COST Commentary: This article addresses the current chapter in the story of ‘Why Train Supporters believe train transit is good for a community.’ First, train supporters touted train transit as an alternative to the car which would be a major solution to congestion and pollution. When it was shown through real experience that trains are ineffective in addressing either problem, much of the train support was shifted and presented as a foundation for development including ‘Transit Oriented Development.’ This too has proven to be a false foundation as discussed below.

Train transit has proven to have no measurable impact on congestion or pollution and frequently increases both congestion and pollution; it is not an effective mechanism for creating new development; it is not cost effective, requiring exorbitant taxpayer subsidies for every rider; and, it is very inflexible to meet changing demand. A bus can carry just as many people, just as fast and safe, far more flexibly and for a fraction of the costs of a train.

A very appropriate and still applicable statement was made by Houston Mayor Bob Lanier in the early 1990’s:

“First they (rail’s supporters) say ‘It’s cheaper.’ When you show it costs more, they say, ‘It’s faster.’ When you show it’s slower, they say ‘It serves more riders.’ When you show there are fewer riders, they say, ‘It brings economic development.’ When you show no economic development, they say, ‘It helps the image.’ When you say you don’t want to spend that much money on image, they say, ‘It will solve the pollution problem.’ When you show it won’t help pollution, they say, finally, ‘It will take time for rail to do some good.’”

Most of the false myths of train transit can be found in the articles on this site.

Austin is another city spending a lot of money to prove, again, the false myths of the merits of train transit in similar cities. Different than many cities, Austin has started with a small system and has an opportunity to withdraw from this unsustainable train transit path before doing further major damage to the area’s mobility; tansit services and its major users; and, taxpayers by wastefully spending massive additional funds on train transit.

It is recommended the reader also read the full story “The Great Transit Oriented Development Swindle” which can be accessed below.

Transit Oriented Development: If Not San Francisco, Where?

by Wendell Cox, 3/11/2010

“The Great Transit Oriented Development Swindle?” reads the headline in the Fog City Journal, one of the growing number of internet newspapers providing serious, professional web-based journalism as an alternative to declining print newspapers (and their often less than effective web sites).

The article does not directly answer the question in the headline, but certainly provides enough ammunition to what has become a commonly accepted mantra among planners and urban boosters. It reveals how transit oriented development (TOD) is often based upon fragile foundations that amount to an ideological swindle. It is important to recognize that the Fog City Journal is no right wing or libertarian organ. There is little market for that in the city of San Francisco. The leftish bent of the Fog City Journal, combined with author Marc Salomon’s unusually incisive (and footnoted) analysis makes this article noteworthy. It also seems clear that the author is a proponent of more transit service and funding, not less – even though he is highly skeptical about the current TOD craze.

Transit Oriented Development: The idea behind transit oriented development is that, in new, higher density developments, people use transit more and cars less. Transit oriented development has become a first principle of some, who seem to believe that cities can become vibrant in part by strangling new suburbs out of existence. Transit oriented development is at the very heart of the Obama Administration’s “livability agenda,” and is frequently cited admiringly by Secretary of Transportation Ray LaHood.

Eastern Neighborhoods: Salomon’s subject is San Francisco’s Eastern Neighborhoods, where transit oriented development is proposed. From the beginning Salomon identifies a fundamental problem: “Transit Oriented Development is predicated upon the notion that existing transit infrastructure is attractive enough such that residents of new units will take transit to work instead of drive. He continues: “The existing transit system, both regional and local, is not capable of handling existing demand.”

Salomon correctly notes that “San Francisco is not the regional employment center.” In fact, nearly 90% of employment in the San Francisco-San Jose area is not in downtown San Francisco. Indeed, Silicon Valley, not downtown San Francisco, has long been the largest employment center in the area and there are also major job concentrations in the suburban belt east of Oakland.

No Better Place for Transit Oriented Development: Yet, there are few places in the world better served by transit than the Eastern Neighborhood transit oriented development. The project is no more than a long walk from downtown San Francisco (Figure 1). Residents will be able to access frequent “Muni” bus services. The development would be well served by BART (the regional metro), midway between two stations, both of which access four routes. There are few places in the world where a non-transfer station serves that many routes. Salomon analyzes transit from the center of the development, the corner of Mission and 20th Streets.

Figure 1 (Click to enlarge)

Transit Oriented Development: Forcing Longer Commutes: Salomon’s concern starts with the recognition that these systems are already overcrowded. However there is more. Even with their heavy (and highly subsidized) loads, the virtually unparalleled level of transit service available from Mission and 20th cannot compete with the automobile. Salomon’s analysis shows that, on average, transit oriented development residents working at jobs at the 30 largest firms in the San Francisco Bay area would spend nearly 3.5 as much time traveling to work by transit than if they drove themselves. The best transit travel time would be more than double the auto travel time, while the worst would near five times (Figure 2).

Figure 2 (click to enlarge)

Transit Oriented Development: Making Traffic Congestion Worse: Mirroring the research on the association between higher densities and greater traffic congestion, Salomon suggests that without substantial additional transit spending, transit oriented development “in San Francisco will most likely diminish transit reliability by increasing auto trips–the precise opposite of transit oriented development’s stated goals.” On this point, however, it is well to remember that no transit system has ever been seriously conceived, much less proposed or implemented that could provide competitive mobility between Mission and 20th and the dispersed employment throughout the San Francisco Bay Area. A transit system that reaches all of the dispersed employment in a modern American or European urban area at travel times competitive with the car could require annual expenditures that approach or even exceed the gross domestic product of the area.

Unaffordable Transit Oriented Development: But Salomon is not through. Insufficient transit service is only part of the problem. There is a fundamental problem with the thesis that “cities need to densify their urban cores to support greater densities of development.” But, he says, “this is predicated upon the assumption that housing in the urban core and periphery are fungible, that the core and periphery compete interchangeably for buyers.”

Unlike most urban advocates and the Secretary of Transportation, it is apparent that Salomon understands the first principle of “livability.” Livability requires affordability. In San Francisco suburb of Brentwood, for example, Salomon notes that the median house price is $298,000. Brentwood is located in eastern Contra Costa County, approximately 50 miles from downtown San Francisco. But there is no need to travel that far, since there is an abundance of jobs much closer.

This compares to a median price of $627,000 for an apartment/condominium near the proposed transit oriented development in San Francisco. Further, the house in Brentwood will be more than double the size of condo in the transit oriented development, as data from zillow.com indicates. Thus, the new home buyer will pay less than one-fourth the cost per square foot in Brentwood compared to the transit oriented development (Figure 3). The Brentwood household will also enjoy a backyard that would not come with a 23rd floor flat.

Lifestyles of the Few: None of this is to suggest that transit oriented development cannot be attractive. The mistake, however, is the outsized enthusiasm of its proponents. Like a Mini Cooper or sportscar, transit oriented development serves the needs and wants of a narrow niche market, but by no means anything close to the majority.

Salomon concludes:

“In order for transit oriented development to check sprawl, prospective home buyers would be expected to make the choice between purchasing a $300K unit in Brentwood or a unit costing twice that much in San Francisco. Further, in order to check motor vehicle commutes, the assumption would be that someone paying that urban location premium would more than double their commute time by taking transit.”

Simply stated, many of the claims of transit oriented development proponents simply do not “pencil out.” TOD residents will have to drive, unless their jobs are within walking distance. Further, in the dynamic economy that has developed in US urban areas, few can assume that they will always work in the same place. Most importantly, however, very few suburbanites could afford the tony TODs. That’s not a problem, however, since most of them are probably not sorely tempted.
________
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life. ”

COST Commentary: This article is about the US Department of Transportation Strategic Plan. The Austin Regional Transportation Plan has similar characteristics and does not serve our citizen’s mobility needs for the same reasons.

Menace to Mobility
By Gabriel Roth Wednesday, June 30, 2010

Comparing the administration’s new transportation plan to a Soviet ‘five-year plan’ would be unfair to the Soviets.

The U.S. Department of Transportation (DOT) recently published its “Strategic Plan for FY2010-FY2015” and invited public comment. One might be tempted to compare it to a Soviet-style “Five-Year Plan,” but this would be unfair to the Soviets.

Missing from the DOT draft are any references to the benefits of travel—such as helping the unemployed find jobs—or the preferences of American travelers. Also missing are hard data on costs and benefits, on amounts of travel now and in the future, or even an acknowledgment that one of America’s great strengths is the mobility of its people. There is also negligible discussion of the private sector’s role in providing roads or airports, and little discussion of the appropriate division of labor among different levels of government.

The plan reveals that it is the policy of this administration to force us out of our cars. Even while the government all but owns an automobile company, General Motors, in this document it has declared war on the auto.

The DOT plan focuses on five areas: safety, maintenance, economic competitiveness, livable communities, and environmental sustainability. In a far-flung and growing country, expanding existing capacity barely merits an asterisk.

So what are the administration’s claimed priorities?

Safety. The plan declares that “Improving safety is DOT’s top priority,” yet the administration is tightening federal Corporate Average Fuel Economy (CAFE) standards, requiring new cars to average 35.5 miles per gallons by 2016. A 2001 study by the National Research Council concluded that the standards legislated in 1975—which required new cars to average 18 miles per gallon (mpg) in 1978, increasing to 27.5 mpg in 1985—were responsible for 2,000 additional highway deaths per year, as manufacturers downsized vehicles to increase fuel efficiency, making the cars less crashworthy. DOT’s top priority “to reduce transportation-related fatalities and injuries” apparently doesn’t extend to those of us foolish enough to drive cars.

Maintenance. The plan says it is essential “that we be good stewards and apply asset management principles proactively to maintain and modernize our critical infrastructure to maximize its productivity and performance and minimize full life-cycle costs.” Yet federal funding policies, with their emphasis on grants for capital improvements, favor new investment over maintenance. The best way to encourage good stewardship of “critical highway, bridge, transit, airport and railroad assets” is through private ownership, because private owners have compelling incentives to keep income-producing properties in good repair.

DOT’S top priority ‘to reduce transportation-related fatalities and injuries’ apparently doesn’t extend to those of us foolish enough to drive cars.

Economic competitiveness. The plan claims that “achieving the maximum net economic benefit from our transportation investments is essential.” But the federal government—which provides no analysis to justify its proposed investment in high-speed rail—has no yardstick with which to compare investments. Private investors use profitability for this purpose. The World Bank preaches the virtues of benefit-cost analysis. But the DOT uses neither criterion. And, to make it easier to spend federal funds on transit and bikeways, it has actually relaxed transit investment criteria used by previous administrations.

Livable communities. The plan gives high priority to what Transportation Secretary Ray LaHood calls “livability,” which he recently defined as “being able to take your kids to school, go to work, see a doctor, drop by the grocery or post office, go out to dinner and a movie, and play with your kids in a park, all without having to get in your car.” This is a dream world. Some people may wish to live this way, but most Americans don’t—and can’t. They need cars to get to work, shop, visit friends and family, attend classes and church. The administration seeks to discourage this alternative. More ominously, the strategic plan seeks to make federal transportation funding dependent on federally acceptable arrangements for land-use planning. Such planning, if desired by voters, should be a function of local government, not Washington. Federal control over local land-use decisions would constitute an unacceptable centralization and usurpation of power and expose members of Congress to pressure from still another special interest: land developers.

