Tag: transportation

Transit Continues Its Death Spiral

Nationwide transit ridership in the first quarter of 2019 was 2.6 percent below the same quarter in 2018, according to data released by the Federal Transit Administration (FTA) last week. Transit’s most recent downward spiral began in 2014, and ridership over the twelve months prior to March 31 was 8.6 percent below the same twelve months four years ago.

Ridership is declining for all major forms of transit travel. First quarter bus ridership was 2.1 percent below 2018 while first quarter rail ridership declined by 3.2 percent. Commuter rail, light rail, heavy rail, and streetcars all lost riders.

Since transit agencies depend on fare revenues to cover part of their operating costs, declining ridership can force them to cut service or raise fares, either of which is likely to lose them more riders. This is known in the industry as the “transit death spiral,” and even major agencies such as the Bay Area Rapid Transit District (BART) are worried about it.

The FTA data show that first quarter ridership had fallen in all but twelve of the nation’s fifty largest urban areas. It even fell in Seattle, the one urban area that has, up until 2019, consistently shown ridership growth.

Ridership over the past four years has declined in every state except Washington.

Thanks to Seattle’s previous ridership growth, Washington is the only state that saw more transit riders in the year prior to April 2019 than the same period four years ago. To understand why ridership in Seattle was growing, it is first necessary to look at where ridership has declined the most.

150 Years of Boondoggles

Today is the 150th anniversary of the pounding of the gold spike that represented completion of the first transcontinental railroad. Union Pacific, which now owns the complete route, plans to bring its newly restored Big Boy steam locomotive to Ogden to recreate, with 4-8-4 locomotive 844, the joining of the UP and Central Pacific in 1869. Numerous museums and history societies are planning exhibits and meetings.

While it would be fascinating to watch the Big Boy operate, you’ll have to excuse me for otherwise being unenthused about this event. As I see it, the first transcontinental railroad was the biggest boondoggle in nineteenth-century America, and one that – as later railroads proved – we could have lived without. Unfortunately, it is still being cited as an example of why twenty-first century America should do even more foolish things like build high-speed rail.

Railroads were the high-tech industry of the mid-1800s. They revolutionized both passenger travel and freight movement and mode it possible to farm and extract resources in remote locations. Yet, like today’s high-tech industries, many planned and some actual railroads were little more than securities schemes to separate naive investors from their money. The first transcontinental railroad did so on a grand scale, relying not on naive investors but a gullible Congress willing to give away tax dollars and resources.

The story is told in detail in Railroaded: The Transcontinentals and the Making of Modern America by Stanford University historian Richard White. To entice investors into building a continuous line from the Mississippi River to the Pacific shore, Congress agreed to give the railroads 10 square miles of land for every mile of track. In addition, it would loan builders $16,000 a mile for construction on flat lands and $48,000 a mile in the mountains.

The leaders of the Central Pacific (which built from California) and Union Pacific (which built from the Mississippi) quickly realized that immediate profits could be made by contracting construction out to themselves. They created separate companies that built the railroads as cheaply as possible, then billed the government the full amount of the available loans. The railroads were committed to eventually repaying the loans, but that responsibility belonged to a different set of investors, while a narrow inner circle of each railroad’s leaders owned the highly profitable construction companies.

The Central Pacific even went so far as to hire a geologist who claimed that the Sierra Nevada Mountains started just outside of Sacramento, many miles away from the real mountains, so they could collect the full $48,000 a mile for that segment. Using techniques like this, the people who owned the construction companies earned millions of dollars in profits before the railroads were even completed.

A Tale of Two Train Disasters

In 2004, Denver-area voters approved a sale tax increase to pay for “FasTracks,” a plan to build 119 miles of rail transit lines in the metropolitan area. In 2008, California voters approved the sale of bonds to pay for the construction of a 520-mile high-speed rail line between Los Angeles/Anaheim and San Francisco/San Jose. FasTracks is within a metropolitan area and high-speed rail is supposed to connect several metropolitan areas, yet there are a lot of similarities between these two projects.

