The Time I Called an Economist "Dude" RE: Caltrain

I've never really been called an "angry blogger" before today. Guess there is a first time for everything.

I hate arguing on twitter.  I don't think fighting in 140 characters is useful and it always just makes me mad and entrenched.  I do love twitter for sharing information, which I do very frequently as many of you reading this know.

But today I just couldn't help myself.  Right after yesterday's Caltrain post I was particularly incensed by Dr. Matthew E. Kahn, an economist who teaches at USC writing exactly what I was annoyed at the day before.  He made even more assertions that bothered me and I felt I needed to call him out on it.

@mattkahn1966 Also, Goog and FB riders take private buses. Perhaps you hadn't heard of them. Finally, why shouldn't we go after our own $$?

— The Overhead Wire (@theoverheadwire) March 14, 2017

To which he replied...

@theoverheadwire land value capture! Study some urban economics please.

— Matthew E. Kahn (@mattkahn1966) March 14, 2017

I don't expect Dr. Kahn to know where I've worked or who I am but considering my previous work on the subject I was a bit shocked by this dismissive response. I've put together parcel data over time in GIS to study the value changes in streetcar lines and have contributed to a number of papers on the subject of transit and value capture so no, I don't need to study urban economics.  I get the concept.

In fact, I understand value capture related to transit very well because of my colleagues that wrote exclusively about it at CTOD.  Case in point.

@theoverheadwire @mattkahn1966 value is already capitalized into the land, in one of the most unaffordable places to live. Capture what?

— nadine fogarty (@NadineFogarty) March 14, 2017

What Nadine is talking about has been discussed many times in her work. We know from the research that value can't be generated in significant amounts to pay for transit without vacant land to goose the increment.   

It seems as if people see Value Capture as a panacea when in reality it's a scrap that's constantly fought over.  Want affordable housing? Use Value Capture! Want new infrastructure for dense infill? Use Value Capture! Want new transit infrastructure? Use Value Capture!  And in his longer than 140 characters here is what Dr. Kahn said:

In truth, a simple Ricardian model of land would predict that the main beneficiaries will be land owners 10 to 15 miles from Silicon Valley whose land is close to the Caltrain stations.  As the train becomes faster, these suburbs will enjoy a sharp growth in housing values. A simple theory of land value capture would say that these land owners should be taxed and the collected revenue can pay for the train.   Why do the Federal tax payers get a bill while the local land owners of the land near the now faster train stations get a $ profit windfall as their asset appreciates in value?  

This ignores all the existing demands on value capture mentioned above, and that Caltrain already exists and development near it is virtually blocked.  Increases in value aren't going to come specifically from Caltrain investment, but rather from zoning restrictions. No one in? Lots of demand? Value up! That's not to say we shouldn't be trying to capture some value, but it's not going to be $2B worth of value created to pay for the line.

But here are some of his other arguments that are to me nonsense.

1.  There are 40 million people in California.  If we all pay for this "key project", then we will pay a one time fee of $16 dollars to invest in this durable capital. This is the immediate proof that California could fund this improvement on its own.

I think we already did pay for the slice of the project when we sent our money to the federal government as taxes.  In applying for funding through New Starts, we're getting our money back.  If you want devolution, say devolution.  If you think we shouldn't fund regional transportation at the federal level, then let us keep our gas taxes. But in the system AS IT CURRENTLY EXISTS, If we don't apply for that money, someone in another city will.  We don't build a lot of freeways here so we're not getting back federal money on the peninsula we're sending in for either gas or income tax.

So don't tell me we could pay for it ourselves.  Yeah. We can. But that's now how federal transportation funding works right now.  The theoretical in all of this bothers me as attack.  Because we aren't repealing Prop 13 anytime soon and the federal process for capital improvements isn't gone yet.  And it's going to be hard to kill it.  Theories are great.  But label them hopes and unicorn wishes.  Not analysis.

2. If the main beneficiaries are Silicon Valley workers, who will have a faster commute --- why don't Silicon Valley firms pay for this themselves?  Why don't the commuters pay a higher fee for the train? They can work away inside this sardine box and Facebook and Google's profits rise as their productive workers make progress.

