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The widely dispersed opposition to proposals for high speed rail (genuine and faux) led Secretary of Transportation Ray LaHood to say that the Administration would press forward in a patchwork fashion if necessary.
"Patchwork" may be an overstatement. House Appropriations Committee Chairman Hal Rogers (R., Ky.) has plans to eliminate high speed rail funding in the current fiscal year. Already, holes have appeared in the high-speed rail plans with the cancellation of the Milwaukee to Madison line by Gov. Scott Walker and the cancellation of the Cincinnati to Cleveland line by Gov. John Kasich.
Should the Republican congressional high speed rail defunding proposal survive, it will could put an end to such proposals as the Miami to Orlando high-speed rail line, which has been advertised as an $8 billion project but which international experience suggests could easily reach $16 billion.
Further, the proposed defunding could render California's presently planned San Joaquin Valley "train to nowhere" (Corcoran to Borden, with stops in Hanford and Fresno) as less than patchwork. The California line was already on life support, with the newest estimates indicating a 50 percent cost increase over two years (to $65 billion), bringing overall per mile cost escalation since the initial 1999 estimate to approximately 100 percent (adjusted for inflation). As these difficulties were not enough, the Community Coalition on High Speed Rail reports that agricultural interests are now raising concerns about the impact of construct in the San Joaquin Valley. Strong citizen opposition has already developed on the San Francisco peninsula and in the Los Angeles area, which may have been part of the reason that the California High Speed Rail Authority chose the "train to nowhere" route as its first segment.
This could also make it unlikely that there will be any new funding for the Chicago to St. Louis high-speed rail line, which requires at least another $2 billion to complete the trip in four hours (at an average speed of 75 miles per hour). In fact, four hour service was promised in the US Department of Transportation documentation that accompanied the previous $1 billion grant.
It will probably also be the end of the $12 billion (more likely $25 billion) proposal to scrap the 75 mile per hour Chicago to St. Louis system after it is completed and replace it with a completely new, faster line that would travel twice as fast.
A number of commentators (including this author) have suggested that zeroing out high-speed rail is a litmus test of the resolve of Congress to control spending. The first steps may have been taken.
There have been reports for some years about the Volkswagen 1-litre car, so called because it would travel 100 kilometers on one litre of fuel. That is the equivalent of 235 miles per gallon. Earlier reports were that the car would be marketed by now.
Now Volkswagen indicates that the car will be produced "within the next few years." The car will be called the XL1. However, rather than being a 1 L car it will be a 0.9 L car, achieving 261 miles per gallon. The improvement is the result of adding an electric motor that will make the car a plug-in hybrid.
This is just further indication of reality that technological improvements can materially reduce greenhouse gas emissions. Indeed, if the entire automobile fleet could obtain this fuel efficiency by 2050, greenhouse gas emissions from cars would be reduced more than 80 percent, despite substantial increases in driving. This development may mean that petroleum itself could emerge as a "green fuel."
Moreover, this advance is consistent with finding by McKinsey & Company and the Conference Board, in a report sponsored by the Environmental Defense Fund, the Natural Resources Defense Council (NRDC), Shell, National Grid, DTE Energy and Honeywell that "....no change in thermostat settings or appliance use, no downsizing of vehicles, home or commercial space and traveling the same mileage” and no “shift to denser urban housing" would be necessary to achieve substantial greenhouse gas emission reductions in the United States.
Volkswagen L1 (2009) photo by RudolfSimon
Vice President Joe Biden announced today a plan to spend $53 billion over the next six years on passenger high-speed rail projects that will help reach the goal of giving 80 percent of Americans access to high-speed rail within 25 years. According to the announcement, the proposal will place high-speed rail "on equal footing with other surface transportation programs." The initiative includes $8 billion in the President’s FY 2012 budget proposal, of which $4 billion will be focused on building new infrastructure and $4 billion will be dedicated to system preservation and renewal. The announcement makes no mention how the plan will be paid for.