Both rely on technologies that were rendered obsolete years before they received voter approval. The agencies sponsoring both projects ignored early warning signals that the projects were not cost effective. Both had large cost overruns. Advocates of both lied to voters about the benefits and costs of the projects. Due to poor planning, both projects remain incomplete. Despite the failure of the projects to date, both have adherents who hope to complete them.

My 2004 paper, Great Rail Disasters, chronicled the failure of recent rail transit projects to significantly enhance transit or transportation in their regions. Since then, there have been several new disasters, but RTD’s FasTracks and California’s high-speed rail project are two of the biggest.

Obsolete Technologies

In 1927, the Twin Coach company designed the first bus that cost less to operate, as well as to buy, than any railcar. Within 10 years, more than 500 American cities replaced their rail transit lines with buses, and by 1974 only eight urban areas still had some form of rail transit. 

The Twin Coach Model 40 bus was first used in Milwaukee, Wisconsin.

Buses are not only less expensive, they have the added benefit of being able to move more people per hour than most rail lines in the same amount of land. A railcar may hold more people than a bus, but for safety reasons the frequency of trains is restricted to 20 to 30 per hour, while a dedicated bus lane can move several hundred buses per hour.

“Actual” for RTD means actual capacity based on the train lengths and frequencies used; for Istanbul it means actual ridership.

The Istanbul Metrobus, for example, has a theoretical capacity of 30,000 people per hour and actually moves up to 20,000 people per hour. The 32-mile line carries twice as many people per day as all of RTD’s buses and trains combined. The theoretical capacity of Denver’s light rail is 12,000 people per hour, and Denver’s commuter rail is less than 14,000 people per hour. Neither operate anywhere close to those numbers, so buses could have been a viable low-cost substitute.

Istanbul Metrobus dedicated lanes move as many as one bus every 14 seconds. Photo by Myrat.

Buses are also potentially faster. RTD’s one bus-rapid transit line averages speeds comparable to its commuter train and more than twice as fast as its light rail. Plus buses, unlike trains, can leave dedicated lanes and fan out to many destinations.

Transit’s Growing Costs Drive Away Low-Income Commuters

The Census Bureau’s 2017 American Community Survey revealed that, for the first time since the Census Bureau began keeping track of such data in 1960, the median income of transit commuters has risen above the median income of all American workers. 

One reason transit commuter incomes have risen is that low-income transit riders are giving up on transit. Thanks to a growing economy, the number of people who earn less than $15,000 a year has declined, but the number of transit commuters who are in that income bracket has declined even faster, so that low-income commuters are 8 percent less likely to use transit than they were a decade ago. Meanwhile, people earning more than $75,000 a year were 10 percent more likely to commute by transit in 2017 than in 2007.

By 2017, people who earned more than $75,000 a year were considerably more likely to take transit to work than people in any other income bracket.

Transit ridership has been declining since 2014, mostly because of the rise of ride-hailing companies such as Uber and Lyft. But few low-income commuters are likely to substitute Uber or Lyft for transit.

Source: Census Bureau

Instead, they are buying cars. Census data show that auto ownership continues to grow and now 96 percent of American workers live in a household with at least one car. Since so few workers lack cars, a small increase in auto ownership can mean a large decrease in the share of people who are dependent on transit.

A major reason low-income workers are turning away from transit is rising fares. In the last decade, average fares have risen from $1.09 to $1.56, growing 2.1 percent faster than inflation each year.

NY-NJ Should Put Up or Shut Up

New York Governor Andrew Cuomo is upset that the Trump administration doesn’t want to fund new tunnels under the Hudson River. Cuomo sent an angry letter to Trump earlier this week accusing the president of being prejudiced against New York and New Jersey because they didn’t vote for him. Cuomo claims the tunnels should be federally funded because “the Northeast is home to 17 percent of the entire population and contributes 20 percent to the national domestic product.” 

