In the Hunt for a Red October

California's precarious budget situation appears to be driving the state closer to potential fiscal ruin. The state is now 28 days into a new fiscal year, operating without a budget, and the deadlocked legislature in Sacramento appears unable and/or unwilling to strike a deal on a new budget able to cover the state's massive $19 billion deficit.

With no fix on the immediate horizon, California faces a cash shortage. State Controller John Chiang claims that at current burn rates, the state will find itself out of cash by October if the budget impasse continues. In order to sustain the state's remaining reserves for as long as possible, Chiang plans to start issuing IOUs to contractors "in August or September to preserve cash".

Today, in another effort to defer the date the state will run out of funds, Gov. Schwarzenegger issued an executive order requiring state employees to "take three unpaid days off per month." This move comes in the wake of the Governor's proposal to impose minimum wage pay on state workers to save money, currently stuck in the courts.

If the state legislature is unable to find a solution to the deficit, and creditors prove unwilling to accept more IOU's, California may be forced to effectively default on its debts. According to Newgeography contributor Bill Watkins, under such a scenario bond issues could fail, state operations grind to a halt, and the "mother of all financial crises" might be unleashed. Even if California is able to find ways to juggle debt load and convince creditors to accept IOU's while the budget impasse drags on, such stop-gap actions may place its already shaky credit rating at risk of being slashed further towards junk status. The state, legally unable to declare bankruptcy, must find some solution to its budget dilemma or it will become the first state to default since the Great Depression.

Transit in Los Angeles: Celebrating the Wrong Thing

Los Angeles area transit officials celebrated 20 years of urban rail at a Staples Center event on July 23. Over the past 20 years, Los Angeles has opened 2 metro (subway) lines, 4 light rail lines and two exclusive busways (though apparently busways aren't worth celebrating). Surely, there is no question but that Los Angeles has been successful in opening a lot of new transit infrastructure.

At the same time, however, The Los Angeles Times reported that Professor James Moore of the University of Southern California, blames the disproportionate financial attention paid to rail projects reduced transit ridership by 1.5 billion (with a "b") over the same period. The reason is, as Tom Rubin put it, is that many more people can be carried for the same money on buses, "Had they run a lot of buses at low fares, they could have doubled the number of riders." Rubin was chief financial officer of the Southern California Rapid Transit District, one of the two predecessors of the present transit agency (MTA). The other was the Los Angeles County Transportation Commission, to which I was appointed to three terms.

Transportation experts were also quoted to the effect that the rail system has done little to reduce traffic congestion or increase the use of mass transit much beyond the level in 1985, when planning for the Metro Blue Line began. Indeed. Traffic congestion has gotten much worse, and traffic volumes have increased materially. Our recent article showed that transit market shares had declined.

These results are in stark contrast to Houston, which in 1984 had the worst traffic congestion in the nation. Houston set about to solve the problem by expanding its roadway capacity. Since 1984, Houston's traffic grew twice as fast as that of Los Angeles, and population grew three times as fast (at least in part because many Californians were moving to Texas). Houston also added freeway mileage at double the percentage rate of Los Angeles. The reward was an increase in traffic congestion less than one-third that of Los Angeles (Figure). The most recent INRIX Scorecard shows Los Angeles traffic congestion to be more than 2.5 times as intense as Houston's.

Spending money on the right things makes a big difference. One can only wonder how different things might have been if Los Angeles had invested in the capacity people need (more roads) rather than in politically correct transit facilities that have no potential to reduce traffic congestion or to improve mobility and economic performance.

There is a lesson from Los Angeles experience both for other areas and other government functions. The test of government performance is outputs, not inputs. Thus, it is appropriate to celebrate large transit market share increases or significant improvements in student achievement, not how many miles of rail are built or how much money is spent on education.

Photograph: Los Angeles and the San Fernando Valley (by the author)

The Fifth Estate Clarifies US Driving and Transit Figures

Late on July 26 (Washington time), The Fifth Estate corrected the attribution by Professor Peter Newman of Curtain University to the effect that driving was down 43% and transit up 65% in the United States. This issue had been the subject of my column on the same morning. It was a simple decimal error (in the reporting) and has now been corrected on the site. Driving is now reported as being down 4.3% and transit up 6.5%. Professor Newman provided slides with the data to Ms. Tina Perinotti, who forwarded them to me.

