedestrian-oriented district. But a BRT system would cost about one fifth of the Metro extension. This is the obvious fall-back position. It warrants a serious look.

Either of the first two alternatives could be complemented by one or both of the following:

Congestion pricing (Tysons). Create a congestion pricing authority in Tysons Corner, charging single-occupancy vehicles for entering the district. The price would vary by time of day, depending on the level of congestion. There would be two sets of benefits: (1) Tolls would encourage commuters to avail themselves of transportation alternatives; and (2) all funds collected by the tolls would be required by law to be reinvested inside the district: either for road construction, traffic light synchronization, BRT stations, Metro stations, traffic demand management programs or any other initiative that would increase transportation capacity or manage demand.

Congestion pricing (Dulles corridor). Create a congestion pricing authority for the Dulles Toll Road, and replace the current flat tolls with congestion tolls. All funds collected by the tolls would be required by law to be reinvested inside the corridor. The money could be used to improve roads, synchronize traffic lights, support BRT or help pay for Metro in the corridor. As with the Tysons scenario, congestion tolls would both encourage changes in commuting behavior and provide a steady funding stream.

I’m not advocating these options, merely pointing out that there are options to the Rail-to-Dulles project as currently conceived. It’s time to start talking about something that has a chance of happening.

The federal government will not provide critical funding for the Rail-to-Dulles heavy rail project, U.S. Department of Transportation officials announced yesterday, effectively killing the $5 billion extension of Metro rail along the Dulles corridor. The decision set off a round of caterwauling that could be heard all the way to Richmond by people who said they were surprised, nay, shocked, by the decision.

Sen. John Warner is “livid,” according to one source quoted by Amy Gardner in the Washington Post. And Secretary of Transportation Pierce R. Homer is none too happy either. Said he: “Many of the issues that were raised today were heard for the first time by the congressional delegation, the governor and the project team, and that is disappointing.”

Then there’s the Washington Post editorial page:

To say that the FTA’s decision is a bolt from the blue is an understatement. Until a few weeks ago, officials representing the state, Metro and the regional airport authority believed, and say they had been told, that the plan was on track and likely to gain FTA approval by the end of January.

But the only people who should be surprised are those who convinced themselves that federal officials would abandon all common sense and ignore the multitude of problems that have cropped up around the project. James S. Simpson, administrator of the Federal Transit Association enumerated sound reasons for denying the requested federal funds — many of which were noted in a report last summer by the DOT’s Office of Inspector General (See “Rail to Dulles: Off the Tracks?”), fueling a firestorm of public debate at that time.

In a letter to Gov. Timothy M. Kaine, Simpson wrote that the project would receive a rating of medium-low under federal funding criteria. Oh, yeah, big surprise — to Washington Post editorial writers, maybe, but not to anyone else. The feds have made no secret that the project was marginal. That’s why state transportation officials have been desperately looking for ways to trim costs!

But there’s more, a lot more. Wrote Simpson: “FTA is concerned that the cumulative risks and uncertainties that characterize the Dulles project in its current form are extremely likely to result in further cost escalation and schedule delays.” Gee, another big surprise — to anyone who doesn’t read Bacon’s Rebellion, or the Washington Examiner. We’ve been harping on precisely those concerns for a couple of years now.

Now for the details:

• Cost reductions. On Oct. 4, 2007, the FTA told the Metropolitan Washington Airports Authority (MWAA), entasked with managing the rail project, that it required “commitments” for $250 million in cost reductions. By Jan. 17, 2008, however, the FTA had received notification of only $16.5 million in change orders and promises that Dulles Transit Partners, the contractor, was working on another $67.1 million. The FTA could not make its cost-benefit calculations on the basis of promises. It had to work with the facts in hand. The project didn’t make the cut.
• Finances. FTA was concerned by the project’s “aggressive financial structure,” including extensive backloading of debt, optimistic revenue assumptions, and significant growth in costs for the Washington Metro transit system, of which the Rail-to-Dulles project would be a part.
• Project risks. “The Project,” Simpson wrote, “is dependent on many and complicated inter-oprganizational management arrangements for Project design and implementation. MWAA … lacks experience with heavy rail construction and has limited experience with design-build contracts, raising serious questions about its ability to control project costs and schedule. … Early indications of potential inter-agency conflicts are already apparent in the Dulles project.”
• Washington Metro. The Washington Metro, which would run the rail line once built, has its own massive problems. “Because WMATA faces significant, unresolved capital funding needs for maintaining the current system, the proposed extension to Metrorail may pose serious financial and operating challenges, and further strain the system as a whole.”

Summarized Simpson: “The sheer number and magnitude of the current Project’s technical, financial and institutional risks and uncertainties are unprecedented for a candidate New Starts project — particularly one seeking nearly $1.5 billion in Federal participation (i.e. $900 million in New Starts funds and $580.4 million in a loan….)”

The only surprise is that the Rail to Dulles project could have lurched along, a dead man walking, as long as it has. The people who should be ashamed are not those who put this nightmare out of its misery, but those who perpetuated its existence, squandering millions of dollars in the process, in the face of all evidence — stalling any meaningful conversation about alternatives for addressing the very real transportation needs of the Dulles corridor.

(Hat tip to “Too Many Taxes” for forwarding a copy of the Simpson letter.)

Most people agree that creating a sustainable future means relying less upon cars and trucks and more upon trains. We can disagree on how we reach that future, but there is little dispute that passenger trains can carry people more energy efficiently than cars, and freight trains can move goods long distance more energy efficiently than trucks.

Now comes Norfolk Southern Corp., which wants to expand existing railroad tracks through Warren county. The company, reports the NV Daily, wants to double a stretch of track so two trains can pass at the same time. To build a parallel track, the railroad needs to acquire a strip of land about 20 feet on average for a length of 15 miles.

Here’s the problem: The land would include a 1.5-mile section between Ashby Station Road and Fairground Road in a conservation easement held by the Virginia Outdoors Foundation. And some people have a problem with that.

A representative from Scenic 340, which aims to preserve the rural character of U.S. 340, expressed opposition to the expansion during the county Board of Supervisors meeting last week. “To take land under easement must be an absolute last resort,” said Bentonville resident Jim Guy. “While we support the railroad’s efforts to remove traffic on the roads, we do not support this application.”

Do you ever get the feeling that the requirements of contemporary civilization are getting so complex and that so many groups and institutions have conflicting interests that it may be impossible to get anything done?