More ominously, the strategic plan seeks to make federal transportation funding dependent on federally acceptable arrangements for land-use planning.

Environmental sustainability. To speed the transition to this “New Generation” America where cars are a nostalgic non-necessity, the DOT plan seeks to reduce “carbon, other harmful emissions, and the consumption of fossil fuels” and to “advance transportation investments that reduce energy use and associated greenhouse gas emissions.” The plan does not seek to reduce such emissions inexpensively. One of the proposals is to “begin development of a national network of high-speed rail corridors by investing in an efficient, high-speed passenger rail network of 100–600 mile intercity corridors that connect communities across America, beginning with the $8 billion down payment provided in the Recovery Act and a proposed high-speed rail grant program of $1 billion per year.” But the costs of avoiding a ton of carbon by investing in high-speed rail are huge. Portland, Oregon’s North Interstate light rail would save so little carbon that it would take 172 years for the savings to cover the construction costs, assuming construction is completed on time and on budget. DOT’s plan seems to assume that any environmental saving, however small, justifies any expenditure, however large.

The DOT strategic plan, when all of the rhetoric is stripped away, is a bold-faced assault on personal choice and rational decision making. The administration has a vision and it intends to force it on us.

DOT’s plan seems to assume that any environmental saving, however small, justifies any expenditure, however large.

Rather than increasing Washington’s power over our mobility decisions, we should be limiting its power. A good place to start would be by dissolving the federal Highway Trust Fund, which was created in 1956 to finance the now-nearly 47,000-mile Interstate Highway System. For all practical purposes, the interstate system was completed decades ago. But the tax and the so-called trust fund remain—more than a quarter of it explicitly siphoned off each year for purposes unrelated to highway construction or maintenance.

The federal fuel tax needs to be reauthorized before March 2011; Congress should end it instead. Eliminating it would result in federal fuel taxes being phased out and give the states—which own the interstates—full responsibility for highway financing. States would have strong incentives to improve the highways in their jurisdiction, spawning innovation. Successful innovations, such as contracting out some or all of their operations to private firms, would be copied in other states.

The Duke of Wellington once objected to railroads because they “will only encourage the lower classes to move about needlessly.” Now, Secretary of Transportation Ray LaHood, a former Republican congressman from Illinois, considers it his job “to coerce people out of their cars.” Such disdain for travelers is regrettable. The administration needs to rethink its priorities.

Gabriel Roth worked for 20 years on five continents as a World Bank transportation economist. He is a research fellow at the Independent Institute in Oakland, California, and editor of Street Smart—Competition, Entrepreneurship and the Future of Roads.

FURTHER READING: Read THE AMERICAN’s automotive columns by Ralph Kinney Bennett here. Dustin Chambers and Dan Ervin discuss “The Green Con Job.” AEI’s Kevin Hassett says “Obama Discovers One More Crisis for a Toxic Tax” on gas, and Jonah Goldberg explains “Oil: The Real Green Fuel.”

COST Commentary: While the costs for California’s High Speed Rail are many times that of a local Austin rail transit system, the very negative ‘cost effectiveness’ of both are unacceptable and not sustainable. As discussed below and as is unfolding in Austin, the proponents of these train systems, often knowingly, substantially overestimate ridership and substantially underestimate costs resulting in unacceptable burdens on all taxpayers to subsidize each rider of the train transit while receiving negligible societal benefits and suffering major negatives which reduce overall quality of life.

strong>You do the math!

Compiled by California citizen, Martin Engel.

Below is part of a longer article with unrelated subjects and is a piece from the Long Beach Press-Telegram.

Analysis: Recent California newspaper editorials

By The Associated Press
Posted: 07/14/2010 03:33:16 PM PDT
Updated: 07/14/2010 03:33:17 PM PDT

July 8

Long Beach Press-Telegram: “Another blow to high-speed rail”

Here we go again with another report casting doubts about the economic viability of developing a high-speed rail system from Los Angeles to San Francisco.

This time it’s the Institute of Transportation Studies at UC Berkeley, which found that the ridership studies made by Cambridge Systematics for the California High Speed Rail Authority are highly flawed and unreliable for policy analysis.

Among the problems uncovered by the Berkeley study was that the ridership estimates were based on surveys that were not representative of California interregional travelers. For example, nearly 90 percent of long-distance (more than 100 miles) business passenger trips made by Californians are done so by car, while 78 percent of those surveyed in the Cambridge study traveled by air.

Also the Cambridge study was based on expectations that are valid for the intra-regional, but not for inter-regional ridership models.

Ridership projections are critical for estimating passenger fares and, thus, the economic success of high-speed rail or any other mode of mass transportation.

In 2008, shortly before voters passed the high-speed rail bond, the rail authority estimated ridership of 55 million passengers by 2035. Just a year later, that forecast was lowered to 41 million.

One has to wonder if a ridership projection figure was deemed to be nearly 30 percent too high a year after it was made, just how accurate will such a forecast be a quarter century from now? The other key element in determining the economic viability of the high-speed rail system is its cost.

That figure also has undergone major upward revisions to $42.6 billion, long before a right of way has been procured, much less any actual work has begun.

As a result, the $55 one-way fare from Los Angeles to the Bay Area, which was presented just before the bond vote in 2008, rose to $105 last year. The real figure is anyone’s guess, and only a guess.

At $55 a ticket, high-speed rail would be competitive with airlines. At $105 a ticket, it is not.

It is becoming increasingly clear that the business model for the high-speed rail system is so flawed that it is worthless. The total cost, ridership figures, fare rates and time line for completion are little more than rough estimates that are sure to change many times, and in the wrong direction.

But these shortcomings are not the only problems facing California’s high-speed rail system. There is the matter of financing. The rail authority was titillated with the federal government’s commitment of $2.25 billion in stimulus money. But the $9 billion in high-speed rail bonds approved by the voters in 2008 can’t be spent unless it is matched by federal money. That means only $4.5 billion is now available in state and federal funds.

The rest of the money is supposed to come from more federal government revenues and private investors.

The authority is depending on getting up to $19 billion from the federal government.

Even if that unlikely largesse were forthcoming, and the state used all $9 billion in state bond money, the project will still need another $15 billion from local government and private sources. That assumes everything is running on a 2020 completion schedule and there will be no cost overruns.

Passage of the rail bond was a huge mistake based on wishful thinking, flawed financial data and unreliable ridership projections.

The best course of action now would be to abandon the high-speed train fantasy, spend the $2.25 billion in federal funds on more realistic rail projects and not sell any of the bonds.
===============================

And, to only slightly change the subject:

The 11 mile BART extension to Livermore would cost $364 million per mile. The Phase I HSR construction, from LA to SF is 432 miles, according to CHSRA. On a comparable basis, that works out to $157.25 billion. That can’t be right, can it? We’re being told that it’s $43 billion.

Published Friday, July 16, 2010, by the San Mateo Daily Journal

Letters to the Editor

Open letter from a taxpayer

If it is going to cost BART $4 billion to build an 11-mile extension to
Livermore, how can $43 billion be considered a realistic cost estimate for the
500-mile high-speed rail system? The BART extension from Dublin to Livermore is
being made to an existing system with known specifications. The high-speed rail
plan doesn’t specify anything. Please stop this boondoggle project. The bankrupt
state of California with the worst schools in the country should not pour any
more money into the black hole of debt that is high-speed rail.

Bill Williams
San Mateo
========================================================

And, here’s another comparative calculation, this one from 2008:

High-Speed Rail Part 5: The Cost of California HSR by Randal O’Toole in Antiplanner

Speaking of cost (in perspective), the Dulles extension of the Washington Metrorail system in Virginia is (currently) estimated to cost about $5.1 billion for about 23 miles of heavy rail (and 11 stations). That works out to about [only] $222 million per mile.

Now if we assume (as the CHSRA Web site says) that the distance from San Francisco to Los Angeles is 432 miles and use the cost per mile of Dulles Rail, that works out to umm, about $96 billion - just for that one line.

Merced to Sacramento is another 110 miles, or $24 billion.

Los Angeles to San Diego (via Riverside) is 167 miles, or $37 billion.

Norwalk to Irvine is 38 miles, or $8 billion.

That works out to a total of 747 miles (and I know I am missing some of the miles above) for a cost of $165 billion.

CHSRA’s Web site says 800 miles, if I use that I get a cost of $177 billion.

Now this proposed high-speed rail system is not the same technology as the Washington Metro, but many of the requirements for train control and power supply are similar (even though CHSRA’s Web site implies overhead catenary, like that used on Amtrak’s N.E. Corridor), and both require a fenced-off and grade-separated right-of-way.

The Washington rail project is an extension of the Greater Washington METRO subway. What is proposed for the California HSR project is a totally new, 220 mph train system. There is no way that the per mile costs cannot be far greater for this project in California than for a subway project running on an elevated viaduct above the median strip of route 50.

by Randal O’Toole, Antiplanner, posted in Transportation

Table 12 of the historical tables supplementing the 2010 Public Transit Fact Book reveals that, since 1970, the number of workers needed to operate America’s public transit systems has increased by 180 percent. Table 38 reveals that, in the same time period, the cost of operating buses, trolley buses, light rail, and heavy rail (the only modes whose costs are shown in 1970) increased by 195 percent (after adjusting for inflation using the GDP deflator).

Meanwhile, table 1 shows that ridership on buses, trolley buses, light rail, and heavy rail (again, the only modes shown in 1970), grew by a mere 32 percent. That means each transit worker produced 53,115 transit trips in 1970, but only 26,314 trips by all modes in 2008. In other words, by any measure, transit productivity has declined by more than 50 percent.

About the only other industry that has seen a similar loss in productivity during the same time period is education–which, like transit, is government-run. Health-care costs have also risen, but at least we have gained longer, healthier lives because of it. Practically every other industry has seen enormous productivity increases and declining costs, at least as a share of personal income.

To help people in different parts of the country understand the problems with transit, and alternatives to the current socialized transit model, the Antiplanner has written briefing papers for several state-based think tanks. These include:

Colorado Transit: A Costly Failure;
Montana’s Transit Systems Harmful to Taxpayers and the Environment (also see guest editorial);
Tackling Public Transit in Tennessee (also see press release);
Public Transit in Washington.
More may be published soon for other states; if so, I’ll let you know.

COST Commentary: The word “canard” in the title below is defined by Webster: “false, esp. malicious report that has been fabricated with the intention of doing harm.” This is an apt description of the situation described.

Wendell Cox does a masterful job of condensing a very complex, misrepresented and misunderstood subject in an easily understood op-ed length article. Many Cities, including Austin, implement “growth” public policies which are based on incorrect assumptions and lack of knowledge regarding the actual impact of these policies. Often, the actual impact achieves almost the exact opposite results of those desired and intended; resulting in higher costs and degraded quality of life for citizens.

The unsupported and incorrect position that suburban infrastructure is subsantially more expensive than urban infrastructure is the rationale many use to supprot their ideology that reduced suburban living in favor of higher density urban living, less driving and greater use of mass transit is a solution to numerous society problems they have defined. This “solution” achieves the exact opposite, actually reducing freedom and opportunity while increasing housing prices which all lead to lower quality of life.