While the new figures are less inconsistent with the official figures than the former, there are still material inconsistencies.

Driving Trend: Official Data: The slides provided simply refer to the two figures as relating to the past year, without a source or specific period. The 4.3% driving decline is more than double the largest annual decline reported by the official source for such information, the Federal Highway Administration (Figure 1).

Transit Trend: Official Data: We reviewed the data published from the official sources for transit data (the American Public Transportation Association and the Federal Transit Administration) and found no recent annual data indicating a 6.5% increase in ridership (either in boardings or in passenger miles). Much of the transit ridership gain from 2007 to the peak year of 2008 was lost in 2009, according to data posted by APTA in early March (Figure 2). A later first quarter report by APTA indicates further losses. Moreover, as we indicated in our article, the percentage decline in transit use since the peak year of 2008 is many times that of the decline in driving.

Not All Percentages Are the Same: Care must also be used in comparing percentage changes between transit and driving, because so little travel is on transit. For example, a one percent increase in roadway urban travel converts to about one-third of a mile per person per day. A one percent increase in transit use converts to about 30 feet per person per day, about the same distance as walking from one side to the other of the average bedroom and back.



Note: It is possible that the 4.3% driving decline was taken from an interim Federal Highway Administration report indicating that driving declined 4.3% in March 2008 compared to March 2007 (a monthly comparison, not a year on year comparison). This FHWA report, however, is subject to annual revision based upon the more comprehensive Highway Performance Monitoring System, which in 2009 revised the March 2008 such that the annual change became 2.7%.

BRT is ERP (or, Bus Rapid Transit is Enlightened Responsible Planning)

Robert Sullivan’s recent article in New York magazine, “Subway on the Street”, marks a welcome addition to transportation discussions in New York City. New Yorkers are currently faced with seemingly paradoxical transportation plans that call for subway and bus service cuts, while relatively short and exceedingly expensive underground subways are being built (Sullivan discusses both).

However, also at the same time, a monumental partnership between the city’s transit agency (MTA) and the DOT is taking root. The result is a new bus rapid transit line in the Bronx – Bx12 SBS, short for “select bus service” – the focus of Sullivan’s article.

To be clear, bus rapid transit is not a New York innovation. Cities throughout the world, and in the United States, have experimented with bus rapid transit lines with general, albeit not absolute, success. But it is nonetheless refreshing to see the largest city in the United States accept buses as potential congestion relief tools.

Jay Walder, a New Yorker named head of the MTA after holding a similar position in London, brought the same promise of a more fully integrated bus and rail system to his home city.
Encouraging innovation, expanding applicability and increasing efficiency are not the exclusive domains of the private sector, even if it feels that way. New York is showing, as cities repeatedly do, the potential for public-sponsored reinvention as a result of resilience.

Howard Kozloff is Manager of Development Strategies and Director of Operations at Hart Howerton, an international strategy, planning and design firm based in New York, San Francisco and London.

How Much of the World is Covered by Cities?

For years, planners and others have raised concerns about the amount of land that urbanization occupies, especially in the United States and other developed nations. My attention was recently drawn to an estimate that 2.7% of the world's land (excluding Antarctica) is occupied by urban development. This estimate, which is perhaps the first of its kind in the world, is the product of the Columbia University Socioeconomic Data and Applications Center Gridded Population of the World and the Global Rural-Urban Mapping Project (GRUMP) and would amount to 3.5 million square kilometers.

While the scholars of Columbia are to be complimented for their ground breaking work, their estimate seems very high, especially in light of the fact that in the United States, with the world's lowest density urban areas, only 2.6% of land is urbanized. Further, the data developed for our Demographia World Urban Areas and Population Projections would seem to suggest a significant overstatement of urbanization's extent. Demographia World Urban Areas and Population Projections data are generally from national census authorities and examination of satellite photography.

The GRUMP overestimation is illustrated by the following.

GRUMP places the total of all urban extents in the United States at 754,000 square kilometers, more than three times the 240,000 square kilometers reported by the Bureau of the Census in 2000. This is despite the fact that GRUMP uses the same urbanization criteria as the Bureau of the Census. At the average GRUMP population density, most US urban areas would not even qualify as urban under the national standards used in countries such as the US, Canada, the UK and France.

