Bacon's Rebellion

  • Virginia’s Civil Rights Monument

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    James A. Bacon

    I know it has been mentioned, but don’t know of a separate post here for Virginia’s Civil Rights monument.

    I look forward to seeing it when I am Richmond.

    This $2.6 million memorial is worth every penny. It’s exactly what the Commonwealth should do to elevate and perpetuate the best of our civilization. From one generation to the next.

    I’d love to know what was it in the education, experience, family or faith of Barbara Jones that lead her – at age 16 – to lead the walkout at Moton High School in 1951. How remarkable a young woman.

    What a proud legacy for all Virginians.

  • “Rural” Economic Development in the Era of Energy Scarcity

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    James A. Bacon

    As noted in the previous post, the Tobacco Indemnification and Community Revitalization Commission has spent more than $400 million over the past decade — and has the capacity to spend $60 million annually for many years to come — in promoting economic development in the tobacco-growing regions of Southside and Southwest Virginia.

    The original hope of those who set up the fund was to find a way to “transform” the economy of Virginia’s poorest regions, to pole vault the hamlets and mill towns into the Knowledge Economy Ireland style. Towards that end, the Commission has invested heavily in making high-speed Internet access more accessible and on a slew of educational initiatives. But the Commission also has spread around a lot of money on local, patronage-like projects as well as incentives to entice traditional manufacturing investment. A decade later, the region has diversified its economic base to some degree, but still remains highly dependent upon light manufacturing and resource extraction.

    It is politically suicidal for the leaders of Southside and Southwest Virginia to ask the question that must be asked, so I will ask it: Are the economies of Southside and Southwest Virginia even salvageable? Has the the Commission squandered hundreds of millions of dollars keeping the region hooked on its old economic model? Would it make any difference even if the Commission changed its strategic emphasis, as a recent report suggests, to education?

    Here’s the problem: The United States’ competitive advantage in the global economy resides in knowledge-intensive industries that leverage productivity and innovation. To compete, businesses need employees with high levels of skills and education. To recruit a workforce, successful businesses must locate in proximity to large labor pools — i.e., large metropolitan areas. (The only partial exception to this rule is that some corporations are willing to locate near university towns that provide access to unique knowledge sets.)

    Not only are businesses biased towards locating in large metro areas, but many cutting-edge businesses locate in particular metropolitan areas where they can join industry clusters in which highly industry-specific industry knowledge can be shared.

    Not only do Virginia mill towns — like all mill towns across the United States — lack the size to create knowledge-intensive labor pools… Not only do they lack the business clusters that support industry-specific innovation, for the most part they lack the amenities required to recruit, retain and remunerate highly educated employees. As Richard Florida observes, the creative class is heading where the wealth-generating opportunities are — and they’re not in tiny mill towns.

    The Tobacco commission simply has not come to grips with this problem. But even if it did, even if the commission followed the advice of its blue ribbon study panel and invested more heavily in education, it wouldn’t make much difference. The vast majority of newly educated residents of Southside and Southwest simply would emigrate to metro regions where they could utilize their skills and make more money.

    I would add one additional perspective that the Tobacco Commission has steadfastly refused to consider: the critical importance of human settlement patterns. Virginia’s mill towns support a highly dispersed population — living in small towns, strung along country roads, in remote cul de sacs — that entail long commutes to manufacturing facilities located in industrial parks with highway access. That pattern was affordable when energy was cheap. But that low-density pattern is crippling to local living standards in an era of expensive energy. To my knowledge, the commission has given no thought whatsoever to encouraging more compact, less dispersed settlement forms.

    Furthermore, the low-density pattern of 50-acre farmettes, a few head of cattle and a small patch of tobacco, which factory workers supplemented their wages with farm income, has no allure to the creative class. (Urban refugees who dabble in farming seem inclined toward horses and vineyards.) To have any prayer of attracting/retaining an educated population, the Commission must pay more attention to creating the kinds of communities where educated people want to live.

    Politically, the Tobacco commissioners can never throw up their hands and say, “We give up. All is lost.” But they should heed the advice of their blue ribbon commission to stop frittering resources on tiny patronage projects that support a few jobs temporarily but fail to achieve lasting transformation. The regions’ only hope is to concentrate resources in creating economically viable magnets within the region. It is possible — not likely, but possible — that cities and towns like Danville, Martinsville and Bristol/Abingdon have sufficient size with sufficiently large labor pools of skilled, educated labor that they could be attractive to businesses seeking respite from the high costs and dysfunctional human settlement patterns of the large metro regions.

    The strategy of supporting “urban” economic activity (primarily manufacturing) in dispersed, low-density human settlement patterns across thousands of square miles becomes less and less viable with every increase in the price of gasoline and the steady migration of the creative class to large metropolitan areas. Until the Tobacco commission abandons that delusion, its cause is futile, and its leaders peddle false hope to the people they serve.

  • Salvaging Southside and SW Virginia

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    James A. Bacon

    Nearly a decade has passed since the passage of the Master Settlement Agreement which divvied up more than $200 billion in cigarette company proceeds between the 50 states. Virginia chose to dedicate more than half of its share — some $770 million so far — to the tobacco-growing regions of Southside and Southwest Virginia whose inhabitants were most hurt economically by the decline of the tobacco cultivation.

    A big chunk of those funds were paid directly to owners of tobacco allotments, but $432 million has been funneled into development and revitalization projects for the economically lagging regions. The commission still has a $1 billion endowment capable of passing out $60 million a year or more, more or less forever. A decade later, the questions arise: Has the money been well spent and how can the funds be better spent in the future?