The Infrastructure Canard
by Wendell Cox 12/01/2009

One of the principal arguments used against suburbanization is that its infrastructure is too expensive to provide. As a result, planners around the high income world have sought to draw boundaries around growing urban areas, claiming that this approach is less costly and that it allows current infrastructure to be more efficiently used.

Like so many of the arguments (a more appropriate term would be “excuse”) used to frustrate the clear preferences about where people want to live and work, the infrastructure canard holds little water upon examination.

Becoming Less Affordable as Demand Declines: Within the new world high-income nations, there was considerable urban growth between World War II and 1980. Nearly all of this growth was in the suburbs, where infrastructure was provided through borrowing, taxation and utility user fees. Yet, even as population growth has slowed, the diminished bill has been declared beyond the capability of governments which have often opted for what is seen as more affordable compact development (smart growth).

Estimating the Cost of Suburban Infrastructure: The seminal volume Costs of Sprawl – 2000 projected a need for $225 billion more in costs from 2000 to 2025 for expanding suburban infrastructure than would be required for more compact development. This superficially large number melts down to $30 per capita on an annual basis. This is hardly the kind of expenditure increase that brings bankruptcy to local governments, even if it were not disputable.

Higher Cost Infill Infrastructure: Costs of Sprawl – 2000 and other analyses generally rely upon a “build up” of infrastructure costs, which is then extrapolated to develop overall estimates. These estimates are rarely, if ever, calibrated for consistency with actual experience as reported in government financial sources. Moreover, they generally assume that the cost of building comparable lengths of sewer, water or roads are equal throughout the urban area. They are not. Generally, costs are far higher in infill areas, for a variety of reasons, especially higher labor costs.

Public and Private Costs: Further, many of the infrastructure costs decried in Costs of Sprawl – 2000 and other sources, are not government costs at all but incurred by private companies. Virtually all local roads and some arterials are built and paid for by developers, with the costs passed on to homeowners. Sewer and water expenditures are usually financed by user fees, either paid to private companies or municipally owned utilities.

Cost Differences are Minimal: Moreover, my analysis with Joshua Utt of municipal water and sewer user fees from all reporting jurisdictions in 2000 indicated a 1,000 increase in population per square mile is associated with a $10 reduction per capita, a figure that does not justify strong-armed land use regulation.

The High Cost of Infill Infrastructure: Proponents fail to account for the fact that infill development also requires more infrastructure. The existing water and sewer systems in densifying areas are likely to require upgrades, now or later. In many older cities, these systems are older, even obsolete and may not have the capacity to meet the increased demand. Constructing these upgrades will generally be far more expensive in an already developed area than building new, state of the art facilities in greenfield areas.

Building Gridlock: The proponents virtually never propose expansion of roads to deal with the increased traffic that occurs in densifying conditions. Yet, the national and international evidence is clear: higher densities produce more traffic. Without more capacity, this means slower speeds, more intense pollution and more greenhouse gas emissions.

There is no point in imagining that it can be any different. For example, the most dense part of the nation is New York’s Manhattan. It is served by a rail system that is far more comprehensive than any other place in the nation. Yet, traffic volumes (total vehicle miles) per square mile in Manhattan are more than 3.5 times that of the nation’s most congested urban area, Los Angeles, and 12 times that of the nation’s least dense major urban area, Atlanta.

Thus, any savings that might be obtained from not expanding roads to meet demand is achieved by retarding service levels. Further, the longer travel times would stunt economic growth.

The Transit Infrastructure Canard in Australia: One of the more ludicrous features of the infrastructure canard in Australia is the fixation with rail transit, which planners frequently justify to ban or limit suburban expansion. This is a Neanderthal view that fails to recognize that only a small portion of urban fringe dwellers work in the downtown areas, which are the only employment centers effectively served by rail. The minute roads are opened, the infrastructure for transit is in place. Bus service can quickly and efficiently be established to downtown, local employment poles, or the nearest rail station for those few outer suburbanites who can get to work more conveniently by transit than by their cars. Overall, less than 20% of commuters work downtown in Australian urban areas, and the farther out they live, the less likely they are to commute downtown.

Operating Costs are the Problem: Moreover, the focus on construction of new facilities is misplaced, because, construction costs are not the principal driver of public expenditures. Less than 20% of local government expenditures are for construction, while more than 80% covers day to day operations. New population, or the same population in a larger area will require similar government operating expenditures. It is likely that compact development will require just as many teachers and just as many public servants. Moreover, they will probably be paid more, since older, more dense communities have significantly higher government employee wages and salaries per capita than average.

Cost Consequences of the Infrastructure Canard: More importantly, the infrastructure canard imposes far greater costs on society than any savings even its most ardent proponents can imagine. This is because compact development materially increases housing costs.

Destroying Housing Affordability in Australia: There’s ample evidence of this down under. Planners have tied a noose around all Australian urban areas which virtually outlaws development on or beyond the urban fringe. As economics would predict, land for development has become scarce, which in turn has increased its price. Once known for its affordable housing, most Australian areas have seen the price of homes relative to incomes double or triple since the new policies were enacted. Nearly all of this increase has been in the price of the land, not in the house construction (inflation adjusted). Land for development is so scarce in this less than 0.5% developed nation that its urban areas are likely to be buried by blizzards before housing affordability returns.

Destroying Housing Affordability in the United States: In the United States, compact development polices have also increased house prices. For example, even after hitting bottom earlier this year, house prices in compact development markets such as California, Seattle and Portland remained as much as twice as expensive related to income than in less strongly regulated markets. The annual US infrastructure savings suggested in the Costs of Sprawl – 2000 are so small that they would pay less than one-third of the excess higher annual mortgage payments in California attributable to compact development (Note).

Fastest Growing Metropolitan Areas: Doing the Impossible: While planners in California, Portland, Seattle and elsewhere delude the public and elected officials into believing that suburban infrastructure is unaffordable, faster growing metropolitan areas found the opposite. Atlanta, Dallas-Fort Worth and Houston are the three fastest growing metropolitan areas with more than 5,000,000 population in the high income world. Rather than restraining suburbanization, these metropolitan areas allowed it to continue. Their reward was not only delightful communities (despite their being despised by the planners), but also the retention of housing affordability. None of this has slowed some positive inner-ring development, particularly in Houston, to meet that niche demand.

A Matter of Will: The fast growing metropolitan areas demonstrate that suburban infrastructure can still be provided without a material financial burden to the community. Indeed, given the house price escalating effects of compact development, the cost of living will be lower where suburban expansion is allowed. It is not a matter of suburban infrastructure being too expensive but the resistance of planners and urban land autocrats to crafting policies that actually reflect the desires of the vast majority of people in most advanced countries.

–
Wendell Cox
Demographia | Wendell Cox Consultancy - St. Louis Missouri-Illinois metropolitan region
Visiting Professor, Conservatoire National des Arts et Metiers, Paris
France..33.6.16.63.58.76
USA..1.618 632 8507

www.demographia.com | www.publicpurpose.com | www.rentalcartours.net

Books & Publications:
WAR ON THE DREAM: How Anti-Sprawl Policy Threatens the Quality of Life
http://www.demographia.com/wod1.pdf

5th ANNUAL DEMOGRAPHIA INTERNATIONAL HOUSING AFFORDABILITY SURVEY (http://www.demographia.com/dhi.pdf)

THE WAL-MART REVOLUTION: How Big-Box Stores Benefit Consumers, Workers, and the Economy
By Richard Vedder & Wendell Cox

Wendell Cox 07/08/2010 in newgeography

Few books in recent memory have started from as optimistic or solid a foundation as Reinventing the Automobile: Personal Urban Mobility for the 21st Century. Reinventing the Automobile conveys a strong message that improved personal mobility is necessary and desirable:

“Have we reached the point where we now must seriously consider trading off the personal mobility and economic prosperity enabled by automobile transportation to mitigate its negative side effects? Or, can we take advantage of converging 21st century technologies and fresh design approaches to diminish those side effects sufficiently while preserving and enhancing our freedom to move about and interact? This book concludes the latter.”

The authors include William J. Mitchell, Professor of Architecture, and Media Arts and Sciences at the Massachusetts Institute of Technology directs the Smart Cities research group at the MIT Media Lab, Christopher Boroni-Bird, Director of Advance technology Vehicle Concepts at General Motors and Lawrence D. Burns, who consults on transportation, energy and communications systems and technology. The book is published by the MIT Press.

Getting Urban Economics Right

The authors start with getting the urban economics right. They recognize that the “freedom and prosperity benefits” of the automobile “have been substantial.” They note that the automobile industry “set the stage for the growth of the middle class,” something that has been labeled the “democratization of prosperity.” The authors say that the car “enabled modern suburbia” and “powered a century of economic prosperity.” This refreshing treatment is consistent with the overwhelming economic evidence that links personal mobility with prosperity, such as by Remy Prud’homme and Chang-Wong Lee, David Hartgen and M. Gregory Fields and others. It is also at considerable odds with the widely accepted, somewhat nostalgic planning orthodoxy that rejects private automotive transport as “unsustainable”, unaesthetic and anti-social. This ideology embraces the illusion that forcing people to travel longer, with less personal flexibility somehow will improve the economy and raise the standard of living.

The Future of the Automobile?

The authors envision a automobile characterized by a new “DNA.” It starts with smaller cars, fueled by electricity and hydrogen (fuel cell technology). It also begins with an understanding that the cars used in many mundane urban operations today – for example getting to the market or pick up the kids at school – are over-engineered. They are far larger than is needed for most trips, their capacity for speed exceeds urban requirements and their range between refueling is also more than needed.

The authors would re-engineer urban vehicle to the needs of metropolitan dwellers, an “ultra-small vehicle” (USV). The designs proposed include far lighter cars that can be easily “folded” up to minimize parking space requirements. Cars would be connected to one another by wireless technology, all but eliminating the possibility of collisions. The cars would be small enough that they could be assigned special dedicated lanes on current freeways and streets. Travel would be less congested because the dedicated lanes would have a far higher vehicle capacity, while the interconnectedness would allow cars to safely operate closer to one another.

The combination of electricity, hydrogen, wireless technology and the USV would bring additional benefits. This would permit improved vehicle routing, as drivers would be advised take alternate less congested routes. This would also, in time, lead to self-drive cars, about which Randal O’Toole has recently written, made possible by the use of wireless technology and that dedicated lanes would make possible.

Empowering Transit Riders through Car Sharing

Car sharing is an important part of this future, for dwellers of dense urban cores, according to Reinventing the Automobile. The author’s note that car sharing can solve the “first mile-last mile” problem making it possible for transit users to speed up their trips by not having to walk long distances to and from transit stops. Indeed, car sharing programs are set to be adopted in urban cores with some of the world’s best transit systems, such as Paris, and London. Privately operated car sharing systems have been established in a number of US metropolitan areas, such as Atlanta, Denver and San Francisco.

