Categories
California High-Speed Rail Finance France High-Speed Rail

Doing Right by the Public: PPPs in High-Speed Rail

» As the retrenchment continues in the American public sector, private-sector investors are likely to play an important role in paying for fast train systems.

California Governor Jerry Brown, a longtime supporter of the development of high-speed rail, has not given up on his state’s plans for an extensive network stretching initially from San Francisco to Los Angeles, and then on to Sacramento and San Diego. Despite cost estimate increases, opposition to the line among residents of some affected areas, and a total loss of new federal funding thanks to anti-investment Congressional Republicans, Mr. Brown has made evident in recent weeks his support for the line.

Construction on a segment in the Central Valley between Merced, Fresno, and Bakersfield is still planned to get under way next year. Funding for that initial link is mostly lined up, thanks to state commitments and federal grants resulting from the stimulus of early 2009.

But because of more detailed projections, the 178-mile first phase of the project is now expected to cost far more than initially envisioned — $10 to $13.9 billion instead of $7.1 billion — and it will need an injection of funds from another source to be constructed. With a promise to the state’s citizens that another demand for California-wide funds will be avoided, few local dollars to contribute, and an utter inability to rely on Washington for practically anything, that means the system will have to find private investors to join in. Whatever the relative merits of allowing private companies to invest in what is fundamentally public infrastructure, California has no other place to turn for the successful completion of its system.

California is not alone; with a depressed economy and few public sector funds available, there is increasing recognition of the importance of engaging private-sector funds in the creation of infrastructure. Illinois Governor Pat Quinn signed a bill this week authorizing public-private partnerships (PPPs) to be used for the creation of infrastructure in his state.

Critics of the California High-Speed Rail Authority have repeatedly argued that the agency would be unable to locate businesses that might be willing to contribute to the system, but international examples suggest that there is significant private sector interest in infrastructure construction. The Authority will release a request for qualifications soon and select a winning bidder in early 2012. But it has yet to clarify the manner in which it would structure its relationship with private companies in terms of financing, construction, and operations.

For precedents, the state should to look at France, which has recently signed two very large deals with private financing and construction conglomerates for the completion of two new extensions of its already large high-speed rail network. They provide two different models for engaging PPPs.

The first is the Bretagne-Pays de la Loire (BPL) high-speed link, which will connect Western France to the existing northern branch of the Atlantique line with 182 km of new tracks between Le Mans and Rennes for a cost of €3.4 billion. The connection will reduce running times from Rennes to Paris by 37 min, making it possible to travel on 320 km/h TGV trains between the cities in less than 1h30 by the time construction is complete in 2016.

The PPP contract here is being mostly funded with public sector sources; RFF, the public infrastructure owner, will contribute €1.4 billion, with state and local governments paying about a billion Euros more. 30% of the costs will be financed by the private sector group Eiffage. These loans will be paid back over twenty years with pre-determined fees from RFF and the government.

Like the Rhônexpress project in Lyon that connects the city center to the airport, this PPP arrangement essentially keeps the operations risks in the hands of the public sector; if ridership comes in under estimates, it will have to scrounge up funds from elsewhere to pay Eiffage its standard due. If ridership is higher than estimates, RFF will make a profit on its investment.

The other much larger project soon to begin construction in France is the Sud-Europe Atlantique line, which will extend the southern branch of the existing Atlantique line 302 km from Tours to Bordeaux. This €7.8 billion program will by 2017 bring Bordeaux within 2h05 of Paris, about an hour faster than today. Ridership to and from that city and Toulouse, planned to be about four hours away from Paris, is expected to rise substantially.

Because of the expected profitability of the line, RFF signed a concession contract earlier this year with a private consortium called LISEA made up of Vinci construction company (33.3%), the Caisse des Dépôts (25.4%), SOJAS investment company (22%), and AXA bank (19.2%). The 50-year contract, which includes construction, operations, and maintenance, is the largest-ever PPP for a high-speed rail construction project in Europe.

LISEA will contribute €3.8 billion to the project, with the remainder of costs being financed by the public sector, from local, region, national, and European sources. Much of the private funding will come from low-interest, long-term loans that will be repaid through charges on TGVs and other trains using the line, which will eventually be passed on to the ticket-paying passenger. The public sector funds are grants, so about half the line’s construction cost is expected to be paid back through ridership over the course of fifty years.

Unlike the BPL line, which limited risks of operational profitability and line ridership to the public sector, in this case the private investors will be responsible if initial estimates fall short.

