Planning our Way into Regional Decline

American Dream Coalition ConferenceDecember 4, 2008

Reston, Virginia

Christopher W. Walker

WHAT GOOD ARE RECESSIONS?

Recessions are good for:

1)Rightsizing activities.

2)Taking time to realize what hasn’t worked in the past, and therefore is unlikely to work in the future. It’s time for COST BENEFIT ANALYSIS rather than Political Correctness.

3)“Insanity consists of repeating behavior and expecting a different outcome”.

“ADVERSITY INTRODUCES A PERSON TO HIMSELF”Attributed to Stoic Philosopher Epictetus, whose career led from slavery to advisor of Roman Emperor Marcus Aurelius.

Public versus Private Investment

• Private:– Costs are bad, revenues are not the test– Profit is the goal: a sign of good management.

• Public:– Costs are good, revenues good: let’s expand the bureaucracy!– “Profit” concept not in lexicon

• Result: With political allocation of capital, “it’s a benefits regime that distributes jobs, contracts and influence: the costs are the benefit.”

-------- quote: James Dunn, Rutgers political scientist who studies transit

Another illustration: Federal transportation bill reauthorization, which now contains 4,000 earmarks, almost all of which don’t appear in any state’s transportation wish list for needed improvements.

Transportation is one of the few remaining socialist functions in our economy. We build and maintain roads the same way the communists manufactured and distributed consumer goods.

The image is Pyongyang, North Korea. For an apartment, you apply to a Neighborhood Council. All real estate is owned by the state. The units are “free”, you just pay for utilities. This is similar to the US road system which is “free” to users with the only charge for the “utilities” of fuel and vehicle usage. This “sustainable” model has a low carbon footprint, mostly because almost no one can afford to own a car at a per capita income of $1,000 per year (compared with South Korea’s $20,000 per year). Result: plenty of shared transit (bus, light and heavy rail).This “environmental paradise”, with communal thought, housing, and transport, is the expressed ideal of many land use planners who regard freedom to live and work as you choose as wasteful consumerism. Be careful what you agitate for.

Just because you can do it, doesn’t mean you should do it.

In the Private Sector, costs are bad. Profit is to be maximized, and profit equals revenues minus costs.

In the Public Sector, costs are OK. The cost is the benefit, all too often. 90% of Public Sector “managers” (politicians) are either untrained in management, indifferent, corrupt, or conflicted by indebtedness to special interest groups such as public employees unions.

Dulles Rail, as an example, incorporates $500 million in “fees.”

Recessions are a good time to redirect “planners” away from the social engineering goals they have been trained in and are attempting to foist on others

After eliminating all those without Professional Engineering degrees, “planning” departments should be redirected towards best practices in roadway design, rational subdivision/collector/arterial road mix, urban navigation and signage, nightscape appearance, and performance specifications for all municipal procurement.

Sign Entering Tysons from McLean:

(Courtesy the Taxpayers League of Minnesota)

Worst of All Worlds, another illustration

The Congestion Cartel just finished spending $500,000 of your tax money on a public relations campaign to promote the idea that paying higher tolls on the Dulles Toll Road on the way to Service Level F (total gridlock) was a really neat concept. As part of this Brave New World of higher taxes, higher tolls, and total congestion, they published this picture of their ideal world…highways so unusable that either walking or rail are the only practical alternatives. The rail cars are moving, but the autos aren’t.

Is this the world we want to live in?

Impact of No Growthers– who oppose all new development and roads. Loudoun County: approved projects in black, proposed in red

“Back to the Past? With Perpetual Land Easements- Virginia

As you enter McLean from Tysons……

Congestion Forecast to be MUCH Worse in 2030, with or without rail

New Transportation Technology starved! A Nationwide Problem.

• Of nation’s 19 largest metro areas, 10 plan to allocate more than one half of their projected 20-25 year surface transportation budgets for transit capital and operating costs; 7 others plan to allocate between one-third and one-half. 17 out of 19!