Progress with Conventional Strategies

The longer term vision of the MIT Press authors may take a while to unfold, but we can already see potential for progress. Just this week, “super-car” developer Gordon Murray announced development of an urban car (the T25), smaller than the “Smart,” which would achieve nearly 60 miles per gallon, with plans for marketing within two years. Volkswagen has developed a “1-litre” car, which would achieve 235 miles per gallon on diesel fuel. All of this makes the 51 mile per gallon Toyota Prius seem gluttonous by comparison.

These developments and the Reinventing the Automobile vision show that it is unnecessary to tell people in America (or Europe or the developiung world) that they must give up their automobiles. That is good news. The social engineering approaches requiring people to move from the suburbs to dense urban cores and travel by slower, less frequent transit are incapable of achieving serious environmental gains (see below) and can not seriously be considered progress or desirable by most people in advanced countries.

The Superiority of Technology

This is illustrated by recent developments in automobile technology and research (Figure).

•Before the adoption of the new 2020 and 2016 new car fuel economy standards, the US light vehicle fleet was on track to increase its greenhouse gas (GHG) emissions nearly 50% from 2005 to 2030 (the green dotted line in the figure).

•As a result of the new fuel economy standards, Department of Energy projections indicate that greenhouse gas emissions from light vehicles will be one-third less by 2030 compared to the 2005 fleet (the yellow dotted line), and this is at the standard projected driving increase rates that could well be high.

•The smart growth strategies of land rationing, densification and discouraging driving would produce, at best, a marginal reduction in GHG emissions, using the mid-point of the recent proponent research (Moving Cooler), indicated by the solid blue line. Actually, this overstates the impact of smart growth, since it discounts the substantial GHG emissions gains that result from higher fuel consumption in more congested traffic produced by densification.

•The potential for technological advance is illustrated by the green solid line, which estimates the GHG emissions from light vehicles in 2030 if the average fuel economy were equal to today’s best hybrid technology.

Click to inlarge

Overall auto-centered technology-based strategies – such as the improved fuel economy standards and the hybrid fuel economy – would each produce about 15 times as much benefit as the smart growth strategies proposed by such studies as Moving Cooler. This approach would not only be far more productive in terms of environmental improvement but would not require interfering with people’s lives in ways that would require longer trips times, less convenience, seriously retarded job access and, inevitably, fewer jobs and lower levels of economic growth.

Technology: The Only Way

It would be a mistake – and likely political folly – to force a re-engineering our way of life in order to enact strategies with dubious environmental benefits. In the final analysis, personal mobility must be retained and expanded, because there is no alternative that is acceptable to people, whatever system of government they happen to live under. Reinventing the Automobile paints the most optimistic picture to date and, if given due serious treatment, could prove a debate changer.

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life. ”

COST Commentary: As discussed in the article below, all major Texas cities, including Austin, avoided most of the housing bubble’s major run-up in housing prices and the “crash” which was a major contributor to the recession. As noted in this article, land use restrictions are major contributors to house price increases. In Austin’s case, much its economic success was not so much due to Austin’s initiatives and policies as it was to rapidly growing, surrounding counties and towns which provided “relief valves” of less restrictive land use policies. The less restrictive land use policies of these surrounding jurisdictions tended to temper the impact of Austin’s increasingly restrictive land use regulations which are increasing the costs of development and housing. However, Austin still has the highest ratio of median home price to median household income for major Texas cities and current policy directions will exacerbate this important affordability index.

Why is this important to transportation? Land use, transportation/mobility, congestion and quality of life are very linked. As demonstrated in many cities, higher density living results in greater congestion and highr prices for housing.

The Capital Area Metropolitan Planning Organization (CAMPO) is the official planning organization, required by US government regulations, for the Austin region’s transportation system. For the first time, this plan has changed its primary focus from transportation to land use with the goal to change human behaviors which they have determined is best for the citizens. Its recently approved 2030 Transportation Plan is based on encouraging higher density living and the use of public transit to reduce roadway mileage and driving per capita. More than 50% of the 2030 Plan’s funding is allocated to public transit and non-roadway uses serving less than 1% of the passenger miles traveled in the area. The results of implementing this plan will be increased congestion and reduced quality of life for most citizens of the region, unsustainable costs and taxpayer subsidies for transit users and major decreases in affordability of housing. Many cities have followed a similar path, and, in each case, it has resulted in greater congestion, higher costs and lower quality of life for citizens.

Hopefully, the realization that Texas Cities have done a lot of things correctly will enlighten enough people that this ill-advised 2030 plan will not be implememnted and a greater portion of our transportation funding will be allocated to the roadway priorities of the people and not to the perceived, ideologically driven needs determined by misguided government employees and elected officials.

How Texas Averted the Great Recession

by Wendell Cox, Demograplhia

Texas has received considerable publicity for superior economic performance during the recession (the “Great Recession”) and the fact that the “housing bubble” had very little impact in the state. The performance of Texas has been particularly favorable compared to its other largest state competitors, California and Florida, both of which experienced severe economic and housing market distress. One of the factors that helped Texas avoid both the Great Recession and the housing bubble was its market oriented land use policies. By contrast, where land use restrictions were more restrictive (California, Florida and other places), house price increases were far more substantial, as was the subsequent price collapse.

More at: http://houstongrowth.org/files/HowTexasAvertedRecessionfinal.pdf

COST Commentary: Below are excerpts from a revealing email exchange regarding Seattle and California Bay Area Transit. This exchange is by loacal area, knowledgable, respected citizens. The excerpts have been slightly edited to be easily understood by the reader.

This exchange again substantiates the unsustainable nature of Austin’s transportation plan which has a trend of allocating increasing percentages of transportation dollars to ineffective public transit such as trains and trolleys while 99% of the regions travelers face increasing danger and congestion on the roadways. The Austin region’s 25 year plan (2035 Plan) recently approved by the Capital Area Metropolitan Planning Organization (CAMPO) includes an almost 50% allocation of transportation funds to transit serving less than 1% of passenger miles traveled. It is well over 50% of the area’s transportation tax funds considering portions of the roadways are funded by toll roads and transit costs are understated by more than a billion dollars.

Harsh Seattle transit realities
from Emory Bundy, See brief background below.

There is a vast distance between the facts and public perceptions, and “the media” is implicated in those misperceptions. A very common belief is that roads and highways are lavishly subsidized, and transit is starved for funds.

It’s transit that’s receiving most of the transportation money, yet serving a small fraction of the transportation needs. Further, all but a tiny fraction of transit trips rely on roads and highways, and even that tiny fraction, i.e. Sounder, Tacoma Link, and Initial Segment/Airport Link, rely largely on roads and highways to get patrons to, and/or from the rail stations.

Politicians and relevant agencies systematically fail to enlighten the public on this vital matter, making it even more incumbent on the press to do so: Namely, that we are heading toward two-thirds of transportation funding for a few percent of the trips, most of which also depend on roads and highways. And, also, an appreciation that, in the main, roads and highways are financed by the users, through gasoline taxes, while transit is funded by everybody, via sales taxes, plus a portion of the gasoline tax. One largely pays its way (and ought to do so in full), while the other is an enormous drain on public resources that could be used for better purposes.

And where are we going? More and more money devoted to transit, with little gain in ridership, and generally no gain at all in transit market share. A problem compounded by the introduction and development of rail transit. Sound Transit now absorbs half of all transit funding, and delivers a very small ridership when compared with the local transit agencies. Plus, while Sound Transit spends its money primarily on Link light rail, secondly Sounder commuter rail, most of its patrons, i.e. its ridership benefits, travel on its Regional Express buses.

To digress: I’ve noticed recently that more than three-times as many daily commuters travel between Tacoma and Seattle, and Everett and Seattle, on Sound Transit’s express buses, as on Sounder, for a tiny fraction of the cost to taxpayers. I am citing Sound Transit data.

Everyone’s entitled to their own opinions, values, and advocacy. But everyone also is entitled to access to the basic facts surrounding their decisions. Currently we operate on flagrantly false, and misrepresented factual underpinnings.

Notes from a California Bay Area resident:

Recently there was an excellent, unusually frank report from the Bay Area’s Metropolitan Transportation Commission, “Transit in Transition: Can we achieve a sustainable future for public transit in the San Francisco Bay area?” The short answer is a resounding NO, unless things are changed, profoundly. The central finding is, while transit funding was doubled over a decade or less, transit ridership increased by only 7 percent–and transit market share did worse. In short, productivity is falling at an enormous rate. The Bay Area has a better record than Central Puget Sound has had in the Sound Transit era, but it’s a fatal, unsustainable course. More and more money, for no commensurate benefit, possibly even no improvement in transit market share at all, maybe even losses, while more and more and more scarce public resources are consumed, with no reason to expect improvement in the future.

Five years ago, a San Francisco Chronicle reporter, Michael Cabanatuan, wrote a most revealing article, typical of press coverage on rail transit–misconstruing the facts to point in exactly the wrong direction. He cogently reports that transit ridership is fading, there are fare increases and service cutbacks, and there have been 11 transit bond issues in the previous four years, all of which passed. In 2004 alone $8 billion more for transit was approved by voters. But then he completely ignores the fundamental problem of progressively more and more unproductive transit expenditures, and concludes that More Money must be found to provide public transit what it needs.

All over the country transit costs are escalating, ridership is stagnant, and market share is going nowhere, often down. This is the case with bus transit, and it’s dramatically escalated with rail transit. Fourteen years ago Professor Jose Gomez Ibanez of Harvard published an article, “Big City Transit, Ridership, and Deficits: Avoiding Reality in Boston” (APA Journal, March 1996), which has the following abstract:

“Boston is typical of many metropolitan areas struggling to maintain or increase their transit ridership while keeping their transit deficits-defined here as the shortfall between passenger revenues and transit agency costs- under control. In Boston, transit rider-ship has increased over the last twenty years because the Massachusetts Bay Transportation Authority (MBTA) has offset the effects of suburbanization and income growth by extending rail lines into the suburbs and by keeping fare increases below the rate of inflation. The service extensions and fare reductions have been a major factor, however, in the explosion of the MBTA deficit from $21 million in 1965 to $575 million in 1991. There has been little political will or incentive to date to adopt measures-such as tolling autos or contracting out transit services with the private sector-that might help control the deficit without greatly reducing ridership. Although these measures are not long-term remedies, without them cities like Boston may soon find they cannot afford to maintain transit ridership.”

What is not mentioned in the abstract is, while the annual subsidy rocketed from $21 to $575 million (YOE$), 1965-91, transit market share decreased from 14 to 11 percent. Further, he reported that, at regular intervals, a massive capital equipment bail-out is required: of the sort that recurrently happened in NYC, and is in urgent demand today in places like DC, Atlanta, and the Bay Area.

Over the years I’ve become increasingly impressed with how on-the-mark Gomez Ibanez’ Boston study is, and how widely applicable.

There is this anomaly/subterfuge in the Bay Area MTC report: The problem is blamed on the recession. Though, it also suggests that the end of the recession won’t solve the problem. Cabanatuan’s 2005 article also blamed the plight of transit’s finances on the tough economic times. Perhaps had Gomez Ibanez been more susceptible, Boston’s problems in the 1965-91 era could have been blamed on tough economic times, too.