But gross domestic product and regional populations aren’t among the criteria Congress established for federal funding of transit infrastructure. Instead, one of the most important criteria that the Department of Transportation is required to use is whether the project is “supported by an acceptable degree of local financial commitment.” Based on the lack of local support, the Federal Transit Administration’s 2020 New Starts funding recommendations gave the project a “medium-low” rating, and under federal law, that makes it ineligible for funding. Not counting some very small projects (such as the downtown Los Angeles streetcar), the only other project to get a medium-low rating was the Portal North Bridge, which is also part of the Hudson Gateway megaproject.

Cuomo argues that Trump has ignored “the financial commitments made by New York and New Jersey.” The FTA’s profile of the project reveals just what those commitments are.

First, the states are asking the federal government to put up $6.7 billion, or 49 percent of the projected $13.6 billion cost. Second, they want the federal government to make them a loan of $2.3 billion that will be “repaid with PANYNJ [Port Authority of New York and New Jersey] funds.” Third, they want another federal loan of $2.0 billion that will be “repaid with project revenues.” These two loans total to 32 percent of the projected costs.

Another billion dollars (7%) is supposed to come from “unspecified private capital sources” who will be “repaid with project revenues.” Further, $1.4 billion (10%) would come from “GDC funds” derived from “project revenues.” GDC is the Gateway Development Corporation, which consists of Amtrak, New Jersey Transit, the Port Authority, and the U.S. Department of Transportation. It currently earns no revenues of its own, so it will have a hard time paying $1.6 billion in construction costs. Finally, $178 million, or 1.3 percent of the total, would come from the Port Authority of New York and New Jersey.

In short, New York and New Jersey are nobly committing themselves to cover 1.3 percent of the cost of the project, while they are relying on the federal government to fund a mere 81 percent. Of course, some of that would be loans, but the states may not be obligated to repay those loans unless the project earns sufficient revenues to do so. The private capital sources who are supposed to put up 7 percent are almost purely imaginary, and even if they existed they would demand that they be repaid out of project revenues before the federal government. But before repaying anyone, these mythical project revenues are supposed to cover another 12 percent of the cost.

Pardon me if I sound naive, but what project revenues are we talking about? Amtrak, New Jersey Transit, and the Port Authority are all money-losing operations. Amtrak claims to make money in the Northeast Corridor, but that’s only because it ignores depreciation and the corridor’s $51 billion infrastructure backlog, only part of which is the Hudson Tunnels. New Jersey Transit trains don’t even earn enough fares to cover 60 percent of their operating costs, much less any to pay for maintenance or capital costs.

In other words, Cuomo is asking Trump to have federal taxpayers pay nearly all the up-front costs and to take nearly all the risks of this project. What if self-driving buses put New Jersey Transit and Amtrak out of business – or at least reduce their ridership enough that they have no surplus revenues to repay federal loans? What if many of the firms now located in Manhattan realize that the subway system is never going to be repaired and decide to move away? Who is going to pay for the inevitable cost overruns? New York and New Jersey are clearly trying to get these tunnels while putting up as little of their own money as possible.

The FTA has long had a policy that applicants for transit capital funds must put up half the cost in matching funds, and federal loans don’t count as matching funds. Following this policy, it rated the Hudson Tunnels “medium low.” Congress made the rules, so Cuomo is complaining to the wrong party when he writes Trump, as the Department of Transportation just followed Congressional direction when it gave the project a medium-low rating. If anything, the DOT was generous: the project really deserves a “low” rating.

Is This Infrastructure Really Necessary?

The United States has “at least $232 billion in critical public transportation” needs, claims the American Public Transportation Association (APTA). Among the “critically needed” infrastructure on APTA’s list are a streetcar in downtown Los Angeles, another one in downtown Sacramento (which local voters have rejected), one in Tempe, and streetcar extensions in Tampa and Kansas City.

Get real: even ardent transit advocates admit that streetcars are stupid. The economic development benefits that supposedly come from streetcars are purely imaginary, and even if they weren’t, it would be hard to describe streetcars – whose average speed, APTA admits, is less than 7.5 miles per hour – as “critically needed.”