If it wasn’t clear, the business case for Sud-Europe Atlantique line, like that for the California High-Speed Rail Authority, assumes operational profitability. Considering that the international record shows that high-speed rail systems have little difficulty achieving self-support, these are not unsound predictions. In both cases, the advantage of acquiring private-sector support for the project is delaying public investment and using future revenues to pay back construction costs. Each approach has its advantages, especially in terms of where risk is directed.

It would be a mistake to conclude from these examples that private-sector involvement will save any significant money over the long-term. Fundamentally, the creation of PPPs to fund projects such as California High-Speed Rail does not mean that the public at large will end up being responsible for a smaller percentage of overall costs. Indeed, the U.S. Department of Transportation’s Office of Inspector General released an under-recognized report last month that expounded on this fact significantly.

By considering a series of PPP highway projects in the U.S. and abroad, the study noted that they “have a higher cost of capital than traditional public financing… [and] involve equity investors who own stakes in the projects, share in the profits, and expect to earn higher rates of return for the risk they undertake,” in addition to having to pay taxes public projects do not have to pay. Even if PPPs have lower design and construction costs, may be able to more effectively increase tolls, decrease percentage of evading users, and take more advantage of concessions*, they are usually not able to offset the higher costs resulting from the formerly noted issues.

Some states like Illinois and Indiana have “made” billions by leasing off highways to private investors for billions for fifty years or more, but the report argues that “the funds paid upfront to the public sector under a PPP are paid in exchange for future revenues, often in the form of tolls.”

In other words, while the taxpayer may appear to be getting a discount now by having a business group pay for infrastructure, users of that same infrastructure will inevitably have to face the costs of future tolls. In the case of high-speed rail, replacing public sector investment during the construction phase with privately financiers using loans means higher ticket prices in the future to pay back a portion of the costs of construction. There is no free lunch.

The question is whether benefits of a transportation investment advantage the entire public or whether they are reserved to the specific people who take direct use of it. Transportation economists are convinced of the value of user fees, which assume that it is inefficient to carry out redistribution through indirect means, and for them, it makes perfect sense to charge users the full cost of not only the operation but also the construction of the infrastructure they are using. (Many economists would also argue that high-speed rail projects have significant positive externalities like pollution reduction and land use prioritization attached to them that demand direct grants from the government to cover some costs.) This user-fee approach is the method being used in the financing systems of the PPPs discussed here.

Others, however, would argue that the benefits of infrastructure like high-speed rail are economy-wide and that they should be paid for not only by users but by all members of the population through taxes. If we take this side of the argument, it becomes less clear that the best value for the society is to divert most costs to users. A grant-based system assumes that benefits of a transportation investment are felt by people throughout a country (such as through economic growth) and therefore just charging the riders for the costs of capital investments would be inappropriate.

Encouraging private investment in the California high-speed system now may make it more feasible to envision its construction in the short-to-medium-term. Delaying using future public sector revenues to pay for a project today is the basis of much long-term investment, so there is nothing particularly out of the norm about this idea. But the use of such investment will realistically mean a future of higher ticket prices resulting from the need to pay off the bonds taken out for the project’s completion.

Nor is the involvement of private-sector groups in a public-sector project risk-free. In fact, the devastating example of the United Kingdom’s High-Speed 1 line, connecting London to the Channel Tunnel, suggests that any decision to incorporate private investors in public infrastructure should be approached with skepticism — even trepidation.

A report from the Public Interest Research Group, also released this summer**, established a number of valuable principles for PPPs that are useful to consider in evaluating whether or not to include private groups in the funding process for a high-speed rail line. These suggestions include aligning “private sector incentives with public sector goals,” only pursuing PPPs “where ample competition exists,” ensuring “clear public accountability,” retaining public control over system decisions, limiting lengths of contracts, and guaranteeing transparency in the contracting process.

In addition to considering the French examples for PPP contract models, these are helpful suggestions that should be taken to heart by the California High-Speed Rail Authority as it develops its plan to bring fast train service to the state.

* Many of these fiscal advantages may (or may not) stem from the ability of private sector groups to avoid paying workers living wages, comply with minority workforce inclusion programs, fulfill expectations expressed by the public in the democratic system, and so on.

** For the sake of full disclosure, I served as a reviewer for the PIRG report.

Categories
Finance Light Rail Norfolk

How significant an opportunity for reducing U.S. construction costs?