It's not all silicon valley workers, and many of these riders don't work for Facebook or Google or the giants because those workers ride their tech buses to work. As public transit, it should be affordable to everyone to make the economy work.  Perhaps they need an employment tax like Portland uses for Tri-Met, but ultimately electrification and speeding up the train allowing more people to take it benefits the environment and people that can't afford a car. 

Silicon Valley is a rich region.  Why on either equity or efficiency grounds does it merit federal transport subsidies? If this project is so valuable, why hasn't the local region figured out a local funding strategy?  My theory is simple.  Since the local political leaders thought that Hilary Clinton would be elected President, they chose to delay the project until her team agreed to provide the subsidy.  The temptation of waiting for other people's money caused an inefficient delay in launching a productive project (the faster train). Now a game of "chicken" is playing out .  I'm sure that speeding up the train is a good public policy. Now, there is a fight over who pays for it.  The winners from the local public good improvement should pay!

Sure! Caltrain officials just were waiting for Hillary to win. This is what made me tweet because its a stupid assertion that doesn't even make sense.  The federal funding process of capital projects doesn't follow a political cycle.  It happens when it happens because of all the analysis that needs to be completed behind the scenes. 

And the FTA has been funding projects since 1991 through different administrations. How is it so hard to think that good projects that get rated highly in a very scrutinized process (more than highways ever will be) wouldn't be approved even in a new Republican administration.  Perhaps they should have thought better because of the asshole tendencies of Trump.  But it was the minority party in the State of California at the federal level that pulled this for political and not value reasons. 

So now according to Dr. Kahn I'm an angry blogger.  I guess I also wear pajamas and live in my parents basement instead of doing my actual work as a transportation and planning consultant, podcast host, and aggregator of news about cities.  Perhaps my 8 years working for a well known non-profit research organization counts for nothing too.  At least my blog allows comments.  I wouldn't want Dr. Kahn to be inundated with views that challenge his blog assertions.

Podcast: Most Roads Don't Pay for Themselves

Kevin DeGood of the Center for American Progress joins the podcast this week to discuss a recent report that reminds us no transportation pays for itself, even roads. We talk about the study, how 5.5% of the roads get 55% of the travel, and what's going on in DC. You can find it on Stitcher, iTunes, Streetsblog USA or the player below.

On Charlotte's Fight with North Carolina, Itself

A fight is breaking out between former Charlotte Mayor/current NC Governor Pat McCrory and current Mayor Anthony Foxx over funding related to the local Streetcar and LRT projects.  Charlotte, unlike many other states gives state level full funding grant agreements for capital transit projects. In 1998 Charlotte passed a half cent sales tax for transit expansion in the region with McCrory leading the charge.  In 2007 the pro transit folks fought off another ballot measure to take away the half cent and won by 70% of the vote.  This fight was partly started because of cost overruns that bothered libertarians, also chafing at the thought of having rail in the region.  Apparently the most despised mode of all. 

At this juncture, the city is looking to fund the streetcar project with local property taxes because there is no funding available from the half cent, which is tied up in the Northeast Corridor and operations of the expanded bus system.  The bus system funding has worked so well, that its seen over a 100% ridership increase.  Because of the lack of transit funding, the regional plan as seen below, is taking much longer than initially planned.

This seems to be the rub.  McCrory believes that only the half cent set aside for transit should be used for expansion, and that funding from the state ($299m) is dependent on local funding being so constrained, that the city has to go through the state.  Apparently trying to speed up the process of building out the network by locally funding is not allowed.  One line at a time, and no streetcars. And forget that the roads don't pay for themselves. What this tells us is that decision makers in the state think that if Charlotte has its half cent of play money, the big boys can use the funding for the other interests.

But what else is going on in the region that would equate to other interests?  How about the $3B in road projects that are happening in Charlotte currently.  And they want to start a state fight over a few hundred million?  What a disgraceful flareup.  The State doesn't want to give money because they think Charlotte has enough, and Charlotte with the help of NCDOT wants to waste billions on sprawl highways. Building sprawl highways that have no use until the land around them is developed into oblivion.  Charlotte pretends that it doesn't want to turn into over sprawling and traffic choked Atlanta, but it looks like being Georgia is the goal, and the state led by Pat McCrory, is more than happy to help them get there.

