Sunday Train: ‘the successful communities are going to be the ones who get rail.’

(2 pm. – promoted by ek hornbeck)

In covering the upcoming vote on the planned North Metro Rail line in Denver, the Denver Post writes:

People and circumstances over the years have tried to change the gritty image of Commerce City. There have been high-end homes on its eastern border and a world-class soccer and concert stadium not far from the city’s oil refineries, and even an attempt to wipe the city’s industrial name off of the map and replace it with the more low-key moniker of Derby. But it may be a stop on the Regional Transportation District’s North Metro Rail Line that brings some shine to the center of the city.

They quote the Commerce City Mayor:

“I’m very optimistic about the commercial opportunities that come with transit-oriented development,” said Commerce City Mayor Sean Ford. “Once rail comes, we can develop around it, and I think it will be highly beneficial.”

… as well as the Adams County Commissioner and Chairman of the North Area Transportation Alliance:

“In our world, the successful communities are going to be the ones who get rail,” said Adams County Commissioner Erik Hansen

And on Tuesday night, the Metro North line was approved, for a 2014 start and 2018 completion, when it had been previously set back to 2044 (an oddly exact date that clearly meant, “not now, but maybe later”):

A spontaneous offer from Graham Contracting in February stepped up the plans for the North Metro line after the company teamed with three other private developers and gave the Regional Transportation District’s board of directors a viable, ambitious construction plan, said RTD spokeswoman Pauletta Tonilas.

A side note

As some of you may be aware, there has recently been a fatal derailment:

A New York City Metro-North passenger train bound from Poughkeepsie to Grand Central Station derailed at 7:20 a.m. in the Spuyten Duyvil section of the Bronx borough this morning resulting in multiple fatalities.

This is not the topic of today’s Sunday Train, as the accident is too recent for a clear picture to have emerged as to the underlying causes of the accident. However, if it turns out that either delayed maintenance or delayed investment in Positive Train Control was a contributing cause to the accident, today’s topic would indeed be quite relevant to preventing a recurrence.

 

Colorado on a Fast Track to Local Rail Transport

The North Metro corridor (pictured right) is just one corridor in an proposed system extending:

• To Boulder with the US 36 BRT corridor and through Boulder with the Northwest Rail corridor;
  
• Through the North metro suburbs (including Commerce City) with the North Metro Rail corridor;
  
• To the west, north of I-70 with the Gold Line Rail Corridor;
  
• East and to the Airport with the DIA with the East Rail Corridor;
  
• Branching from the existing SE/SW Light Rail corridors for Light Rail West, south of I-70, to Jefferson County;
  
• Extending the existing Southwest Light Rail from Littleton an additional stop toward Highlands Ranch;
  
• Extending the existing Southeast Light Rail from Lincoln three additional stops toward Lone Tree; and
  
• Extending the I-255 Light Rail corridor from Nine Mile seven additional stops to connect to the East Rail Corridor at Peoria/Smith
  

The FasTracks system is, in short, an excellent skeleton for a sustainable local transport system. In a “pedal to the medal” acceleration of roll-out of sustainable transport, the commuter rail and light rail stations would provide anchors for both local scale personal electric vehicles such as electric bikes and neighborhood electric vehicles, as well as anchors for hybrid battery-trolleybuses.

By 2012, 8 of the 12 corridors were under construction, and the first to be completed, the West Light Rail line to Golden, opened in April 2013.

However, as indicated by the previously penciled in 2044 completion date for the North Metro Rail Corridor, in order for that framework to be available in time for a pedal-to-the-metal acceleration of sustainable transport policy, we need a more effective sustainable transport funding system than we have at present. Originally adopted in 2002 on a 10-year timeline, that was modified in to a 12-year timeline (pdf: 2004 plan). But that was dependent on sale tax revenue receipts & projected materials costs. By March of 2012, a drop in sale tax receipts and increase in cost of copper, concrete, steel, and diesel fuel implied a $2m gap in funding to complete the project by 2017-2020, resulting in the completion date finally being pushed out in May of 2012 to 2044.

Last year, there was talk of turning to “private/public partnerships” to fill the funding gap, and given the general description of the proposal from Graham Contracting, it seems likely that some kind of private funding with private developers is part of restoring the North Metro line to a 2018-2020 completion date.

And the FasTracks system includes the complementary support for improved bus service, along the lines of the discussion last week:

Enhanced Bus Network and Transit Hubs: FasTracks offers a family of bus services tailored to individual markets and linked together to create a comprehensive and seamless network. RTD will continue to operate the full array of bus service it offers today, and will offer two new services. Recognizing that employment, residential, commercial and educational opportunities are dispersed throughout the region, FasTracks includes a comprehensive network of suburb-to-suburb bus service linked together with “FastConnects” or timed transfers at transit hubs throughout the region.

The FastConnects concept schedules buses and trains to arrive at transit stations, stops and park-n-Rides at the same time, minimizing the time a passenger has to wait to transfer to another vehicle. The second new service offered by FasTracks is an extensive system of bus feeder service to rapid transit stations. This service will provide neighborhoods near rapid transit stations a convenient option for accessing rail or bus rapid transit lines.