» Norfolk, Virginia celebrates the opening of a relatively cheap new rail corridor. It’s not as out-of-the-ordinary as we might hope, though.

Last weekend, Norfolk’s Tide light rail line opened to big crowds and lots of excitement in a state that has never before seen modern light rail technology in action. But the project was overbudget and the subject of years of controversy. What was once supposed to be a $232 million line had ballooned in cost to $318.5 million and in the process taken down political leaders who had supported it. Perceived mismanagement delayed consideration of extensions into nearby Virginia Beach. And the scheme’s implementation flaws emboldened conservative activists insistant on playing up the poor performance of government.

The irony of the story, it turns out, is that even at its higher-than-expected cost, the Tide’s construction came in at just $43 million a mile, less than any recently completed or under construction light rail system in the United States — even better than Salt Lake City’s just-finished Mid-Jordan and West Valley light rail lines, which cost $50 and $73 million per mile, respectively. It came close in price to the cheapest such project in generally less expensive France, Besançon’s $35 million a mile tramway.

What does this mean for other U.S. cities hoping to keep costs down and get the biggest bang for their buck? Has Norfolk done something tremendously different than other places?

One explanation is the corridor chosen for the rail line: The 7.4-mile right-of-way was almost entirely located within either an existing freight railroad corridor or along public streets. This reduced the need for land acquisition and land grading. It also made it simple to serve some of the region’s most important destinations pretty directly, including the Medical Center west of downtown, Norfolk’s central business district, a baseball stadium, and Norfolk State University. The line’s position along the edge of I-264, a major highway, and the quite limited residential and commercial populations of downtown Norfolk won’t do the project any favors; its eleven stations are only expected to attract 2,900 daily riders this year and 7,200 by 2030. But its alignment parallel to Virginia Beach Boulevard — the route of the most popular bus line offered by Hampton Roads Transit — means it would likely do better than any other rail line in the city.

Let’s return to the matter at hand, though: Just how different is Norfolk? Has it been able to apply some magic elixir to reduce its costs of construction?

Perhaps the most accurate answer is that it’s not clear. A review of 32 urban rail transit projects across the nation that have either been recently completed, are under construction, or are soon to enter construction suggests that there are limited margins for cost differentiation among similar projects.

In the following chart and the table at the conclusion of the article, I have compared service miles with construction costs among five types of projects — some that are fully underground; some partially underground, partially above ground; one that is fully elevated; some fully on the surface (or partially elevated); and two fully on the surface with only one track in service for parts of their routes.

As the chart demonstrates, there is clear evidence that the type of service provided — surface, elevated, or subway — is the primary determinant of construction cost differences. Unsurprisingly, of course, rail projects that operate within independent rights-of-way such as along elevated viaducts or underground are likely to cost more than similar-length projects running at ground level. The easiest way to lower construction costs would be to convert every subway project to an elevated and every elevated line to surface running and every surface-running corridor to one with just one track.* Yet this is no answer at all: This would be an ineffective solution, since it would reduce capacity in corridors where it is necessary.

But within each of these groups, evaluating like project to like project, we are given the opportunity to compare similar schemes addressing similar ridership demands. If Norfolk is cheaper, why? How do light rail programs serving equivalent populations fare?

Unfortunately, this comparison indicates that there isn’t much we can do to differentiate between projects. For surface-running lines and those that are planned to run on the surface and in subways, for instance there is relatively strong evidence (note those trendlines) that construction costs will be close to $73 or $239 million per mile, respectively.

The most expensive surface-running rail line now under construction is Portland’s Portland-Milwaukie light rail, which will cost $204 million per mile to construct as of the most recent estimates. That’s expensive, but it includes a significant bridge over the Willamette River and a series of elevated sections. The large majority of light rail lines like Norfolk’s will come in at less than $100 million per mile, most between $50 and $70 million per mile. Streetcar lines, running in shared automobile lanes, are a bit cheaper. Overall, this suggests that regional differences do not seem to matter much (see Sacramento’s South Corridor, in a union-friendly state, versus Phoenix’s Central Mesa Extension, in a right-to-work state), nor a reliance on federal funding (see Salt Lake’s West Valley line, which was funded without Washington’s support), nor indeed the existence of private investment (see Denver’s Eagle project, funding that city’s East and Gold Lines).

What conclusions can we take from these data? One must be that construction costs in the U.S. are relatively steady across the country, at least when taking into account differences in grade separation. The other is that if we consider it in the public interest to reduce construction costs because of a declining ability to afford infrastructure, a national solution, rather than a local one, may be necessary.

