Orphan Road

The Urban Land Institute states what should be obvious: if you keep voting down transportation funding, sooner or later you're not going to have any money to spend on transportation:

Among U.S. cities/metro areas studied, the Seattle-Puget Sound area's infrastructure-funding gap was nearly twice that of Dallas-Fort Worth, which was second at nearly $400 per capita. ULI, a nonprofit education and research institute that focuses on land-use, population growth, urban planning and the environment, worked with financial consultants Ernst & Young to produce the 60-page study.

"By 2040, the population of the Seattle area is projected to grow by 1.7 million new people, with 1.2 million new jobs ... that's like dropping the population of greater metropolitan Portland into the Puget Sound area," John Hempelmann, co-vice chairman of the Reality Check Task Force for ULI Seattle, said Wednesday.

I-695, Prop 1, the monorail... the list of transportation projects ultimately rejected by Puget Sound voters is long (going back to the Bogue plan in 1911 and Forward Thrust in '68).

But the really maddining thing is that the Seattle Metro area has generated an absolutely astonishing amount of wealth in the last decade or two. We're home to two of the richest men on planet Earth, not to mention the highest number of millionaires per capita in the country. And yet, despite all this, we can't fund an infrastructure project (and don't get started on funding for other priorities like education).

At the end of the day, then, this is our own fault. After all, we have no state income tax, so our taxes end up being more regressive than most places. Partly, of course, it's a leadership issue. But at the end of the day, trying to lead people in the Northwest is like herding cats. This part of the country, tucked away in the corner, appeals to (and breeds) a certain kind of loner, a do-it-yourself type. As such, we're pretty skeptical of mass movements and big organizations. That's too bad, because we have the resources (natural, intellectual, and financial) to really show America (and the rest of the world) how to do things right.

(via CIS)

More and more, the answer is the good ol' U.S. of A:

There are lots of ways in which infrastructure inadequacy matters to the US but I would focus on two.

First, it imposes a drag on economic growth. The private infrastructure is poor enough – broadband speeds lag behind other countries and mobile coverage is spotty. But much of the public infrastructure is unfit, a fact that was becoming clear even before Hurricane Katrina flooded New Orleans and a Minneapolis bridge collapsed during rush hour last year.

Second, it presents an awful image of the US to investors and other visitors. The state of transport and communications infrastructure is a symbol of a nation’s economic development and the US is starting to look like a third world country. In fact, scratch that. Many developing countries look and feel better.

To follow up on serial catowner's post below, one thing I've not mentioned enough is the federal Dodd-Hagel bill to create a National Infrastructure Bank.

Obama's on board, and Hillary Clinton's a co-sponsor as well. The Campaign for America's Future has a good overview of the legislation:

Perhaps most importantly, the selection criteria required by the National Infrastructure Bank would encourage the federal government to undertake projects that are significant to the country’s long-term well-being: rather than stop-gap measures to repair existing problems, such projects would take into account new challenges like climate change, the growing importance of urban areas, and the need for more affordable housing, while at the same time confronting the more typical concerns associated with economic growth (increased air, highway, and port traffic). A database with details about each infrastructure project and its funding would provide at least some public oversight.

Being a real estate developer/transit agency might be shady, but it sure is profitable:

The subway's underlying net profit, which excludes any changes in valuation of real estate properties, rose to 8.57 billion Hong Kong dollars (1.1 billion U.S. dollars) for 2007. A large chunk of MTR's profits comes from the developing and selling of real estate properties. MTR has built residential real estate surrounding train stations, selling 7 billion dollars worth of units last year. The construction of these flats, however, were accounted for in 2006 books, so the profits in 2008 are suspected to be less than the previous year. Ridership remains to be at a high for Hong Kong's subway. About 948 million rides (an increase of 8 percent) were taken last year.

A couple of months back daijimin at STB and I went back and forth
over Vancouver's proposal to become a real-estate developer. At the time I argued that it was illegal because TIF is barred in our state constitution. Daijimin said, in response, that "if it's illegal, we might as well go ahead with the even shadier plan of buying the land with eminent domain, building light rail then selling it after the prices go up. That way you capture all of the gains."

Well, now that more details of the plan have emerged, I think daijimin may have been on to something: Translink has, it seems, gone with the "shadier" approach.

The nickel version of the idea is this: Translink needs funding to build new rail lines, and they know that the property around the stations is going to be in demand, so why not go the extra step and develop the property yourself and use that money to finance the project? It's certainly more attractive than more property or sales taxes.

There are a couple of problems...

The first is eminent domain. Giving a property developer that kind of power sounds like a recipe for a massive conflict of interest. Already Translink is saying that the only way to reall make it work is to buy the property on the sly:

To build three rapid transit lines in a decade, TransLink will need to secure high-density zoning from municipalities to feed ridership and create opportunities to profit from the real estate appreciation, Jacobsen explained.

To acquire the land cheaply and beat out developers and speculators, TransLink will have early discussions about alignments and station locations and then quickly and quietly buy the land where stations are to be built.

Shady! Especially if, as a government agency they have access to the records about property transactions that private developers don't have.

