Tag Archives: mass transit

Washington Metro as Wealth-Redistribution Tool

Posted on August 28, 2017 by | 12 comments

Paging Karl Marx. Karl Marx, please. Three left-leaning think tanks think businesses should be taxed to subsidize lower Washington Metro fares.

The progressive outfits — the Virginia-based Commonwealth Institute, the DC Fiscal Policy Institute and the Maryland Center on Economic Policy — have declared their opposition to a region-wide one-cent sales tax to fund the Washington metropolitan region’s decrepit Metro heavy rail and bus systems. Such a tax would fall disproportionately on poor families, they argue, taking five times the share of income from the bottom 20% of earners when compared to that of the top 1%.

“It does not make sense to add an extra cost to families who already struggle from stagnant wages, rising housing costs, and Metro fare hikes and service cuts,” says the joint position paper. “Black and Latino families are more likely to be living on low incomes than white families, which means that a sales-tax approach would ask communities of color to devote a greater share of their incomes toward fixing Metro.”

Who, then, should pay for Metro, which requires billions of dollars in maintenance and capital improvements to reverse a vicious cycle of poor service, eroding ridership, and declining fare revenue?

“Those who benefit the most should pay the most, including businesses,” say the think tanks. “A strong Metro is critical to a functioning economy. This suggests that businesses should be expected to shoulder a substantial share of the costs, since their success depends on a strong public transit system.”

All businesses should be expected to contribute, whether they are close to public transit or not, since even businesses not near public transit benefit from the reduced traffic that results from having a strong public transit system. Public transit takes cars off the roads and reduces congestion for those who drive.

The think tanks did suggest, however, that localities might consider imposing the biggest taxes on businesses located closest to Metrorail lines. “While it’s likely that these businesses already face higher rents and property taxes because they are in a desirable location, it’s also the case that these businesses have the most to benefit from a strong Metro system.”

The authors also oppose cost-cutting measures such as reducing hours of operation or cutting low-usage bus lines on the grounds that they would fall hardest on low-wage workers and economically disadvantaged communities.

Bacon’s bottom line: Wow. I would be hard-pressed to devise a way of thinking more diametrically opposed to my own. My core principle is that all modes of transportation should be self-supporting to the greatest extent possible, and that those who benefit from a transportation asset should be the ones who pay for it.

The most immediate beneficiaries of the Metro system are the riders — the people who actually use it. In an ideal world, fare box revenue would cover all operating expenses. Politically, that is impossible, of course. A major cause of Metro’s slow-motion fiscal train wreck is that the Washington Metropolitan Area Transit Authority has kept fares excessively low for years, largely on the grounds that higher fares would harm the poor and minorities. Decades of under-funding have led to the situation WMATA now finds itself in.

The absurdity of holding down fares is that it subsidizes fares for the non-poor as well as the poor. If the think tanks and WMATA board members really want to help the poor, then they should find a mechanism that targets low-income people rather than subsidize all Metro riders equally. To the extent that Metro rail serves suburbanites commuting to work in the region’s urban core, many are well-off and can readily afford a fare increase.

The second set of beneficiaries is not the generic business community. While businesses may benefit from proximity to Metro stations, they pay for that location through higher rent. The real beneficiaries are the property owners. A respectable body of thought says that heavy rail can be financed through “value capture” — capturing the increased value of the real estate created by building a Metro station. That value represents a windfall to the property owner who did nothing to create it. Insofar as property owners near Metro stations can charge higher rents, it is reasonable to ask them to pay a real estate tax surcharge out of their higher cash flow. But that’s not what the think tanks are arguing. They advocate charging everyone, including tenants who are already paying higher rents to landlords for the privilege of proximity to Metro.

While it may be true in a very general sense that businesses benefit indirectly from the construction and operation of mass transit, that is no justification for compelling them to subsidize Metro service. Businesses benefit from people having food to eat — why not make them subsidize grocery stores? Businesses benefit from people knowing how to read — why not make them subsidize schools? Businesses benefit from the digital revolution — why not make them subsidize the cost of PCs, laptops and smart phones?

Subsidizing everyone to benefit the poor becomes an opaque and open-ended handout. If left-leaning think tanks want the poor to have more money, perhaps they should help elected officials create a program that precisely targets lower-income Americans and appropriates funds annually in a transparent process visible to all.

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Posted in Transportation

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Another Useless, Irrelevant Debate

Posted on July 17, 2017 by | 18 comments

Sterile

Ed Gillespie, Republican candidate for governor, has gotten himself in a political pickle. According to press reports, he has been blasting his Democratic rival Ralph Northam for backing the 2013 transportation tax package as “the largest tax increase in Virginia history.” But as Democrats have been pointing out, Gillespie was gubernatorial campaign chairman for Bob McDonnell, who pushed the bill through the General Assembly with significant Republican support.

The criticisms don’t address the substance of what Gillespie is saying — Northam did back the biggest tax increase in Virginia history. But the pushback raises an obvious question: What would Gillespie have done differently? How would he have proposed to fund Virginia’s pressing transportation needs?

Frankly, both Republicans and Democrats are incoherent on the subject of transportation funding. Both sides base their arguments on three untenable propositions: (1) that building more roads or commuter rail will solve our transportation problems, if only we build enough of the right thing; (2) that someone else should pay; and (3) that current transportation solutions will be relevant in the rapidly approaching era of driverless cars, transportation as a service and Uberization of transportation.

Let’s address these issues point by point.

Building more roads and commuter rail will not address transportation congestion unless local governments allow developers to transform what we commonly call “suburban sprawl” into traffic-eating walkable urbanism. Pedestrian-friendly, mixed-used development built at moderate densities substitutes foot travel for car trips, substitutes short car trips for longer trips, and makes mass transit a attractive to more riders.