Table of recent American rail transit projects, either under construction or soon to enter construction
CityProjectProject TypeCost $mMilesCost $m/MileRiders 2030Cost $/Rider-Mile
St. LouisDelmar Loop TrolleySurface, 1 Track442.22026007692
AtlantaStreetcarSurface722.628260010651
New OrleansUPT StreetcarSurface451.530
MilwaukeeStreetcarSurface64.6232
CincinnatiStreetcarSurface1283.93364005128
NorfolkTide LRTSurface3197.44371006072
SeattleFirst Hill StreetcarSurface1252.55090005556
Salt LakeMid-Jordan LRTSurface53510.650190002656
TucsonStreetcarSurface1973.951
Salt LakeDraper LRTSurface2063.85468007972
DenverWest LRTSurface71012.159
SacramentoSouth II LRTSurface2704.363100006279
PhoenixCentral Mesa LRTSurface1983.164
DallasGreen/Orange LRTSurface14062167459001459
DenverEast/Gold LRTSurface204330.268575001177
Salt LakeWest Valley LRTSurface3705.173105006909
Twin CitiesCentral LRTSurface9571187409002127
CharlotteNortheast LRTSurface118011107175006130
HoustonSoutheast LRTSurface8236.5127283004474
HoustonNorth LRTSurface7565.2145282005155
Los AngelesCrenshaw LRTSurface/Subway14008.5165180009150
PortlandMilwaukie LRTSurface14907.3204228008952
San JoseSilicon Valley BART MetroSurface/Subway256310.2251467005381
HonoluluHCT MetroElevated534820.12661160002294
WashingtonDulles MetroSurface/Subway314211.7269857003134
Los AngelesWestside SubwaySubway53409593780007607
SeattleUniversity Link LRTSubway19483.16284020015632
Los AngelesRegional Connector LRTSubway13672684900007594
San FranciscoCentral LRTSubway15781.79283510026445
New YorkEast Side Access CRSubway73863.5211016730012614
New York2 Ave SubwaySubway48872.321252130009976

* In essence, this means reducing the degree of provisions for independent rights-of-way for each project is the best way to save costs. But those same reserved rights-of-way are the best ways to keep transit reliable and fast; the effort to reconcile this problem is the raison-d-être of BRT. Data for charts and table above from either agency websites or Federal Transit Administration 2012 New Starts Report.

Categories
Bus Chicago

In Chicago, a Massive BRT Plan Could be the Best Bet for Inner City Mobility

» Chicago’s bus network is already slated for improvements. But what about a huge upgrade?

When he assumed office early this summer, Chicago Mayor Rahm Emanuel announced that he would pursue the construction of a network of bus rapid transit lines in his city — in addition to the extension of the Red Line L and the implementation of a number of bike lanes. A focus on buses in the Windy City is nothing new: The Chicago Transit Authority carries almost a million riders a day on its network, and the city came close in 2008 to establishing a $153 million BRT system paid for by the Bush Administration, before the city’s refusal to implement a downtown congestion charge got in the way.

Newly empowered by the change in leadership, the CTA has moved forward quickly on three proposed corridors — one in the Loop downtown, another along Western Avenue, and a third along Jeffery Boulevard. These, CTA President Forrest Claypool admitted to the Chicago Tribune, are more “BRT Light” than anything else — while they will feature improved stations, they will have limited reserved rights-of-way and little signal priority — and they will not serve much of the city.

But a new proposal by the influential Chicago-area Metropolitan Planning Council (MPC), whose board is a collection of some of the city’s top business leaders, goes a lot further, promoting a $1.23 billion project that would dramatically improve connections between the city’s outlying neighborhoods and reinforce the core network of commuter rail and L lines. While Chicago, like all major cities, has a number of transportation priorities, an endorsement by Mr. Emanuel of this scheme as the city’s long-term plan could go a long way towards making the city a place where it is easier than ever to get around without a private automobile.

The proposal (click map above to see citywide vision) would add dedicated lanes, pre-paid fares, level boarding at defined stations every half-mile, and signal prioritization to 94.6 miles of streets on ten corridors. The proposal would offer service every five to ten minutes during peak hours and every twelve to fifteen minutes other times, perfectly adequate for most people, especially now that bus tracking is ubiquitous. The effect on the city’s transportation connections would be significant: Far better linkages among existing L and Metra rail stations, improved access to currently transit-deprived areas, and the ability to bypass the Loop when making connections between neighborhoods without loosing time or experiencing diminished transit service quality.