Emory Bundy is a graduate of the UW and UCLA and a former professor of political science at Oberlin College and University of East Africa. He has served as head of the staff of a member of Congress and as the Director of Public Affairs at King Broadcasting Company during 1969-83. He is an avid environmentalist and has served as a member of the staff of a major foundation focused on environmental affairs. He is an avid bicyclist, commuting for some 30 years and does not own an auto (as of 2002). Bundy has written and spoken frequently regarding transportation in Seattle.

COST Comments: The article below is a precursor story for Austin if leaders continue to pursue a rail transit trolley for downtown Austin. Below are a few comparisons which should raise strong warnings for Austin City Council members:

1. Dallas’ DART transit serves less than two times as many people as Austin’s Capital Metro. However, its more than $525 million operating costs (including net debt service of $123 million) are more than 3 times Capital Metro’s $166 million. These Dallas DART costs include just over $12 million in operating costs for Dallas HOV lanes which are used by Dallas DART buses.

2. Dallas DART’s light rail serves about 60% as many riders as Austin’s bus system but the light rail’s annual costs including debt service is almost 150% greater than Austin’s bus operations.

3. Dallas DART’s has debt of $2.7 billion, primarily train capital borrowing, and the debt service to pay for this huge rail capital is $123 million this year and growing. This debt service is 75% as much as Capital Metro’s total annual operating costs.

4. Dallas DART planned almost 4,000 employees this year and which is almost four times the number of Capital Metro employees to serve less than twice as many riders.

This is additional strong evidence that rail tranist is not cost-effective and financially sustainable in cities like Austin.

DART set to trim jobs, light-rail service to tackle budget shortfall

12:00 AM CDT on Wednesday, May 26, 2010
By MICHAEL A. LINDENBERGER / The Dallas Morning News
mlindenberger@dallasnews.com

Dallas Area Rapid Transit will make deep cuts in its annual operating budget – including eliminating at least 300 jobs and significantly reducing the frequency of light-rail service – over the next two years as it corrects what appear to have been wildly optimistic revenue projections.

As recently as late last year, the 20-year forecast assumed nearly $3 billion more revenue than DART executives now say is likely to be available. Officials have said the necessary adjustments will all but end the expansion of the agency’s rail service beyond what will be completed by 2013.

DART executives, who had warned board members last month that deep cuts were likely, provided more details Tuesday.

Still, how severely annual operations will be cut may not be clear for another year.

Chief financial officer David Leininger said that if the local economy recovers fairly quickly, as the agency and its advisers predict, DART could get by with annual cuts of about $30 million to $40 million.

That would require about 300 job cuts, a number that could largely – though not entirely – be achieved by attrition and what would amount to a job freeze for the foreseeable future.

No DART employee will receive a pay raise in 2011, he said.

That level of budget cuts would probably leave bus service essentially unchanged, though some of the least popular routes would see their 40-foot coaches replaced by vehicles less than 20 feet long.

Passengers would also see longer waits for light-rail trains. Rail lines that now feature trains every 10 minutes during peak hours would be reduced to a train every 15 minutes. During the single busiest rush hour, service would drop from every five minutes to every 7 ½ minutes.

“This $30 million to $40 million scenario focuses on taking costs out of every area before we get to the bus service,” Leininger said. “That’s because it’s still the case that the majority of ridership actually comes from people who ride the bus. We’ve been very focused on that.”

But bus service will nonetheless be cut severely, if the economic forecast provided by Waco economist Ray Perryman proves again to be too optimistic.

If the North Texas economy recovers more slowly, or if the recovery is short-lived, Leininger said the agency would need to cut $60 million a year from its operating budget. He said he has faith in Perryman’s revised forecast, but he noted at least one other economist working for DART has urged caution.

“We really believe it’s reasonable to assume the Perryman base case,” Leininger said, adding that DART has scrutinized its underlying assumptions thoroughly. “But we think it’s important to put before you the other scenario, so you know what it looks like and what would be required.”

One hopeful if inconclusive sign: DART received 2.7 percent more in sales taxes for March than it did during March 2009, the first year-over-year increase in more than 18 months, he said.

No matter what decisions the board makes this year, it will have to look again at its revenues by next summer to make sure they are in line with Perryman’s projections.

If not, then more aggressive cuts would be required. And that could mean big cuts for bus services, as DART would look to reduce the $102 million it spends annually on bus service by about 17.5 percent.

Core bus routes would not be impacted, but many others would be. Early projections roughly estimate such cuts would end service for about 5,000 round-trip riders each weekday and about 6,500 people on Saturdays. DART provides the equivalent of round-trip bus service to approximately 60,000 riders a day, across 130 routes.

The budget decisions will be made by the board later this summer, in time to approve a fiscal 2011 budget in September.

Unless sales tax receipts are lower than expected over the next few months, it’s likely that the DART staff will urge board members to enact the smaller cuts this year. If by next summer, the economy has not recovered sufficiently, it would then need to enact the steeper cuts.

Some board members questioned whether that was prudent.

“You mentioned that the [less aggressive] cuts would have a limited impact on customers,” said board member Mark Enoch of Rowlett. “But I assume you are talking about existing customers. What about future customers that won’t be served?”

With some DART member cities still waiting for rail service, he said it may make more sense for DART to impose the steeper cuts even if it believes Perryman’s projections. Any savings, should he prove accurate, could then be plugged back into the capital construction budget, he said.

Board member Pamela Dunlop Gates of Dallas asked “why is it reasonable to assume Perryman’s numbers are right” when, she said, it seems that his numbers have been wrong for most of her tenure on the board.

Board member Robert Strauss of Dallas said he wanted to know exactly how much the agency spends on its maintaining and enforcing traffic laws on the HOV lanes it operates jointly with the state.

“I am not sure why that burden has become ours,” he said. “They are not our highways.”

COST Comments: Below is the letter with attached comments which COST submitted to the Texas State Sunset Advisory Commission regarding their review and report on Capital Metro, the Austin, Texas’ regional transportation authority.

Ken Levine
Interim Director, Sunset Advisory Commission
P.O. Box 13066
Austin, TX 78711

RE: Staff Report on Capital Metropolitan Transit Authority

Dear Director Levine:

We applaud The Commission’s audit review and report regarding Capital Metro. It addresses a number of key issues at various operating levels within the agency and makes generally sound recommendations regarding them. We suggest there are a number of equally or more important issues which have not been addressed by this or other audits/reviews. Several of these are discussed in our comments below.

We observe that Capital Metro has been the subject of numerous very negative audits/reviews and reports for many years. However, the fundamental reform of Cap Metro necessary to effectively address the issues in these reviews has not been achieved to date. COST believes the top level priority should be to establish a Capital Metro board which is fully qualified with the applicable experience and capability to effectively lead the organization. The comments attached to this letter offer suggestions as to a process which could achieve this priority. Without a qualified board, it is very problematical that necessary changes can occur at Capital Metro because unqualified board members simply do not have the applicable experience, knowledge and capability to assure competent agency management and achieve needed reform. Without this reform, the pattern of past failures will continue to be repeated and long term positive changes will not be achieved.

In addition, this report and others have not addressed the key point that Capital Metro has been unable to effectively serve its ill-defined mission while achieving social equity. Capital Metro’s foray into commuter rail has created a situation in which taxpayers are currently highly subsidizing about 500 people on daily round trips, who mostly have a choice of transportation, with about $30,000 per year for the average rider. This subsidy is almost doubled for round-trip-riders traveling the entire route from Leander to downtown Austin. The financial drain of constructing and operating the commuter train for 500 people has resulted in degrading transit service for about 40,000 daily bus riders, who mostly do not have a choice, by more than doubling fares in the past 18 months and cutting bus service.

Also, reports have not discussed the fact that Capital Metro does not responsibly and transparently conduct alternative analyses which determine the most cost effective methods to achieve defined transit objectives. This results in planning ineffective systems which require massive subsidies and dramatically reduces the ability of Capital Metro to serve the most transit needs for the available dollars. One obvious example is Capital Metro’s broken promise to implement “Rapid Bus” as a part of its “All Systems Go” plan which was presented to voters at the time of the commuter rail referendum. The first route for Rapid Bus was promised to be operating in 2007. It would have substantially improved transit for up 15-20 times more people than ride the commuter train for a fraction of the costs of the commuter. However, the high costs of the train resulted in the Capital Metro board canceling the program for years and its implementation is still a long time in the future. Cost effectiveness is the bedrock foundation of a sustainable transit system which will most effectively serve the community.

Capital Metro has not been subject to comprehensive operations and financial performance evaluations, with thorough follow-ups, to assure its board accepts responsibility and accountability. We believe a thorough operations and financial evaluation should be conducted by nationally recognized and experienced people to address the broad array of issues and provide a solid baseline for future improvement. Annual follow-up reviews must be conducted to assess progress and consider “course” corrections. As the first major step, the board selection process should be reformed as soon as possible to assure selection and appointment of qualified board members who will provide the capable leadership necessary to achieve the depth of reformation required at Capital Metro. The magnitude of the long-term, entrenched issues may well call for extraordinarily capable board members in the early phases of Capital Metro’s reform. Until this is achieved and comprehensive reviews indicate solid progress, Capital Metro should refrain from making major, costly service modifications or embarking on major new projects such as rail extensions.

Best regards,

Jim Skaggs
Coalition on Sustainable Transportation

Enclosures:
-Expanded comments on Sunset Report
-Answer to Sunset Commission questions during review

These are expanded comments regarding the Sunset Advisory Commission’s report on Capital Metro dated April, 2010.

Why is it that for many years Capital Metro has been the subject of reviews and reports regarding its very poor performance? Each such instance seems to result in some general Capital Metro acceptance of the resulting recommendations, immediate scurrying around with a flurry of activities including “political” posturing and promises to fix things. The storm passes, there is rarely any follow-up to determine Capital Metro’s compliance with recommendations and sometime later another storm occurs.

This cycle continues because: While the reviews generally may make very good recommendations, they tend to deal with important but lower level operating details and processes which are the symptoms of the real problem and are not the root cause. The top priority must be to dramatically transform Cap Metro’s foundation of long term, ineffective leadership and organization if it is to achieve effective, long term, positive change and acceptable performance. A third party recommending changes to fundamentally the same incapable organization and leadership is likely to always fail because it is this leadership and organization which created the unacceptable performance. They do not have the knowledge to know how to fix it!

The root cause goes deeper. There is a major flaw in the method used to establish Capital Metro leadership/management. This flaw results in the very high probability that, without major process overhaul, the Cap Metro board will continue to be populated with primarily unqualified members. It starts with local government officials on the Austin City Council, the Travis County Commissioners Court, the Williamson County Commissioners Court, the Capital Area Metropolitan Planning Organization (CAMPO) and small city mayors being responsible for appointing Capital Metro board members. The elected officials on these bodies do no generally have the experience and background to know and understand the experience and background required of a person to effectively serve on a complex, technical agency’s board overseeing a budget of several hundred million dollars and over 1,000 employees/contractor employees. While a “government” entity such as Capital Metro is a little different than a similar shareholder owned corporation, the basic management procedures, approaches and processes are the same and the experience, knowledge and competence qualifications are essentially the same.