While this market-driven transformation is taking place in fits and starts — mainly in Virginia’s urban-core jurisdictions and around Washington Metro stops — it is not taking place nearly fast enough. There will never be enough money to provide congestion-free transportation for sprawling, low-density land use patterns.

The second problem is that everyone wants a better transportation system, but no one wants to pay for it themselves. Having long ago abandoned the idea of a user-pays system, Virginia politicians excel at singling out others to pay. The result is an absurd system in which there is no connection between those who use transportation infrastructure (roads and rail alike), and those who pay for it. Thus, 85-year-old, blue-haired ladies who drive 2,000 miles a year pay sales taxes to subsidize road warriors who drive 20,000 miles, Dulles Toll Road users pay inflated tolls so Silver Line riders can enjoy below-cost fares, and everyone subsidizes tractor-trailers whose taxes don’t come close to covering the wear and tear they cause on roads. The perverse result: When people don’t pay the full cost of their travel decisions, they travel more.

The third problem, approaching insanity, is that Virginia continues to build roads and rail on the assumption that driving and commuting patterns will be the same in 20 years as they are today. But that is a manifestly idiotic assumption. The advent of driverless cars will drive down the cost of taxi-like, bus-like and jitney-like transportation services, making shared ridership services a more attractive option. The rise of subscription-based transportation-as-a-service enterprises will provide an alternative to individual automobile ownership. There is no way to forecast with any certainty how these innovations will affect driving habits and the need to build more highways and commuter rail.

The debates that politicians should be having, but aren’t, are these:

  1. How can we relax zoning codes to encourage land use patterns that put less strain on the transportation system?
  2. How can we reform transportation funding to support a user-pays transportation system?
  3. How should Virginia position itself to take maximum advantage of the fast-approaching driverless/electric/transportation-as-a-service revolution?

None of these conversations are occurring. Ed Gillespie isn’t talking about them — but neither are his critics. The debate is more sterile than a mule with a vasectomy. Virginians should demand better.

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Posted in Land use & development, Transportation

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Business Leaders Demand WMATA Governance Reform

Posted on June 23, 2017 by | 11 comments

An alliance of Washington-region business groups is calling for a fix for the Washington Metropolitan Area Transit Authority (WMATA) that would create dedicated funding streams for the Metro rail system and a restructuring of the authority’s board.

Twenty-one chambers of commerce and employers groups outlined the proposal in a letter to the region’s political leaders, reports the Washington Post. The proposal is expected to have influence, the Post says, noting that executives with the signatory businesses are frequent campaign contributors.

WMATA has said it needs at least $500 million a year to restore to functioning condition the commuter rail transit system, which has been plagued by maintenance issues, safety incidents, and declining ridership. The letter signatories did not specify a particular funding mechanism.

“We’re not trying to get into the weeds,” said Bob Buchanan, founder of the 2030 Group, told the Post.

One commonly floated proposal is a region-wide, penny-per-dollar sales tax, but Northern Virginians have objected on the grounds that Northern Virginia would wind up paying more than Maryland and the District of Columbia combined.

Describing the Metro as in a state of “crisis,” the letter linked the creation of a dedicated revenue source toward a revision of the tri-state governing compact and a restructuring of the board. States the letter:

We reiterate our strong conviction that any reform effort must include reforms to WMATA’s governing, financial and operational structures. Reform of any one structure alone will not be sufficient. For instance, additional funding for Metro will only be beneficial if it is accompanied by structural changes that give WMATA’s board the flexibility to effectively allocate resources and staff the flexibility to leverage additional resources to make operational improvements.

Governance reforms include “right-sizing” the WMATA board and requiring directors to have expertise in specialized areas, including transit operations, management, finance and safety.

Bacon’s bottom line: WMATA is critical to the functioning of the Washington metropolitan region. After decades of short-changing maintenance, WMATA needs billions of dollars to remain a viable transportation mode. There is no avoiding the necessity for regional taxpayers to cough up more money to restore the rickety system to health. Washington-area residents have been enjoying the benefit of a heavy-rail transit system for years without paying its full cost — now it’s time to pony up. But given WMATA’s dismal history, the NoVa business leaders are absolutely right to demand reforms that will ensure that any new funds are not mis-spent or frittered away in concessions to WMATA labor unions.

Working out a compromise with Maryland and D.C. won’t be easy, but Virginia’s political leaders need to hang tough.

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Posted in Governance, Transportation

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$150 Million a Year More for WMATA? Good Luck with That!

Posted on May 26, 2017 by | 23 comments

Source: Virginia Department of Rail and Public Transit. (Click for larger image.)

Downstate Virginia legislators are inclined to block increased capital funding for Washington’s dysfunctional heavy-rail commuter system unless the Washington Metropolitan Area Transit Authority (WMATA) undertakes serious structural reforms.

WMATA officials say they need about $15.5 billion for capital spending over the next 10 years to work through a massive backlog of deferred maintenance. Virginia’s state-government share would be about $150 million a year over and above the $200 million it allocates annually to operations and capital spending.

“I want value. I’m willing to deliver,” said state Sen. Mark Obenshain, R-Rockingham, in a meeting of the Senate Finance Committee yesterday, reports the Richmond Times-Dispatch. “But I want to see problems solved. And all too often when we talk about solving problems, the easy way to solve it is just throw more money at it. It’s a workplace problem; it’s an efficiency problem.”

Convincing constituents that giving Metro more money is a hard sell when in his district the Robert O. Norris Bridge “is literally falling into the river,” said Sen. Ryan T. McDougle, R-Hanover. “How is it that I can go to my people and say, ‘We’re going to spend money on an organization where we have no control from the state, we have no say so in the administration based on the board is put together? … There’s no way I can justify a vote to spend that kind of money for an entity that we have this little control over and is refusing to change how that structure is done.”