The second issue is that property development is itself a risky business. I know that Vancouver (and Cascadia generally) is supposed to be The Land Of Eternally Rising Property Value, but reality doesn't work that way. Developers go belly-up all the time. Do we really want the trains to stop running if the real-estate market tanks?

Now, Vancouver's planners are hella smart and I wouldn't be surprised if they've thought of these things. Or maybe it's just different in Canada and the idea of giving a government agency that much power doesn't make anyone sweat. After all, they've already done it in Hong Kong, apparently.

But if we're looking for a potential solution for our own fair city, it seems like a LID is a safer, more reliable revenue stream, but one that effectively accomplishes the same thing. Of course, a LID requires all the property owners to approve. Even in South Lake Union, where the vast majority of the property is held by a single owner who was in favor of the tax, there was significant opposition from some property owners.

In short: there are no free lunches!

For all the sins of the Bush Administration, this is the transit-fan equivalent of killing puppies for sport:

The bulk of funding for the federal Highway Trust Fund comes from the 18.4 cents-per-gallon federal gasoline tax. But revenues from the tax have flattened out, likely because people are driving less due to the price of gas and because cars have become more fuel efficient in the 14 years since the federal gas tax was last increased.

White House budget officials said the Highway Trust Fund will have a roughly $3 billion surplus in the current fiscal year. But by the end of fiscal 2009 it will be running a $3.9 billion deficit.

“There are challenges,” said Christin Baker, a spokeswoman for the federal Office of Management and Budget, which writes the president’s annual budget proposal. “We can’t spend what we don’t have.”

When Congress proposed raising the federal gasoline tax by 4 cents per gallon several years ago, President Bush threatened a veto and urged lawmakers to curb spending.

In its latest budget proposal, the administration suggested as a temporary solution that money from the federal mass transit trust fund account, which is running a surplus, be transferred to the highway account to cover the anticipated shortage.

Exempting the state from paying itself sales tax on transportation projects seems eminently reasonable:

The tax exemption would apply only to transportation projects that use tolls to pay for at least $1 billion of the total cost or use tolls to pay at least 50 percent of the cost. The $735 million Narrows bridge qualifies because more than 90 percent of its cost will come from tolls that will be paid through 2030.

For the replacement Highway 520 bridge across Lake Washington, the exemption would cut $180 million from the cost of a project that is now estimated at $4.38 billion.

Other projects that could be eligible for the sales tax exemption are a new Interstate 5 bridge across the Columbia River, which will cost $3 billion to $5 billion, and the north-south corridor in Spokane, which is expected to cost between $2 billion and $2.5 billion.

The reason this matters for the Columbia River Crossing, of course, is that WSDOT would have otherwise bought the bridge in Portland to save the sales tax.

Nice article by Seattle NYT correspondent William Yardley on the increase in construction costs and how it's affecting public projects around the country:

Costs have jumped for projects as varied as levee construction in New Orleans, Everglades restoration in Florida and huge sewer system upgrades in Atlanta. The reconstruction of the Interstate 35W bridge in Minneapolis, a $234 million project, has been fast-tracked for completion by December, and state officials say it is too soon to know whether it will come in on budget.

The impact has been felt in different regions at different times, and not every project has been high-profile. In Oregon, high costs have forced the State Department of Transportation to slow the rate at which it upgrades roads and bridges. In Seattle, school building projects were put on a fast track this fall because of fears of cost overruns.

The article focuses on the increase in costs of bulding materials and labor, due to a global construction boom. I have to wonder how much the falling dollar also plays into the equation.

The final price tag for the Tacoma Narrows Bridge is $735 million, $114M under budget. The new Evergreen Point bridge will cost almost six times that much. Now, clearly all bridges are not created equal, but surely this disparity warrants further investigation. How did this project go so well?

Certainly one advantage was the design-build contract with Kiewit and Bechtel, which shaved two years off the process and committed the contractors to delivering a new bridge at a fixed cost.

However, the cost doesn't include finance charges. The legislature floated an $800M bond, and we'll be paying that off over the next 23 years -- plus interest -- with tolls. By contrast, a good chunk of the $4.4B cost of the new 520 bridge is the finance charges. If the proposed Lake Washington tolls do bring in the $2B or so that WSDOT expects they will, then the real cost of the 520 bridge is more like $2.4B, if we're comparing apples to apples (or bridges to bridges).

Nonetheless, even with Frank Chopp's last-minute effort to re-do the finance plan (which either saved us money or cost us money, it's not entirely clear to me) the Tacoma Narrows Bridge seems to be a runaway transporation success story in a region with too few of those.

Daijimin asks about the Hong Kong method of transportation finance described here.

The big problem that I see, which I alluded to in a comment to David Brewster's article, is that the financing scheme described -- tax increment financing -- is illegal in Washington State.

I wrote about this a few months back in the context of I-747. Tax increment financing (TIF) is the idea that you borrow money to finance, say, a transit project, and the resulting increase in property taxes around the project can be used pay back the loan (this is a bit different than LID, which financed the Seattle Streetcar, and which involves assessing an up-front tax on the property owners).

In speaking with folks who know more about this issue than I, I've come to thnk that there are too many barriers in the state constitution vis-a-vis property taxes to actually implement TIF in the way Brewster describes. Which is too bad.