    John Reid Blackwell raises that question in the Times-Dispatch today, drawing heavily upon a report recently issued by a blue ribbon panel tasked with reviewing the “structure and operations” of the Tobacco Indemnification and Community Revitalization Commission, the group that has dispensed the tobacco allotment funds. The commission has spent millions following the conventional economic development play book: upgrading the region’s telecommunications infrastructure, attracting and retaining manufacturing jobs, building educational capacity and supporting entrepreneurial initiatives.

    Viewed within the narrow parameters assigned to it, the panel made some sound observations and recommendations.

    Given the existing state of the Southside and Southwest economies, it is fair to ask whether the expenditure of over $400 million by the TICR since the year 2000 on “regional transformation” projects has had the desired transformative effect on the regions. …

    Despite this spending, population in the region continues to decline, wage rates still lag behind the rest of the state, there is persistent high unemployment and poor educational attainment is still endemic.

    The panel suggests, among other things, tweaking administration of its tobacco-funded endowment, routinely updating the commission’s strategic plan and streamlining the governing organization. Some some proposals go deeper and may well encounter some resistance.

    The panel recommends adopting an “investor” approach to disseminating funds rather than a grants approach, in which funds are parceled out to every town, city and county throughout the region as commissioners respond to “grass roots initiatives.” A foundation/endowment approach would view its spending plans as “investments” that continue to pay off well into the future. Along the same lines, it should fund fewer micro grants under $100,000 and more investments that offer the potential to “transform” the region. The panel also calls for collecting data and measuring outcomes.

    Finally, and most importantly, the panel recommends investing more strategically in education. “The [panel] believes that education from preschool to high school and beyond high school is the future of Southside and Southwest Virginia. No miles of highways constructed, no tens of thousands of feet of water or sewer lines laid, nor any number of industrial park buildings erected can change this.”

    Good recommendations all. The report provides excellent advice for ensuring that the tobacco endowment money is better spent. But the panel did not ask the really big question, which was outside the scope of its study mandate: Are the Southside and Southwest Virginia economies even salvageable in the Knowledge Economy. Is the Tobacco Commission fighting an unwinnable battle? Is the Tobacco Commission, in effect, spending hundreds of millions of dollars rearranging the deck chairs on the Titanic? I’ll tackle that issue in the next post.

  • Virginia and the Coal Boom

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    James A. Bacon

    It’s nice to know that, as soaring energy prices reallocate wealth globally, not all of the redirected flow of wealth ends up in the hands of Saudi princes and Houston wildcatters. While we Virginians are paying at the pump and paying at the electric meter, at least a few amongst us — owners of and workers in Virginia’s coal mining companies — are seeing some benefit.

    The biggest business news story in Virginia of the past week, largely ignored outside of Southwest Virginia, was the decision by the board of Alpha Natural Resources to accept an offer by Cleveland Cliffs Inc., to buy the Abingdon-based coal mining company for $10 billion in cash and stock. If the merger goes through, it will create a natural resources giant with assets in iron and coal in North America, South America and Australia.

    Alpha Natural Resources didn’t even exist 10 years ago. Michael Quillen, a life-long veteran of Virginia’s coal mining industry, built the company in the early 2000s by assembling cast-off coal properties that no one else wanted. As he told me when I interviewed him for VA Newswire back in 2004, there was no better time to buy than when everyone else wanted out. He foresaw the inevitable increase in electric consumption, especially in China, and had faith that the market would turn.

    And turn it has. Coal prices have shot through the roof. Profitable back in 2004, Alpha Natural Resource is super-profitable now, and it’s investing heavily in expansion. The company’s shares, which sold for $20 in 2005 are now going for $95, as investors anticipate the likely closing of the Cleveland Cliffs deal.

    Of course, only a sliver of that $10 billion will trickle down to the inhabitants of SW Virginia. The big beneficiaries are investment firms in New England and, surprisingly enough, Bank of America, which own most of the stock. CEO Quillen, who owns 370,000 shares (according to the March 2008 proxy) won’t do too shabbily. The deal should make his cut worth about $35 million.

    Yeah, I remember Quillen when he was just a working stiff… Well, maybe not a working stiff, but just the number two guy for a midsized coal company, Paramont Coal, a non-union outfit that kept running during the UMW strikes of the early 1980s. I was a reporter for the Roanoke Times, and Quillen hauled me around from one of Paramont’s operations to another in his 4-wheel drive, weaving past placard-waving picket lines and watching out for jackrocks (mean, spiky things made of nails and shaped like toy jacks that picketers threw in the road to give coal trucks flat tires.) Maybe it’s just my imagination more than 20 years later, but I’ll swear he kept a shotgun in the back rack.

    Other big winners here in Virginia include:

    • Massey Energy, a publicly traded company headquartered in Richmond.
    • James River Coal, another publicly traded company headquartered in Richmond.
    • Norfolk Southern, which with CSX enjoys a duopoly in hauling coal, extracts an outsized share of price fetched by coal on the global market
    • The coal-loading piers in Hampton Roads, which are handling booming exports.

    I haven’t kept track of him for the past few years, but another beneficiary should be E. Morgan Massey, the former Massey Energy CEO who retired then pioneered U.S. investment in Chinese and Venezuelan coal mines. I’m not sure if he spends much time in Richmond anymore. He’s got nice spreads down in Florida and the Bahamas.