Congressional reaction to the announcement was immediate. House Transportation Committee Chairman John Mica (R-FL) and Railroads Subcommittee Chairman Bill Shuster (R-PA) issued a press release expressing "extreme reservations" regarding the Administration’s plan. Several congressional sources we reached for comment pronounced the Administration initiative "dead on arrival."
"What the Administration touted as high-speed rail ended up as embarrassing snail-speed trains to nowhere," Mica said. "Rather than focusing on the Northeast Corridor, the most congested corridor in the nation...the Administration continues to squander limited taxpayer dollars on marginal projects," Mica added. "This is like giving Bernie Madoff another chance at handling your investment portfolio."
Rep. Shuster was equally critical. "The Administration continues to fail in attracting private investment, capital and the experience to properly develop and cost-effectively operate true high-speed rail," he said. "Government won’t develop American high-speed rail. Private investment and a competitive market will." Shuster was also critical of the manner in which the Administration has administered the program. "Selecting routes behind closed doors runs counter to the Administration’s pledges of transparency. ... High-speed rail funding could become another political grab bag for the President. ...If the Obama Administration is serious about high-speed rail, they should stop throwing money at projects in the same failed manner."
The strong condemnation by two leading congressional transportation spokesmen poses a serious obstacle for the Administration’s proposal on Capitol Hill. They are not alone. House leadership has called for cancelling the high-speed rail program as part of its deficit reduction plan.
Opposition from governors and state legislatures adds another hurdle to the Administration’s plan. Without state support high-speed rail projects cannot go forward. But, as we have seen, the governors of Wisconsin and Ohio have declined to participate in the Administration’s HSR programs. Other governors, concerned about potential operating subsidies, open-ended risk of construction overruns or unable to raise the required matching funds, may do likewise.
Florida’s Gov. Scott, in introducing his budget proposal on February 7, offered a hint about his thinking, that makes HSR boosters uneasy. "Over the last few years,’ the Governor said, "Florida accepted one-time hand-outs from th federal government. Those temporary resources allowed state and local governments to spend beyond their means. There was never any reason to think that Florida taxpayers could afford to continue that higher level of spending once the federal hand-outs are gone. The false expectations created by the federal hand-outs are the reason we hear about a multi-billion dollar deficit." The words "high-speed rail" and "operating subsidies" were not mentioned, but the implication was clear.
Several other high-speed rail projects are in danger of collapse because of stringent conditions demanded by the Federal Railroad Administration (FRA)— conditions that the host railroads find unacceptable. As reported by the respected railroad observer Fred Frailey, high-speed rail projects in Washington State, North Carolina and Virginia, totaling $1.4 billion in HSR grants, are in jeopardy because the service agreements negotiated by the states with Class 1 railroads have been rejected by the FRA as not strict enough. At the core in each case is the railroads’ insistence that passenger train operations must not interfere with freight operations and their refusal to accept penalties for potential delays suffered by passenger trains.
If these projects fall through, there will be little to show for the $10.5 billion HSR program other than a 48-minute reduction in travel time between Chicago and St. Louis as a result of an ongoing project with Union Pacific (see, "The Uncertain Future of the High-Speed Rail Prgram," InnoBrief, January 5, 2001). It is revealing that the only example the White House announcement chose to highlight was a $38 million program of track improvements between Portland and Brunswick, ME to permit a 30-mile extension of the five Downeaster round trips to and from Boston at slightly increased speeds, as Frailey pointed out.
Given this meager progress, given more than ample evidence of congressional and state-level opposition, and with so many, much more deserving infrastructure needs awaiting federal support (incl. rail in the Northeast Corridor), one wonders why the Administration has chosen to doggedly pursue its unrealistic vision of a nationwide high-speed rail network. We hope Congressmen Mica and Shuster will try to get some answers.
The head of the group pushing the Los Angeles plan for an NFL stadium, Anschutz Entertainment Group, doesn't understand why anyone would be suspicious of the finances behind his plans for a downtown football stadium. From the LAT:
"Almost every other community in the world would be throwing parades," Leiweke said.