(For the record, the Robert O. Norris Bridge is not “literally” falling into the Rappahannock River. Transportation Secretary Aubrey Layne told the committee that the state does not even consider it to be structurally deficient.)

Ray LaHood, the former U.S. Transportation Secretary chosen by Governor Terry McAuliffe to review WMATA’s performance and governance, told the Finance Committee that he is trying to develop consensus around four areas: WMATA’s governance structure, its funding structure, its legacy labor costs, and maintenance.

The current management team has cut 1,000 of 1,300 WMATA workers, mostly nonunion employees and tightened ethics and nepotism policies. Also, said LaHood, “We’re going to try to fix the governance part so you feel you do have a voice. We can figure out how to fix your bridge and have a good transportation — Metro system — in Washington, D.C., that you can be proud of.”

Bacon’s bottom line: Obenshain and McDougle are absolutely right. Virginia should not fork over one red cent until WMATA can prove it won’t become a fiscal black hole. It appears that the new management team has taken some important steps with the nonunion workforce, but the real challenge will be extracting major concessions from the union. If it chooses to strike, the union can virtually shut down Washington, D.C. The only way — the only way — for Virginia legislators to stiffen management’s spine in a confrontation is to withhold that $150 million a year.

Even if WMATA delivers needed reforms, pumping another $150 million a year into the authority would aggravate an already lopsided distribution of rail and transit revenues.

As can be seen in the Virginia Department of Rail and Public Transit’s fiscal 2017 budget atop this post, DRPT hands out a total of $437 million a year in grants to cover operational expenses and capital spending for rail, buses and handicapped transportation around the state. Of that amount, $303 million already goes to Northern Virginia. Adding another $150 million a year to that sum would favor Northern Virginia even more lopsidedly — boosting its share from 69% of the DRPT budget to 77%.

Where would the money come from? Shifting money from inside the DRPT budget would eviscerate non-WMATA programs, most of them downstate. Most likely the money would have to come from road & highway spending. Virginia Department of Transportation funds allocated to construction spending in fiscal 2017 amount to about $802 million. Taking the WMATA money from roads & highways would reduce construction spending by 19%. Not just one year, but for 10 years.

Even Northern Virginia lawmakers might balk at that.

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Posted in Budgets, Transportation

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McAuliffe Orders WMATA Review

Posted on March 23, 2017 by | 29 comments
Governor McAuliffe has ordered a sweeping review of WMATA, the Washington area's train-wreck of a commuter rail system.

Governor McAuliffe has ordered a sweeping review of WMATA, the Washington area’s train-wreck of a commuter rail system.

Governor Terry McAuliffe has announced an independent review of the Washington Metropolitan Area Transit Authority (MWATA), the troubled organization that runs rail and bus systems in the Washington metropolitan area. Hampered by massive maintenance backlogs, high labor costs, safety issues and declining ridership, the authority requires billions of dollars in capital funds and hundreds of millions a year in operating funds to reverse a devastating loss of traffic. There is no consensus on where the money will come from.

Ray LaHood, former U.S. Secretary of Transportation, will lead an “objective, top-down review” of WMATA, said a statement issued by the governor’s office today. Virginia will pay for the review but will not control it. WMATA is governed by an interstate compact between Virginia, Maryland and Washington, D.C.

WMATA’s rail and bus operations move more than one million people a day, making it essential to the Washington-area economy. “Unfortunately,” the statement said, “WMATA today has significant problems that hinder its ability to serve this region’s residents and businesses. It did not happen overnight. It is the result of decades worth of decisions.”

“Everything will be looked at, including operating, governance, and financial conditions,” the statement said. That includes board governance, labor policy, and long-term financial stability. The study will benchmark system costs and expenses, governance, funding levels, cost recovery, maintenance costs, and rail safety incidents. A final report is expected to be issued this November.

The latest fiasco. There was no explanation of what prompted McAuliffe’s decision to launch the review, but news of another management fiasco today illustrates how badly WMATA has broken down. Federal track inspectors have found that the new 7000-series rail cars, which are heavier than the older cars, may be damaging the tracks, reports the Washington D.C. Patch.

WMATA purchased 528 of the 7000-series rail cars in 2013. News reports revealed last year that the cars wouldn’t be used on Blue, Orange and Silver lines because they can’t navigate a steep curve on a stretch of tracks shared by the three lines. Then this year, it was reported that the trains were experiencing failures every 5,000 to 10,000 miles, way below the contract expectations of 20,800 miles.

The decision in 2013 to purchase rail cars that can’t navigate a critical curve, experience failures at three times the contracted rate, and also damage the rail lines is a management failure of spectacular proportions — and the responsibility doesn’t go back decades.

McAuliffe’s decision to act is welcome, even if it’s overdue. The Commonwealth of Virginia cannot continue to dump money into a dysfunctional organization without concrete assurances that the money won’t be wasted.

Update: I was curious about how the McAuliffe administration came to the decision to launch this review but had no insight to share when I made this post. Turns out that the 2017 budget bill called for it, ordering the Secretary of Transportation to “initiate an objective review of the operating, governance and financial conditions” at mWATA.

The review shall encompass the following: (1) the legal and organizational structure of WMATA,; (2) the composition and qualifications of the WMATA board of directors; (3) potential strategies to reduce the growth in labor costs; (4) options to improve the sustainability of employee retirement plans; (5) safety and reliability; and (6) efficiency of operations.

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Posted in Governance, Transportation

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Loudoun County Never Bargained on This

Posted on March 20, 2017 by | 13 comments

Loudoun County doesn’t even have service on the Metro Silver Line yet, but potential liabilities are escalating beyond levels county officials ever imagined when they signed up to participate.

Metro’s capital needs and operating deficits are growing as the transit system grapples with a multibillion-dollar maintenance backlog, union featherbedding, and declining ridership.