Assume the Risk

There have been a lot of issues recently over cost estimates that are starting to rub me the wrong way. I had never mentioned it before but in my head I kept thinking to myself that the cost for LRT in Norfolk seemed awfully low. The most recent estimate was $232 million for 7.2 miles. Compared to most LRT lines that would have been a steal. Phoenix was upwards of $80 million per mile while Norfolk was hovering around $32 million. Now it's $340 million which is still ok at $47 million a mile, but everyone is going crazy.

But today I saw something interesting out of Houston. The city is going to pay up front an extra $100 million for their contract and the bid winner will assume liability for any cost overruns during the project (assuming it doesn't cause them to go out of business). My question then becomes, how come we don't make all contractors stick to their cost estimates?

While I understand that things change and work orders change, shouldn't the company which came in with the chosen bid be responsible for seeing through with their magic eight balls? Perhaps that is asking too much or asking in some instances for disaster. Cutting corners leads to bad things and I certainly wouldn't want a contractor to go cheap on materials because they were trying to make money. In any event, with all these cost overruns on projects that are making LRT look bad, I don't see why more isn't being done to make the bidders more responsible for their bids.

Match Points

Every place in the country wants to spend more money on infrastructure but none of them have it. Los Angeles and Denver want to pay for their transit systems and Governor Goodhair in Texas wants more roads but doesn't want anyone to pay. No new taxes!...? But isn't a toll a tax? All arrows point to the federal government but they aren't budging any time soon. What gives? Always money.

What I also don't get is why Denver isn't asking for a full New Starts contribution for its Fastracks money match. They need as much and even more than they are asking for, 39% and 28% for two corridors. Why can't they ask for 50% of each? Roads get 80%! I don't get it! They need the money to complete the project.

Los Angeles on the other hand is going looking for more. $9 Billion and soon. Mayor V says LA should get money because they are putting up their own, but isn't Denver putting up its own? Isn't Houston putting up its own? It's Salt Lake putting up its own?

“What we’re saying to them is we’re one of the few cities coming in with our own money,” Villaraigosa said in an interview yesterday. “You figure it out.”

Perhaps he has those other cities in mind. Cities are living up to their end of the deal and more. With the feds giving out money, many have struggled to criticize, feeling like they might get the spigot cut off. Well right now there isn't a spigot at all, so its probably time to start railing on the folks in Washington to get moving already. Apparently Peter DeFazio has already started. Get rid of the clowns that are advising Obama or at least shut Summers up and get some infrastructure spending going. LA is putting up their end, Denver is putting up their end. Metro Regions keep getting the shaft, give them a hand and create some jobs already!

California Air Raid

Just like the transit folks, the CRA is not going to take it from the state anymore. Or at least they are not going to let it be taken. Recently the state supreme court ruled that transit money couldn't be just thrown into the general fund and now the redevelopment agencies are trying to block to keep California from stealing their money as well. Who is the plaintiff? Why Union City who has been trying to redevelop around their BART station.

In Union City, the State raid threatens to delay the 100-acre BART Station District redevelopment project. The project, a collaboration between the Union City Redevelopment Agency, other local transit agencies and the state and federal governments, includes remodeling the BART station to create a two-sided station with additional parking; nearby new housing; new offices; and retail space. This transit-oriented development has been in the works for 10 years.

Here's a solution. Fix prop 13! Fix the budget process and hold a constitutional convention. Cut out the shell games because everyone is tired of you not bringing enough lunch money and bumming off of them.

Payback Time

Looks like the State of California is finally getting nailed for stealing all that transit money from local agencies. It would be amazing if transit agencies across the state get back the over $3.4 billion that was taken over the last few years. I'm not so optimistic that they'll get all of it, but hopefully this means no more raids on the funds that should go to transit. Of course this is California and they'll probably try to take it again next year. Can we fix the state already?

Non Highway Users Anonymous

They can will it to be a user fee all they want, but it isn't. As an example, during my time in Austin I drove quite a bit around town if I wasn't on the #1, 5, 7 buses. But for the most part I wasn't on the highways. A little Mopac here, a little 183 there, but maybe twice a month during school if that. TxDOT and the MPO get back federal flex funds which they can use for lots of things. But it's not usually paying directly for what you're using that gas on most, those local roads.

