Portland is Not a Transit Role Model for Austin

COST Commentary: There have been numerous articles posted on this site over the past few years which paint a picture of Portland’s expansion of a very high cost light rail transit system during the past 25 years and, more recently, to expand a streetcar system. These high cost rail systems and related tax abatements and incentives for development near transit stations have reduced Portland’s general fund, placing severe stress on budgets for all basic city services. Increasing transit fares and bus service reductions have resulted in lower income citizens and all taxpayers bearing a heavy burden to highly subsidize rail riders which are, mostly, not low income citizens. Meanwhile, Portland’s rail has no measurable impact on congestion. The percentage of people using transit for work commuting and transit’s share of total urban passenger miles is less today than it was with the bus only system, before light rail was implemented in the 1980s.

Portland is considered and perceived by many to be the “Mecca” or model for rail transit in cities primarily developed after the automobile. It is difficult and often misleading to compare any two cities because there are many factors and conditions are different for every city. However some indicators and clues from real experience are important to consider and understand as Austin pursues its future options for mobility and transportation. It is useful to study Portland because it has achieved the greatest rail ridership of the new light rail cities.

A quick comparison of census data on Portland and Austin area transit ridership shows both cities have a very small percentage, but, Portland has a higher percentage of work transit commuters. The Portland Metropolitan Statistical Area (MSA) has about 6.1% of its work trips on transit or about 3.3% more total work commuters using transit. This is more than double the Austin MSA percentage. Austin has a total of about 0.6% more commuters using carpooling than Portland does. Austin has twice as many people working at home as using public transit for the work trip and Portland has about the same number of transit commuters as those who work at home. Portland has about 2.8% and Austin about 1.8% of commuters walking to work. If you have spent time in Portland, you understand that Portland’s year-round weather is far more conducive to walking and riding public transit than central Texas’ weather, primarily, extremely hot and humid summers. Austin has about the national average percentage (76%) of drive alone commuters and Portland is lower at 71.6.

According to the Texas Transportation Institute (TTI), Austin and Portland comparisons reveal:

-Austin has less congested travel as a percentage of peak Vehicle Miles Traveled (VMT).

-The two cities have about the same congestion as a percentage of lane miles.

-Austin has almost 75% of Portland’s total person hour delay which is about the same as Peak Travelers and commuters showing almost no difference.

-The two cities have about the same Delay per Peak Auto Commuter.

-Austin’s travel time index (TTI) is 1.28 reflecting slightly more congestion than Portland’s 1.25, but Austin’s has been improving faster over the past 5 years since Austin had its peak TTI.

-Portland has more than 3 times the transit trips and passenger miles, or 2 times per capita, while Austin has more freeway and arterial vehicle miles per capita.

The bottom line is: Portland and Austin areas are slightly different in conditions and travel modes, including the use of public transit, reflecting the choice of citizens under these different conditions. The mode differences are minimal and are at the margin of the main mode of transportation which is the private vehicle/automobile. With minor differences in transportation modes, Portland and Austin have almost identical commuting times and close to the national average, according to the census. In both Portland and Austin, the vast majority of passenger miles traveled are on the roadways in private vehicles. It is not likely possible, but, assuming it could be done, Portland has shown the costs to substantially change these human choices would be exorbitantly expensive for taxpayers and would not provide societal benefits which serve the greater-good of the overall community. Portland has shown what it takes to become the highest train ridership transit agency in the US. It is not cost effective and it is detrimental to the overall community. There are far better alternatives and responsible expenditure of taxpayer funds.

Portland’s transit fares are already double Austin’s fares which have been increased three times in the past three years. Portland’s transit fares are expected to increase again next year to help fill a minimum $17 million budget gap. As in Austin, fare increases have been accompanied by bus service reductions and both actions decrease ridership. This is a continuous cycle: Transit costs are rising faster than inflation and potential riders are driven away by the increased fares.

Portland’s operating revenues from fares, advertising and service contracts recover almost 30% of its operating costs/debt payments. This does not include the streetcar which is funded separately and recovers only about 10% of its operating costs from fares. As in all train transit systems, Portland’s light rail operating costs omitting bus shuttle and feeder costs. On this bases, recovery is actually higher than its bus system but more than $4 billion, and growing, has been spent for rail capital and none of this is recovered with fares. Austin has one of the lower operating recovery rates in the nation, recovering less than 10% of its total operating costs/debt payments. Austin’s fare recovery rate for its Red Line commuter rail operating costs/debt payment is even worse at less than 5%. This does not include recovery of its high capital costs. Considering capital costs, each weekday, two-way rider is subsidized more than $20,0000 per year ($40 per ride or $80 per day) by taxpayers and bus riders. Most of these 800-900 daily Red Line rail riders have automobile choices, whereas, most of the 40,000 daily bus riders, carrying a substantial portion of the burden of rail costs, do not have choices. This, cycle, degrades social equity as it has and is in many rail cities.