    AMVEST Corporation, based in Charlottesville, could be another. Founder Carl Smith (for whom I worked briefly some two decades ago) created a highly profitable enterprise based on coal mining in Virginia and West Virginia. Carl, for whom the University of Virginia football stadium is named, died a few years ago, and AMVEST was sold last year to Consol Energy of Pittsburgh. The administrative offices in Charlottesville might have moved as well — I haven’t kept track.

    Sad to say, the people who actually live in the coalfields aren’t seeing much of this vast wealth creation. They’re better off to be sure. After years of contraction, the coal industry is back in job-creation mode, and wages and benefits are stronger. But the region doesn’t seem to be spitting out a new generation of home-grown entrepreneurs like the industry did back in the 1970s coal boom. Coal mining is a big corporate game now, requiring lots of capital and big engineering staffs to sort through all the environmental and safety regulations. There isn’t any room anymore for the plucky guy with a bulldozer, a backhoe and a plot of land like there was 30 years ago.

    Back in the ’70s and ’80s, Virginia’s bootstrap coal barons made quite an impression down in the lowlands. They donated huge sums of money to state gubernatorial candidates. Every candidate had to travel down to Bristol and kiss the ring of Jim McGlothlin, founder of the United Coal Co. Since then, McGlothlin sold United Coal and invested his money in natural gas and golf courses, among other things. Although he remains involved with William & Mary, where he went to law school, he keeps a very low profile in Virginia these days.

    While the distribution of coal wealth was always unequal, at least the “coal barons” kept the politicians in Richmond focused on the needs of the coalfields back then. There’s really no one around to stand up for the region today.

  • Kermit the Frog Notwithstanding, It Is Easy Being Green

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    James A. Bacon

    Many people have the wrong idea about “green” houses. They think of Mongolian-style yurts, or solar-mounted rooftops, or kitchen counters made of recycled glass. But going green rarely entails anything that exotic or expensive, says Karl Bren, executive director Earthcraft Virginia. “It’s just a matter of paying an attention to the details. Like making sure the [HVAC] ductwork isn’t leaking.”

    Green building doesn’t have to be expensive, stressed Bren and two other panelists at a Wednesday panel discussion hosted by the Richmond branch of the Urban Land Institute. Anecdotal evidence backed up by formal studies generally conclude that erecting commercial and residential buildings according to green standards costs only 1 percent to 3 percent more than conventional building. Those costs can be recouped many times over in the form of lower energy bills, lower water bills, lower maintenance and improved health.

    An up-front expenditure of an additional $3 to $5 per square foot can yield $50 to $60 in savings over a 20-year period, said Sandra Leibowitz Earley, a principal with Sustainable Design Consulting. The more effort a developer makes early in the project on setting goals and assembling an integrated design team, she added, the more favorable the economics look.

    While green, or sustainable, building consumes more up-front resources in design costs, it can shave expenses by reducing the size of HVAC systems, and it reaps big savings in lower utility bills. By better controlling moisture and mildew, green buildings also reduce the incidence of asthma – now the leading cause of admittance into emergency rooms, Bren said.

    Whether your goal is energy independence from foreign despots or reduction of the carbon dioxide emissions implicated in global warming, switching to green building standards must be a central element of national energy policy. According to Earley, buildings account for 37 percent of all U.S. energy use, 12 percent of water consumption, 40 percent of non-industrial waste and 35 percent of CO2 emissions. As an aside, buildings also are far more polluted (in ways that effect humans) than the outdoors.

    The Richmond region is five to seven years behind more progressive regions of the country in embracing green building techniques, the panelists said, but the message is catching on.

    Bren’s not-for-profit enterprise provides a certification process, similar to LEED (Leadership in Energy and Environmental Design), for residential housing. Earley’s Richmond-based company provides sustainable design services to builders and developers – mainly in the Washington area but in the Richmond region as well.

    The third panelist, Lynn J. Rogien, is the green project manager for W.M. Jordan, one of the region’s largest construction companies. When viewed on a life-cycle basis, green commercial buildings offer superior rates of return for investors, he said. While up-front design costs and construction costs are marginally higher, he said, utilities are significantly lower. So are O&M (operations and maintenance costs). And here’s the kicker: Developers can charge higher lease rates.

    “The market demand is changing,” Rogien said. “Developers have discovered that they can make a higher return on investment when they make a green, or high-performance, building. Our country is in a paradigm shift. We’re changing the way we do business construction.”

    (Cross-posted from R’Biz.)

  • Kaine Pushes State Telework Policy

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    James A. Bacon

    A journey of a thousand miles starts with a single step. Gov. Timothy M. Kaine’s action yesterday in expanding the state’s telework policy to the 120 employees working in the Governor’s office and cabinet is no more than a single step. But it pushes the Commonwealth of Virginia along on a very important journey.

    “Rising fuel prices, the escalating cost of commuting to work, worsening traffic congestion and reduced air quality compel a change in the business culture of state agencies,” Kaine said in a press release. “Telework reduces energy consumption, both in the amount of gasoline used for daily commuting and in office building energy costs. This policy provides a timely opportunity to create a culture of conservation within the state workforce, which can serve as an example for Virginia businesses in the private sector.”

    Well, technically, Kaine’s announcement wasn’t the first step. But the governor’s announcement serves as a prod to the private sector to make similar accommodations.

    According to the press release, more than four dozen employees of the Cabinet and Governor’s Office had already started teleworking or utilizing alternative schedules for part of their work week. Nearly 23,000 state employees have been ascertained to be eligible for telework, based on the nature of their work — and 5,000 are actually engaged in it. The Department of Taxation alone has 591 teleworking employees.

