Posts about Privatization

Most of all, such a deal would force the MBTA to keep its parking garages as parking for the life of the contract. If they want to develop mixed-use transit-oriented development (TOD) instead, their hands will be tied.

Though it's not clear the MBTA has much interest in pursuing TOD at all. In my hometown of Acton, which has a commuter rail stop, the MBTA wants to build a parking garage on their current surface parking lot. Residents, understandably, are concerned it will just draw traffic. The MBTA rejected other ideas about making a connection to the nearby bike trail and improving pedestrian accessibility.

Absent from this discussion is anything about possibly putting housing and jobs on the site, which is one of Acton's relatively walkable nodes.

This increase in parking was actually partly environmentalists' idea:

The MBTA must add 1,000 new parking spaces along its commuter rail lines by the end of 2011 under an agreement with environmental groups to mitigate the impact of the Big Dig.

In fairness to the environmental groups, that settlement also includes a number of other, non-car-oriented provisions, like building the Green Line in Somerville. But while adding parking to commuter rail could improve ridership in the short run, it would generate more car trips in the long run as new sprawl farther out would just replace any car trips on the major highways that switch to commuter rail.

Better to pursue housing within walking distance of transit, both in the suburbs and city, which has the added benefit of not making the MBTA add even more money-losing parking facilities and further strain the budgets of the next few decades.

As Stephen Smith argues in Market Urbanism, the LA deal lets the partner manage the garages, but only for the purpose of parking cars. There's considerable additional value in the properties if they're used as housing or offices, perhaps with underground or internal parking, but the contract prohibits it.

LA's contract would last for 50 years. Should the city decide 25 years from now that it would rather use the space for something better, they're stuck. They might be able to renegotiate the contract or include options for termination (details aren't available, or are not yet decided), except for the second big flaw in this privatization plan: they'll spend almost all the money up front.

This isn't a deal where the private operator runs the garages at a greater profit and shares the proceeds with the city. Instead, this deal has the operator paying about $189 million in one lump sum payment, along with small revenue shares in future years. If the city decides it's ready for something other than parking, they'll presumably have to repay the initial payment. Maybe the land would fetch so much money that it could cover the debt, but what if they want to build a school, or affordable housing?

Chicago's 75-year parking meter deal also promised the vendor revenue from all existing parking spaces. If they decide to conduct some construction or hold a street fair, they have to reimburse the vendor, with even greater penalties if they want to remove parking spaces to create a bicycle facility, bike racks, wider sidewalks, bulb-outs, sidewalk cafe space, or anything else.

Chicago's deal also provided a single lump sum, and as you might expect, the city couldn't resist spending it. 2/3 is already gone after the first year. That saddles all future leaders with the debt from the past constraining their choices about their own public space. They can't make choices freely, because officials long dead chose to solve the past's budget problems with the future's money.

Elected leaders seem to find more and more ways to borrow from their children and grandchildren. We finance construction and transportation projects with bonds, transfer preventative maintenance dollars to operating expenses, sell off public facilities and lease them back, and more. Financing actual infrastructure and economic development can make sense because it facilitates greater economic growth in the future to make back the investment. But using future parking meter or garage revenue for today's budget hole doesn't grow the pie one bit. Instead, it just adds new obstacles to making the pie sweeter in the future.

That percentage needs to increase dramatically over at most a couple of decades, from less than 2% nationally to something like 20%, or 50%, or more. We can't just keep driving cars 2.6 trillion miles per year. Reducing that 2.6 trillion just a little to 2 trillion by shifting to transit would require a 12-fold increase in transit capacity. What does that mean for WMATA? Or BART? Or SEPTA? Or RTD? What would it require to make a 10- or-20-fold increase in capacity?

Transit agencies and governments work too slowly and incrementally for this kind of increase. It will take at least 16 years from the first real plans to build the Silver Line out to Dulles airport and its completion—longer, if you also count the time it was being thought about, proposed and debated. The FTA issued a decision on a short, 5-mile extension of BART in 2006 that will open 8 years later, in 2014. DART's 2030 plan includes a paltry 18 additional miles of light rail (less than 1 mile per year). And let's not even get started on the Purple Line.

How can we possibly increase the capacity of our public transport systems by an order of magnitude or more if it takes decades to complete a single project?

Lincoln said it best:

The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise—with the occasion. As our case is new, so we must think anew, and act anew."

The occasion is global climate change, and we must think and act anew. Somehow we need to change the model for transportation such that the private sector benefits from providing transportation with close to zero emissions.

Private streetcar companies built thousands and thousands of miles of lines in just a couple of decades around a hundred years ago. Some streetcar barons made millions of dollars in the process, but to great public benefit as well.

I don't know what the right answer is, but I know the wrong answer is just to keep doing what we're doing now, but just a little better or a little faster or a little different. Just another billion dollars here or a dedicated funding source there. How can we best engage the private sector to invest and invent and move forward?