Even though Portland has spend billions of dollars on expanding their Light Rail system, the buses still carry in excess of 45% more bus riders. In Portland, as in Austin and other rail cities, bus riders shoulder much of the burden of high rail costs by paying higher fares, experiencing reduced service and being denied appropriate bus route expansions.

The major point is that Portland’s more than $4 billion dollars (and growing) spent on light rail to encourage and increase transit ridership use has been a wasteful investment. It has not succeeded and has not been cost-effective. It has had numerous negative consequences. It is ironic that Portland’s focus on rail transit as the foundation of a better city vision began long ago by elected officials who were strongly motivated by self-interest and personal political and economic gains.

Portland’s downtown circulator, rail streetcar can be appropriately compared to the service and function of much of the City of Austin’s proposed urban rail. As stated in the article below: “Unlike other forms of transit, the streetcar isn’t designed for commuters going to and from work. Instead, it caters to shoppers, diners and tourists who aren’t in a rush.” Another major source of the streetcar’s minimal ridership is its function as a slow shuttle between the central downtown bus and light rail stations/stops and downtown activity centers such as Portland State University, the Pearl District and the South Waterfront Development, just south of city center. Portland’s streetcar ridership was flat for several years prior to dropping substantially in 2011. The streetcar is facing a $16 million budget shortfall as discussed below.

Portland’s current streetcar line cost more than $100 million for 4 miles. The City of Austin is planning a 17 mile urban rail (downtown streetcar) which the city currently estimates to cost about $1.3 billion. Realistically Austin should expect to pay closer to $2 billion for urban rail. This urban rail will provide minuscule support to Austin’s transit and work commute needs, requiring exorbitantly high taxpayer subsidies for every rider. This $2 billion could be used to provide many important transportation needs which would far better serve the general Austin community. Urban rail will instead: increase congestion and create major downtown safety hazards, both of which will discourage people from coming downtown.

Portland is constructing a 3.35 mile, double track extension with an estimated cost of $148 million or $44 million per mile. While this total cost is 50% more than the current line, It is likely this expensive expansion will enjoy even less ridership.

From a more “global perspective,” Portland’s draconian land use and development regulations, its focus on high cost rail transit and other decisions have created unaffordable home prices throughout the city. In the 1980s, Portland’s housing affordability as measured by the ratio of median home price to median household income was similar to Austin’s and other Texas cities’ at around 3.0, which is the dividing line between affordable and various degrees of unaffordable. Since the 1980’s, Portland’s public policies increased this ration to 5.0 just prior to the economic crash, while its median household income remained below Austin’s. Texas’ major cities, other than Austin, have maintained ratios near 3.0. California cities had even higher pre-crash ratios up to 7,8 or 9. Thus, the economic collapse and the stampede to Texas. Austin’s affordability ratio, however, has moved up for the past several years and now stands higher than all major Texas cities at 3.5: the median house price is $195,000 or 11% above 5 years ago while the median household income has dropped 1.6%. One just needs to look at Portland and other cities to view this as a trend to be concerned with regarding Austin’s future. Austin is closing-in rapidly on Portland’s current median home price of $223,000 which is 22% below its level of $285,000 just 5 years ago. Dallas, Houston and San Antonio median home prices remain 28-35% below Portland and 18-25% below Austin.

Over the many years of Portland’s decreasing affordability, families moved from Portland and their public school enrollment declined from more than 80,000 to about 47,000 while many schools were closed, year after year. Austin now has more than 80,000 public school students. What impact will rising costs have on families here? We are already beginning to see it as some central schools are not filled. Numerous major companies moved from Portland because of the “unfriendly’ business environment. Portland’s unemployment percentage has been tracking close to the national average and higher than Austin.

During the 25 years from 1983 to 2008, Portland spend billions of dollars and opened the most expansive new light rail system in the nation, achieving the ninth ranking of 2.3% in the share of urban passenger miles traveled on transit. Portland started at 2.4% in 1983. This loss of transit share increased the roadway private vehicle share to 97.7%. Was it really worth it and did they responsibly spend tax funds and achieve “bang for the buck.” Where do they go from here with a train transit infrastructure which requires huge and growing annual operations funding and they are facing capital replacement cost of billions not many years away with zero in reserve funds.