 

Why not pursue to community economic development without rail, like we are used to doing?

There is very good reason to believe Adams County Commissioner Adams when he says the successful communities of the future are going to be those that get rail. (Note: the details below are US-centric, but anyone who has been in a Malaysia traffic jam knows the general issues are not restricted to the US.)

To understand why, lets step back and understanding a fundamental principle of the sprawl development system that dominated property development in the US from the 60’s through the turn of the century. The sprawl development system was based on a system of cross-subsidies from urban and inner-suburban residents to residents of newly developed suburbs on the outskirts of urbanized areas. There are a range of cross-subsidies that could be mentioned, including the following four:

• The National Highway System was funded by a federal gasoline and diesel taxes, but restricted to Interstate, National, State, County and Township Highways … in others words, basically any road in an unincorporated area, but only a subset of roads through urban areas, with towns and cities making up the difference from sales, property and other local taxes. That was a cross-subsidy from urban transport spending to investment in suburban transport facilities.
  
• Utility hook-ups have been normally required to be offered on a non-discriminatory basis, which means that hook-ups in low density developments that require more wire, pipeline or pipe per lot than higher density developments are cross-subsidized by users in higher density area, which is again a cross-subsidy from urban payments for infrastructure to investments in infrastructure supporting suburban developments.
  
• To a varying degree depending on state and local conditions, many core regional services have been focused in the urban core of metropolitan areas with substantial support funding from the urban core to meet demands of the urban residential population, that are relied upon (either directly or indirectly) by suburban residents living outside of the area contributing to the upkeep of those regional services.
  
• The Federal mortgage interest rate deduction discriminates in favor of owner-occupiers and against renters, and it is easier to provide opportunities for people to buy their own property on a mortgage on the fringe of an urban area than closer to the center, where land values are higher.

The sprawl residential, commercial and industrial development has often been enforced by single use, single user zoning, and we can look to common uniform zoning codes to understand the reason that development on the fringe of existing urban areas has taken the “maximize driving” form that it has … but we must turn to these cross-subsidies to development on the fringe of existing urban areas to fully understand what has made this property development into a core engine of economic growth in the 50’s through the turn of the century.

However, constantly developing on the fringe means that the fringe keeps moving further and further out. Even those working in industrial and office parks in what was the fringe a decade or two ago will find that to buy in the new fringe, they must commute into already developed areas, with ever growing traffic congestion and therefore ever rising commute times. And at the same time, the impact of cross-subsidies in juicing up outer suburban property development has been constantly eroded over the past half century, since has been a growing share of the population that are recipients of the cross-subsidy and a declining share of the population that are providing the cross-subsidy.

At the same time, there was a substantial income-multiplier component to the sprawl suburban development in the 50’s through the 80’s, because as people moved out to the suburbs, they not only bought the houses, they also bought cars, and appliances and durable consumer goods, primarily manufactured in the United States. And under the Fordist economic system in place, a portion of the productivity gains in these industries were shared with their workers. So the cross-subsidies acted as a “pump priming” stimulus that led to earnings in construction and from manufacturing that led to incomes that made it possible to afford to pay for the suburban housing and a growing range of consumer goods, also made in the US. And from the 80’s to the turn of the century, a growing share of those products were imports, weakening the income multiplier component as well.

So starting in the 90’s and continuing in the turn of the century, the fading cross-subsidy and income multiplier growth engines were increasingly supplemented by weakening prudential lending limits and lending to people first closer to what they could prudently afford, and then beyond what they could prudently afford. And so by 2007, we were more than a decade into a residential property bubble that bore only a shallow surface resemblance to the original sprawl property development growth engine of half a century before.

And then in the end of 2007, the bubble popped. It popped fundamentally because every bubble always pops, but its proximate cause was the rising cost of gasoline as rising global demand in the face of stagnant productive capacity generated the 2006-2008 oil price shock.

And the popping of the property bubble revealed that in most large urban areas, the fringe of the urban area had been pushed further from employment centers than was sustainable without the ultra-cheap real cost of gasoline that was maintained from the mid-80’s through to the middle of the turn of the century.

 

But, WHY is rail important to community economic development?

Now, what can be done about it? If we cannot sustain a property development growth engine based on growing ever further outward, based on ever smaller cross-subsidies and ever smaller income multipliers, we must turn to infill.

And without cross-subsidies and income multipliers to tap, we have to turn to mining the gross inefficiencies of the existing system. And the most inefficient aspect of the current Auto-Uber-Alles system is its use of space.

As the text accompanying that animated gif to the right, from WaPo “KnowMore” online, notes

Think about how much space we give to cars. There are parking spaces, of course, which can make up as much as a third of the land area of some cities. But the bigger category in many cities is streets, which, cabs and buses aside, mostly serve as a playground for privately owned cars. In New York City, streets take up 30 percent of land area. 30 percent! Between that and parking, many cities give a majority of their land over to cars.