Much of the nation’s transit infrastructure is falling apart, and the Department of Transportation has identified $100 billion of infrastructure backlog needs. (Page l – that is, Roman numeral 50 – of the report indicates a backlog of $89.9 billion in 2012 dollars. Converting to 2019 dollars brings this up to $100 billion.) Yet APTA’s “critical needs” list includes only $24 billion worth of “state of good repair” projects. Just about all of the other “needs” listed – $142 billion worth – are new projects or extensions of existing projects.

In fact, few if any of these new projects are “needed” – they are simply transit agency wish lists. For example, it includes $6 billion for phase 2 of New York’s Second Avenue Subway, but no money for rehabilitating New York’s existing, and rapidly deteriorating, subway system. Similarly, it includes $140 million for a new transitway in Alexandria, Virginia, but no money for rehabilitating the DC area’s also rapidly deteriorating Metrorail system. (In case anyone is interested, I’ve converted APTA’s project list into a spreadsheet for easy review and calculations.)

The $166 billion total on APTA’s “Project Examples” list is less than the $232 billion APTA says is needed, but even if all of the difference is “state of good repair” projects, that difference plus the $24 billion on APTA’s list doesn’t add up to what the DOT says is needed to restore transit infrastructure. This shows that even APTA doesn’t take public safety and “crumbling infrastructure” seriously.

I’ve previously pointed out that the best-maintained infrastructure is funded out of user fees. For example, Federal Highway Administration data show that only 2.9 percent of toll bridges are “structurally deficient,” compared with 5.5 percent of state-owned bridges funded mainly out of gas taxes and 12.2 percent of locally-owned bridges that are funded mainly out of general tax dollars. Gas taxes are a user fee, so state bridges are better maintained than local bridges, but tolls are an even better user fee so toll-funded bridges are in the best shape.

Politicians allow infrastructure funded out of tax dollars to deteriorate because they would rather spend money on new projects than maintain old ones. APTA’s list simply confirms this: APTA is trying to entice politicians into funding all sorts of new projects rather than maintain the existing ones that are falling apart.

To justify this spending, APTA claims that transit produces $4 in economic benefits for every $1 spent. This is based on a report prepared for APTA in 2009. This report includes two kinds of benefits from transit spending.

First, when anyone spends money on anything, the recipients of that money turn around and spends it again. That’s called “indirect” or “secondary” benefits. Spending money on digging holes and filling them up would produce similar secondary spending. That doesn’t mean the government should pay people to dig holes and fill them up (although that’s really what it’s doing for many rail transit projects). For one thing, if government didn’t spend that money, there would be more money in the hands of taxpayers, who would spend it, generating just as many secondary benefits.

Second, the study counts cost savings to transit riders and other travelers, such as the savings from not having to own a car, from getting to destinations faster, or from congestion relief. But transit costs far more and travels far slower than automobiles; there is no cost or time savings from substituting expensive, slow methods of transportation for inexpensive, fast methods of transportation. Transit also does not provide a significant amount of congestion relief; in fact, large buses, streetcars, light rail, and commuter trains that have many grade crossings often do more to increase congestion than reduce it.

The study’s arguments are even less plausible today, when transit ridership is shrinking, than they were in 2009, when transit ridership had been growing. Charlotte, Los Angeles, and Portland recently spent hundreds of millions or billions on new light-rail lines or light-rail extensions, yet transit ridership in those regions dropped after the new lines opened. There is no way that can that be good for transit riders or other travelers.

APTA’s wish-list is just one more reason why Congress should only pass an infrastructure bill if it is one that is funded exclusively out of user fees. An infrastructure bill funded out of tax dollars or deficit spending would impose huge costs on taxpayers in order to build unnecessary projects that we won’t be able to afford to maintain. 

Yesterday’s Technology the Day After Tomorrow

The apparent death of California high-speed rail has led to a spate of stories asking, “What went wrong?” The answer to that question is a lot simpler than most people think: what went wrong is that the state even considered building the project in the first place.