    Another 24,000 state employees are eligible to work alternate schedules such as 10-hour, four-day work weeks — and 14,000 do.

    Meanwhile, Kaine is asking state agencies to work with their employees to encourage use of alternate transportation. A recent survey indicated 16,218 of Virginia’s approximately 95,000 state employees use some form of alternate transportation – public transportation, van pools, car pools, even bicycles – to commute to work.

    These are all positive developments. Kaine should be commended, and the Commonwealth should serve as an inspiration to others who have yet to embrace the possibilities created by laptops, cell phones, PDAs and the like.

  • VINDICATED! VCU Comes Clean

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    James A. Bacon

    Yesterday, at a meeting of 100 members of the Virginia Commonwealth University community, Dr. Francis Macrina admitted that his school was wrong for the secrecy agreements it has entered into with Philip Morris USA.

    Other speakers among the 100 or so attending the meeting of a task force tasked with exploring corporate research addressed a variety of concerns related to the propriety of the tobacco contracts and whether VCU should be doing tobacco-funded research at all.

    Since I have been writing against the contracts for Bacons Rebellion and have researched the issue extensively on Richmond.com, all I can say is “Bravo!”

    The meeting is restoring my faith in VCU although I am disappointed they still believe they need to take baby steps in dealing with issues that plenty of other schools would have absolutely no problem in addressing. VCU administrators, for example, refused to allow news cameras to film any of the meeting. A small step backwards.

    A few other points. This meeting and Macrina’s honesty shoots down some folks on this blog. One is a Virginia State Chamber of Commerce lobbyist who saw absolutely no problem with the tobacco contracts. Well, fella, VCU sees a problem with those contracts so maybe you ought to enter the 21st Century.

    And, our beloved Blogmeister, Jim Bacon, needs to wake up and smell the coffee, too. After all this, he doesn’t need to step back, all-knowing, and complain that he can’t find enough to “condemn” VCU about. Well, Jimbo, mark Macrina’s words. Next time, no knee jerk defense of the “Richmond” you so proclaim to love. Think it over, first. Okay?

    The danger, however, is that this issue may die ove the summer. VCU President Eugene Trani seems to be recovering part of his and his school’s reputation by holding these public meetings and encouraging debate. Funny that there’s still an element of fear.

    Unfortunately, Trani, 68, has been ill with heart troubles and has undergone a bypass. This and his age raise the question about his succession. One wonders if VCU has started looking.

    Peter Galuszka

  • Virginia Leaders in the “Green” Revolution

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    James A. Bacon

    Virginia, like the rest of the world, is in the early stages of a “green” revolution that will result in the massive reordering of economic, institutional and governmental priorities to accommodate the reality of higher cost energy. While public policy sets the parameters — upholding environmental standards, designing transportation systems and influencing human settlement patterns — let there be no doubt it is the innovation and creativity flowing from the private sector that will actually make change happen.

    In the future, Bacon’s Rebellion will pay more attention to the activities of private-sector players either based in Virginia or active here. There are two particular players that are worthy of attention, for they have gotten a jump on everyone else in building a track record and establishing credibility in developing renewable energy. They are AES Corp. and Intrinergy Inc.

    AES, based in Arlington, provides electric generating capacity in North America and around the world, racking up more than $4 billion in revenues in the 1Q of 2008 alone. While much of this generating capacity burns fossil fuels, the company is rapidly building its holdings of renewable energy capacity. The company owns or operates 32 hydropower stations in nine countries, which collectively generate nearly 7,454 megawatts of electric power. The company owns/operates wind farms in California, Texas, the Midwest and Pennsylvania (the latter of which, in a recently announced deal will supply green energy to the Old Dominion Electrical Cooperative). The company is actively involved in developing 49.5-megawatt wind energy project in China as well.

    In a new line of business, the creation, qualification and sale of Carbon Emission Reductions, AES’s Greenhouse Gas Services division works on projects to reduce greenhouse gases like carbon dioxide and methane. One current example is a project with Malaysian oil mill owners to capture and destroy the methane emissions that are a byproduct of palm oil production. The market for carbon emissions reductions is estimated at $10–15 billion annually.

    Meanwhile, the company is laying the groundwork for solar energy generation as well.

    Intrinergy, based in Richmond, isn’t nearly as large as AES, but it is growing fast. Formed in 2005, the company has developed an expertise in producing clean-burning gas from biomass: anything from wood chips, forest residue and yard clippings. The technology is particularly suited to industrial clients who can use the gas for cogeneration: generating electricity and using the waste steam for industrial processes.

    Intrinergy doesn’t just design and build cogeneration plants. It also lines up supplies of waste byproducts to feed the cogeneration units. Currently, the company buys about 7,000 tons of waste byproducts a month for its European and domestic operations, reports Garry Kranz for Virginia Business magazine. The company also provides the financing for the projects, funding the full cost of constructing the energy generation facilities. That way, the client can share in energy savings without putting up any of its own capital.

    The company has built plants in Mississippi, Ohio and Germany, and it has another 35 facilities in the pipeline in North America and Europe. Says President John Keppler: “We believe realistically that we could invest $2 billion to $3 billion in renewable energy over the next five years.”

    Ironically, Intrinergy has no active clients in Virginia, although the company is in contact with a number of companies that are interested in its services.