The system’s operating shortfall of nearly $300 million by fiscal 2018 and could double by 2019, said Jim Corcoran, a Virginia representative to the Washington Metropolitan Area Transit Authority (WMATA) board. “If things don’t change, it will be impossible. … We’re at $300 million this year … but next year it’s going to be $500-$600 million.”

WMATA hopes to close the gap through some combination of help from the federal government, the states of Virginia and Maryland, Washington, D.C., and local governments served by the commuter rail system. There is nothing close to a consensus on how to apportion the costs. Many, including Corcoran, said that changes to the regional compact between Virginia, Maryland and D.C., may be necessary to reach a financial agreement.

Writes the  Loudoun Times-Mirror:

According to the Metropolitan Washington Council of Government’s latest projections from October, Loudoun will start to pay Metro around $12 million in fiscal 2019 in annual operating and capital costs. The next year, the number is slated to jump to $50.8 million, then to $58.4 million in 2024 and as high as $82.1 million in 2025.

Phase 2 of the Silver Line, which is still under construction, is scheduled to go into service in Loudoun in 2020. How much more the county will have to pay as its share of keeping the rail system solvent is not known, but it is sure to measure in the millions of dollars yearly.

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Posted in Transportation

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Virginia’s Infrastructure Deficit

Posted on March 15, 2017 by | 9 comments
Virginia's infrastructure deficit, though not as big as that of many other states, still represents a multibillion-dollar liability.

Virginia’s infrastructure deficit, though not as big as that of many other states, still represents a multibillion-dollar liability.

I have often opined on Virginia’s hidden deficits — fiscal time bombs in the form of budgetary gimmicks, pension under-funding, and deferred infrastructure maintenance. These problems are national in scope, and Virginia has been somewhat less derelict in its duty than other states, but sooner or later the Old Dominion will have an ugly confrontation.

The 2017 Infrastructure Report Card conducted by the American Society for Civil Engineers (ASCE) rams home the message. The U.S. overall infrastructure rates a D+ rating. Virginia-specific infrastructure rates a C-. (For whatever reason the 2017 national report card links to the 2015 Virginia report card.)

Here’s a summary of the ASCE’s run-down of major infrastructure categories.

Bridges. Virginia has 20,977 bridges and culverts, and their overall health is in decline due to age and lack of funding. Fifty-six percent are approaching the end of their 40-year anticipated design life. Some 30% are more than 50 years old. In 2013, 23% were found to be either structurally deficient or functionally obsolete.  “Available funds are often used to address immediate repair or replacement needs, leaving few remaining funds for preventative maintenance. … The statistics indicate an impending peak of replacements which may be required within the next 10 years.”

Dams. Virginia’s dam inventory continues to grow older and more susceptible to damage. The majority were built in the 1950-75 era, and their average age is 50 years old. Of the state’s high-hazard dams, 45% have conditional certificates, indicating that they do not meet current safety standards. The rehabilitation cost for high- and significant-hazard dams is estimated to be $392 million.

Drinking water. Virginia has 2,830 public water systems supplying drinking water to more than 7 million Virginians. A large number of these systems have passed 70 years in age. The Environmental Protection Agency’s latest assessment showed that Virginia waterworks need nearly $6.1 billion over the next 20 years. “Deferral of the necessary improvements has worked so far, but can result in degraded water service, water quality violations, health issues, and higher costs in the future.”

Parks & recreation. Park attendance in Virginia is on the rise, and state parks are consistently ranked as some of the best in the nation. The ASCE commentary vaguely states that “a lack of commitment to adequately fund and maintain our facilities will change things for future generations.”

Rail and transit. The report focuses mainly on the inadequacies of funding for passenger rail, which must share rail lines owned by railroad companies that give their own commercial traffic priority. Virginia did recently set up a Rail Enhancement Fund, and it created an Intercity Passenger Rail Operating and Capital Fund, although it did not actually put any money into the latter. “The current funding is not sufficient to meet the increasing demand for rail and passenger service or to complete the much-needed rail infrastructure improvements and upgrades.”

Roads. The condition of Virginia roads is tolerable from a maintenance and safety standpoint, but traffic congestion in the Washington and Hampton Roads metropolitan areas has a huge negative economic impact. The average Washington-area commuter experiences 74 hours a year of delay. Despite an increase in transportation funding in 2013, “a network that has grown by 14% over the last 35 years and with every dollar buying less construction work, more funding is needed to maintain safe roadways while adding needed capacity, making this a  high priority for Virginia.”

Schools. More than 1,800 public school buildings serve Virginia’s K-12 students. A comprehensive 2013 analysis found that 60% of schools are at least 40 years old. Estimated renovation costs exceed $18 billion for schools more than 30 years old.

Solid waste. Virginia’s solid waste infrastructure is in “good” condition. Increased recycling, a reduction in out-of-state waste, and the addition of 11 additional waste facilities have increased the state’s capacity from 20 years to 22 years.

Stormwater. About one-third of Virginia’s stormwater infrastructure is more than 30 years old, and much of the remainder was built 25 to 30 years ago. Most stormwater infrastructure has a 50- to 100-year lifespan. But the ASCE report is not impressed. “There are shortcomings to address for state-level, standardized reporting, public education, and ensuring a dedicated source of funding commensurate with the economic benefits of a healthy Chesapeake Bay and Virginia ecosystems.”

Wastewater. Virginia has $6.8 billion in wastewater needs over the next 20 years, a 45% increase from ASCE’s previous report card in 2009. That includes $1 billion for combined-sewer overflow, and much  more to achieve Chesapeake Bay clean water standards. “Virginia has made progress with considerable investments and has a comprehensive plan, but has tremendous challenges ahead.”