The overestimation can be illustrated by Cairo, which surrounded by desert land virtually devoid of urbanization. GRUMP places Cairo's urban land area ("urban extent") at 10,900 square kilometers. Cairo is well known among demographers as one of the world's most dense urban areas. Yet the GRUMP urban density, at 1,550 per square kilometer would make Cairo no more dense than Fresno, though somewhat more dense than Portland. The Demographia Cairo urban area is estimated at 1,700 square kilometers, more than 80% smaller. The contrast between the GRUMP and Demographia land area estimates is illustrated in the figure. There are a numerous additional discrepancies of similar scope.

One problem with the GRUMP estimates is their reliance on lights at night as observed from satellites. The problem is that lights illuminate large areas and any estimates based upon them would be likely to be inflated. Documentation associated with GRUMP acknowledges this effect, which it refers to as "blooming."

But "blooming" is not the only problem. The poorest urban areas tend to have fewer lights and are thus illuminated to a larger degree than more affluent areas. The result, in the GRUMP data is that some of the project's most dense urban areas are in fact not the world's most dense. For example, low income Kinshasa (former Leopoldville), in the Democratic Republic of the Congo is indicated by GRUMP to be 40% more dense than Hong Kong. The reality is that Hong Kong is twice the density of Kinshasa, the difference being the effect of "blooming," combined with more sparse electricity consumption in the African urban area.

Demographia World Urban Areas and Population Projections accounts for more than 50% of world urbanization and includes all identified urban areas with 500,000 population or more. These urban areas cover only 0.3% of the world's land area. There is only the most limited data for smaller urban areas. However, it is generally known that smaller urban areas tend to be less dense than larger urban areas (which makes one wonder why the anti-sprawl interests have targeted larger urban areas). In the United States, the urban areas with less than 500,000 population average about one-half the density of larger urban areas. University of Avignon data indicates that the smaller urban areas of western Europe are about 60% less dense than the larger ones.

If it the US 50% less factor is assumed, then urbanization would cover approximately 0.85% of the world's land (1.1 million square kilometers).

If the European 60% less factor is assumed, then urbanization would cover 1% of the world's land (1.3 million square kilometers).

By these estimates, the GRUMP urbanization estimates would be more than 200% high.

GRUMP has contributed a useful term to the parlance of urban geography --- the "urban extent." An urban extent is simply continuous urbanization, without regard to labor markets or economic ties. For example,

The Tokyo urban extent might be considered to run from the southern Kobe suburbs, through the balance of the Osaka-Kobe-Kyoto urban area, Otsu, Nagoya, Hamamatsu, Shizuoka and through the Tokyo urban area to the northern suburbs, a distance of 425 miles (GRUMP calls the Tokyo urban extent the world's largest).

China's Pearl River Delta, with its physically connected but relatively economically disconnected, urban areas (including at least Hong Kong, Shenzhen, Dongguan, Guanzhou-Foshan, Zhongshan, Jiangmen, Zhuhai and Macao) is another example.

Despite its difficulties, the GRUMP project is an important advance and it is to be hoped will produce more accurate estimates in the future.

Note: The Demographia Cairo urban area is also the urban extent (the extent of continuous urban development). It includes the 6th of October new town and New Cairo, but excludes the 10th of Ramadan new town, which is physically disconnected from the Cairo urban extent.

Photograph: In the GRUMP Cairo Urban Area (by the author)

Top Secret Edge Cities

Here's three items from the Washington Post's "Top Secret America" series:

The Series: We've long known that high-security businesses warp the statistics describing Edge Cities. No matter how sophisticated the data source you go to, you find anomalies in which the numbers just wildly do not match the office buildings, retail locations and expensive homes you can plainly see. You know you're in this territory when the GPS in your car starts giving you screwy results -- because it's being jammed. Now my former Washington Post colleagues Dana Priest and William H. Arkin and a platoon of their associates have done an astounding job of lifting the veil. In their two-year investigation, "Top Secret America" -- sure to win a Pulitzer -- they've put together an authoritative data base of government and private job locations where 854,000 people with high-level clearances work. (That's one and a half times the population of the District of Columbia.) They call it "an alternative geography" of the United States, and they're right. Here's the home page for the sprawling report.

