Houston Metro and Austin City with Cap Metro Competing for ‘Lack of Integrity’ award.

COST Commentary: Transparency is a word often used in criticizing public agencies. In particular, numerous transit agencies in cities around the nation have recently experienced the loss of their top executive due to the agencies’ severe poor performance issues, usually involving fiscal mismanagement and often due to much higher costs and lower ridership for new train transit lines.

Criticism for ‘lack of transparency’ is a common fall-out in poorly performing transit agencies. The article below by Bill King discusses this situation in Houston surrounding the recent replacement of Houston Metro’s top executive. The article has many parallels to the Cap Metro and City of Austin approaches and ‘lack of transparency’ regarding Austin rail transit. Cap Metro lost its top executive in a similar situation with reports of “lack of transparency.” Austin City still has its top transportation executive but they are very early in their ambitions to install passenger rail trolleys in the central downtown area.

COST would suggest that in many cases, this so-called ‘lack of transparency” should be more appropriately labeled: ‘lack of campetence coupled with lack of integrity.’

COST has highlighted below several of King’s key sobering and refreshing points which Austin should heed before it makes the same mistakes leading to political fall-out and financial damage which are far more severe than facing the issues now with responsibility and transparency. As King says below: “It would be better if we could kill this boondoggle now–.”

Note by Barry Klein of Houston:

Kill the boondoggle, says Bill King
Houston Metro broke a key promise made to voters in 2003 when it started rail construction in 2008 before getting federal commitments. At that time Metro stated it could build four extensions for $1.2 billion. Now Metro has expanded the plan to six corridors, the newest being along US 90-A to Fort Bend County. Bill King, a featured op-ed writer for the Houston Chronicle, has called for a new election in the past. He says here:

“So far Metro has spent more than $300 million on the LRT project. This includes when it inexplicably began construction last year prior to the Federal Transit Administration agreeing to provide the federal match, something Metro promised in the 2003 referendum it would not do.” And ” It would be better if we could kill this boondoggle now, once and for all….”

Voters should demand a new election in which all the costs and sources of revenue are stated in the ballot language.
B Klein

Metro finally faces facts about its financial straits

Houston Chronicle op-ed
Sept. 22, 2010, 10:16PM

It is important to give credit when it is due. And it is due for Gilbert Garcia and George Greanias, Metro’s new board chair and CEO, respectively, for their candid budget presentation last week. It was by far the most realistic and transparent discussion of Metro’s finances I have seen since I have been following the agency.

First, their presentation admitted what many Metro observers had been saying for some time. The previous Metro administration used the one-fourth cent mobility funds earmarked for the member cities’ street projects for other purposes. Virtually all of the diversion has gone to pay for the light rail transit project.

So far Metro has spent more than $300 million on the LRT project. This includes when it inexplicably began construction last year prior to the Federal Transit Administration agreeing to provide the federal match, something Metro promised in the 2003 referendum it would not do.

The previous administration made a huge bet with the taxpayers’ money that the grants would be forthcoming in short order, a bet that went sour early this month with the Buy America fiasco.

To cover the shortfall, Metro has borrowed heavily in the commercial paper market and now owes $167 million on these short-term notes. Even so, Metro will finish its fiscal year with a fund balance of only $64 million, the lowest in more than a decade.

The good news is that instead of the cognitive dissonance that we got from the previous administration, the new management team is taking sensible steps to deal with the situation.

For example, the budget presentation says that Metro will “pace MetroRail expansion to funds availability.” Now there is a novel idea … don’t start building something until you have the money to pay for it.

The Garcia/Greanias team also should be commended for including in the budget a commitment not to raise fares. It is always tempting for a transit agency in a financial crisis to raise fares to attempt to solve its financial problems. It is almost always a self-defeating strategy. Metro proved this with its 2008 fare increase that has driven ridership down to the lowest level in many years. It is also viciously regressive, placing the burden on working families that rely on public transportation. I have always found it ironic that my “progressive” friends, who are generally such ardent supporters of the LRT, have no compunction about having poor people pay for it.

What the new budget presentation did not say, but what is painfully obvious from its content, is that Metro does not even vaguely have the financial resources to build a $3 billion to $4 billion project, even if it can get out of the FTA doghouse and get federal funding for it. With the federal government clearly headed toward a more austere environment and even Obama’s FTA administrator publicly questioning the wisdom of additional rail investment, how likely is it that Houston will see significant rail money any time soon? It is not like the Obama administration has been trying to find ways to send money to Houston. Think the BAE plant in Sealy, NASA, offshore drilling ban and none of the high speed rail money coming to Texas.

I do not know if Garcia and Greanias have in their own minds concluded that Metro cannot afford the LRT project.But they are smart guys, and if they have not yet, they soon will. Even if they have, it is probably too early to expect the new team to admit the logical implications of their budget presentation. Politically, it is difficult to admit that we spent six years and a few hundred million dollars going down a rabbit trail.

More likely the LRT will die a death of a thousand cuts with a series of delays before being canceled outright. And that is unfortunate. It would be better if we could kill this boondoggle now, once and for all, and get about the business of implementing realistic transit projects to improve public transportation in our region.

King’s e-mail address is BKing@wek.net.


(1) barryklein wrote:
Metro is hiding the cost of the rail expansion plan but has revealed that its share will be $2.8 billion. Since the Feds are expected to pick up half the cost the total will be $5.6 billion. We should assume Metro has low balled the true cost as it did with the Main street line (a 40% error in that case). Thus the real cost is likely well above $6 billion. Add on interest charges and you are talking serious money. All this to replace one percent of the bus system. Why do it? Buses are cheaper.
9/23/2010 11:50:28 AM

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