In order to select the corridors for investment, MPC analyzed the city from a variety of perspectives: It considered which areas were least transit-accessible, which places had room for new development, and which streets were wide enough to provide for two lanes of dedicated bus lanes, in addition to car traffic, bike lanes, and generous sidewalks (it determined 86 feet for running ways and 97 feet for places with stations was the minimum required).

The routes the group selected would provide north-south and east-west routes that are completely ignored by today’s transit network, thereby allowing for easy interface with the rail system. They would take advantage of Chicago’s broad and straight streets and significantly speed up bus running times by reducing the amount of traffic vehicles encounter and limiting the number of times they stop. In total, the MPC estimates, these corridors would add 71,000 daily transit trips to the region-wide total and reduce travel times for many more.

The total costs of these investments, which would also include improvements to the streetscape to allow for the incorporation of bike lanes and improved sidewalks, would sum to over a billion dollars, which may sound expensive until you realize that the estimated cost of the short, single-route Circle Line L, which would serve the areas just outside of the Loop, is between $2.3 and $4.2 billion. And that’s for a service that would serve far fewer people in total.

Why invest in improving Chicago’s transit system, when the city is known as already having one of the nation’s most extensive networks? Because there are hundreds of thousands of people in the city who are underserved. A new Brookings Institution report by Adie Tomer, released yesterday, notes that 400,000 households in the Chicago metropolitan region have no car — representing the second-highest rate in the country. Of those carfree who live in the city itself, just 39.2% can reach 40% of the metropolitan-wide jobs via transit in 90 minutes, far less than in Subway-heavy New York City (51.9%) and even supposedly car-dependent Los Angeles (44.9%). Part of the explanation may be job sprawl, but another is clearly that the radial orientation of Chicago’s existing network makes it difficult to get to jobs outside of the Loop; BRT running along circumferential and neighborhood-to-neighborhood routes would relieve some of those problems. So there is a need for the kinds of BRT the MPC has described.

For now, though, MPC’s suggestions are merely that — a study group’s vision for how the city should look in a decade or so.

On the other hand, Chicago’s municipal Department of Transportation has its own plan, as Commissioner Gabe Klein (recently moved in from Washington, D.C.) revealed on Wednesday in a roundtable discussion at the MPC. In addition to the BRT routes planned for the Central Loop, Jeffery Boulevard, and Western or Ashland Avenues, other corridors could form a grid of east-west and north-south lines throughout the city, much like the MPC plan would. To Mr. Klein, these investments would produce 80% of the bang of traditional rail investments at 20% of the price — enough to justify a significant investment.

The first rapid investment will come to Jeffery in 2012, replacing the existing #14 Jeffery Express line, serving parts of the far South Side. $11 million in federal dollars will go towards dedicated lanes between 83rd and 87th Streets and rush-hour only reserved bus lanes between 67th and 83rd Streets. Signal priority will be integrated into the network and there will be a queue jump at the intersection of Jeffery Boulevard and Anthony Avenue. This will be enough to reduce trip times by an estimated 9.3% at rush hour, declining from 72 minutes to 65 minutes. Finally, the project will include improved bus stations every half mile with next bus LED signs and kiosks providing fare card machines and neighborhood maps.

Similar improvements are planned for the Western Corridor, though the exact route has yet to be chosen, and the Central Loop BRT, which would connect Union Station with the Navy Pier by 2014. The latter project (see map below) was funded by a federal Urban Circulator grant.

Thus the city is advancing quite remarkably on its own, making more effective bus transit not just a vision but a soon-to-be reality. But the MPC proposal goes a step further than the city has been willing — or able — to do. The city is planning minimal investments in reserved lanes and some better stations, all of which will amount to slightly reduced travel times and a service quality that falls somewhere in between traditional bus operations and true BRT.

Unlike the DOT, MPC would encourage efficiency in the BRT network by encouraging adoption of systemwide standards along entire corridors: Visible, reserved lanes, level boarding, signal prioritization, and off-board payment — all which would make Chicago’s system world class. This would come at a significant cost. But compared to other investments the city is planning to make over the next few years, like the $2 to $4 billion replacement of the northern section of the Red Line, serious investments in BRT would be a great deal.