Really? A power-hungry developer backed by a reclusive Denver billionaire comes along with a plan to tear down part of the city-owned-and-operated convention center and jam in a stadium without providing any specifics on how the deal would be structured - other than his promise that it won't cost taxpayers a dime - and he's wondering why so many people are skeptical?
"When the proposal gets there, everyone's going to take a deep breath and realize: There is zero risk to the taxpayer," Leiweke said. "This is people trying to scare people. And it's a shame."
More disinterested voices continue to point out that pro sports teams do little, if anything, to boost local economies - and that the job creation figures being bandied about for the downtown stadium are crazy high. From the LAT:
Villaraigosa said the stadium complex would create more than 22,000 jobs, an assertion that drew a laugh from Brad Humphreys, an economics professor at the University of Alberta, Canada, who has studied such facilities for years. "That's way outside the usual garbage that I read," he said. "The best estimate ... would be zero jobs created." Construction jobs, he explained, would be the most visible, but they would be short-term.
Humphreys and colleagues studied every city in North America that had built sports facilities in the last 40 years, "and we were unable to find any evidence that the local economy ever did any better," he said. What such developments tend to do is move existing money, and presumably jobs, around -- as, say, entertainment dollars that would have been spent in Westwood are spent instead downtown.
This piece originally appeared at Mark's LA Biz Observed blog.
The Houston Chronicle editorial board recently argued that light rail is key to combating Houston's traffic congestion problems. But if you look at the three cities with worse traffic congestion than Houston - DC, Chicago, and LA - they have much more transit, including tons of light rail in LA. Transit clearly hasn't solved the problem in these cities. These people aren't stuck in that traffic because they like it - it's because the transit doesn't go where they need to go or isn't timely. This is especially true with the rise of dispersed job centers in those cities where the trains don't go or don't provide good connectivity to the suburbs where people live. Let's see, in Houston we have downtown (<7% of jobs), uptown/Galleria, the med center, Greenway, Greenspoint, the Energy Corridor, Ship Channel, and NASA - among others. If that's not a dispersed set of job centers poorly suited to rail connectivity, then I don't know what is.
It's absurd to argue a light rail network focused inside the 610 Loop is going to do anything to relieve congestion or provide relief to commuters from the vast suburbs outside the loop. The solution is not doubling down on our multi-billion dollar LRT network, but instead scaling it back (University line only, IMHO) and instead spending the funds on a radical increase in express bus commuter services connecting all suburbs to all job centers with frequent nonstop 60+ mph transit using high-speed HOV/HOT lanes. Imagine driving to your local suburban transit center (which might just be a mall parking lot) and finding regular, frequent express buses (of all sizes) serving every major job center in Houston. These buses could have amenities like wifi and laptop trays. They might even be run by private operators (with subsidized fares) competing on routes, schedule, reliability, service, and amenities. And after they get to the job center, they can circulate to get you right to your building - no long walks in heat, cold, or rain. Finally, all of this is a single-seat service without annoying and time-consuming transfers from bus-to-rail or rail-to-bus (or even rail-to-rail).
It's a much more practical solution for a city like Houston, but one that requires innovating 'outside the box' as a transit agency rather than parroting the "more rail" mantra that every other transit agency in the country repeats endlessly.
For more details, see these two previous posts:
This post originally appeared at Houston Strategies.
Governor Chris Christie of New Jersey is looking like a prophet now. In late October, the Governor cancelled a new tunnel across the Hudson River between New Jersey and New York City, because of the potential for cost overruns, which would be the responsibility of New Jersey taxpayers. By that point, the cost of the tunnel had escalated at least $1 billion to $9.7 billion. The tunnel was to have doubled New Jersey Transit and Amtrak capacity into Penn Station from New Jersey.