    AES and Intrinergy are just two of the more prominent companies active in Virginia. There are many more enterprises creatively laying the groundwork for a transformation of the global energy economy, not to mention a growing number of financiers, attorneys and business consultants who supply the intellectual capital to identify deals and close them. I will bring them all to the attention of Bacon’s Rebellion readers as the opportunity arises.

  • Faulty Logic in the Offshore Drilling Debate

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    James A. Bacon

    The off-shore drilling debate is heating up here in Virginia and it’s generating a good deal of posturing and over-heated rhetoric.

    The posturing comes from General Assembly Republicans, who introduced a bill during the special transportation session that would have allocated a share of the state’s royalties to help pay for new transportation projects. Wow, that’ll be a big help… 12 years from now! The regulatory hurdles to exploration and drilling will delay exploitation of oil and gas reserves off the Virginia coast for years, and energy companies are more likely to chase more lucrative opportunities before investigating the Virginia coast.

    The Washington Post quotes Stewart Glickman, an equity analyst at Standard & Poor’s: “There would probably be far more interested in the eastern Gulf of Mexico than they would be in the mid-Atlantic. [But] it is a possibility at some point.”

    The over-heated rhetoric comes from the environmentalist camp. Some environmentalists oppose drilling under any circumstances, citing concerns about leaky pipelines, on-shore refineries, platform lights cluttering a pristine night sky and large-scale oil spills. Burning oil and gas, they add, contributes to climate change which could help raise sea levels and swamp much of Hampton Roads and the Eastern Shore.

    No one wants oil spills, and with oil likely to sell above $100 per barrel more or less forever, oil companies could afford to deploy whatever safeguards are needed to reduce the potential for oil spills to near zero. Someone ought to take a visit to the oil rigs in the Gulf of Mexico and ask how much oil spilled during Hurricane Katrina… or ask how much oil spills ever. If the safeguards aren’t sufficient to protect Virginia’s pristine coast, then I agree, let’s wait until we can guarantee that the waters will remain clean. But rather than assuming that offshore oil wells pose a big risk, let’s ascertain the facts.

    One argument against drilling seems especially disingenuous: Getting a few hundred thousand barrels per day from Atlantic Coast oil wells won’t make a dent on oil prices. We can’t extract enough oil, the argument goes, to impact global supply and demand. Well, that’s true… but it’s irrelevant. Pumping 25,000 barrels a day (to pick a number) from Virginia’s continental shelf would allow us to avoid buying 25,000 barrels a day of someone else’s oil. At $100 per barrel, that’s $2.5 million a day that’s being circulated in the United States economy, much of it in Virginia, not shipped overseas to support foreign despots. That would be a good thing.

    None of this logic obviates the need for a restructuring of transportation systems and human settlement patterns into more energy-efficient forms. Exploiting off-shore oil and gas can pump some money into the state’s economy but it won’t come close to meeting our long-term energy needs.

    (Photo credit of California oil rig: Solar Cola.)

  • No Tract Is an Island

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    James A. Bacon

    West Broad Village, the large mixed-use development underway on West Broad Street, rates cover story treatment in the Metro Business of today’s Times-Dispatch. The 115-acre project, which is rising upon one of the few remaining undeveloped tracts in the Short Pump area, will contain about 550 town houses and 340 apartments, 420,000 square feet of retail space and 668,000 of office space.

    It’s hard to imagine that western Henrico County needs more retail space – especially so close to the 1.2 million square feet in nearby Short Pump Town Center, not to mention the big boxes lining West Broad and Pump Road — during an economic slowdown that has bit deeply into consumer pocketbooks. But “Village” officials profess optimism.

    One of the very things crimping the economy – rising gasoline prices – should help the residential component of project.

    With gasoline prices at $4 per gallon, people want to simplify their lives, maintains Patrick Ashley, a sales and marketing manager for Ryan Homes. “People are telling me that the higher gas prices, the more attractive West End Broad gets,” he told Louis Llovio with the Times-Dispatch. “Residents will be able to walk to the grocery store and to work: go to dinner and shop, all without leaving the area.”

    Continued Ashley: “For someone who lives in, let’s say, in Goochland and works in Innsbrook or even downtown, this is a great spot because the commutes are shorter. After work and the weekends, they can just park their cars and not have to worry about it.”

    Are higher gasoline prices enough to goose sales at West Broad Village? Will households forsake their single-family dwellings with big lots just to shave a few bucks off their weekly gasoline bill? The Villages at West Broad could provide an interesting test of consumer preferences — at least in the Richmond metropolitan region.

    “Live, work play” is the new mantra in real estate development as rising gasoline prices prove punishing to Richmond-area road warriors. The project literature calls upon the vocabulary of the New Urbanism school of urban design, which calls for mixed uses, people-friendly streetscapes and a balance between accommodating the interests of pedestrians and automobiles. While West Broad Village makes concessions to the surrounding auto-centric landscape of Henrico County — it surrounds its retail stores with the usual vast parking lots — it provides parking decks for apartment dwellers and homeowners, and it has paid keen attention to creating designing “walkable,” pedestrian-friendly streets. As the website explains:

    There are seamless transitions from neighborhoods, to the “main street,” to the public spaces and even to the adjacent school and park. Collectively, these spaces create a dynamic community framework, a community of neighborhoods social interaction can take place. …

    Tree lined streets with comfortable sidewalks bring back the small town feeling of a community in West Broad Village. Streets will be designed to a pedestrian scale without compromising the automobile. Intersections will consider the pedestrian, bicycle and vehicular movement. Multiple connections and traffic calming will be integrated into the network design.