Chicago Central Loop BRT Plan Chicago DOT BRT Plan

Image at the top: Imagining a BRT-based future for the Garfield Green Line Station, from Metropolitan Planning Council report. Maps of Central Loop and full-scale DOT BRT plans, from Gabe Klein presentation.

Categories
Atlanta Finance Seattle

In Atlanta and Seattle, Hope for Better Transit Through Referendums

» Recognizing the limitations of federal  aid, local leaders in Atlanta and Seattle propose tax increases or additional fees to improve the quality of their transit networks.

Despite the skepticism about the importance of government spending now enthralling Washington on both sides of the aisle, the perceived value of investing local resources in public facilities such as new transit lines seems only to be ramping up.

Take Atlanta and Seattle, sitting at the helm of the nation’s 9th and 15th-largest metropolitan areas, respectively. In the first, a regional initiative supported by political and business leaders across a ten-county area will advance a 1% sales tax to the ballot next November. Over half of the billions in locally raised funds is proposed to be transferred to transit capital and operational programs. In the second, an enthusiastic mayor is articulating a grand, citywide strategy to bring high-quality transit to his city as quickly as possible. If approved by voters, a significant increase in the vehicle registration fee could mean rapid streetcars and more bus rapid transit.

If this is the face of the future of transit funding, then supporters of improved public transportation offerings may have reasons for optimism. In contrast to Washington, municipal and regional groups, convinced that today’s infrastructure is underperforming, are pushing forward — alone.

Atlanta’s referendum, if passed by voters in the 4.1 million-person, 10-county region covered by the Atlanta Regional Commission, would represent the most significant expansion of the area’s transit system since the creation of MARTA in 1971. After state legislation was passed last year to allow the region to ask its voters whether they wanted to increase their own taxes, a “Regional Roundtable” comprised of elected officials was established to determine how exactly to spend the estimated $6.1 billion that will be raised by a 1% sales tax over the course of ten years. Though the final list has yet to be completed (that will not happen until October), 54% of the funds noted in the preliminary list would go to transit (the rest mostly directed towards highway expansion).

The projects suggested for funding range from general support for suburban bus operations in Clayton and Gwinnett Counties to $600 million for state of good repair upgrades for existing MARTA lines to significant expansions of the heavy rail network. Of those, several are particularly exciting: $658 million of the $1.55 billion in total costs for the Beltline light rail corridor; $700 million for a link along the Clifton Corridor between Lindbergh Station and Emory University, expected to cost $1.11 billion; and $879 million of $1.23 billion for a light rail line from Midtown’s Arts Center to Cumberland Mall in northwest Atlanta. In general, these are good projects: Unlike several others proposed by exurban counties in the region, they are aimed towards upgrading transit links in the urban core, where rail investments will be most cost effective.

Not everyone will be completely satisfied, however long the list: DeKalb County politicians have argued that they will actively fight against the tax’s passage if their preferred rail line, an extension of MARTA five miles south from the existing Indian Creek terminus on the east side of the system to Wesley Chapel Road and I-20, if not included in the plan. That threat is likely to be heeded in order to maintain the regional collaboration that appears necessary to support this referendum (it can only pass with a majority of votes across the metropolitan area, not in one municipality at a time). Supported projects must reach as much of the taxed zone as possible. Otherwise, this once-in-a-generation opportunity to expand the transit system could be lost.

Seattle’s Mayor Mike McGinn has taken a wholly different approach, focusing on his municipality alone. Unlike his predecessor Greg Nickels, who championed regional thinking and the successful passage of a 2008 ballot question that increased funding for a regional light rail system, Mr. McGinn has determined that the needs of his city may be best met through its own initiative.

Just a few months after Seattle increased its vehicle licensing fee by $20 and a week after King County (which includes Seattle) added its own $20 charge to prevent cutbacks in the county’s Metro bus network, Mr. McGinn challenged the city to increase the tab by $80 more in order to “be bold” an fund a citywide network of rapid streetcar corridors. In theory, voters would be asked to approve the increase this November.

Displaying genuine entrepreneurship in his approach, the mayor suggested that the city could invest in five high-capacity rapid transit corridors, four of which qualify for rail. Instead of relying on slow-moving Sound Transit, which is building the Seattle region’s light rail network, Seattle could be more successful by playing alone and avoiding having to deal with the delicate matter of regional cooperation, Mr. McGinn argues.