Now Amtrak proposes to build the tunnel itself, a scaled down version of the previous tunnel. The new tunnel would increase capacity for New Jersey Transit and Amtrak trains by 65 percent.
However, the cost is not scaled down. For one-third less the capacity, initial estimates place the cost of the new tunnel at 40 percent more ($13.5 billion) than the already escalated cost of the cancelled tunnel.
Of course, it is likely that if planning and construction proceed, the cost of the tunnel could increase substantially beyond initial estimate. This virtual inevitability is indicated in international research by Oxford University professor Bengt Flyvbjerg and others.
The highly respected Californians for Responsible Rail Design (CARRD) has released a new cost estimate for the phase 1 Los Angeles to San Francisco high-speed rail line. Based upon an analysis of California high-speed rail Authority documentation, including stimulus grant applications and other internal sources, CARRD estimates that the line will now cost $65 billion, rather than the current estimate of $43 billion.
The CARRD release indicated:
Our analysis, based solely on official and publicly available Authority documents, determines the
current project costs are approximately $65 billion. The $43 billion figure was inaccurate, even at the time it was made.
CARRD also pointed out that there has been no recent update to the official cost estimates and that the planned October 1, 2011 update, required by state legislation, may not be released on time because of contract negotiation difficulties with Price Waterhouse Coopers.
Even as environmental and planning work has advanced, no update to the official capital cost estimate has been made. This is true even when the only alternatives in most segments still being studied are significantly more expensive than those used to calculate the $43 billion number
However, CARRD cautioned even this 50% increase in just two years may understate the eventual costs:
...we have received some feedback that these numbers may actually be too conservative since there still is very little engineering information about some of the most technically challenging parts of the project (like the mountain passes).
The new CARRD cost estimate is consistent with the perennial cost escalation that has been noted in such projects by Oxford University professor Bengt Flyvbjerg and others, who found that passenger rail systems typically have cost overruns of 45 percent.
The California Air Resources Board had good intentions when it developed a cap-and-trade plan to meet greenhouse gas standards, but according to a San Francisco Superior Court Judge, the Board made a few mistakes that will delay their efforts. The Air Resources Board is acting in response to AB32, California’s Global Warming Solutions Act of 2006, which calls for the reduction of carbon emissions to 1990 levels by 2020.
They are being sued by a team of environmental groups, represented by the San Francisco’s Center on Race, Poverty and the Environment, who disapprove of the Board’s inadequate analysis of alternatives to cap and trade. Not only that, but Judge Ernest Goldsmith found that the Board’s “analysis provides no evidence to support its chosen approach.” These issues are becoming commonplace in California these days, as they echo the criticisms of California’s High Speed Rail Authority’s quick decisions in building new rail lines.
The California Air Resources Board will not be able to move forward until it complies with the California Environmental Quality Act of 1970, which Governor Reagan enacted to make sure agencies in California both determined and prevented the environmental consequences of their projects. The environmental groups who raised this lawsuit, who would be disappointed if AB32 were to be delayed or abolished, want to assure that any environmental legislation would not hurt disadvantage communities in the state. Therefore, they are willing to wait for the Air Resources Board to comply with the California Environmental Quality Act and explore the possibilities beyond cap-and-trade.
Acting too quickly without fully exploring all options has become a theme in California politics, mainly because the state is in such a rush to meet deadlines outlined in the legislation or that dictate the disbursement of federal funds. This haste to develop may ultimately hinder new projects since the public will be extra vigilant in making sure agencies find solutions that support their well-being.
In his new book, Last Exit: Privatization and Deregulation of the U.S. Transportation System , Brookings Institution economist Clifford Winston contends that transit subsidies are largely the result of labor productivity losses, inefficient operations and counterproductive federal regulations.
Winston finds that transit service is so underutilized, that load factors were at 18 percent for rail and 14 percent for buses in the 1990s, before the Federal transit administration stopped requiring transit agencies to report that information.