According to the Texas State Transportation Code: “the board is responsible for the management, operation, and control of an authority (Capital Metro in this case) and its property.” The board member selection process, specified by the Texas Transportation Code, results in the appointment of people who predominately do not have the qualifications to effectively perform this management and legal responsibility. This is not personal criticism of the individuals selected but of the process which selects them. In most cases, these are very capable people in their primary realm of expertise and they have a strong, well intended commitment to serve the community. Further, the board is vested with the authority to “employ a general manager—,“ and, “prescribe the duties, compensation, and tenure of persons employed;”. So, generally unqualified officials appoint board members and these generally unqualified board members employ a general manager and prescribe the duties. This is a very high risk of failure chain of actions as proven by Capital Metro’s 25 years of operations. The selection process for board members has changed a little over time but the fundamental flaws still exist, even with the current primarily new board.

The Sunset Review Commission’s report regarding Cap Metro provides one a glimpse at a dysfunctional, incompetent and incapable agency wastefully spending hundreds of millions of local tax dollars and providing inferior public transit while placing severe burdens on the low income. This report is consistent with numerous audits, reports and indications over many years that Capital Metro is an agency with little grasp of its mission and direction and with almost zero accountability.

It seems the “system” keeps taking the same kinds of actions to correct Capital Metro’s dismal performance; hoping for a different result than the last time. The necessary changes will not occur without a comprehensive reformation of the process for selecting board members so that well qualified people are selected and that they accept responsibility and accountability for acceptable performance. Performance should be measured continuously and board members’ performance evaluated regularly to determine their acceptability.

In 1997, John Sharp, Texas Comptroller of Public Accounts, conducted an extensive Performance Review of Capital Metro, in which the following was stated:

“We have never, in all of the performance reviews we have conducted, seen an agency with such a lack of accountability.”
In this report they cited:
• “irresponsible management”
• “expensive, embarrassing mistakes”; and
• “dubious contracting and purchasing practices”
The current Sunset Commission report is generally well done in the limited, narrowly focused areas it discusses. It has major comments such as:
• “Capital Metro faces a crisis that could threaten its ability to maintain current services unless the Board takes immediate action to shore up the Authority’s
finances.”

• “Capital Metro’s overspending cannot be sustained.”

• “Capital Metro’s lack of adequate financial planning, combined with its high cost of services, places its long-term financial viability at risk.”

• “Spending decisions over the last several years have led Capital Metro on a risky financial path.”

• “The Authority also has a long history of subsidizing fares at levels far in excess of its transit peers.

• “Sunset staff also reviewed numerous stumbling blocks Capital Metro encountered in developing its commuter rail line. These problems stemmed from unreliable tracking of commuter rail expenses, insufficient planning, persistent technical problems, poor contract oversight, fragmented project management, and a lack of accountability for results across departments.”

• Capital Metro’s new Board must rise to the challenge of conducting its business in a new way that embraces fiscal constraint and open accountability for its expenditure of public funds.

• To address these longstanding problems, Capital Metro’s new Board must rise to the challenge of conducting its business in a new way that embraces fiscal constraint and open accountability for its expenditure of public funds.

While all of these are good review observations, accompanied by generally sound recommendations, the larger implications and root causes have not been a focus of the Sunset review. Several of the Sunset comments could be much more critical than they are to better represent the extreme serious nature of Capital Metro’s issues. But, more germane, these issues have been mostly known for years; many discussed by the board and management, but not effectively addressed.

One way to think of Capital Metro is that it is a patient on a table and has several wounds, any one of which can be fatal. There is no time for long consultations and evaluations. All the wounds need to be addressed simultaneously by skilled “doctors” who have the background and experience to make urgent, decisive, effective decisions; take necessary actions immediately and follow-up to assure continued recovery.

One of the unfortunate outcomes of the media and Capital Metro highlighting and debating individual report items is that the focus is distracted from the serious, root cause issues such as: board competency, agency management competency, the urgency of critical operational and financial decisions, the degrading of social equity/justice and Capital Metro’s mission contradictions.
None of the historical reviews and reports has resulted in fundamental change at Capital Metro. Following this same pattern, it is likely the Sunset review will not result in significant long term change. While the current Sunset Review Commission report effectively addresses a number of individual areas of Capital Metro’s unacceptable performance as did the past reviews, it does not address the foundation issues which must be addressed to achieve true reformation of the agency.
One of the most critical areas is not mentioned in the Sunset review: providing transit choices, at highly subsidized rates, to those who have alternatives while degrading service (increased fares and reduced service) for primarily low income people, who have no choice, is making a mockery of our goals of social equity/justice. It is just plain wrong. This leads to another top level decision which Capital Metro must face: What is its mission and how can it most effectively support its mission within its funding limitations? The Sunset review states that Capital Metro presents its mission as: “provide quality public transportation choices that meet the needs of its growing region.” Capital Metro is like a social service agency with such a broad mission. It can spend as much money as there is. This mission is probably too broad and provides little guidance to Capital Metro management although more qualified management could better work with it. This mission needs the next level of detail and it should be prioritized. The mission creates a potential major conflict which may not be reconcilable: Providing public transit to typically lower income, who need it in their daily lives and have no alternative, frequently involves different parts of the city/region than the providing of public transit to those who have an alternative. Highly subsidizing those who have a choice degrades the ability to serve those who have no choice. This contradiction of social services and general public transportation services must be addressed. There is clearly social good in subsidizing the lower income. A balance must be achieved between this and taxpayers highly subsidizing a very small number of the mid range income transit riders such as with the commuter train?

For example: the commuter rail requires massive subsidies for each daily round-trip rider. Most of these riders have a choice and many rode the bus before the train. At the current ridership of some 500 people per day, the taxpayers subsidize each average rider more than $30,000 per year. Those who rode the bus previously were only subsidized with about $3000 or 10% of the train subsidy. It would clearly be more cost effective to provide a new automobile, a leased automobile or fee gas or taxi passes for the train riders. At this ridership, or much great ridership, there is no measurable societal benefit as there is no congestion or pollution benefit. However, the high cost of the commuter train’s 500 people, who mostly have a choice, has been a significant factor in major fare increases and service cutbacks for 40,000 daily bus riders who mostly do not have a choice. So, what is the mission and what are the priorities? Isn’t his making a mockery of social equity goals.

As stated in the Sunset review, Capital Metro is on an unsustainable financial trend. It has been on this trend for a long time. In commercial, corporate terms, Capital Metro is dangerously close to “bankruptcy.” For years, Capital Metro’s has projected its expenses to exceed its income and, yet, the board and management proceeded as if there was no issue. They did not consider and make the tough decisions to change these negative trends.

Fundamental to financial sustainability is to understand that “cost effectiveness” is the foundation of sustainability. Some 90% of Capital Metro’s spending is funded with taxes and while it is a very large amount per year, the tax funds do have a limit. If the service being provided is not cost effective, then the quantity and quality of service is further limited or, the more that ineffective service is extended, the greater the financial deficit becomes until insolvency.

Cost effectiveness is the foundation for a sustainable trend and “long-term financial viability” but it is not mentioned in the Sunset report. It is the most important performance measure to assure financial sustainability and maximum coverage of transit service. For example, at the top level of thought and planning, a transit system must be based on a valid “alternatives analysis” to determine the most cost effective method of achieving an established transit goal. Capital Metro has a long history of not providing cost effectiveness information regarding transit modes, of avoiding its discussion and providing no transparency. Capital Metro never provided this information for light rail or for the commuter rail. If the general public knew how much each commuter rider was being subsidized by taxpayers, they would very likely totally rejected this train and any future such ineffective system.

Another example of Capital Metro’s ill-advised previous plans can be examined by looking back to their Light Rail plan and vote in 2000: Where would public transit be today if voters had approved the light rail in 2000? Cap Metro presented costs of $1.9 billion (1999 dollars) which would clearly would have been much more and close to double this amount. Cap Metro would have torn up many of Austin’s major downtown streets, causing massive congestion and closing hundreds of small businesses. Confirmed by today’s revelations, they clearly did not have adequate funds to finish light rail and would have stopped work prior to completion, leaving the city in a transportation nightmare. Public transit would have been bankrupt long ago, placing heavy burdens on low income citizens.

The original comments submitted to the Sunset Commission are attached. These comments elaborate on much of the above and discuss several other important areas including a proposed board selection process, Capital Metro’s planning deficiencies and the need for a thorough overall operations and financial audit of Capital Metro in addition to the current limited review by the Sunset Commission. These comments are still valid and few have been addressed by the current Sunset review.

Thank you for all you do.

Best regards,

Jim Skaggs, Coalition on Sustainable Transportation

Below are answers to Sunset Review Questions late in 2009.

Preliminary Issue List
Capital Metropolitan Transportation Authority (Capital Metro)

Name: Jim Skaggs _________________________________

Organization you represent: Coalition On Sustainable Transportation (COST) _______

1. What changes, if any, could help Capital Metro more effectively provide public transportation services?

Answer: Cap Metro needs to establish its primary mission and focus on doing it well. It must prioritize its services and establish cost-effective services or it cannot be sustainable. Cap Metro cannot have a primary mission to provide transit to those who need it and have no choice while spending hugely disproportionate percentages of its resources to provide exorbitantly expensive, highly subsidized train transit to very few people who primarily have an alternative. This results in the vast majority of transit riders, who use the bus, to experience degraded service with higher fares and reduced service. These majority bus riders bear the burdens caused by subsidizing the few who ride train transit.

Cap Metro’s primary objective should be to provide transit to those who need it and have no choice. This is very different than their current objective to provide transit as a means of offering alternatives to those who already have transportation choices. These two very different transit missions are diametrically opposed and cannot be sustained within reasonable budgets. Before Cap Metro can serve enough people to make any difference (even if enough would choose the service and this is not likely) with this strategy of highly subsidized train service; the agency will be bankrupt as it is now approaching. Finding more ways to fund the agency and the wasteful spending of more tax dollars is not a sustainable answer to this dichotomy.

This is why Cap Metro must thoroughly restructure its mission and focus. As discussed below, new, experienced leadership is required at the board level as well as the hiring of a CEO/President who is an inspirational leader with strong credentials in complex organizational management. It is obvious, this leader will need to reorganize Cap Metro and replace a number of key management people with those qualified for this challenging task.

2. What changes, if any, should be made in the operations and oversight of Capital Metro?

Answer: Capital Metro should have a strong, experienced board as discussed in question 3 below. Cap Metro should be required to establish sound performance measures and regularly report performance relative to these measures. Cap Metro should be required to report its financial and operating performance using transparent methods which clearly reveal its performance. Today, Cap Metro’s annual report is so obfuscated in content and format that it is impossible for the board, management, oversight authorities or any member of the public to decipher their true performance. For example, we would challenge anyone to read this report and have a clear understanding of even Cap Metro’s basic performance in its major operating segments such as freight rail, the bus system or the commuter train. Capital Metro seems to purposely allocate and present cost incorrectly to mislead anyone reading the report.

Cap Metro should report its status and performance on at least a monthly basis with absolute integrity. For many years, Cap Metro’s distorted and misleading reports have deceived the public as well as most of its own management and board that were not qualified to thoroughly examine and understand the reporting. Capital Metro is so secretive about their financial status that a previous board member complained that they could not even receive the financial data they requested and many citizens have been denied information through the freedom of information act.