• Source: Federal Highway Administration, Federal Transit Administration; 2002

To address the requirement that the plan be financially realistic, the TPB hired a consultant to conduct a study in 2003. The study projected the revenues that each state would have available for transportation through the year 2030 and compared the projected revenues to the estimated costs of maintaining and operating the current transportation system together with the expected costs of implementing the long-range plan. The total expenditures over the 25 years of the plan are equal to the total expected revenues or $93.3 billion. Overall, almost $72 billion or 77 percent of the total expenditures is for operations and preservation of the region’s transportation system. About $22 billion, or 23 percent is for expanding the transportation system. Transit expenditures are $56 billion or 60 percent of the total and highway expenditures are $37 billion or 40 percent.

2005-2030 Long Range Transportation Plan for DC Area

Transit Share of Future Demand even smaller

Washington COG forecasts that total daily Vehicle Miles Traveled will increase 40,000,000 by 2030—126,000,000 to 166,000,000 vehicle miles per day (or 32%). Average auto occupancy is 1.13. This is then 45,200,000 passenger miles.

Metrorail Miles is projected to increase 24%, or 840,000 (from 3,500,000 to 4,340,000)

Metrorail is thus capturing 840,000/45,200,000 or 1.86% of new travel demand 2005-2030. The nonrail share will increase transit modal share in toto to around 3.0% of new demand.

Thus, the rail share will decline to 1.86% from its current 2.67%, and overall transit share to 3.0% from its current 4.0%.

Congestion ISN’T inevitable due to population growth..

The “True Story” of Transit

What is the Real Issue?• Mobility!• Because of the arbitrary “proffer” system, there is no

guarantee adequate transportation improvements will happen.

• Blind faith in “rail”– a 19th century technology which has proven beyond a doubt to be INEFFECTIVE in reducing surface congestion in modern cities.

• “Why can’t we just all get along?”– common attitude.

• Reason: $$$$$$$$

• Freeways comprise just 6% of our total road system yet carry 45 percent of all trips.

• Principal arterials comprise 6% of our road system yet carry 20% of all trips.

The logic behind rail boondoggles

It dates to Aristotle:

•If we don’t do something, congestion will get worse.

•Building rail is doing something.

•Therefore, let’s build rail.

•This is about as far as many clueless pols take the process, since they can “talk” about addressing the issue and leave the cost of feeding the while elephant to others after their watch.

•The fact that the logic is faulty (“denying the antecedent”) is of course irrelevant. (If not A, then B, if C, then A, doesn’t imply C in a rational world.)

But we’re more enlightened here…

Aren’t we?– the “No-Build bus scenario

Location: One block off Toll Road, Reston Pkwy, 50,000 cars/day

No shelter, no schedule, no marquis, fortunately water only 2 inches deep

It’s easy to get caught up in the hype of popular fads and let other people do the thinking for us– otherwise known as drinking the Kool-Aid.

Faith Based Beliefs

The Religious: Faith produces Salvation

The Ethicists: The Past Guides the Future

The Rail-igious: Rail reduces Congestion

An indulgence was a contract between you and the Church– given for money, not good works.

Religious Certainty plus money is a powerful combination…..

Off to the Middle East to plunder and riches

Beware Planning Assumptions

• Chicken and Egg: Does transit follow densification, or vice-versa?

• In post-automobile cities (built after 1910), no successful examples of density following expensive transit investment. E.g., Washington heavy rail stops.

• Plenty of examples of the opposite: Reston Town Center, Tysons, Columbia, Houston’s Post Oak, Dallas North end, Los Angeles nodes such as Century City, edge cities all over the U.S.

• Beware the argument that “if it is built, they will come” (Field of Dreams attitude): no evidence from WMATA, BART, or elsewhere this is true. “Transit Oriented Development” is a myth, much talked about, like Saddam’s weapons stockpiles, but nonexistent

Evidence Based Approaches

What do we know about suburban transportation in a 21st century city?