Now it does come back to transit etc, but you're not paying directly for what you're using. I do pay a user fee now when I go over the bay bridge to my Gramma's house. And for the most part that $4 charge keeps me taking BART, which is faster anyway to downtown Oakland. But these tea party cries of socialism fall on deaf ears when you know these same people LOVE the socialism of roads. They even love the community good of transit. So much so that when it doesn't work, they get angry that government isn't doing a job they didn't fund it enough to do. Oh the irony.

A Shotgun Wedding?

Meteor Blades has a post on teh Orange Satan that goes more towards the middle of the cash for clunkers argument. He believes that even though our goal should be moving more towards better transportation systems and land use, we're still going to have automobiles until we get those systems in place. He then ties the idea of cash for clunkers with transit.

Money for the CARS program should have its own budget, not taken from spending for renewable energy projects. And every dollar spent should be legislatively tied to a matching dollar added to the federal mass transit appropriation in the following year. Funding for both these projects should come from increased taxes on gasoline.

While the cash for clunkers program that actually makes people double their mileage instead of letting them off the hook might move us towards more efficient vehicles, transit and land use is so far behind that I don't believe a 1:1 add to the fund won't really help much. It seems to me like keeping the status quo, because outside of that funding, 80% of federal monies still goes to cars, plus the other side of the 1:1 cash for clunkers, which is still subsidizing people to buy cars. I can appreciate that people are still going to drive cars. But we didn't get to be a single minded car driving society by the free market alone. There are a lot of subsidies that made it so and the pendulum swung too far, and we're still pushing to that side, when we should be aiding a swing back to the center on both transportation and land use.

$eeking A Green Funding Scheme

Congress is looking hard for a funding source for all things transportation. With the gas tax woefully inadequate, they are looking for other sources. One that continues to come up is the VMT tax. While this is a promising idea, no one likes to think further or beyond the box. I was actually surprised when people immediately let an idea like DeFazio's oil futures tax even sit for a while. But for the most part, congress is boring. It's like people are stuck going in circles.

But in the Streetsblog article there are some ideas that have floated before, in other forms that might be a bit innovative. For example the tax break idea has been floated before and discussed here, albeit for a somewhat different cause. Alan Drake has been proposing for a long time that we use property tax breaks to electrify the main freight lines across the country. This is just an addition.

Rep. Kendrick Meek (D-FL) touted his bill to provide tax credits for companies that build new freight tracks or terminals. Rep. Ken Calvert (R-CA) suggested levying a freight fee of 0.075 percent per shipment, with a maximum of $500, on goods that arrive at the nation's ports.

But what about other ways to find funding for transport. Are there any other innovative mechanisms for a national scale? The Transport Politic says we should take it from the general fund. How about if we can carve out some of the income tax for transportation. Perhaps you can see how much you're paying into it on your weekly statement, kind of like FICA. Especially since everyone uses transportation to get to work where they get income. And if they don't, they are living at home and should get a break for that.

Or one of my favorite ideas is an electric bill surcharge, perhaps one for commercial electricity and one for residential. This might accomplish two goals, one being a reduction in energy usage from higher price points and another being when more electric automobiles and other vehicles start coming, they will be paying into the transportation fund. Obviously not completely thought out, but there's something in there somewhere.

I really wish we could throw all kinds of crazy ideas on the table and see what might stick. Any other ideas out there we should know about?

An Interesting Funding Source

This is quite fascinating. I always notice the blue highway signs with the gas stations and fast food but I never knew they paid for the privilege. But using that funding to pay for Amtrak is pretty innovative it seems. Any other interesting funding mechanisms out there?

Let's See if Coburn is Still a.....

Seems as if Steny Hoyer is going to take up the mantle of getting WMATA some money. It's really sad that it continually has to be death that wakes people up .

On Wednesday, House Majority Leader Steny Hoyer said he plans to seek $3 billion for Metro transit capital improvements, some of which would likely be spent to replace some those old Series 1000 cars, purchased between 1974 and 1978.

But they've tried to help Metro before. Hopefully people like Coburn will stop being jerks. Anyone remember this gem?

Legislation that would mandate collision-avoidance systems for trains is being blocked by Republican Sen. Tom Coburn of Oklahoma, who objects to a provision that would provide a major funding boost for Amtrak that was bundled together with the safety measures this week.
...
Mr. Coburn also opposes a provision that would steer $1.5 billion to the Washington Metropolitan Area Transit Authority, saying passengers and local authorities should fund mass-transit operations in the nation's capital.