The city council must approve the proposal — other members have suggested raising the fee by $40 or $60 instead — but Mr. McGinn’s initiative speaks for itself: Here is a leader who recognizes the value of public investment and is willing to put his face forward in order to support what is effectively a significant increase in the cost of driving a car in the city. That’s courageous.

Of the $27 million the fee is expected to generate annually, about half would fund transit, and those dollars would go towards investing in city corridors based on recommendations from the city’s Transit Master Plan, currently under development. Mr. McGinn’s approach would spread good transit throughout the city and put corridors within easy access of most of its citizens. The most important links not already in Sound Transit light rail plans would connect Ballard, Fremont, and the University of Washington each to downtown in conjunction with the South Lake Union and First Hill streetcar lines, the first of which is in service and the latter of which is funded. (These and other potential corridors have been meticulously described by Seattle Transit Blog: I, II, III, IV, V, VI, VII.)

To save costs, Mr. McGinn has been pushing European-style rapid streetcars — some might refer to them as tramways — that run mostly in road rights-of-way but that have fewer stops and reserved travel lanes and therefore travel more quickly than most American streetcars. This could allow Seattle to build significantly more rail than other American cities investing in more traditional light rail.*

Though the annual sums that could be collected by the license fee are modest, one approach being considered would involve asking the U.S. government to finance low-interest bonds that the city could pay back with expected future revenues; this would allow faster construction.**

One wonders how many of these projects will be able to advance, though, since most major transit commitments in the United States have relied on significant support from the federal government. With a Congress in continued cost-cutting mode, the likelihood that the proposals in Seattle and Atlanta — amongst those in many other deserving cities — will see full support may be shrinking by the day. If the federal government removes funding for day-to-day capital expenses, like the purchase of new trains or buses or the upkeep of rights-of-way, the new income resulting from these tax and fee increases will have to be redirected back to expenses that were supposed to be supported by other sources. This will disappoint voters, who hate to be misled or have promises pulled out from under them.

In addition, there is no guarantee that either of these referendums — or the others like them being proposed in other U.S. cities — will receive citizen approval. Though it is true that voters in municipalities as varied as Charlotte, Miami, and Phoenix have expanded funding for transit by taxing themselves in recent years, other cities have been less successful, such as Kansas City, where voters rejected a sales tax increase for a light rail line in 2008.

report from the Mineta Transportation Institute last week provided some insight into the success factors that account for the passage of similar measures. By examining eight case studies, the study’s authors pointed to the importance of consensus among business, elected, and environmental interest groups and suggested that campaign leaders must be able to orchestrate a savvy, well-funded media message. What appears to be less important — especially as compared to the 2001 study that this report updates — is producing a multimodal plan that distributes gains evenly across the area whose population is asked to fund it. The reputation of the existing transit agency may or may not be important.

While Atlanta appears at least so far to have sufficient business and political support for engaging a positive dialogue in favor of higher taxes or fees for investments, Seattle’s Mayor McGinn may have more work to do. On the other hand, Seattle’s city-only referendum may by its very nature be easier to pass than Atlanta’s region-wide ballot question, which must convince typically transit-hostile exurban voters. Other cities hoping to fund similar improvements should examine these experience to see what lessons can be learned.

Update, 17 August 2011: The final list of projects approved for funding has been agreed upon.

* It is ironic that Mayor McGinn has become such a fervent supporter of light rail investment; his pre-election persona was in favor of bus rapid transit rather than rail because of what he described as its lower costs and equivalent performance.

** This closely mirrors Los Angeles Mayor Antonio Villaraigosa’s America Fast Forward proposal, which he hopes to encourage cities across the country to emulate.

Image above: Seattle Streetcar, from Flickr user sillygwailo (cc)

Categories
Light Rail Salt Lake

Two Light Rail Extensions for Salt Lake, with More on the Way

» An extensive network of rail and bus corridors spreads out across the Wasatch Front.

Much thanks to federal spending, the Salt Lake City metropolitan area practically doubled the size of its TRAX light rail network this weekend, adding two extensions a year early and 20% under budget. Though estimates predict relatively modest ridership on the new lines, the routes provide the city and its suburbs one of the most comprehensive transit systems in the country, with frequent bus and rail corridors spread out in a grid across the immediate urban core.

And with two other light rail extensions, a commuter rail line, a streetcar, and a series of bus rapid transit corridors on the way, the region is far from finished.