Below are several articles, posted on this site, on various aspects of Portland’s rail venture:

Portland Going Nowhere: Austin must heed this transit failure story

Portland Light Rail: A Colossal Financial and Transit Failure

Portland Transit Tax Fraud

Portland: Mecca of transit’s role model fading as debt piles up

Voters Reject Transit Mecca, Portland, Bond Measure

Portland’s Vision of “Smart Growth” Utopia seems to be fading

Portland and St. Louis Light Rail Crime is Serious

Portland Light Rail Crime

The Portland Epistles: More Delusion

Portland, Ore., Struggles to Remain a Leader in Public Transit

Reduced revenue and federal funding, combined with unsustainable employee costs, are making it difficult for the Oregon city to stay on top.

by Ryan Holeywell, Governing Magazine, March 2012

When Peter Rogoff, the head of the Federal Transit Administration, visited Portland, Ore., earlier this year, local leaders and transit officials were abuzz. The city’s identity has long been tied to its reputation as a transit leader, and hosting the highest transit official in the land helped bolster those credentials.

Rogoff, in town as part of a conference on streetcars that drew local leaders from across the country, took time to praise the region while visiting the nearly completed Southwest Moody Avenue renovation. The $51 million project, which includes new traffic lanes, a bike and pedestrian path, and links to light rail and streetcar lines, is key to the region’s efforts to expand its transit system. But it means more than that to the city. It’s also touted as a way to encourage millions in redevelopment of the nearby waterfront.

The city and regional transit agency, Rogoff said in a press release, “have hit a home run with this project and demonstrate the enormous economic benefits transit can deliver to a community.” Rogoff’s presence at the site was a fitting capstone, since U.S. Department of Transportation Secretary Ray LaHood had been on hand for its groundbreaking a year earlier.

But the timing of the Rogoff visit could have been better: About 36 hours earlier, the suburban community of Lake Oswego, some seven miles south of downtown Portland, withdrew its support for a proposed new transit line that would have vastly expanded the Portland streetcar system. The withdrawal was due in part to questions about costs, which were initially pegged at $458 million. The decision was front page news in the local newspaper — and a bad omen for Portland. Despite Rogoff’s celebratory remarks, the decision makes the future of the new line unclear.

The Tri-County Metropolitan Transportation District of Oregon (TriMet), the regional transit agency that runs buses, commuter rail and light rail, faces a budget shortfall of up to $17 million next fiscal year. The Portland Bureau of Transportation, which manages the streetcar, faces a $16 million gap. Local officials are still crafting those budgets, but it’s virtually certain that leaders of a region long known for a commitment to multimodal transportation will have to increase fares and reduce service to balance budgets in 2013. Especially significant will be the likely end of the Free Rail Zone, an innovative program that provides no-cost rides in the center of the city and has come to symbolize the region’s commitment to easily accessible transit service. What’s less clear is how significant Portland’s transit challenges are in the long term. Most government leaders here say they are temporary setbacks that won’t change the region’s future priorities. But some critics say that’s exactly what needs to happen.

Transit systems nationwide are facing budget shortfalls similar to those of Portland — and in some cases vastly larger. Yet Portland occupies a unique space in the eyes of transit observers. Despite a population of less than 600,000, it’s considered one of the most influential voices — if not the model — for American transit. “Has there even been a case in American history of a city as relatively small as Portland having the same sort of pervasive impact on the policy and the built environment of America?” wrote urban affairs analyst Aaron Renn in The Oregonian in 2010. “It is truly remarkable, shocking even, and something I dare to suggest will likely never happen again.”

Neil McFarlane, general manager of TriMet, puts it more succinctly. “We outbox our weight class.”

From the window in his office, McFarlane can survey the agency’s fleet of buses and, more important, get a sense of how many of them are stuck at their central parking lot and how many are busy ferrying residents across the greater Portland region. Sporting a purple V-neck sweater and round spectacles, McFarlane has both the demeanor and look of a tenured college professor as he discusses the agency’s monumental budget struggles calmly while acknowledging their significance. “There are high expectations and lots of demand for our service, frankly, above and beyond what our financial capability is in the long term,” McFarlane says.