I don’t share the ASCE’s sense of urgency for every category. If we want to reduce traffic congestion, there are alternatives to building more road and transit projects: (1) reforming land use to provide a better balance of jobs, housing and amenities, and (2) accelerating the Uber-ization of ride sharing in order to reduce the number of single-occupancy vehicles on the road. I also question whether 40 years is an appropriate standard for rehabilitating or replacing school buildings. Clearly, many schools need rehabbing, but the study may overstate the number.

Even with these caveats, Virginia’s infrastructure deficit runs into the billions of dollars. And this analysis does not address recurrent flooding, an increasing problem in Hampton Roads. On top of all the other issues mentioned above, hardening the region’s infrastructure will cost billions of dollars of dollars more.

Update: Charles Marohn over at the Strong Towns blog eviscerates the ASCE report, which he describes as a “propaganda document.”

The reason why we can’t maintain our infrastructure is not because we lack the money or are afraid to spend it. It is because the systems we have built and the decisions we’ve made on what is a good investment are based on the kind of ridiculous math you see reflected in this ASCE report. We spend a billion here and a billion there and we get nothing but a couple minutes shaved off of our commutes, which just means we can build more roads and live further away from where we work. (Or, as we call that here in America: growth.)

Sixty years of unproductive infrastructure spending later, we are awash in maintenance liabilities with no money to pay for them. This is what happens when you have a government-subsidized, Ponzi-scheme growth system that, at all times, lives for the next transaction. America is all about new growth, which is why we don’t even bother to question the findings in a study like this.

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Posted in Education (K-12), Infrastructure, Transportation, Water-waste water

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MTR, Would You Take over Metro, Please?

Posted on January 21, 2017 by | 12 comments
MTR, the Hong Kong commuter rail system, is arguably the world's most efficient.

MTR, the Hong Kong commuter rail system, is arguably the world’s most efficient.

Here’s an idea for readers to chew on while the Big Bacon is on vacation: How about privatizing the Washington Metro system? Honk Kong privatized its subway system in 2000, and it has worked out pretty well.

Writing on the Cato Institute blog, Chris Edwards quotes a report by McKinsey:

Hong Kong’s MTR Corporation has defied the odds and delivered significant financial and social benefits: excellent transit, new and vibrant neighborhoods, opportunities for real-estate developers and small businesses, and the conservation of open space. The whole system operates on a self-sustaining basis, without the need for direct taxpayer subsidies.

MTR’s railway system covers 221 kilometers and is used by more than five million people each weekday. It not only performs well—trains run on schedule 99.9 percent of the time—but actually makes a profit: $1.5 billion in 2014. MTR fares are also relatively low compared with those of metro systems in other developed cities. The average fare for an MTR trip in 2014 was less than $1.00, well under base fares in Tokyo (about $1.50), New York ($2.75), and Stockholm (about $4.00).

The ratio of passenger fares to operating costs is a high 185 percent, which means that fares cover not only operating costs but a share of capital costs. MTR raises other funds for capital from real estate deals under which it gains from land value increases near stations — a concept known as “value capture” that we have touted on this blog. MTR is so highly regarded in the mass transit world that it has contracted to run commuter rail systems in cities China, the United Kingdom Sweden and Australia. Why not Washington? (Hat tip: Tim Wise.)

Bacon’s bottom line: It would be unrealistic to expect Hong Kong results in in the Washington Metro. For one reason, Hong Kong is far more densely populated and rail is a more attractive option compared to driving. For another, it’s not clear whether Washington Metro could extract the same economic benefit from putting real estate deals together that MTR could. Zoning controls and land use planning may work very differently in the U.S. than in Honk Kong.  But the idea certainly appears to be worth pursuing. If MTR could do no more than bring operational efficiencies to Metro, Virginians would benefit from better service and lower subsidies.

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Washington Metro Needs another $1 Billion… Fast

Posted on December 19, 2016 by | 7 comments
The Washington Metro train wreck keeps piling up.

Washington Metro needs another $242 million from Virginia and its localities over three years.

The train wreck of the Washington Metro keeps piling up higher. The Washington Post sums up the situation this way: Local governments are “alarmed” as Metro says it needs an extra $1 billion over the next three years from Virginia, Maryland and Washington, D.C.

Metro General Manager Paul J. Wiedefeld has earned credibility as an executive willing to make tough decisions, such as shutting down rail service at times and locations where maintenance and repairs are urgently needed. Now he’s telling local governments in the Washington area that fulfilling his goals for safety and reliability — needed to reverse a continued decline in ridership — will cost them an additional $1 billion over what they’ve budgeted for the next three years. That translates into a 36% increase in annual operating subsidies. Writes the Post:

According to Metro’s new forecasts, the District’s total contribution for operations and capital would jump from $467 million in the current budget year to $735 million in fiscal 2020. Maryland’s total would rise from $479 million to $727 million, and Virginia’s would increase from $332 million to $574 million. (Metro’s fiscal years run from July 1 to June 30.)

“We have a $40 billion investment [in Metro], and it’s 40 years old,” said Wiedefeld. “As we replace that, there’s big numbers going forward, and they grow with inflation. . . . Either we start to wrestle with this so it’s where we want it to be, or we just push it down the road.”

Bacon’s bottom line: Maintenance is a bitch, especially when you fail to properly fund it over 40 years. Politicians love the accolades for building new highways, bridges and transit projects. Of course, the ribbon-cutters are long gone when the infrastructure wears out and someone else has to pay to fix it. I wonder how many other Metros there are in Virginia, quietly racking up unfunded maintenance liabilities while nobody notices.

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Posted in Infrastructure, Transportation

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Where Have All the Riders Gone?

Posted on September 7, 2016 by | 37 comments

by James A. Bacon

Where have all the riders gone? That’s the question transit agencies are asking nationally, but nowhere more urgently than in the Washington metropolitan area. Rail and bus ridership for the Washington Metropolitan Area Transit Authority (WMATA) fell 6% in the fiscal year ending July 31, a decrease of 20 million trips. Ridership had been forecast to increase slightly, according to the Washington Post‘s Martin Di Caro.