After passing a local sales tax increase in 2006 for the UTA transit agency’s $2 billion Frontlines 2015 program, millions of dollars flowed in from Washington as the government agreed to fund 80% of the new Mid-Jordan extension through a New Start grant as part of a significant downpayment on system expansion. (For Frontlines 2015, federal funds to three lines now account for $1.04 billion in total, up from $500 million as originally planned.) In combination with the West Valley line, paid for mostly with local funds, UTA officials suggested that this weekend’s was the largest two-route rail opening in a single day in American history.

Light rail routes in the region have been re-configured into three colored corridors — the Green, Red, and Blue Lines.

In addition to the pre-existing 15.8-mile route from downtown Salt Lake to Sandy (which opened in 1999) and the 3.8-mile corridor to the University of Utah (which began operations in time for the 2002 Winter Olympics there), the 10.6-mile, $535 million Mid-Jordan route extends southwest from Fashion Place to a major development at Daybreak and the 5.1-mile, $370 million West Valley line runs from Central Pointe to West Valley Central Station. The 3.5-mile extension south from Sandy to Draper (receiving a 60% commitment from Washington), the 6-mile link to the airport, and the 44-mile FrontRunner South commuter rail route to Provo (getting 80% of its funding from the feds) are other parts of the program and are under construction, ready to be open by 2013 and 2014.

The region, with about 1.2 million inhabitants, now has as much light rail — 35 miles of it — as far larger metropolitan areas like Denver. Total TRAX ridership is expected to reach 58,000 a day by the end of this year, up from 43,000 today; ridership could exceed 100,000 daily by 2030.

These extensions, in addition to the Sugar House streetcar half-funded by a federal TIGER II grant and the BRT routes, are being completed fifteen years ahead of what was predicted to be feasible by the region’s original long-term plans laid out in the early 2000s. UTA’s 2003 purchase of the rail corridors along which most of the routes run was assumed to provide for expansion needs up to 2030 or 2040, but local entrepreneurship and skilled application of federal dollars pushed up construction.

Now the area will have to focus on maintaining frequent service. A cut of bus operations by 10% to coincide with the opening of the rail lines and more efficiently utilize the gridded transit network may make sense from an operations standpoint, but it is an ominous sign of tighter budgets to come.

Compared to light rail projects around the country, the $50.5 million and $72.5 million per mile spent on the Mid-Jordan and West Valley lines, respectively, is limited. They are on the low end compared to similar projects currently under construction in Portland ($204 million/mile), Houston ($145 million/mile), and the Twin Cities ($87 million/mile). But Salt Lake had the advantage of building its rail lines along existing corridors, limiting right-of-way purchase costs. In addition, it has constructed most of its projects in the midst of a recession that has hit the construction industry particularly hard, making it possible to contract out the building of the tracks and stations at comparatively low prices.

Salt Lake’s lines are exciting, certainly, especially as they are being implemented in coordination with the bus connections. The BRT route with dedicated lanes completed along 3500 South last year has been quite successful in increasing ridership, doubling the number of daily passengers even before full improvements were completed. The new light rail line to West Valley Central will provide direct connections to that route.

Overall, 90% of all bus routes in the region are being reconfigured to better match the new rail service in order to guarantee best-possible utilization of the significant investment made in rail.

Moreover, Utah seems to have taken strongly to the idea of transit-oriented development: A massive new mixed-use project called Daybreak has been constructed southwest of the city, directly along the final two stations of the Mid-Jordan extension.The developers were so convinced of the value of light rail that they agreed to provide $13 million in property and cash to the UTA to speed the line’s construction. Inhabitants of the area who work downtown may find the transit offering appealing: The reliable 42-minute trip time offered between it and Salt Lake’s courthouse is only about five minutes slower than a car trip on uncongested roads. As Jeff Wood has noted, it will be interesting to examine commuting trends for people who live here to see whether light rail is a useful tool or simply an exciting accessory to what is otherwise a standard suburban subdivision.

Daybreak is not the only place where new development is expected to follow construction of light rail: West Valley City, for instance, expects to see a “string of pearls” in new buildings constructed near its new rail stops.

The successful use of locally raised taxes and developer contributions in Salt Lake City’s transit expansion is to be lauded, but the massive involvement of the federal government in the funding process cannot be overlooked; after all, Washington has spent more than a billion dollars aiding this city to become more transit friendly in the last decade. Salt Lake would not have been able to do nearly as much with a government that pulled back. We may want other cities to follow in this city’s footsteps, but assuming we can do so with fewer federal dollars seems completely unrealistic.