The State’s transit agency formation and operating regulations provide little accountability for Cap Metro and the procedures for selecting the board of directors and management has consistently resulted in filling these key agency leadership and management positions with people who are not qualified resulting in the same result: unacceptable performance. The answer to question 3 below further addresses this issue.

3. What changes, if any, should be made to the membership and length of terms of Capital Metro’s board members?

Answer: The Cap Metro Board should be populated with people experienced in the management of complex operations with budgets of several hundred million dollars per year. It can be argued that essentially none of the board members over the past, more than 10 years and probably much further back, have little or no experience to qualify them to be Cap Metro board members.

Senator Watson’s bill to improve the board’s expertise was a reasonable idea but its implementation has fallen very short of the desired improvement goals. It will likely fail to make measurable improvements. The board members selected under the new bill have minimal experience and do not meet any reasonable definition of the bill’s required experience. These members will be little, if any, improvement over the previous board members. In addition, the two new members selected to meet the bill’s requirement have strong conflicts of interests with their careers which will prevent them from making the rationale, objective decisions needed even if they possessed the required experience and capability. The several elected officials on the current Cap Metro board also present similar conflicts of interest in addition to their lack of applicable management and business leadership credentials.

The board should have one-year terms consistent with any public corporation and the board members should be elected each year by the people within the Cap Metro area. These elections could be cost effectively conducted by mail-in, electronic ballot or personal appearance at the annual meeting as in corporate board situations. A brief resume of each candidate and a brief candidate statement could be part of the voting information.

The processes used to select board members have failed for more than 20 years to produce qualified board members. A comprehensive overhaul is clearly needed to produce qualified board members who will serve the best overall interest of Cap Metro’s shareholders/stakeholders including taxpayers and transit riders. This could be done by establishing specific and firm criteria for all board members. An expert, independent panel should be selected based on specified experience and knowledge. The panel should exclude all elected officials and parties with potential conflicts of interests. This panel would review applications and interview candidates to assure they meet required qualifications. Candidates meeting qualifications would be placed on the ballot along with incumbent board members who qualify. Those receiving the highest number of votes from the voting public are elected for a one-year term. The number of candidates will probably not be large but a maximum number could be established at no more that double the number of board members. This could be done by the ‘expert panel’ scoring candidates qualifications and putting the top scoring people on the ballot. This system includes accountability with a series of needed checks and balances and addresses conflicts of interest which the current selection process does not provide.

It may also be appropriate to consider paying Cap Metro Board members a nominal fee. This may attract qualified people which have not volunteered and been selected for the board to date. This lack of qualified members is also the result of another underlying weakness in the process: Past board selections and the current selection of members under the new Watson bill have inherent weaknesses in that most of those involved, including the CAMPO committee also have little experience to judge qualified board members or have a biased agenda in filling board seats. This is addressed in the paragraph above.

4. How well does Capital Metro’s long range planning fit with the region’s transportation needs, and could strategic planning be improved?

Answer: Cap Metro’s long range planning has been from superficial to shameful for many years. It does not start with clearly delineated, specific primary missions and flow to a functional evaluation of the most effective manner to meet the mission’s goals. Cap Metro rarely follows its plans and rarely succeeds in implementing them as specified. The plans are not based on sound functional analysis of the alternative methods to address specified goals. Cap Metro’s planning and actions seem to be more driven by politics and ideology than sound thinking, analysis and evaluation using the abundant experience throughout the nation.

Plans could be dramatically improved by establishing the primary mission, performing sound alternatives analysis to determine the most cost-effective approach to achieve the mission and focusing the agency and its resources on this mission’s priorities.

Cap Metro must focus on providing effective transit service to those who need transit and have no alternative. Cap Metro’s current transit mission dichotomy results in making a mockery of the community’s stated goals for social equity. Those citizens with lower incomes, and no transportation alternative but transit, are being negatively impacted by major disproportionate subsidies for those who will ride rail transit, many of whom have an alternative mode of transportation. These large subsidies provide little or no societal benefit and drain resources resulting in inferior transit for those who have no choice who bear the burdens are higher transit fares, reduced bus service (especially to those areas which traditionally have higher percentages of low income citizens) and longer trips, as reflected in Cap Metro’s 2010 plan. The current Cap Metro plan/strategy to degrade current and needed transit service for more than 40,000 daily bus riders in order to serve a maximum of 1,000 people (if all train cars are full: sitting and standing room) is not a responsible transit plan. Transit and the overall community would be better served if Cap Metro, even after investing well over a hundred million dollars, would cancel the commuter train and focus future resources on the goal to establish an excellent bus system. Of course, this will not happen as too many people have too much ego invested and perceived embarrassment to stop. However, the $8-10 million (and growing) in annual commuter rail operating expenses will continue to siphon funds from the backbone bus system and degrade social equity.

Capital Metro’s planning (or lack there of) seemed to provide it no clue, or the clues were ignored by management and the board, that its approach was leading to financial disaster. Prior to “discovering” that it was approaching bankruptcy, Capital Metro spent millions in preliminary planning and had plans to move ahead with a central downtown circulator using rail transit. This plan was focusing on rail transit through downtown on Congress Avenue. A plan to install an exorbitantly expensive fixed rail transit system totally ignores the following:

a. Austin is an adolescent city and is growing and changing rapidly. Fixed rail transit provides little flexibility to meet changing demands. It would be very expensive to move or revise. For example: The Waller Creek project could significantly change the downtown circulator needs and rail transit on Congress Avenue would not serve Waller Creek.

b. Rail transit would the most expensive alternative and would offer no advantages over the use of buses. In fact, there are many disadvantages compared to buses. The high cost of rail would require subsidizing the relatively few rail riders by city taxpayers much as Cap Metro’s commuter will require huge subsidies, an average of 10 times that of a bus.

c. A train on Congress Avenue would significantly increase congestion for 99+% of the travelers.

d. A train mingling with cars and pedestrians would significantly increase safety hazards.

e. The myriad of electric wires, support poles and train connecting devices would provide visual obstruction of some of the most cherished views of Congress Avenue and the capital building. These views belong to all the citizens of Texas.

f. Fixed rail on Congress Avenue would prevent many of the civic uses of this traditional street for major parades, charity runs, celebrations, marches, etc.

Preceding the light rail election in 2000, Cap Metro was embarked on a $1.9 billion (by their estimate) light rail plan. The fact that their currently advertised $105 million (it really cost much more with proper cost allocation) commuter rail has brought them almost to financial bankruptcy is an indicator of just how inadequate and dangerous their planning in 2000 was for a light rail which most experts would have estimated to cost more than $3.0 billion. Cap Metro’s light rail plan also projected one-third of the ridership would be UT students as it was at the time for buses. At the time, UT ridership was about 8.5 million boardings per year. Today, the UT ridership is down to 5.3 million in the past 2009 fiscal year, a 37% drop: Another major flaw in Cap Metro planning.

It is likely that many of the underlying problems defined in the 1998 State Comptroller’s audit were not adequately addressed in the short time between the audit and Cap Metro focusing its primary energy on a light rail proposal for the 2000 election. This probably led to many of the shortcomings in the proposal. In a similar move, following the light rail election loss, Cap Metro spent millions for about three years continuing to study light rail. Then in the fall of 2003, they suddenly stopped the light rail work and shifted to the current commuter rail concept with just over a year till the election in 2004. This was clearly not enough time to do the proper evaluation, alternative analysis and engineering which led to the many problems we have witnessed in implementing the commuter, which still has an indefinite start date.

The good news is that Capital Metro ran out of money before wasting another more than a billion dollars on a downtown rail. The bad news is that the city of Austin has picked up the rail baton and is moving full speed while making many of the same major mistakes Capital Metro made in implementing the commuter rail and in planning for the circulator.

Capital Metro’s plans do not adequately consider the fact that the percentage of area jobs is rapidly decreasing in the central, downtown area and increasing in the suburbs. In most major cities, the downtown employment is about 10% of the regional employment and the Austin area is approaching this relationship. Transit plans have been based primarily on a wheel spoke concept where the primary destination is the central city which is no longer the single primary destination.

Capital Metro has attempted to establish itself as a ‘land use’ planning authority and implementer. It has a department for this and has significantly based its planning on increasing the living density around train stations and on development near stations. There is no foundation of experience to indicate this approach to be successful or cost-effective in significantly increasing transit ridership or providing significant societal benefits.

There will always be factions which, in sum, believe a public transit agency should do all things for all people. Addressing all demands is not possible within any reasonable bounds of financial responsibility and is the main reason that a specific, primary mission must be established and addressed with strong focus. Transit systems which are inefficient and not cost effective (Note: “cost-effective” does not mean profitable because no public transit system in the Nation is profitable) will be inferior for those who need it most and will be unsustainable. We are witnessing this with Capital Metro and transit agencies in many other cities.

Capital Metro should seriously reevaluate the wisdom of the plan for being in the freight business which it has been operating for many years. They have lost many tens of millions of dollars in this operation but have not reported these losses in a transparent way which could easily be understood by the taxpayers who primarily fund Cap Metro’s operation. Cap Metro alleges its plan was to retain the freight track ownership until needed for passenger rail. If so, the millions in freight loses should be allocated to the cost of the commuter train capital and the continuing freight looses should be allocated to the commuter rail operations. The legality of Cap Metro’s retention of this track while loosing many million of dollars over many years should be reviewed: In truth, this track has no valid relationship to Cap Metro’s primary mission and has led to the added, wasteful spending of hundreds of millions to put passenger trains on a small portion of the track.

Some deny that Cap Metro is a social service agency but by every sensible definition this is a major reason for its existence. It receives well over 90% of its operating budget from taxpayers and distributes services to a very small percentage of the citizens at highly subsidized rates. A large portion of its customers are low income. A major and priority service to the community is this social service mission of serving those who need transit, do not have an alternative and cannot afford to pay the full cost. Cap Metro provides negligible or negative societal benefits for congestion, air quality or development.

5. Does Capital Metro provide sufficient opportunities for public input and incorporate this input into its planning efforts? If not, how should this be changed?

Answer: Most major decisions within Cap Metro seem to be essentially pre-determined by those controlling Cap Metro. Public input is primarily to comply with regulations and is not structured to gather input which is truly representative of the region. Much of the “so called” public input is provided by the same, self-selected and limited number of activist people and groups who have a definite and biased agenda.

The only way to achieve true, representative public input would be through a public input selection process which would assure required numbers of geographically dispersed, representative samples of people to reflect the opinions of the entire community. The current “self-selection” process for public participants will not provide representative and adequate public input and results in major distortions regarding public input. It is probably an expensive waste of time.

6. Please add any other comments about Capital Metro. If you suggest any changes, please provide:

● background information on the current problem and what you would like to see changed,
● benefits of your recommendation, and
● any potential difficulties that may arise from implementing your recommendation.

