NewGeography.com blogs

Wendell Cox questions the long-held and popular belief that lower density cities have longer average work trip travel times and greater traffic congestion compared to more compact cities.  He puts forward several key evidence, arguments and analyses to show that the opposite is true - that higher urban densities are associated with longer work trip travel times and greater traffic congestion.

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Although some infrastructure advocates are hoping to use the current budget negotiations to win support for an increase in the federal gasoline tax, the idea is unlikely to gain support in Congress or the Administration.  While  the 2010 Simpson-Bowles deficit-reduction commission proposed raising the federal gas tax by 15 cents/gallon as part of a broad deficit-reduction plan, neither House Speaker John Boehner (R-OH) nor Senate Majority Leader Harry Reid (D-NV) have endorsed the idea.  Nor is an increase in the federal gasoline tax popular among  the rank-and-file.  Most lawmakers see the pressure to raise it as coming only from a narow coalition of liberal advocacy groups and transportation stakeholders that stand to benefit from increased federal transportation spending.

Nor is the Obama administration eager to advocate a gas tax increase whose burden would fall most severely on the middle class ---precisely the constituency it  wishes to protect from the pain of any further tax increases.  Given this perception, it is almost certain that a federal gas tax increase will remain off the table in the current fiscal cliff negotiations  and probably throughout the next session of Congress as well.

Look instead for the states to assume a larger share of responsibility for funding their transportation needs. An early harbinger may be the state of Arkansas whose voters recently approved a half-cent statewide sales tax increase to back a $1.3 billion bond issue to fund highway construction over the next ten years. The measure has been called "the largest infusion of new tax dollars into a state transportation system in recent history." Local  referenda supporting public transportation also have appeared on the ballot in numerous states.  According to the Center for Transportation Excellence,  last November voters approved 70 percent of such initiatives.

In addition to greater local financial participation, look for a shift in emphasis from federal funding to public and private financing of large infrastructure projects. The shift will be fueled by a vastly expanded TIFIA lending authority ---by more than 600 percent, from $122 million in FY 2012 to $750 million in FY 2013---and by a large reservoir of equity in pension funds and private infrastructure investment funds looking for attractive investment opportunities. (TIFIA stands for the Transportation Infrastructure Financing and Innovation Act).

This means an expanded role for tolling, for TIFIA and private sources of capital can only be used to finance facilities that are backed by a dedicated stream of revenue to cover interest payments on the loan and the loan repayment itself.   Tolls are viewed by many as a fairer way to pay for new and reconstructed highways and bridges because, unlike the gas tax,  they are paid only by the users of the particular tolled facility. In other words, drivers in Montana will not be required to pay for a road or bridge built for and benefiting mainly  the residents of say, Texas.  

The likely prospect that  financing will replace stagnant or dwindling federal funding, dominated discussion among financial practitioners at ARTBA's Public-Private Partnership Conference in Washington on October 10-11. Participants were encouraged to hear that 19 projects worth $27.5 billion have already submitted letters of interest for TIFIA loans in the past three months. Four more projects totaling $1.9 billion have been announced since October.  More applications are certain to follow as it becomes clear that the Highway Trust Fund no longer can continue to serve as a source of investment capital for transportation infrastructure.

In sum, rather than hoping for an increase in the gas tax, the transportation community should look forward to three new trends as the most likely response to the perceived inadequacy of current  transportation revenue:  greater financial participation by state and local taxpayers,  a shift in emphasis from federal funding to private and public financing, and an expanded use of tolling.

Las Vegas Railway Express has signed an agreement with the Union Pacific Railroad to operate a conventional speed train from Fullerton, in Orange County to downtown Las Vegas, according to a story by Michelle Rindells of the Associated Press.

This is not to be confused with the proposed Xpress West (formerly DesertXpress) high-speed rail line which would operate from Victorville to Las Vegas, expecting riders to drive through Los Angeles Basin traffic congestion to get to the station. Further, unlike Xpress West, the Las Vegas Railway Express train would require no financial assistance from taxpayers for its largely leisure travelers. As we indicated previously, our analysis concludes that XpressWest revenues are unlikely to be sufficient to repay a proposed federal loan. This could expose taxpayers to a loss of $5.5 billion or more --- approximately 10 times as great as taxpayer losses in the Solyndra federal loan guarantee debacle.

The Las Vegas Railway Express promoters intend to take the full financial risk, as do most entrepreneurs who start businesses. Moreover, the Las Vegas Railway Express train would operate only when demand is substantial, with all trips between Thursday and Monday. The first trip is tentatively scheduled for New Year's Eve, 2013.