    The developers are saying all the right things. How well the project will work in practice, wedged as it is into a classic landscape of “suburban sprawl,” is another question. West Broad Village is sealed off from neighboring development by a combination of wetlands, forested areas, upland reserves and parks, a “continuous natural edge.” The project map indicates little connectivity between the “village” and surrounding communities — other than the six-lane highway on West Broad Street. Traffic in and out of West Broad Village will add to the already horrendous congestion along West Broad.

    Unlike the genuine urban environments that the project emulates, the Village’s streets and sidewalks do not knit the village into the fabric of surrounding neighborhoods. West Broad Village is a pedestrian oasis in a sea of auto-centric, big boxes, shopping centers and cul-de-sac residential development. The village cannot create an authentic urban experience. Still, with gas prices rising, retailers and homeowners may find even a faux-urban oasis preferable to the auto-dependent, suburban alternative.

    (Cross posted with R’Biz.)

  • NATIONAL DISASTER

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    James A. Bacon

    Jim Bacon and EMR tune in on different MainStream Media outlets and today they saw different stories and came to different conclusions. Bacon reported on a Richmond Times-Dispatch op ed column by the US Secretary of Transportation (“Mary Peters on Virginia Transportation Policy”). EMR has been reading WaPo.

    In SundaySource, WaPo splashes a lot of colored ink on “An Airfare To Remember: As the Cost of Travel Soars, Couples in Long-Distance Relationships Are Feeling the Pinch.”

    True and touching but WaPo would do better to alert citizens to the economic, social and physical impact on citizen’s well being due to a deteriorating Mobility and Access system in the air, on the water and on land.

    It is all well and good to chew over the cratering of IntraRegional transport – roadway congestion, deteriorating bridges and other realities – but let us not forget InterRegional transport. The headline from a 22 June WaPo Op Ed by David Ignatius puts the air issue in perspective: “Failing Airlines, Failing Government.”

    We considered the impact of the declining health of Air Enterprises in a column “The End of Flight as We Knew It” on 21 April 2008. Things have gotten worse since. Last week the EU finally voted (640 to 30) to start forcing Air Enterprises to pay the cost of their upper atmosphere impact. That on top of fuel costs…

    For years Air interests have pumped Agency and private Capital into a system of air Mobility and Access based on cheap fuel. They have convinced smaller urban enclaves that the saviors of their community’s economy will fly in and out of town. Uncle Sugar’s pork barrel has doled out grants to build a system that now will be so expensive it will only serve a few at the top of the Ziggurat.

    Just yesterday WaPo reported that airport managers have come to the federal trough for help. (“Feeling Airlines’ Pain, Airports Seek Help in D.C.”) Sorry, Uncle Sugar has spent all his money in the casbah – protection money for cheap petrochemicals – and he has nothing to show for it but war casualties and debt.

    On the water and on land, the problem is no better. In “Interstate Crime,” (28 February 2005) we outlined some of the problems with the Interstate System and the ideas floating around to “fix” it.

    Most now understand the profound negative impact the Interstate Highway system has had on human settlement pattern – for a refresher see “Interstate Crime.” A growing number are coming to realize dysfunctional result of relying on Autonomobiles for Mobility and Access – See THE PROBLEM WITH CARS.

    The foolishness of building a system of roadways that must be used by vehicles with vastly different weights and driven by persons with different skills is coming into focus as drivers get older and energy costs will result in vehicles that are smaller, lighter and more dangerous. See our 13 June Bacon’s Rebellion Blog Post “Aprera and the Tiger Riders.”

    The dialogue in Jim Bacon’s Friday 11 July post “Get Over it” on the physics of InterRegional Mobility and Access via rail makes it clear how far citizens, even citizens of good will, are from coming to a well considered judgement on a course of action with respect to any mode of travel.

    Where have the 100s of millions of dollars in transportation “research” gone over the past 60 years? To the Enterprises and Institutions that are the Haliburtons of the Autonomobile, the vehicle of choice of Business As Usual.

    It would be so nice not to have torn up the street railway system – the Federal District hopes to have its system rebuilt by 2030. And what about those thousands of miles of abandoned railroads?

    Seems like Ms. Peters should be worrying about the big picture, not giving op ed advice on finding money for IntraRegional short-term fixes. On the other hand she has not been in office for 60 years so it is hard to put all the blame on her.

    Where is Will Owen when we need him?

    EMR

  • Mary Peters on Virginia Transportation Policy

    Posted on

    by

    James A. Bacon

    Mary E. Peters, the U.S. Secretary of Transportation, has published a column in the Times-Dispatch today that displays a surprising familiarity with Virginia’s transportation-policy gridlock. Perhaps, as a federal employee, she is a resident of Virginia, which means she is affected by the actions (or non-actions) of the General Assembly. Or, perhaps her knowledge derives from the fact that Virginia is a national leader in tolling and congestion pricing — which happen to be the very remedies for the nation’s transportation woes that she advocates.

    Whatever the case, Peters makes far more sense than most national politicians who pontificate about transportation policy. She’s got the big themes right. Now she needs to work on the details.

    At the heart of her message, Virginia needs to change the way it funds transportation projects. She writes: “It makes little sense — and it’s certainly not sustainable — to increase our reliance on gasoline taxes at a time when we all recognize the need to decrease fuel consumption and increase the use of alternative fuel sources. … gasoline, car, property, and sales taxes have little or nothing to do with the use of highways and are ineffective at reducing highway congestion.”