The fall-off in Metro rail traffic, which tumbled 7%, is at least comprehensible. Metro has been plagued by accidents, delays, interruptions and maintenance backlogs that have left many commuters disgusted with the service. But ridership on WMATA’s bus lines declined, too, while New York, Chicago, Los Angeles and other cities with large mass-transit systems have seen falling ridership.

It wasn’t supposed to happen this way.  This decade was supposed to experience a great mass transit revival as growth and development shifted back to the urban core, and as Millennials and Empty Nesters gravitated to walkable, mixed-use communities served by commuter rail. Millennials were supposedly abandoning the idea of car ownership in favor of walking, biking and transit.

Although there are plenty of theories about what’s happening, no single explanation has emerged as decisive. Ridership was down across all time periods, days of the week, and nearly all individual stations, although losses were especially severe in off-peak periods,” states one WMATA document cited in the article. Di Caro summarizes the possible explanations:

Demographic changes, the rise of telework, the proliferation of transport alternatives such as Uber or Capital Bikeshare, the economic downturn and reductions in federal spending, constant weekend track work over the past five years – all have combined with consistently poor rush hour service to drain Metrorail ridership.

Mass transit authorities across the country are focusing on the dramatic ridership gains by Uber, Lyft and other “e-dispatching taxis.” Their effect seems to be most pronounced late at night and early at morning when transit service is spottiest. But there is no research to support a conclusion that the Uber revolution is capturing millions of commuter trips.

Demographic changes should be favoring mass transit, not hurting it. So should the economy, which, though sluggish, is growing. As for Capital Bikeshare, total ridership ran about 2 million last year. Any increase in ridership could have diverted only a tiny percentage of Metro passengers.

Bacon’s bottom line: I have no explanation for the decline, which I didn’t anticipate. I have never been a transit utopian, but I thought that social and economic trends did portend at least a modest shift from single occupancy vehicles to bus and rail. Clearly, I was wrong.

What set me apart from other transit advocates was a reluctance to spend heavily to build expensive new commuter-rail facilities that had no hope from the get-go of supporting themselves financially. Private developers, not government entities, should take the risk that notoriously unreliable traffic projections would pan out.

WMATA, already facing a multibillion maintenance backlog, now must divert millions of dollars slated for critical preventive maintenance to cover the the operating the revenue deficit. The authority is staring at a vicious cycle. Less maintenance = poorer service = fewer riders and revenue. The WMATA board is considering a fare hike to help cover the revenue gap. But higher fares drives off riders as well. The deficit could surpass $150 million this year.

Until the dynamics driving mass transit ridership are better understood, it would be advisable for Virginia localities to revisit their assumptions underpinning proposed projects like Virginia Beach light rail and Richmond Bus Rapid Transit. Their ridership and revenue projections are almost certainly flawed. The same applies to toll-funded highway megaprojects, such as the $2 billion in Interstate 66 improvements. Given the precarious condition of the global economy, the fragility of the sovereign debt bubble, and the vulnerability of Virginia to cutbacks in federal spending, we need to be more disciplined than ever with our capital spending.

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Integrating Uber with Mass Transit

Posted on August 17, 2016 by | 8 comments
Photo credit: Washington Post

Photo credit: Washington Post

by James A. Bacon

Arlington County is toying with the idea of replacing under-utilized bus lines in the northern part of the county with ride-sharing services provided by Uber Technologies Inc., and Lyft Inc. The service could offer rides to and from Metro stations at Ballston, East Falls Church and Courthouse

Subsidizing the ride-sharing services would be more cost-effective than operating full-service bus lines with low ridership,  Marti Reinfeld, the county’s interim transit chief, told the Washington Post. 

“What we would be supporting is picking up residents in their neighborhood and taking them to one or two designated stops, most likely a transit station,” Reinfeld said. “The county will subsidize that at some level.”

The idea is still conceptual, but Arlington officials confirm that they have held conversations with Uber and Lyft, both of which have sought similar partnerships elsewhere in the United States.

Bacon’s bottom line: Every transit operation in Virginia with money-losing routes ought to be thinking the same way.

The first step is to prune under-utilized and money-draining bus routes and concentrate resources into the most robust transportation corridors, offering greater frequency and reliability of service, in turn increasing ridership on those routes. This is what Houston famously has done, boosting ridership at no extra cost. The same consultants behind that transformation are working to rationalize the Richmond bus system.

The second step is to work with Uber, Lyft and anyone else with a bright idea to create a shared-ridership feeder system, in effect substituting vans and carpools for near-empty buses. Subsidies might be useful in order to stimulate the start-up of these services, but ideally they could be phased out over time as the concept takes hold and ridership builds to profitable levels.

A third step worth considering — requiring input from Uber, Lyft and others on what would be cost-effective — would be to invest in remodeling bus stops, rail stations and intermodal facilities to accommodate the easy ingress and egress of vans and carpools. The more seamless the connection between Uber-like services and mass transit, the more attractive the set-up is to passengers, and the more likely the idea is to succeed.

While I am no fan of subsidizing any mode of transportation, I acknowledge that there is no getting rid of money-losing transit operations, and we must do the best job with them we can. If subsidizing shared Uber rides instead costs less money, then there is a net gain to taxpayers.

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Metro Positions Itself for the Big Ask

Posted on July 18, 2016 by | 18 comments

metroby James A. Bacon

Staring into a fiscal black hole, Washington Metropolitan Area Transit Authority Chairman Jack Evans is trying to nail down the authority’s 2018 spending plan by November, months earlier than usual. The move, suggests Washington Post writer Martine Powers, “is a signal that the transit agency is preparing to ask the District, Maryland and Virginia for additional money if fares are not raised or the federal government does not come forward with more funding.”