Here's hoping the train is successful and that the owners make at least a competitive return on investment, while providing employees commercially funded (not subsidized) jobs, paying, not consuming taxes and with revenues earned from willing customers, rather than relying on public funding. And just as important, if they fail, taxpayers will not be left holding the bag. That's how things should work.

A continuing increase in new single-family house sales has fueled the substantial increase in the NAHB/Wells Fargo Housing Market Index (HMI) to 46 in November. This indicates that nearly one half of surveyed home builders are positive about future sales of single family houses. This is a strong increase from the HMI of 41 in October. The HMI had reached its low point in the midst of the housing bus in January 2009 at 8 and is now higher than at any point in more than six years.

NAHB reported that national single-family house sales in September were nearly 30% above the September 2011 rate, though remained approximately one-half the 2007 rate.

The National Association of Realtors also reported that single family houses continued to dominate existing house sales, garnering approximately 88% of sales in October.

The strengthening of the single-family housing market Is to be expected as the economy improves. These developments are further indication that the claimed change in housing preferences from single-family to multifamily is not occurring. In a related development, the latest available data indicates a preference in California for single-family housing on conventional sized lots, which is described in A Housing Preference Sea Change: Not in California.

Election results from all three of Portland, Oregon's largest suburban counties indicate a reaction against what has been called "Portland Creep," the expansion of the expansive light rail system without voter approval and the imposition of restrictive densification measures by Metro, the regional land-use agency.

Portlanders in the three largest Oregon counties (Multnomah, Washington and Clackamas) have previously voted against financing light rail extensions, however the transit agency has found ways to continue the expansion and now operates five lines, with a sixth under construction. While urban rail aficionados tout the success of the Portland system, transit use by commuters has fallen significantly in relative terms from before the opening of the first light rail line. At the same time, working at home, which does not need billions in taxpayer subsidies, has caught up to and passed transit (Figure).

The electoral events of the past 60 days could severely limit future expansion.

Clackamas County: Chicanery and its Price

In a September 2012 election, voters in Clackamas County approved a measure by a 60% - 40% majority requiring that any commitment of funding to rail would require a vote of the people. Perhaps fearing a negative result in the election, the pro-rail Clackamas County commission hastily approved $20 million to support the under construction Portland to Milwaukie (Clackamas County) light rail line.

Things were to become substantially more difficult for light rail in the November election. In Clackamas County, the two incumbent commissioners on the ballot, both of whom voted for the $20 million bond issue, lost their seats. Voters rewarded their chicanery by replacing them with anti-rail commissioners, leaving the Clackamas County commission with a 3 to 2 anti-rail majority. The Oregonian characterized the election as "a referendum on light rail."

John Ludlow, who defeated Clackamas County commission chair Charlotte Lehan by a 52% to 48% margin, told The Oregonian:

"I think the biggest boost my campaign got was when those commissioners agreed to pay that $20 million to TriMet" for Portland-Milwaukie light rail four days before the September election. I think that put Tootie and me over the top." 

"Tootie" is Tootie Smith, a former state legislator who unseated commissioner Jamie Damon in the same election by a similar margin.

Washington County, Oregon: Taxpayers Take Control

Meanwhile, light rail has run into substantial difficulty in suburban Washington County. In September, voters in King City approved a measure to require all light rail funding to be approved by the voters. In the more recent November election, voters in Tigard, the 6th largest city (50,000 population) in the metropolitan area, voted 81%-19% to subject all light rail expenditures to a vote of the people.

Clark County, Washington: Voters Say No

Portland's transit agency also had its eye on expanding light rail service across the state line and the Columbia River to Vancouver, in Clark County, Washington. The plan was to build a new "Interstate Bridge" (Interstate 5) across the river, which would include light rail. The voters of Clark County were asked in a referendum to approve funding for the light rail system and turned it down soundly according to the Columbian, by a 56% – 44% margin.

But there was more. For some time, citizen activist and business leader David Madore has been working to stop both tolls on the new bridge and light rail service. Madore was elected to the board of commissioners of Clark County at the same time that the light rail referendum was being defeated. Madore, like the two other Clark County commissioners, also hold seats on the transit agency board.

Tri-Met's Death Spiral?

Further, Tri-Met's dire financial situation could be another barrier to future expansion. As John Charles of the Cascade Policy Institute has shown, Tri-Met's fringe-benefit bill is astronomically high, at $1.63 for each $1.00 in wages. This is more than five times the average for public employers, according to US Department of Commerce Bureau of Economic Analysis data. Charles refers to Tri-Met as being in a "death spiral" and says that:  

"The agency is steadily devolving from a transit district to a retirement and health-care center, with unsustainable fringe benefit costs that now far exceed the mere cost of wages."