When he was named head of the agency two years ago in the midst of the economic downturn, he faced big challenges — namely a massive budget hole. Today, things aren’t much different. That’s due to several factors. One is the payroll tax, a unique feature that funds half the agency’s operations with a tax paid by local businesses based on employees’ gross wages. With employment down as a result of the recession, that revenue is about $3 million shy of where agency officials expected it to be. Another challenge is an estimated $4 million the agency expects to lose from a belt-tightening federal government. But most challenging, says McFarlane, are the unsustainable health benefits TriMet employees and retirees are receiving.

Right now, a TriMet employee with 10 years on the job can retire at age 55 and get full lifetime medical benefits with no deductible, no employee contribution and a co-pay of just $5, he says. TriMet’s own financial analysis illustrates just how costly such a generous package has become. In 2000, the cost of active and retiree health benefits accounted for about 12 percent of the agency’s payroll tax revenue. By 2014, it will gobble up more than a third of that revenue, and by 2020, it will account for more than half of it. “They promised themselves into a catastrophe, and riders are going to pay for it unless there’s a healthy fight,” says Michael Andersen, publisher of Portland Afoot, a monthly newsmagazine that covers transit in the region.

The recession has helped pull back the veneer on the agency’s business model, McFarlane says, and it’s clear that it’s broken. A state board recently rejected some cost savings tied to worker benefits that the agency hoped to achieve this year. That puts the budget another $5 million to $10 million in the hole, depending on how the battle between the agency and union plays out this spring. And this year isn’t an aberration for TriMet. Since the Great Recession began, the agency has absorbed approximately $60 million in revenue reductions and has been cutting service, increasing fares and shedding positions. Now, McFarlane says, “there’s no low-hanging fruit left.”

To solve the problem next year, TriMet has proposed fare increases — by nearly 20 percent in some cases — as well as eliminating the Free Rail Zone program, cutting bus service and reducing the frequency of light rail trains. When you take any of those steps, McFarlane acknowledges, “You’re messing with people’s lives.” (Earlier this year, riders could use TriMet’s website to vote on which remedies the agency should pursue using what The Oregonian calls “the most depressing interactive survey you’ve ever taken.”) If the agency makes service too spotty or fares too expensive, riders may switch to other means of transportation. And if those passengers are driven away for too long, it will be a challenge to get them back — even once revenue rebounds.

At the same time it works its way through seemingly intractable budget problems, TriMet is pursuing a massive expansion: A seven-mile, $1.5 billion light rail line to the suburb Milwaukie is scheduled to come online in 2015. That’s caused some observers to scratch their heads, wondering how the agency can have enough money for new projects but not enough to keep up existing operations. “They’re closing their eyes and jumping,” says Andersen. “They’re running on faith. And hopefully their faith is justified — it always has been in the past. I hope they’re right. I fear they’re wrong.”

Others have a less nuanced outlook. “Why do people think TriMet is a model for the rest of the country?” John Charles, president and CEO of the Cascade Policy Institute, asks from his office in a small business park just outside the Portland city limits. “Because they don’t know this,” he answers, referring to the agency’s structural budget problems. TriMet’s generous commitments to its workers have put it on a path that can’t be reversed, he argues, and he believes the agency isn’t being fully candid about just how bad the situation has become. McFarlane fully acknowledges that one-time concessions from the union won’t do his agency much good in the long term and emphasizes that big changes are necessary.

There are those who claim the region has focused so much on transit — specifically rail, which has high capital costs — that its officials are blind to the risks they’re taking. Charles and many other skeptics believe the current push is driven largely by local leaders’ desire to continue receiving national accolades for their commitment to rail. Indeed, when U.S. News & World Report ranked Portland the No. 1 city in America for transit last year, TriMet tooted its horn by plastering ads highlighting the ranking on its vehicles. (The agency had to pull them when the publication revised its rankings due to problems with its methodology.)

Charles says the rail-first approach is fundamentally wrong. The region could serve more people who really need transit for less money if it instead focused on buses. In a case of politics making strange bedfellows, that’s the same point that one local liberal group, OPAL Environmental Justice Oregon, continues to make. Jonathan Ostar, executive director of OPAL, has taken up the cause of low-income residents and argues that the region’s focus on rail is causing service cuts and fare hikes that create an undue burden on those who rely on transit the most: bus riders who don’t live on rail lines. “We’re in a region that invests in public transit but doesn’t necessarily invest in the modes of transit that speak to the needs of the most transit-dependent,” Ostar says. “If we’re building out the system with rail, why are we cutting the system with the bus? That sends a very clear message about who the system is for and who we want the system to be for.”