    Translation into Bacon-ese: Transportation funding needs to address the demand side, as well as the supply side, of the equation. There needs to be a direct connection between how much, and when, people drive and how much they pay. If drivers pay their share of the cost of building and maintaining roads and highways, they won’t “demand” as much transportation capacity as if they pay by other means.

    Peters is a huge fan of variable pricing, or congestion pricing, as am I — the difference being that I recognize there is a gap between abstract economic theory and how congestion pricing is applied in the real world.

    Private toll operators, Peters says rightfully, bring private capital to the able, allowing projects to get financed that Virginia otherwise could not afford. Congestion pricing, she adds, manages transportation corridors on the basis of supply and demand, allocating scarce capacity in a manner very much like long-distance phone service.

    But the analogy with long-distance phone service is far from exact. There is abundant competition in phone service, with multiple players utilizing multiple technologies. Private toll operators strive to squelch competition in order to lock in their captive markets, as Virginians discovered when we got a peek at the contract between the Commonwealth of Virginia and Capital Beltway Express for operation of the Interstate 495 HOT lanes. (See “The Capital Beltway HOT Lane Deal.”) That was a deal, incidentally, that Peters’ office was intimately acquainted with, as the feds provided much of the low-interest financing to make it happen.

    The Beltway HOT lane contract protects the private operator’s revenue stream by imposing significant financial penalties on the state of Virginia for making transportation improvements that would undercut toll revenues. I would humbly suggest that the solution to traffic congestion is more competition, not less. On the other hand, it is questionable whether Transurban and Fluor, the joint venture partners, would have made the investment and taken on the financial risk without some assurances, so there are no easy answers.

    Still, Peters articulates the critical issues clearly when writes:

    Virginia’s leaders have a clear choice. They can ask drivers to pay more at the pump, more at the store, and more at the DMV — regardless of where they live or when they drive. Or, they can put in place direct user fees that will be targeted to areas where congestion is at its worst, and will actually cut traffic, speed commutes and improve the timeliness and quality of transit bus service. …

    Embracing direct pricing for road use would also have the added benefit of encouraging better decisions about land use, stimulate reductions in carbon-dioxide emissions and encourage more of the commonwealth’s commuters to try transit. In short, embracing tolling as a solution to Virginia’s transportation funding challenges would cut traffic, generate needed revenue, improve transit, and significantly benefit the environment.

    Now, if we could just get Madame Secretary to start talking about “balanced communities,” we’d really be making some progress!

  • Get Over It

    Posted on

    by

    James A. Bacon

    Gov. Timothy M. Kaine blasted Republicans yesterday for the collapse of the General Assembly special session on transportation, and the Republicans blasted him back. The blame game is inevitable as the pols mug for the cameras and play to the next day’s headline writers. But Kaine’s comments rang especially hollow.

    As Jim Nolan reports for the Times-Dispatch: Kaine “likened what he saw in the Republican-controlled House of Delegates to a situation comedy.

    “It was like a Seinfeld episode — a show about nothing,” Kaine told reporters at the Capitol, hours after lawmakers adjourned following a marathon 12-hour day, closing the six-day special session with no transportation fix for the state.

    “And in the House, it was a road session about nothing.”

    How rich. This comes from a governor who was so unprepared for the special session that he couldn’t even get his own party to introduce his bill in the state Senate. This comes from a governor who made zero effort to reach out to the opposition Republicans and, instead, stumped the state in series of public hearings, hoping to generate public sentiment — that never came — to pressure the Rs into capitulating.

    News flash: The entire special session was “about nothing.” If you want to point the finger, point it at the guy who called the special session. That wasn’t Sen. Richard Saslaw, D-Fairfax, chief muckety-muck of the senate. It wasn’t Del. William Howell, R-Stafford, head honcho in the House.

    Hands down, the transportation special section has been the biggest gaffe of the Kaine administration. The sooner the governor drops the subject and moves on to other things, the better of he’ll be.

  • It’s All Over But the Name Calling

    Posted on

    by

    James A. Bacon

    The special General Assembly session on transportation collapsed in a heap yesterday, with no one agreeing on much of anything. None of the three major proposals for raising revenue to fund transportation improvements managed to get any traction.

    There were three major proposals on the table, one submitted by Gov. Timothy M. Kaine, one by the Democratic-controlled state Senate and one by the Republican-controlled House of Delegates. (Actually, according to press reports, the House trotted out a couple of different ideas.) All died. Predictably, Democrats blamed Republicans, Republicans blamed Democrats and editorial writers wrung their hands at the inability to achieve a consensus.

    Here’s the reason that consensus is so difficult to achieve: When the debate is about raising taxes, the issue quickly focuses on who pays. While most of the constituencies involved want more money to spend, they all want someone else to pay. The real estate industry opposes grantor’s taxes. The auto dealer’s lobby oppose car titling taxes. Defenders of the poor oppose the gasoline tax. Richmonders don’t want to pay for roads in Northern Virginia.

    As I’ve noted before, politics is all about getting someone else to pay for what you want. With the terms of debate framed the way they are, a consensus is unachievable. The tax hikes are a zero sum game. If someone comes out ahead, someone else loses. When there is no electoral groundswell for higher taxes and the agitation comes overwhelmingly from business interests , the debate inevitably pits one set of business constituencies and regional interests against another — a recipe for gridlock.