1) Rail fixed guideway systems cost far more than rubber tire based solutions with a fully allocated cost of $40-120 per ride, at an average speed of 30 mph. They must be heavily subsidized by the public sector. Consult the Brookings Institution study at http://www.brookings.edu/papers/2006/08_rail_systems_winston.aspx which concluded that only one US heavy rail system increased social welfare.

2) Shared guideway roadways offering service to anyone who is willing to pay for guaranteed time travel can be built largely by the private sector with unsubsidized operations. They can be built largely or completely by the private sector. So far, they have been uniformly successful: I-5 in San Diego, SR 91 in Orange County, I-10 in Los Angeles and Houston, I-394 in Minneapolis.

Would any megaproject be undertaken if some form of delusion were not involved, that is, would projects be undertaken if the true costs and benefits were known beforehand?

Project promoters appear to think delusion is necessary to get projects started and they effectively produce deceptive forecasts…

Martin Wachs interviewed public officials, consultants, and planners who had been involved in transit planning cases in the U.S. He found that a pattern of highly misleading forecasts of costs and patronage could not be explained by technical issues and were best explained by lying.

In case after case, planners, engineers and economists told Wachs that they had had to “cook” forecasts in order to produce numbers that would satisfy their superiors and get projects started, whether or not the numbers could be justified on technical grounds.

What do we do when our public officials lie to us and hide the truth? The ugly history of the Dulles Rail promotion in the Capital of government by the people, of the people, and for the people:

--2001: Secret vote of the Commonwealth Transportation Board replaces previously authorized Bus Rapid Transit demonstration project to heavy rail. No minutes, no agenda, no notice, no recorded vote in violation of Virginia Open Government law.

--2004: Special Transportation Tax District put together by interested private landowners with no notice nor open meetings, arbitrary boundaries. Rubber Stamped by Fairfax Board of Supervisors.

-2007. Secret no-bid construction contract with Bechtel with all important numbers redacted.

-2008: Turnover to Airports Authority with no supervision of General Assembly. All meetings of Airports Authority are in executive session and free from Virginia FOIA law. MWAA has the ability to raise Dulles Toll Road tolls with only a notice.

Dulles Rail-- No Way to do a PPTA

To-Do List #1

Build the Second Crossing Bridge

--We have 7 major crossings of the Potomac in the DC Area --Baghdad has 11 river crossings --Pyongyang has 7 Should be tolled, and tolls will pay for most of the cost.Toll only for new or expandedCapacity.

Can and should be a PPPWith the public sector Contributing the right of way

To Do List #2 -Build a Connected Network of Congested Managed Lanes

I-395, portion of I-495 a good start, BUT --too many close interchanges drive up costs and complicates driving experience. Congested Managed Lanes should be designed for thru traffic with crossovers to the general purpose lanes only every 5 miles or so. -- lobbying by Tysons landowners resulted in at least one interchange too many (Jones Branch Drive) and a confusing, if not terrifying, network of lanes east of Tysons Corner

Interchange with Dulles Toll Road and end of HOT lanes at Georgetown Pike will fail and may destroy the usefulness of the southern HOT lane section

Why do Express Toll Lanes work?

The Dulles to DC Loop– 122 HOT lane miles at$1 billion cost. All financed by the private sector

To-Do list #3

Give the Tysons Landowners all the building potential they want, as long as they pay for the public infrastructure to support it

Lower Manhattan, 57 transit stops Tysons study area, 1700 acres

But give the same building potential to everyone else.

Don’t get taken into the “downtown economic engine” pitch which inevitably overloads our transportation system in one direction during rush hours. Plan for a post-automotive, multi centric city (eg Los Angeles, Houston, Atlanta).

Dump the proffer system and go to impact fees. Zoning and proffers are inherently corrupt ideas and increase the uncertainty of development, thereby increasing costs to the end user.

Traffic and Density

• Up to densities of 30,000 per square mile, linear increase of roadway use.