Some ideas, for what it's worth:

• The HOT lanes in Virginia are controversial, but they are getting built quickly. The private consortium is motivated by the profit motive to get this project done as rapidly as possible. No doubt it is not perfect, but it is an example of engaging the private sector's profit motive to expedite progress. Given that the US is a big place, experimenting with different ideas in different places across the country will help us discover the ideas that work and those that don't.
• One could imagine a rail system in which the operators are private entities but the infrastructure is not. This is analogous to our air transportation system: the government runs air traffic control, airports are usually quasi-government entities, and the airlines are private companies. What if the Northeast Corridor, for example, were opened up to private operators. They could buy "slots" like airlines do and provide varying levels of service at varying levels of price. There would likely be Wi-Fi on some trains by now if that were the case; even the Acela trains do not have Wi-Fi today.

The trick is to make the financial incentives align with the societal goals. If the goal is to reduce miles being driven, then private companies could be paid per mile reduced. They would then strive to find solutions. One example of this is the contract Houston has with a company called NuRide (disclosure: I used to work for NuRide). NuRide is paid by VMT reduced. They offer incentives to people to rideshare and take other modes. If they are successful, they get paid; if not, they don't. So it is in their direct financial interest to find the incentives that will get people to change their behavior.

Transit agencies, as they are currently organized, do not have to worry about not getting paid if they don't perform or, conversely, make a gazillion dollars if they over-deliver.

I don't have all the answers, but rather hope to begin a discussion about rethinking the current public agency model of transit that is incapable of delivering the massive market transformation that is required. What do you think?

Explanatory information about each area or next to each choice helps the user understand the pros and cons of each level of cuts or revenue increases.

It would be great to have something like this for the WMATA FY2011 budget. Or, at the very least, it'd be great to have the information about options to build something like this ourselves. In fact, perhaps we can set something like this up for the FY2010 budget tradeoff debate that's going to happen in the next few weeks. Any Flash developers interested in throwing something together?

By the way, the options available on the LA tool make it impossible to balance the budget without entering into a public-private partnership at least for city parking structures ($100 million), if not also meters (another $100 million). That's a bad idea, because while such a contract would encourage market-rate pricing in garages, it would also probably preclude, or at least make very difficult, any redevelopment for the term of the contract. It also brings in a big one-time windfall at the expense of future years' budgets.

Peters began by relaying powerful statistics that build the case for congestion pricing—or, as Newt Gingrich suggested she call it, a "convenience fee". Americans spend 4.2 billion hours a year stuck in traffic, traffic that represents a $72 billion drain on the economy. Congestion pricing in the 98 largest metropolitan areas, on the other hand, would generate $120 billion a year in revenues.

Most agree that the current system doesn't work very well. Congress directs significant transit money to pet pork projects and "bridges to nowhere". Federal transportation dollars not allocated with earmarks go into discrete pots of money that can only be used for a specific purpose, like highway construction or small transit lines, "modal silos" that prevent broader thinking or local decisionmaking. This "stovepiped approach," Peters argued, is "more focused on process than performance."

Peters wants to focus on three main areas: Transportation safety, the interstate highway system and a few other key national corridors, and mobility in metropolitan areas. Congestion pricing falls into the third category. The second, as you may note, assumes that highways represent the best way to move goods while making no mention of intercity rail. When I asked about this, she replied that getting away from "modal silos" will allow "incentivizing other investment" in high congestion corridors like Boston-DC. But by listing the interstate system, rather than all modes of intercity travel, as her top priority, it's clear that silos aren't completely purged from Peters' thinking.

Secretary Peters strongly supports local decisionmaking, using federal dollars to "encourage local officials to pursue sustainable congestion strategies" like congestion pricing and HOT lanes. We need to have federal money "leverage investment by states and localities." Every dollar spent could bring in three or four in local and private money and "tap into the $400 billion in private capital available for intrastructure." To open the faucet on that money, Peters wants to remove federal restrictions that prohibit tolls on many roads, expand pubilc-private partnerships and "allow jurisdictions greater flexibility."

A former county executive from Buffalo, New York asked about our decades of overbuilding infrastructure that has created sprawl, to which Peters reemphasized the value of local control. Of course, local control is a great principle until Virginia decides their top priority is Metro expansion to Dulles, at which point the focus on process roared back as Peters and the FTA raised their eleventh hour concerns about WMATA, MWAA, and other issues that are more about process than performance.

Several questioners asked about her opposition to the gas tax. "If the American people were clamoring for gas tax increase, we would have one," she declared. But, asked one questioner, why would they accept a congestion charge which the American people don't seem excited about either? Peters feels the difference is that the congestion charges (or "convenience fees") go directly to local government, and people support pricing when they know the revenues will fund local improvements. That's entirely true, but a gas tax could just as easily be dedicated to local improvements if the tax revenue went to local governments.

Peters also emphasized the importance of reducing dependence on foreign oil, through more efficient vehicles and other means. A gas tax, therefore, is "contrary to our environmental goals." I can't figure out what she means: economics tells us if we tax something, people will do less of it. Taxing fuel directly, therefore, is the most immediate way to reduce dependence on foreign oil.

Despite the occasional Republican talking point showing through, Peters is clearly very committed to solving the problem of congestion and even the environmental impacts of driving, even if her solution is to make sure people can drive faster at higher cost rather than providing alternatives to driving altogether. Peters said that HOT lanes and congestion cordons were really only first steps to a better, longer-term solution of having a "VMT-based form of payment," which is "convenience priced" in the highest congestion areas and lower in other areas. That's a great direction to go, even if a gas tax and construction of rail lines, despite Peters' opposition, are equally great steps to take along with congestion pricing.