In 2010, voters in Multnomah, Clackamas and Washington counties rejected a bond that would have generated $125 million in revenue that TriMet could have used to replace older buses (and indirectly would have freed up millions in general fund revenue). The tab would have been $20 a year for a homeowner with a house worth $250,000. For Ostar, that’s a sign that bus service is an afterthought in otherwise progressive Portland. Transit-dependent riders represent only about 16 percent of TriMet customers. A recent city auditor’s survey found that transit is the primary form of transportation for only about 7 percent of residents.

McFarlane, for his part, says it’s an issue of costs. The agency is investing heavily in rail since its higher capacity means lower operation costs per-rider compared to buses. And TriMet’s contribution to the capital costs of the Milwaukie extension is $47.4 million — less than 5 percent of the total. Bonded out over a 25-year period, its annual impact isn’t nearly as costly as it would appear at first glance. But it’s still significant. Starting in 2016, debt service and operations on the new line will add $7 million in costs to an agency that has yet to balance its 2013 budget. But McFarlane says TriMet can’t afford to stay idle. With a million new residents projected for the region by 2035, neglecting expansion would be irresponsible, he argues.

Portland is a city that actually has two rail-based transit systems that are integrated — the light rail and a streetcar. In some ways, the challenges facing the streetcar may be the more significant, says Chris Smith, who serves on the streetcar system’s board. A new $150 million extension is scheduled to open later this year and will nearly double the level of service. TriMet and the city have each kicked in about $1.3 million for the new operations costs, but another $1 million per year is still needed — over and above the approximate $1 million that will be generated if free rides on the streetcar are eliminated. Another project known as “closing the loop” — connecting the new streetcar line to the new light rail line — only has about half of its funding nailed down, though officials have a few years to figure out that one. “We’re looking under every seat cushion and rock to find spare change,” Smith says. New revenue sources may be necessary. One idea that’s been pitched is a local gas tax. Another is something called a street utility fee, which would be something like a property tax. But getting citizens to accept either could be difficult.

The streetcar plays an atypical role in the transit system in that it explicitly is not intended to move large numbers of people long distances in a short period of time. With long waits and stops that are sometimes just a couple of blocks apart, it does not have commuters in mind. Instead, it caters to university students, tourists, shoppers, diners and bar-hoppers — namely people who aren’t in a rush — who want a simple way to move around town once they’re already there. Critics of the approach say it’s a project that fills a need that doesn’t really exist. But supporters say its primary purpose isn’t as a people mover; it’s to encourage development, which it has.

The Portland Bureau of Transportation, which runs the streetcar, is still looking to fill its $16 million hole. The agency is funded largely by the city’s portion of the state gas tax revenue, which itself is becoming less reliable, given the growing efficiency of vehicles, says Tom Miller, the city’s transportation director. Portland has also committed itself to non-revenue-generating projects like a major bridge rehabilitation. “Structural funding deficiencies plague our budget,” Miller says. But that same agency’s budget covers much of the new operational costs associated with the streetcar extension. The situation is so tight that, as a way to help solve the crunch, Miller has pitched the idea of calling a halt to road repaving for five years.

Yet streetcar supporters say the slow mode of transportation plays a vital role. Portland Mayor Sam Adams argues that it would be foolish to give up on it, given the federal money available (half the streetcar extension was funded by the feds), the billions in redevelopment it’s prompted (which even critics acknowledge) and the support it’s given to the modern streetcar industry (United Streetcar, based in suburban Portland, is taking orders from transit agencies across the country). “The critics here have to confront the reality — the positive reality — that transit has had,” Adams says.

Ethan Seltzer, a professor at Portland State University, is an unabashed supporter of transit. A former land-use supervisor for the metro government, he’s intimately familiar with where Portland has come from, and how far it is has progressed. Much of that success he attributes to a transit system that has fundamentally changed people’s lifestyles and neighborhoods.

From his office just steps from a streetcar stop, he emphasizes that both the light rail and transit systems are important components of an urban lifestyle to which Portlanders are committed. He questions why, while transit agencies nationwide are struggling, Portland has come under the microscope. “We’re not here to save the world,” he says. “We’re here to save one part of the world. We do these things because we think they make Portland a better place.”

For better or for worse, those expectations were cultivated by the region’s leaders, who have embraced and even promoted their role as a national example. Transit agencies and observers monitored the system’s successes during its halcyon times, and they’re likely to give it an even closer eye now that it’s struggling. Will Transit City USA have to pull back on its commitments? Seltzer doesn’t think so. “Good things take time,” he argues. “The fact of the matter is, what cities become is the legacy of generations, not the legacy of a budget.”

Ryan Holeywell is a staff writer at GOVERNING.

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