• At higher densities, per capita roadway use declines.• Tysons population density is currently about 5,000 per

square mile (20,000 over 4 square miles)• Conclusion: Tysons would have to densify more than 6

times current level to have any “transit related effect” and 12 times current level before significant lessening of per capita highway use (60,000 people per square mile)

• Question: Who is adding to highway capacity?– Kemper Freeman research, Seattle:

http://www.letsgetwashingtonmoving.com/pages/KemperQ&A.doc

To-Do List #4

Deregulate land use: use, density, and height of structures built on private land.

--commercial, industrial, retail immediately

--residential, after ten years, giving neighborhoodAssociations time to develop local governmental structures if they want, or in older neighborhoods selling as a group to developers proposing more intensive uses

--Goal: lower land costs and produce the result in Houston where real estate related costs are the lowest in the nation and perhaps in the world. Houston, adjusted for cost of living, is #1 in the U.S.

Adjusted Average Income, Selected Metro Areas, 2006

$44,166

$42,050 $41,580 $41,355 $40,978$40,091 $40,043

$37,870 $37,594$36,834

$35,756 $35,236 $34,652$33,626

$31,082 $30,473

$27,529$26,534

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Cost-of-Living-Adjusted Median Earnings in Selected Metro Areas, 2005Manufacturing, Wholesale Trade, Professional, Scientific and Management Industries

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Boston

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Manufacturing Wholesale Trade Prof/Sci/Mgmt Srvcs

Source: Calculations based on data from 2005 American Community Survey, U.S. Census Bureau; ACCRA Cost of Living Index , Second Quarter 2006, The Council for Community and Economic Research

To –Do list # 5: Keep the Tax Structure Sensible:

1)Taxes should be low, uniform, and with few exemptions. Virginia needs to keep sales and income tax levels at “southern” levels. Let the states north of the Potomac tax themselves into oblivion.

2) It is a mistake to have separate classes of real estate. The Virginia constitution allows differential rates only for agricultural, horticultural, forestal, and open space. This requirement for uniformity is violated in the Commercial/Industrial tax for Northern Virginia and Norfolk and the Dulles Rail Special Tax district. A challenge to these taxes is pending in Fairfax Circuit Court.

3)The best transportation tax is a local option gasoline tax, provided the money is spent according to strict cost effectiveness ratings for actual transportation improvements. This is not happening with the 0.11/100 Northern Virginia Transportation Authority tax, which is being spent for politically correct boondoggles by their board members.

4)Transition towards road metering. Equipment cost is nearing $100 per vehicle. This will enable time of day and location metering, as used in Singapore and Germany (truck traffic). Studies are being done for broader use in the Netherlands and Oregon.

To-do List No. 6

Fire all the Planners who don’t have a Professional Engineering Degree

--The pseudo-architects and innumerates can find jobs elsewhere.

To-do list #7 --Dump the Rail

“Why can’t we all just get along-” Because there is a limit to money and the ability to tax for infrastructure

Reprogram the money for Congestion Managed Lanes. Each dollar invested by either the public or private sector in HOT lanes will accommodate 30x the traffic.

For more information on Dulles Rail, consult:www.dullescorridorusersgroup.com

Total Cost of Dulles Rail-- $25 billion, 95% paid by local business

Of the estimated $6 billion construction cost:

--$4.5 billion will be paid from securitizing the tolls from the Toll Road. At 7.5% total cost giving effect of interest, amortization, and debt service coverage of a likely BBB- rated revenue bond, the cost per annum is $335,000,000 per year.

--The Special Tax District is capped at $625 million, costing landowners $45 million per year.

--Loudoun BPOL taxes and higher airline tickets will cost $30 million per year.

--Operating costs to collect fares will cost $15 million per year.

--The Silver Line deficits are projected to run $110,000,000 per year, which the transfer agreement states will be paid for by Toll Road users.

--Depreciation and amortization of equipment should be budgeted at $90 million per year (3% of $3 billion).

Total yearly costs will be $625,000,000 a year, or $1.7 million per day. Over a 40 year FTA project lifetime, this cost is $25 billion. Only $900 million will be a grant; the project is thus funded locally at a 96% llevel.