Some Numbers: Howard County, Md., has the largest secret Edge City in the United States and the numbers are eye-popping. The headquarters of the National Security Agency -- the communications intercept spooks -- is 6.3 million square feet - about the size of the Pentagon - and is surrounded by 112 acres of parking. It's on its way to 14 million square feet. (Downtown Memphis is 5 million square feet.) And that doesn't count the miles and miles of super-secure commercial office buildings housing the corporations in the NSA orbit. Finally we get more than rumors about why this is one of the richest counties in the U.S. We're talking a $20 billion payroll much of which doesn't show up in other data. In fact, most of the wealthiest counties in America turn out to have Top Secret Edge Cities.

The Map: Check out the interactive U.S. map of where the Top Secret Edge Cities are. Zoom around. These are the Edge Cities where "the extrovert is the one looking at somebody else's shoes."

CA State Treasurer Skeptical of High-Speed Rail

California High Speed Rail officials and the Governor’s office seem to be suffering from selective hearing. Lawmakers and experts at the University of California’s Institute of Transportation continue to challenge the high-speed rail project’s viability due to precarious statistical projections on ridership and cost. One wonders if developers will reconsider upon hearing California treasurer Bill Lockyer’s recent criticisms.

Lockyer’s first major issue lies with the basics: the ability to raise enough capital from private sources needed to complete the project. The Rail Authority claims it would need $10 to $12 billion from private investment alone, although some analysts think that, like most of the monetary figures associated with the rail line, this number will ultimately grow. Investors are reluctant to fund such a risky venture, as nothing proposed in this project has proven stable or certain. If investors do indeed close their checkbooks, there is no way the Rail Authority will complete the project.

Lockyer doesn’t think selling the idea in smaller chunks would work either. He questions the willingness of anyone to buy state bonds for the HSR, even though voters approved $9.95 billion worth in November 2008.

Despite these reservations, Governor Schwarzenegger is protecting the funding promises made in the 2008 ballot measure. The Rail Authority is also ignoring the warnings of Lockyer and others. They are also trying to start building in the Bay Area in order to meet deadlines for federal funding. But the way things are going, it looks as if federal funding is all they will get. As more and more powerful people add their names to the list of skeptics, the high-speed rail line seems that much closer to complete failure.

Rather than overriding their critics and spending money they may not get, the Rail Authority should invest in consumer confidence. They need more concrete plans and more promising statistics to create a market for this line because right now, most think the project will turn out to be nothing more than a huge budgetary debacle.

California: Bad for Business

Looking for a business-friendly state? You had better skip California. Extensive regulations, high taxes, and high worker’s compensation rates have made California unappealing for resident and out-of-state businesses alike in the past two years. However, according to the business relocation coach, 2010 marks an economic “emergency” as there have already been 84 instances in California of companies either closing their factories, moving their headquarters out of state, or investing heavily in another out-of-state location. This nearly doubles the 2009 total of 44 instances, and more than doubles the 2006-2008 total of 35. California is losing its economic luster at an alarming rate, which does not bode well for job seekers.

Some of the companies moving or hedging their bets by shifting operations elsewhere include Google, Apple, Genentech, Facebook, and Hilton. Orange County, Los Angeles, and Santa Clara counties have suffered the most in 2010 with 25, 19, and 16 company moves respectively. Santa Clara in particular houses some of the big tech names like Google, Hewlett Packard, and Apple. In 2009, Los Angeles had the largest number (and the only county in double digits) of company moves with 12. California is not only losing out economically, but it is also losing some of its character as the technology-hub of the US.

This exodus follows recent trends emerging during the recession. The states benefitting most from California’s high taxes and strict regulations include Texas (with 18 events), Colorado (17 events), Arizona (11 events), Nevada (10 events), and North Carolina (10 events). Increasingly, these states have established themselves as promising havens for job seekers and have fared better during these tough times.

The state that once drew thousands of hopeful migrants during the Great Depression is now stifling growth opportunities. This is a bleak and unfortunate reversal, particularly for a place struggling to stay afloat in the recession.