Answers:

1. Audit: There should be an immediate financial and operations audit of Cap Metro by unrelated parties who are experienced and thoroughly understand public transit financial and operating performance. The last major State Comptroller’s audit of Cap Metro was in 1998 and its report was filled with major issues as reflected in the report’s introduction: “TPR’s review of Capital Metro found abundant evidence of the results of irresponsible management. Capital Metro’s board and managers have made expensive, embarrassing mistakes; more to the point, however, they have been allowed to go on repeating them, year after year, with no consequences and no apparent ability to learn from the past.” In appears that much of this irresponsible management and lack of accountability still exist 11 years later in 2009. The changes made in Cap Metro leadership and operations as a result of the 1998 audit were not adequate to address the underlying issues and there were no follow-up similar audits. It now appears that changes being made currently are repeating the same errors of 1998 and do not adequately address these same issues, leaving a high probability of future continuing problems.

There are many indications there has been a gross lack of transparency and numerous misleading and incorrect recordings and presentations of Capital Metro’s financial and operating performance and projections which seem to be designed to purposefully hide Capital Metro’s poor performance and mistakes and deceive and mislead the public and those to which the agency is accountable.

The fairly recent departure of a long term Capital Metro board chairman, the current departure of the long term Chief Executive and the poor performance and apparent irregularities all make it obvious that a financial and operations audit is appropriate and demanded to provide a sound baseline for the future operation of Capital Metro.

We would be pleased to recommend potential, qualified folks to participate in this important audit.

2. Management Processes: Cap Metro should use sound, tried and proven approaches in evaluating transit systems and modes. Cap Metro has not followed structured and disciplined engineering and evaluation approaches to determine the most effective alternative to achieve established transit objectives nor have they followed these approaches in implementing transit projects. This has and is resulting in the wasteful spending of hundreds of millions of dollars.

Cap Metro did not follow project evaluation steps and approaches required by the federal government to be considered for partial government funding of the commuter rail. Therefore, local taxpayers paid the $30 million which Cap Metro promised would be paid by the federal government and the additional tens of millions which were wasted because Cap Metro did not follow the governments specified process. This is a major reason Cap Metro faces bankruptcy.

In its response to the Sunset Commission, Cap Metro blames numerous outside influences for their missteps and failures. For example, Cap Metro points to the requirement for an election as a major reason for its failings in implementing the commuter on the schedule and within the budget promised. This excuse is absurd and rather childish: Cap Metro alleges that spending a few million to take the necessary steps on the front end would have resulted in criticism had they lost the election. However, Cap Metro, did not seem to have concern for the certain criticism for not taking the necessary management steps and costing the taxpayers many times the cost of taking the right steps and missing the schedule by being at least 2 years late? Nor has Cap Metro been concerned for the wasteful spending of tens of millions of dollars hanging on to the freight business while waiting to put a passenger train on the tracks and continuing to suffer freight looses which they do not consider a cost of the commuter train. These clumsily contrived “hindsight” excuses and rationale are “smoke screens” designed to deceive the public and to hide the real problems and issues which are rooted in their incompetence.

3. Cost-effective analysis and selection: Cap Metro’s ‘All Systems Go’ plan released in 2004 promised several ‘Express Bus’ and ‘Rapid Bus’ lines and the first Rapid Bus was to start operations in early 2007. This line is still years away because the resource drain and Capital Metro’s focus on the commuter prevented moving ahead with Rapid Bus. This first Rapid Bus line (North Lamar – South Congress) would have provided dramatically improved transit service for a minimum of 6 times as many people projected to ride the commuter train daily, for a fraction of the costs and with excellent flexibility to immediately respond to changing transit demands.

Express Bus and Rapid Bus can do anything rail transit can do for a fraction of the costs. In most cases, the Express Bus routes along the commuter rail corridor can provide faster, more comfortable trips for a fraction of the taxpayer subsidy per passenger and provide much greater cost-effective flexibility than the commuter train.
4. Communications: For many years, Capital Metro has communicated and reported with a lack of transparency and integrity. Its communications are distorted to mislead the public and it has lied about many issues. One fundamental fact is that Cap Metro has experienced a 10 year declining trend in ridership and a 10 year increasing trend in costs. Current operations will continue these trends. This is not sustainable and should be a foundation issue immediately addressed by the board and management.

5. Broken Laws: Capital Metro appears to be have broken several laws in their operations. Among these are the following Texas Transportation codes:

a. Code 451.061 states a transit agency can only collect taxes sufficient to meet its obligations. For years Capital Metro collected tax amounts far in excess of its obligations resulting in many wasteful spending examples and the building of a huge cash reserve. Increasing cost substantially in excess of inflation while experiencing decreasing ridership rapidly depleted the reserves leading to Cap Metro’s current state of projected bankruptcy. The State Comptroller’s audit in 1998 stated “In other words, the authority collects far more from its taxpayers than it needs to operate its present transportation system.”

b. Code 451.103 states that an agency cannot exceed its approved budget of operating expenses. Cap Metro has exceeded their budget.

c. Code 451.153 requires the major municipality (Austin) in the Cap Metro area to approve transit stations based on meeting specified criteria. I doubt Austin City has approved Cap Metro’s commuter train stations and these stations do not meet many of the State Code’s required criteria for stations.

d. Code 451.454 requires a performance audit at least every 4 years. While Cap Metro has contracted for what they called audits to meet this requirement, it was clearly a sham, as Madoff’s audits were. These audits did not uncover any of the underlying major issues which are now being publicly exposed. Audits were not performed by unconflicted third parties who have thorough knowledge of transit operations and financial performance.

In addition, there have been numerous instances of Cap Metro evading responses to ‘Freedom of Information’ requests and, unfortunately, some were ill-advisedly upheld by the Attorney General’s Office with little investigation of the situation.

As mentioned above, the operation of the freight business is very questionable.

6. Austin City Transit and Development: It is a major mistake for the City of Austin to follow its current path of picking up Capital Metro’s dropped train transit baton. The city is now proceeding down a similar path which Cap Metro followed leading to its major financial demise. The city is ignoring the need for sound, disciplined approaches with an unbiased alternatives analysis and is proceeding with the pre-determined view that a train is the answer to transit needs in the central Austin area. This will lead to the same unsustainable, high cost, highly subsidized train transit which Cap Metro has created with the commuter. It will not provide responsible cost-benefit solutions and will clearly result in net negative community benefits. The City should not decide to be another public transit agency serving in the same area as Capital Metro.

Some Austin City leaders have alleged a downtown train will increase development and property tax receipts. There is no foundation for this claim. A study commissioned by the Austin City Council to evaluate the impact of downtown rail transit on development indicated no additional gain in downtown property values or tax revenues. The study indicated it was a zero-sum situation: While a train may result in developments near the train station, it would be at the expense of the developments being some other place in the area and the net result on property values and taxes is zero. The facts are very obvious: Downtown Austin is blessed to be one of the fastest growing major cities in the nation and none of it has been inspired by trains on downtown streets.

In 1985, voters approved the formation of the Capital Metropolitan Transportation Authority (Capital Metro) as the sole public transit agency for this region and approved funding the agency with one penny of the sales tax collected in the Capital Metro area. Another public transit agency serving the same area will complicate and confuse the public transit situation while creating substantial additional costs. This will only serve to further degrade transit service while dramatically increasing costs. This very large cost increase will result in unacceptable and unsustainable tax increases for the citizens of the region while an overwhelming percentage of the citizens will experience no or negative benefits. We should focus on fixing the problems at Capital Metro and not compounding or duplicating the problems with another, overlapping transit agency. It is not at all clear that the federal government system can deal with the funding of two transit agencies in the same area. A recent Washington Post article about the Washington, DC metro contains a final line very applicable to Austin: “But giving Metro more money without addressing its misplaced priorities will only encourage more of the same.”

7. Better ideas than outdated rail technology:

Cap Metro has been so focused on train solutions that it has resisted evaluating new ideas for more effective transit. It has put Express Bus and Rapid Bus on a lower priority and has not fully evaluated alternative concepts such as Cellular Mass Transit (CMT). CMT offers promise to provide more effective bus transit over a much broader area for much less cost. CMT is a system of dividing the region into “cells” and connecting cell to cell using express buses with local bus/van distribution to final destinations, all using ‘right-sized’ vehicles which are on-demand with minimum wait times. This cellular approach contrasts to the primary ‘wheel spoke’ approach now used and can significantly reduce travel times for many while covering broader area two-way transit.

8. Six steps to success:

Capital Metro has the primary responsibility for public transit services which are a vital part of Austin’s and the region’s social fabric and quality-of-life for many of its citizens. Capital Metro is floundering in its critical roll of providing effective transit services. The path Capital Metro is pursuing has proven to be unsustainable and is resulting in degraded transit services for the citizens of the community who depend on transit daily and have no alternative. These citizens are faced with rapidly rising fares and decreased service.

Experience would indicate that major negative trends, such as those currently established by Capital Metro, can usually only be changed if major actions are taken and these actions almost always include changes in a significant portion of the leadership team.

The agency is experiencing its greatest challenges since its formation in 1985. It will require leadership with extensive experience and demonstrated success in the management of large, complex government, private or publicly traded organizations, through extremely difficult periods. It will take this knowledge, skills and understanding to constructively address Capital Metro’s many issues effectively and very quickly.
Capital Metro leadership must have accountability as discussed earlier and needs the following major six ingredients to successfully manage its operation and provide public transit which serves the greater good of the region:

1. Experience: Almost all of Capital Metro board members have very little experience to qualify them for board positions of a complex agency spending several hundred million tax dollars per year with projections to spend some $7 billion over the next twenty years. The agency needs a major overhaul of its leadership with an experienced team ready to hit the ground running. This is not a learn-on-the-job situation.

2. Vision: Capital Metro’s board and management must clearly define the agencies specific mission priorities and its realistic and sustainable vision for the future. These are clearly not understood today by the community or the agency. The agency seems confused and trying to be all things for all people in a poor attempt to satisfy many factions and political forces. This vision cannot be a broad, all-encompassing statement designed to please all, as this leads to the many problems which exist and are described above.

3. Focus: The agency must focus, focus, focus on its defined priorities and not be distracted by forces to take divergent paths which would dilute its resources of time, energy and money.

4. Communications: The agency must operate with total transparency. It must communicate often and clearly with all constituents: employees, riders, citizens, regional political leaders, and communities.

5. Disciplined management processes: As experience has shown, many of the agency’s major problems could have been avoided by the application of disciplined, structured, well know and developed management processes and approaches to complex programs, projects and operations.

6. Integrity: Last on this list, but of vital importance, is Capital Metro leadership’s unwavering commitment to operate with absolute transparency and integrity in every aspect of the operation. The essence of management is “doing what you say” and this is rooted in integrity. Integrity immediately brings honesty and ethics to mind. It is certainly these, but, in a much broader sense, it includes credibility, sincerity, reliability, principle, decency, right, responsibility and character.

Thank you for this opportunity to respond to the Sunset Advisory Commission’s questions. We stand ready to be of any further help you may need of us. We urge your review to be comprehensive, candid and “hard hitting” where needed. Capital Metro has not had a thorough, frank review since the Texas Comptroller’s review in 1998. This review’s findings of gross incompetence and errors probably should have been followed up frequently until satisfactory performance was achieved. The “softball” reviews of years since 1998 have not been impactful and have resulted in little change to the agency’s unacceptable operations.