Dulles Super-Toll Road Gridlocked….

The worldwide design paradigm is free outer lanes, HOT inner lanes tolled by transponder.No precedent for free airport access supported by tolls on local roads. Rejected universally for good reasons- none of our regional competitors would tolerate this tax on local business.Cost of Dulles Rail will be about $1 million per day. In contrast, the historically depressed economic conditions are costing local business only $250,000 a day to carry vacant space along the Dulles Corridor.

TEAR DOWN THE TOLL PLAZAS

The “Gotta Get that rail link to the Airport to be a real city” argument

Rail links to International Airports aren’t worth the money for the following reasons:

1)The distance from baggage retrieval to train boarding is too long– typically 1/5 to ¼ mile. The Dulles center terminal will be no better. Coach service departures are typically located several hundred feet from baggage retrieval.

2)Trains typically run less frequently than optimized direct coach services, which offer direct to destination delivery rather than just to a train station.

3)Trains typically operate at around 35 mph whereas coach services on a congested managed highway operate at 55 mph. Heavy rail from Dulles to DC core is 1 hour. With HOT lanes, time is ½ hour.

4)Express coaches always offer seating and baggage handling help.

5)For near destinations, taxis or hotel vans are a better bet, faster and more comfortable.

Impact on Dulles Airport

• Rail actually bad for airport– $3 per ticket surcharge for everyone; around 3% of users will take

rail. Equivalent to a $100 per ride subsidy for trip to airport. Much cheaper to give a voucher for 50% of taxi ride.

– Configuration of free and uncongested inner lanes encourages commuters to take the extra five minutes to drive around the airport and avoid tolls and congestion. This is poor design and the wrong economic incentive.

– Recent rail links to international airports have dismal patronage: JFK, Newark, Shanghai, San Francisco

– Dulles rated the third-worst medium size airport worldwide in terms of passenger satisfaction (2004 JD Powers study). Last thing it needs is higher cost structure. Airport now gets more traffic from congested Route 28 N/S and roads west than from the Dulles Corridor.

Airport Illustrations with today’s best thinking:

1) Beijing’s terminal 3.

To-do #8--maintain the heavy rail system, but don’t expand it:

Transit Math 101- Parking costs are the Key. To minimize auto use, if you really want to, raise the tax on parking spaces.

Cost comparison:

1)Add the marginal cost of using a personal vehicle (for cars about 15 cents a mile) to parking costs.

For a 20 mile commute each way, that’s $6.

2) The fare for transit plus the value of your extra time via transit. For most urban commutes of ½ hour each way, the extra time is equal to the personal vehicle time or say 1 hour. Multiply the 1 hour times the cost for your time (at an income of $50k per year, at 2,000 hours of work, $25 per hour), add a few dollars for fare, and you’re at $28 per round trip.

If your destination provides free parking, it’s almost always better to drive. If parking is north of $15-20 per day, transit is worth a look. That’s the experience in most urban areas.

Some commentators try to use average rather than marginal cost for personal travel, but that’s not the way people behave. In wealthy countries, people own and use cars, period.

Who should pay for transit?

First, the users. There should be 100% farebox recovery. To the extent that the lesser income population needs help, they should get vouchers. (Note experience with federal vouchers at $120 a month)

In most of the USA parking must be built (either by code or by market demand) at about a 1:1 ratio between gross building area and parking area (including circulation), at a cost beginning at $10,000 a space (excluding land) and increasing rapidly for smaller decks and underground parking.

Therefore, BUILDERS/OWNERS should pay for transit construction subsidies TO THE EXTENT THAT IT SAVED THEM PARKING COSTS (cost minus parking revenues/fees).

If there are NO parking savings– and in suburbia, there are none, owners should NOT be asked to pay for transit. Note: very few private builders, even at Metro stops, are building less parking than code.

In Conclusion—

It’s not what we don’t know that causes problems.

It’s what we think we know that isn’t true.

Thank you.