How much money? Between $75 million to $100 million per jurisdiction.

Evans issued the warning after a meeting in which the WMATA board discussed a presentation by McKinsey & Company indicating that the mass transit organization was paying significantly more for expenses than comparable transit agencies.

The McKinsey report, issued in April, is must reading for Virginia legislators pondering how to respond when WMATA approaches, tin cup in hand, begging for more money or risk seeing the collapse of the mass transit service so critical to Northern Virginia’s economy. That report clearly lays out the management challenges facing the authority and provides concrete ideas on how to address them.

WMATA’s long-term mismatch between revenues and expenses has been getting worse, not better. According to McKinsey, Farebox recovery has declined from 47% of costs in 2011 to 45% today and will continue to drop further as passengers fed up with the rail system’s poor reliability commute by other means. Rail system revenues would need to grow at 7% yearly just to maintain the current operating deficit. Personnel growth averaging 5% annually has driven most of the cost inflation. The authority has more employees who getting paid more (wages growing 4% annually) to work less (regular hours per full-time equivalent employee down 2% annually).

Poor railcar maintenance is the single-most important driver of service unreliability — 63% of all rail line delays are caused by railcar failures, the report says. There are two main reasons for cars being unavailable: parts are frequently out of stock, and repair throughput is exceptionally low. “Estimated technician wrench time ranges between 25% and 40%, below a best-in-class standard of 60%.” The reasons for the low productivity can be traced to systemic management failures such as the uneven distribution of cars between shops, turnover in mechanic staff, and technicians starting work orders without all necessary tools and parts.

The report also took note of the high cost of MetroAccess, a transportation service for people with disabilities. McKinsey estimated that WMATA could cut the $110 million program’s costs 20% by experimenting with innovative delivery models. The report also recommended extensive changes to WMATA’s capital allocation model and the structure of its pension, retirement-benefits plans and workers compensation plans.

Bacon’s bottom line: The McKinsey report provides an objective checklist of reforms that WMATA needs to make before entrusted with any more Virginia taxpayer dollars. Give management the money without conditions, and the urgency to implement the reforms disappears. Make added money contingent upon implementing reforms, and WMATA actually might wind up needing less than it thinks it does. If WMATA’s board and management are unwilling or unable to execute these of equivalent reforms, Virginia should give them no more money.

Hat tip: Tim Wise

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A Once-in-a-Century Opportunity to Get Transportation Right

Posted on June 20, 2016 by | 14 comments
Photo credit: Wall Street Journal

Photo credit: Wall Street Journal

by James A. Bacon

Take the Uber revolution of summoning rides with a smart phone. Then add driverless cars, which eliminate the expense of paying someone to drive the car. Then overlay the emerging business model of Transportation As a Service, in which people pay for rides when they need them rather than buy cars that sit idle 90% of the day, often incurring parking fees in the process. Shared self-driving cars could take up to 80% of all vehicles off the road, according to a Massachusetts Institute of Technology study noted in a Wall Street Journal thought piece by Christopher Mims.

How would the impact of such an eventuality ripple through the rest of the economy? While acknowledging that such things are impossible to predict, Mims speculates that shared, self-driving cars will spur “suburban sprawl.”

Nearly everyone who has studied the subject believes these self-driving fleets will be significantly cheaper than owning a car…. With the savings you will be able to escape your cramped apartment in the city for a bigger spread farther away, offering more peace and quiet, and better schools for the children.

As for the putative preference the Millennial generation has for living in the city, writes Mims, it’s a myth. “Not only do 66% of millennials tell pollsters they want to live in the suburbs, they are moving there, as population growth in suburbs outstrips growth in cities.”

I don’t agree with Mims’ conclusion, but these are ideas worth exploring. I’m most intrigued by the MIT forecast that the shared, driverless-car future will take 80% of all vehicles off the road. For purposes of argument, let’s say that shared, driverless cars take only half of all vehicles off the road. That’s still an astounding number.

My first question is this: Will the streets, roads and highways in a world of shared, driverless cars be less crowded? To answer that, we must distinguish between the number of vehicles and the number of trips taken. Unless people take fewer trips, they still will need means of conveyance. If everyone rides solo cars, the country may need fewer cars but there will not be fewer cars on the road. Only if people share rides — either in conventional cars, vans or micro-buses like the one pictured above — will there be a need for fewer cars on the road. I think it’s possible that we’ll see fewer cars on the road, but no one can make such a prediction with any confidence.

Here’s what we can predict: A shift to shared, driverless cars will reduce the number of vehicles needed to serve the population. To the extent that fleet operating companies maximize the asset value of their fleets by running them 24/7, most cars will be on the streets (or in maintenance garages or recharge stations) instead of sitting in parking lots and parking decks. The most confident prediction we can make is that America will need fewer parking spaces.

Shrinking acreage dedicated to parking will have a profound impact on human settlement patterns. While it will free up some land in densely settled urban areas — putting a lot of parking garages out of business — the biggest impact will be in the scattered, low-density areas we think of as suburbia. Millions of acres of parking lots across the country will become redundant and unnecessary.

If localities are intelligent enough to eliminate minimum parking requirements, retailers would have every incentive to convert acres of land into something useful — offices, townhouses, apartments, parks, whatever. So much land would be freed up from redundant parking lots that there would be no need to develop another acre of greenfield land for another generation. Localities that anticipate this opportunity by revising their comprehensive plans and zoning codes will enjoy a huge advantage over the laggards in attracting new development.