Six Years Severance Pay: Winston cites the fact that dismissed transit employees may be eligible for up to six years severance pay, under requirements of federal law. For example, less costly services that could be provided under contract by private providers could result in the six-year severance payments if transit employees are laid off. No such benefit is available to other workers in the nation and an impediment that discourages cost-effective innovation.
Costly Rail Systems: The nation's urban rail systems, which have consumed so much of transit tax funding in recent decades, are the subject of considerable criticism.
Winston reminds readers of the considerable literature that shows that "the cost of building rail systems are notorious for exceeding expectations, while ridership levels tend to be much lower than anticipated" and that "continuing capital investments are swelling the deficit." At the same time Winston questions transits high subsidy levels for rail transit, for example, noting that the average income of rail transit riders is approximately double that of bus transit riders.
In particular, Winston criticizes the now under construction Dulles Airport rail line that will become a part of the Washington DC area transit system, noting that the route is not cost-effective. He characterizes cost overruns on the Dulles rail line and on the soon to be under construction Honolulu rail line as "inevitable." (This is despite the fact that both lines have already experienced substantial cost escalation.)
Indeed, Winston notes that among all of the US rail systems, the subsidies exceed the benefits on all systems except for San Francisco's BART.
Public Sector Mismanagement: Winston offers an ominous conclusion. He says that "social desirability is hardly a demanding standard for a public enterprise to meet" and indicates that is that it is rare to find a public service not meeting that standard. However, of transit Winston concludes that "the fact that transit's performance is questionable ... Is indicative of the extent that transit and bus rail services have been mismanaged in the public sector and been compromised by public policy. It is notable that over the quarter century since transit began receiving income from the federal gasoline tax that its share of urban travel has dropped one third.
Competition as an Answer: Last Exit indicates that transit can produce beneficial results, but makes a compelling case for reform. Winston suggests that transit could be improved by greater involvement of the private sector, following models such as the competitive tendering (competitive contracting) that now accounts for approximately one-half of Denver's bus system.
The international evidence, which Winston does not cite, is even more substantial. This includes the all of the world's largest bus transit system, in London, the entire Copenhagen bus system, and the entire subway, commuter rail and bus systems of Stockholm. However the ultimate in privatization is Tokyo, the world's largest urban area, where transit ridership is 1.5 times that of the entire United States. More than two-thirds of all transit ridership is carried by unsubsidized private rail and bus operators.
Photo: Competitively tendered bus in London (photo by author)
Even if Australia is a beautiful place to live, it is far from affordable. Results from the Demographia International Housing Affordability Survey show that some of the country’s major cities rank near the bottom of the list of areas with affordable housing. Out of the 325 cities analyzed, Perth ranks 291st, Melbourne ranks 321st, and Sydney ranks 324th. At 6.3, 9, and 9.6 respectively, each one has a median housing price to median household income ratio at least three to six points higher than the 3.0 price to income ratio demarcating affordable from unaffordable housing. Compared to these places in Australia, living in New York or London seems almost reasonable.
Residential property prices in Australia have risen 250% in the past ten years, mainly due to the Government’s concentration on incentives for investors and speculators. A first home buyer’s program and negative gearing incentives for home and property owners have taken a toll on the housing market, creating such “inexcusable” conditions according to Australian Greens housing spokesman Senator Scott Ludlam.
The 2008 Senate Select Committee on Housing Affordability’s investigation into this issue reveals that the Government spent about $50 billion annually on capital gains exemptions and negative gearing incentives, while only spending $512 million over the course of five years to improve the supply of affordable housing. Rental affordability is not much better, as indicated by the gap of 493,000 affordable and available rental properties in Australia.
Ludlam and others have started to call this a “crisis,” an adequate term given migration trends all over the world. Cities with unaffordable housing, such as New York, London, and San Francisco, are losing people moving to the less expensive suburban areas. If Australia continues to have housing bubbles and affordability issues, cities like Melbourne and Sydney may experience high out-migration rates in the coming years, which would not bode well for cities on the rise.
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