US Leads World in Greenhouse Gas Reduction

For years, the United States has been portrayed by both international and domestic interests as an environmental outlaw, because of its high rate of greenhouse gas (GHG) emissions. The United States, Canada and Australia have the highest GHG emissions per capita in the world. Further, the United States has historically had the highest overall GHG emissions, until having recently been passed by China.

It is likely to come as a surprise that the US has become a model for its reduction in GHG emissions over the last decade. According to a report by the Netherlands Environmental Assessment Agency, GHG emissions per capita fell more in the United States from 2000 to 2009 than in any other area reviewed. The Agency also reported that there had been no growth in global GHG emissions in 2009.

Per capita GHG emissions fell 16% in the United States from 2000 to 2009. This is half again as large as the 11% reduction in the highest income portion of the European Union (EU-15). Among EU-15 nations for which data was provided, per capita GHG emissions were down 14% in the United Kingdom, 12% in France and Italy, and 11% in Germany. Spain, where economic reality is forcing a reduction in support for its highly touted "green" energy program, reduced per capita GHG emissions by little more than one-third the US rate, at 6%. The Netherlands achieved a 3% reduction (Figure).

In both the United States and Europe, the deep recession contributed to a reduction between 2008 and 2009. Between 2000 and 2008 (pre-recession), US GHG emissions per capita declined 9%, while EU-15 emissions declined 7%.

Canada's GHG emissions declined 9% from 2009 to 2009, while Japan's per capita GHG emissions declined at one-half the US rate (8%). Australia's emissions rose 1%, while emissions per capita rose 18% in South Korea.

GHG emissions per capita increased in all of the developing nations surveyed except for the Ukraine (-12%) and Brazil (-1%). Such increases are not surprising, as people in developing nations move from the countryside to urban areas and as they seek greater affluence.

There was more good news for the United States. Biofuel use in road freight transport was more than double that of the European Union (EU-27). This is significant because road transport volumes in the EU-27 are nearly the same as in the United States.

Photograph: Southern Greenland (by the author)

Revisiting Toronto’s G20 Costs

In the lead up to the G20 conference, the security costs were projected to approach a billion dollars. As high as this number sounds, sources are now speculating that the total bill could be closer to $2 billion. Shocking as that number is, the costs incurred by local businesses may have exceeded that total.

In addition to the physical damage to the hundreds of shops that were smashed in, there were major productivity losses during, and in the week before the conference. The most visible opportunity cost was the sharp decline in retail sales. According to Monaris Solutions, businesses within the security barrier saw a 28.08% decline in sales, and a 40.87% decrease in transactions. Businesses outside of the barrier experienced a 10.78% decline in sales, and a 16.43% decrease in transactions. The total city decline in sales was 9.31%, with 14.96% less transactions. This may not seem like that much, until you consider that the city has $47 billion in annual retail sales. A crude calculation puts the total retail losses in the $386 million range for the 25-27th. Given that this is a summer weekend, it is probably a low estimate.

The implicit costs to the financial sector would be difficult to tabulate. With 223,000 employees, even minor disruptions to the sector are extremely costly. Many of the large banks asked their employees to work from home for several days, which certainly caused some level of productivity costs. Many of them also had to temporarily move their trading floors outside of the downtown core. Moreover, each bank needed to prepare its employees for the inevitable disruptions during the conference. As the security boundaries shifted, and government policies to deal with the conference changed, banks were required to hold multiple meetings in preparation. Assuming each meeting lasted a half hour, and the average employee earns $20/hour (an understatement), the financial sector would have lost roughly over $2 million for every single preparatory meeting.

Unfortunately, it is impossible to calculate the full cost of the summit to Toronto businesses. The banks have been fairly quiet about their own costs, likely because of the Harper government’s strong stand against implementing a global bank tax, a move that would have devastated the global financial sector. Though there have been no public statements from the banks, there are rumors circulating that the financial sector lost at least as much as retailers. Those same rumors have it that the overall economic losses exceeded the security costs (based on the original security estimates). With nearly $400 million in retail losses alone, this seems realistic. Let’s hope this G20 experience has finally put to death the myth that hosting controversial global political meetings in major cities brings economic benefits.