McGovern Calls for Transit Spending

Former Democratic presidential candidate George McGovern is asking President Obama to think about halving the military budget and spending more of it on things like railways. Things are getting interesting out there.

Finally, I would like to see America build the fastest, safest and cleanest-powered railway system in the world. This nationwide system of passenger and freight rail service should be integrated with equally superior public transit facilities in our cities.

Very few Americans are in the market for a tank or aircraft carrier. There are many eager consumers for the world's best, fastest and safest rail and transit systems.

A recent study showed that public transit spending was much higher in returns on jobs than defense spending and other national priorities. I don't understand why we don't jump on this faster.

Links for Night Owls

I often wonder what proponents of BRT mean when they say BRT. Apparently so will people in Minneapolis.
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I haven't quite gotten my head around Yonah's funding idea but check it out.
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Shocker! Only 17% of downtown shoppers drive to San Francisco. Now can we stop playing the car game?
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Tucson orders 7 cars from Oregon Iron Works. More American Made Streetcars! Boise might have an order in soon too.
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Apparently the recession hasn't beaten down Charlotte's LRT too much. It might be that lunch crowd I saw when I was there.

Detroit's Federal Dilemma

Detroit is stuck in federal funding hell. They want to spend public and private funds to build a new light rail line down Woodward. Now this would be no big deal usually but since they want to get federal funding as a match later, they are being asked to go through the environmental process that requires all new starts projects to follow NEPA requirements.

Now this is a demonstration of what is wrong with the federal process. It discourages transit agencies from seeking alternative sources of funding for a first line and ensures that lines will take a really really long time to build as the city waits for federal approval. An example I always give is the fact that the Seattle Streetcar (local funding) and Charlotte light rail line (federal funding) opened at approximately the same time in 2008. Yet Seattle began as an idea in 2005 and Charlotte before 1998.

Second is that a huge environmental document must be completed to build a streetcar for a street that once had a streetcar on it before it was ripped out. This seems arbitrary and un-necessary to me. If there is an environmentally sensitive area along the line then please do a study to make sure the impacts aren't great, but if we're talking about going down the center of a street, let's stop pretending like an environmental assessment is anything more than consultant money.

Missing the Point

Blah blah Earmark blah.... Sound familiar? That's the sound of no context. Anyone else want an earmark story that discusses how our transportation funding is so broken that the only way for some places to get federal funding for transportation needs that George Will deems not important is through the earmark process? With a backlog of 50 years or more on the New Starts process, how many legislators are going to try to go through the back door to get something done? We all know what happens when there is an extreme shortage or overpriced good, a black market develops. In transportation funding world, the earmark system is just a black market for goods that are missing from the market. Is there a way to solve this issue? Perhaps if we figured this out, would earmarks disappear? Unlikely, but I believe there would be less need for certain types.

Perhaps a Trend?

Looks like Arnold has stolen over $5 billion. I know a certain gubernatorial candidate who might fit as a follower to this trend. Seems some pranksters called Where's Gavin? have also called for photos of him riding Muni (not in a cable car). I wonder if these types of comparisons will matter in the general or even primary election?

Texas Legislature Holds Dallas Hostage

It's unfortunate that legislators in Texas choose to keep people from voting on a tax. Not the tax itself, but the ability to pick a fee to vote on to fund transit. Sigh.

Why Not the Gas Tax?

Why isn't raising the gas tax the answer? It's not like gas prices aren't going to go up $2 at some point. It's silly to say we're not going to raise gas taxes 10 cents when two dollars will happen in a summer. If there is such a pressing need for transportation money, this should be a viable alternative. The money is going to leave your pocket in either tolls or gas tax money or mileage tax money. Why not leave all options on the table?

Cost Crash?

I wonder how many costs such as Fastracks in Denver are wildly overestimated in this current fiscal environment. The estimates of late from BART are encouraging even if their line is a skeptical investment.

...here's the latest. BART estimated it would cost nearly $250 million to begin construction this summer on the Fremont-to-Warm Springs extension. The low bid came in at $137 million, or 45 percent below the projected cost. The Bay Area Rapid Transit District still has to evaluate this bid before awarding a contract, so it's not a done deal. But the five next lowest bids are within $7 million of the low offer.

For more commentary on cost overruns, check out Orphan Road.