Now, back to Mims’ observation that Millennials prefer “the suburbs” by two to one over “the city.” That’s a meaningless statement. True, young families may prefer so-called “suburban” jurisdictions with quality school systems, but the operative factor is the quality of the schools, not the low-density and auto-centric design of the communities. Other research shows that Millennials also prefer walkable, bikeable communities. The preference for good schools may be stronger, but that doesn’t mean the Millennials wouldn’t jump at the chance to live in a community that offered both good schools and walkable-bikable places.

In contrast to Mims, I do not think that shared, driverless cars will spur more of the scattered, disconnected, low-density that we call “suburban sprawl.” To the contrary, I believe it will stimulate the redevelopment of low-density, auto-centric communities into walkable urban places.

Localities across Virginia will enjoy a once-in-a-century opportunity to convert parking lots into taxable development without incurring the offsetting liability of needing to upgrade the transportation infrastructure to support the denser population. But this will happen only if they stop mandating parking lot requirements and revise their comprehensive plans and zoning codes to accommodate the new possibilities.

Likewise, the Commonwealth of Virginia, which once again (and as predicted) finds itself short of dollars to fund the roads, highways and rail systems, needs to re-think the twenty-year future. The transportation infrastructure of the 21st century will be Uber-fied. Throw out all long-range traffic projections! Rather than sinking hundreds of millions of dollars into expensive new highways, light-rail rail and Bus Rapid Transit systems, we need to start thinking what kind of investments will expedite the coming of shared, driverless cars.

States and localities that work out the solution first will be winners. Those that stick to the current transportation paradigm will lose.

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NoVa Legislators Balk at Bailing out Metro

Posted on June 6, 2016 by | 18 comments

by James A. Bacon

Eleven Virginia legislators from Northern Virginia say they would block any “new dedicated funding stream or tax increases” to fund Metro repairs expected to cost $60 million.

“We cannot in good conscience ask Virginia taxpayers to bail out years of mismanagement, negligence and wasteful spending,” stated a letter signed by House Majority Caucus Chairman Timothy Hugo, House Majority Whip Jackson Miller, Del. David Albo and Del. James LeMunyon.

Washington Metropolitan Area Transit Authority Chairman Jack Evans called the letter “ludicrous.” Channel 4 Washington quotes him as saying, “The fact of the matter is, Metro has a $300 million operating shortfall, an $18 billion capital shortfall and a $2.5 billion unfunded pension liability. And we have to address it some way.”

Wrote the legislators:

Virginia has more than met its funding commitments to WMATA. In 2007, Virginia committed $50 million per year for 10 years to fund capital improvements for Metro. In 2013, the General Assembly passed legislation to increase funding for transportation, providing $300 million for the construction of the Silver Line and generating about $80 million per  year for the Commonwealth’s Mass Transit Fund. The General Assembly also provides an annual operating subsidy to WMATA of about $100 million, Virginia has delivered over and over again.

The solution to funding Metro’s safety needs and on-going operations lies internally. WMATA’s financial problems are, in our view, largely self-inflected. Metro must get labor and operations costs under control. WMATA’s labor cost increases in recent years have exceeded ridership increases and …. benefits for WMATA employees are significantly than the norm among big city transit agencies. WMATA also has a $2.5 billion unfunded pension liability.

Bacon’s bottom line: The legislators’ numbers don’t include subsidies from Arlington, Alexandria, Fairfax County and Falls Church, or revenues from the Tysons special tax district and toll increases on the Dulles Toll Road to help pay for completion of the Silver Line to Dulles International Airport.

At the end of the day, Virginia has no choice but to help bail out WMATA. A collapse of the flailing giant would cripple Northern Virginia’s economy. But Virginian legislators need to drive the hardest bargain they possibly can to bring accountability to the organization or it will become a veritable fiscal black hole. It looks like senior Republican lawmakers in the General Assembly are willing to bargain hard. I have every confidence that downstate legislators will back them up.

(Hat tip: Tim Wise)

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Virginia in No Rush to Address Impending Metro Meltdown

Posted on May 19, 2016 by | 23 comments

metroby James A. Bacon

The McAuliffe administration seems to be in no hurry to bail out the ailing Washington Metropolitan Area Transit Authority (WMATA) commuter rail system crippled by declining ridership and an $18  billion capital spending shorttfall over the next ten years. Bolstering state support for the transit authority, which has been plagued for decades by union featherbedding and short-sighted, politically driven decision-making, would divert billions from other projects around Virginia.

At a recent discussion of Virginia’s rail and transportation budget Tuesday, Virginia Transportation Secretary Aubrey Layne said there are no immediate plans to send more money to Metro, although there could be discussions with the General Assembly in the future.

“At some point, based on the estimates that I have seen as to what the capital needs are going to be, there’s obviously going to be that discussion for additional revenues,” Layne said, as quoted by the Washington Post. “That is not contemplated in these budgets.”

Bacon’s bottom line: This discussion is unavoidable, and the sooner it starts, the better. The Washington Metro is mission-critical transportation infrastructure for Northern Virginia and the rest of the Washington region. It cannot be allowed to fail. Failure to address the system’s maintenance needs will result in more accidents, more delays, more malfunctioning escalators and other conditions that drive away ridership, which in turn will cut into operating revenues.

At the same time, Virginia taxpayers are understandably reluctant to pour billions of dollars down a rat-hole, diverting funding from their own much-needed transportation projects, without some assurances that the commuter rail system can be made to run efficiently. Among major concessions that I would push for are higher fares, revisions to union contracts, prioritization of maintenance funding over expansions of the system, and an overhaul of the governance system.

Working out an agreement that satisfies constituencies in Virginia, Maryland and D.C. will be incredibly difficult, given the different ideological and geographic interests involved — not to mention the inevitable turnovers in political leadership. Negotiations could take years. Metro doesn’t have years. Discussions need to start immediately. McAuliffe could show leadership by convening a high-level confab to bring together major stakeholders from across the Washington region and surfacing the major issues that must be resolved.

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