That’s a shame, not just because of the health costs of commuting or the emissions cars produce, but because we could be using that space much, much more efficiently. The above GIF demonstrates this very well. If the same number of people travel in a bus or a trolley rather than a car, they take up a fraction of the space. If we were to commit to public transit more seriously, we could shrink roads to a fraction of the size, freeing up land to use for housing or businesses, while still allowing people to get around easily.

Land used for road access and parking is a direct tax on development in two ways: first, it increases the full economic costs of all development, as the value of all development depends on getting human feet onto square feet; and second it removes the opportunity for complementary development in the space set aside to support automobiles.

So a reduction in the area that must be set aside for transport offers at the same time a real decrease in the full economic cost of development, and an increase in the real economic benefit of development. A reduction in the area that must be set aside for transport allows us to mine the inefficient built into the existing system.

At the same time, areas that offer the real choice to not drive when people don’t actually wish to drive will be more appealing for the twenty to thirty year old demographic that is driving less over time, rather than driving more, as their parent’s generations did. There is a debate as to why this is, with the economic downturn as a common explanation, but the data does not necessarily back this up:

Conventional wisdom links the decline in driving to economic slowdown, suggesting that Americans will start driving more once the recovery picks up. However, PIRG’s study found that a state’s unemployment rate had no impact on driving trends.

However, even if it is the economy … the long term structure of the economy is the result of long term policy decisions, it is not a fact of nature. If the opportunities for sustained growth will occur in those places that find ways to transfer space currently spent on cars into more economically valuable uses, then by selection the economic growth will not be associated with a growth in miles driven per person in the population. Indeed, the current drop in miles driven is occuring despite the lack of investment to support that shift:

Meanwhile, public transit use has risen steadily over the past two years, but investment in such more sustainable transportation has stagnated. As driving continues to decline, PIRG concludes, infrastructure funds may be shifted away from building new highways and more toward repairing decrepit roads and bridges and expanding investment in public transportation.

Which brings us back to the funding challenge that FasTrack faced, which had threatened to add as much as two decades to the completion date of the system. This is an issue that deserves multiple weeks of examination on its own, but I want to point to one specific approach that merits consideration at the state level.

 

A Value-Increment Approach to Improved Transport Funding

The funding strategy I wish to raise today is focused at the state level, and so is not constrained by the political terrain in the US Congress regarding transport funding.

Consider my argument above. There is value to be tapped by enabling infill development. And in order to tap that value, more space efficient modes of transport are required than cars on streets.

Now, consider the zoning that is in place in most suburban areas: single use, single user per lot, mandatory set-asides to decrease density and force up value per house in new developments through artificial scarcity, and as a side-effect spilling over into increase property values in existing residences, and often severe height limits except when loosened by specific (and often expensive to obtain in terms of required political contributions) waivers. All of that, whether imposed by town or city zoning or by property owners association agreements, falls under state regulatory authority.

Now, suppose that the state specifies that for any dedicated common carrier transport corridor above a certain service quality ~ start and and service times, frequency, service waiting times & capacity ~ there are zoning easements around the dedicated stops of that service. For example, within a quarter mile radius, multi-use development is allowed on the ground floor, parking requirements may be met with share parking spaces within a quarter mile, a three story development height is allowed, and two or three residential properties are allowed on top of commercial or professional ground floor space. Within a half mile, three floor residential development with up to four residences per lot. Set asides are eased to no more than required to allow for a wide streetside sidewalk and service access to the buildings.

Compared to what is allowed under most uniform code suburban zoning, that is a substantial increase in prospective property value.

Now, a specific property tax levy is applied to the property that is allowed due to the easement, and that levy is directed to subsidize investments into and operation of the transit corridor that allows the easement. This may seem to be “TIF”, for “Tax Increment Finance”, but TIF is typically a diversion of existing property taxes. This is rather “Property Value Increment Funding”. The easement creates additional property value, and also allows for more affordable residential properties, and a portion of the increase in value is directed to sustaining the transport corridor that allows it to exist in the first place.

How much funding would this generate? Under current conditions, the answer would be, an amount that can clearly be put to a high value use, but not enough on its own. However, I am not looking for a silver bullet solution here, I am looking to pack as many silver BB’s as I can into a given policy package shell, blast away, and then look for more silver BB’s to repeat the process. The important point is that it relies on newly created value, rather than cross-subsidy or bubble debt accumulation, and so as a piece of transport financing it is far more secure than the underpinnings of the late 20th century system that have already started their collapse.

Conversations, Considerations and Contemplations

One thing about chasing down silver BB policies is that it puts one in a mind of being open to hearing more suggestions, as opposed to the “Silver Bullet” solution, which leads one down an antagonist path in which one is tempted to talk down other Silver Bullets as part of talking up yours.

So rather arriving at a conclusive answer to the funding challenge, I can end with a question: what are some of your preferred approaches to addressing the sustainable transport funding challenge?

Also, if you have an issue on some other area of sustainable transport or sustainable energy production, please feel free to start a new main comment. To avoid confusing me, given my tendency to filter comments through the topic of this week’s Sunday Train, feel free to use the shorthand “NT:” in the subject line when introducing this kind of new topic.

And if you have a topic in sustainable transport or energy that you want me to take a look at in the coming month, be sure to include that as well.