Back in 1997, a graduate student at the University of California, Berkeley named David Levinson – who has since gone on to do a lot of incredible work on transportation access – asked whether high-speed rail would cost more or less than flying or driving. The state had not yet made cost estimates, so Levinson estimated that the line from San Francisco to Los Angeles would cost about $10 billion. Based on that, he found that high-speed rail would be “significantly more costly than expanding existing air service” and also more expensive than driving.

Just three years later, California’s first official estimate was that the SF-LA line would cost $20 billion. The state should have stopped right there. Yet, having made that estimate, the momentum was in place to continue even as estimates rose to $33 billion, then $68 billion, then $77 billion and more.

High-speed rail is presented as some kind of new technology race that America is in danger of losing if it doesn’t start building right away. In fact, American railroads began experimenting with high-speed trains back in the 1930s. Japan’s bullet trains date to 1964, 55 years ago. By that time, we had already surpassed them with jet airliners.

Today, air travel is far less expensive than train travel, with airfares averaging under 14 cents a passenger mile, barely more than a third of Amtrak fares even though Amtrak receives much bigger subsidies, per passenger mile, than the airlines. Racing to build a faster train would be like subsidizing the manufacture of new IBM Selectric typewriters because China developed a faster electric typewriter – no matter how fast, typewriters have been rendered obsolete by word processors.

The reason high-speed rail is expensive is that it requires a lot of precision infrastructure that is costly to build and costly to maintain. By comparison, airlines require very little infrastructure and while highway infrastructure is relatively inexpensive: for the cost of one mile of high-speed rail, California could build eight to ten miles of four-lane freeway.

Moreover, the growth in costs was totally predictable. Bent Flyvbjerg has shown that megaprojects like this just about always go way over the original projected cost because planners are guilty of optimism bias — they always make optimistic assumptions about each part of the project. Flyvbjerg went even further, saying that often planners weren’t just optimistic but engaged in “strategic misrepresentation” in order to get the projects approved. 

California rail planners, for example, justified the high costs with unrealistically high ridership projections. Although the California corridor has a lower population that is less optimally arranged than the Boston-to-Washington corridor, California was predicting that its high-speed rail line would attract 55 million riders a year, fifteen times the number carried by Amtrak’s high-speed Acela. Based on this, the planners predicted the trains would collect so much revenue above their operating costs that private parties would gladly invest $7.5 billion in the project. Such private money never materialized.

Whether light rail, heavy rail, commuter rail, or high-speed rail, it turns out to almost always be true that construction and operating costs are higherridership and revenues are lower, and projects take longer to complete than the original projections – a combination of problems known as the planning fallacy. Moreover, maintenance costs are almost never considered since rail infrastructure wears out after about 25 to 30 years, by which time the original planners are retired and won’t be blamed when the systems start falling apart. This is why rail transit today is suffering far more from crumbling infrastructure than the nation’s highways.

Though these problems are repeated over and over, many cities and states today are planning more such urban and intercity rail projects. The state of Washington is thinking about starting a state high-speed rail authority. Cities like Austin and Durham want to build light rail even though transit ridership in those regions (and just about everywhere else) is declining. 

The reason these projects go forward is the city or state hired some engineering firm to do a “feasibility study” – and then that firm spent part of its income from the study to lobby for the project, knowing that if it goes forward it is likely to get some of  the future contracts. A plan to extend Portland’s light rail into Vancover, Washington died after it was revealed that the main lobbyist for the project was paid by the contractor who was hired to write the environmental impact statement.

Such revelations rarely come in time: Honolulu is building a rail line whose costs have tripled partly because the transit agency turned most project administration over to consultants – paying them $505,000 a year per person – who made more than 270 contract changes that added a half a billion dollars to the total costs.

The bottom line is that states and cities should not even ask whether urban or intercity passenger rail projects are feasible. I can tell you at the start that they are not: unless you are in Tokyo or Hong Kong, buses, cars, and planes are always superior to passenger rail. Once you start spending money on it, it is hard to stop. The only thing that stopped California is that it literally didn’t have any more money to spend.