    The only way to create a political solution is to craft legislation based on user pays principles: If you pay higher taxes or tolls, in return you get improvements to infrastructure that you use. Voters aren’t willing to raise a bunch of money and hand it over to the government — either at the state level or the regional level — where it disappears into a black box where only the special interests can influence how it is spent. Citizens want ironclad guarantees that they get something in return for their money.

    As I’ve preached over and over, the first place to start is with the gas tax. The problem with the Saslaw bill is that it would raise a whole lot of money and distribute it via the same arcane and opaque funding formulas and project-selection processes, subject to manipulation by the special interests, that exist today. To win voter trust, we need to set the gas tax not at some arbitrary level but at whatever level it takes to do two things: (a) maintain state roads and bridges, and (b) provide state matching moneys for federally funded projects. And nothing else.

    In the short run, such a measure would actually provide citizens a tax cut. That would make it easier to sell politically. Over the longer haul, as maintenance costs escalate, the gas tax eventually would float higher than the 17.5 cents per gallon charged today, bringing more money into the system than we have now. But citizens would be willing to accept those increases because they know that their tax money was paying for their share of road maintenance, not funding boondoggles.

    How, then, do we pay for new roads? I’ve explained it all before. Toll roads, whether operated by the state or by public-private partnerships. Congestion pricing corridors. Impact fees. Community Development Authorities. If road projects can’t support themselves in the open marketplace, there is no economic justification for them and they shouldn’t be built. Virginians would soon learn that the transportation “crisis” isn’t a crisis for anyone but the rent seekers who feed at the government trough.

  • The Capital Beltway HOT Lane Deal: Did the Kaniacs Give Away the Store?

    Posted on

    by

    James A. Bacon

    TheNewspaper.com, a blog that bills itself as a journal of the politics of driving, has made quite a scoop: It has obtained a copy of nine pages excerpted from the “Comprehensive Agreement Relating to the Route 495 HOT Lanes in Virginia Project,” dated Dec. 19, 2007, between the Virginia Department of Transportation and the Capital Beltway Express LLC.

    The blog summary of the contracts seems to confirm many of the worst fears of those who harbor doubts and suspicions about the HOT lane agreement — and I, a staunch advocate of HOT lanes, may well be forced to eat humble pie. In the end, I base my opinions on what the facts are, not what I wish them to be, so I bring this information to the attention of Bacon’s Rebellion readers to dissect and ruminate upon.

    While the agreement asserts VDOT’s “unfettered right” to make transportation improvements, in the interpretation of theNewspaper.com it contains measures that would, in fact, curtail VDOT’s latitude to make improvements to the I-495 Beltway and other projects that might threaten HOT lane toll revenue. Writes the blog:

    If [VDOT] determines that additional traffic lanes on the Capital Beltway Corridor are in the state’s best interests, the department shall consult with the concessionaire [Capital Beltway Express, a joint venture of Transurban and Fluor] as to an appropriate strategy to implement such additional traffic lanes. At the department’s sole discretion [it shall] permit the construction of additional lanes as part of the project with a view to minimizing any detrimental impact on the project or its ability to generate revenues…”

    As theNewspaper.com boils down the meaning of that last phrase, the agreement is structured “to ensure the area remains sufficiently congested so that motorists will have an incentive to pay to use the toll lanes.”

    The contract considers any improvement to the Beltway to be a “Department Project Enhancement,” which could trigger a “compensation event.” In such an event, Virginia taxpayers could be required to pay Transurban/Fluor compensation for lost toll revenue. Observes theNewspaper.com: “Given VDOT’s stated lack of funding, adding an extra monetary premium to the cost of any improvements effectively gives the foreign company the ability to prevent such projects from happening.”

    Compensation events are not limited to Beltway improvements. They extend to improved connections between the Beltway’s general purpose lanes and Interstate 66, and the Dulles Toll Road, says theNewspaper.com. In such an event, an “independent engineer” would conduct a traffic impact study and determine the compensation due the concessionaire.

    (I’m not sure that I read the agreement that way. From my perusal of page 69, the agreement specifically permits VDOT to make the improvements mentioned above, at its own expense, provided that… blah, blah, woof, woof… a bunch of impenetrable legalese follows. Readers better versed in reading contracts than I are invited to weigh in.)

    The agreement also contains provisions to discourage any increase in the number of motorists sharing rides, says theNewspaper.com. Quoting the agreement, “The department agrees to pay the concessionaire, subject to Section 20.18, amounts equal to 70% of the average toll applicable to vehicles paying tolls for the number of High Occupancy Vehicles exceeding a threshhold of 24% of the total flow of all permitted vehicles…”

    Bottom line: If escalating gasoline prices revives the popularity of carpooling, taxpayers could wind up making multimillion-dollar payments to Capital Beltway Express.

    The blogger casts this contract, which he regards as highly beneficial to Capital Beltway Express, in the light of recent revelations that Transurban, an Australian company, had mistakenly made $172,000 in contributions to various PACs of both parties. Recognizing that foreign contributions are illegal, the company has asked for its money back. See “Bring Your Own Checkbook” for details.

    (See also a discussion of how the firm benefited from federal financing in “Federal Subsidies for HOT lanes,” and the revelation that Capital Beltway Express will be required to maintain minimum HOT lane speeds of only 45 mph in “HOT Lanes at 45 MPH Not So Hot.”)

    I have contacted the Kaine administration press office asking for a response. With the General Assembly convening for the transportation special session, the spokesman I talked to said he could not promise to get back to me immediately, but would do his best. I will post the response as soon as I get it.

    (Hat tip: Jim Wamsley.)

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