You Can't Spell Subsidy Without B-U-S

By Josh Stephens

It's funny to consider the circumstances under which Americans are willing to accept government subsidy or programming. Education: good. Agriculture: Good. Fire and safety: sure. Health care: no comment. As for transportation, we seem to be OK with ambulances, whether they're transporting us to publically supported hospitals or not. But mass transit to someplace else -- be it work, recreation, or your Botox appointment -- is another, more complicated matter.

Public transportation seems like a business because the fare structure is so familiar. Paying for a bus ride feels no different than paying for a movie ticket, so it's natural to think that the marginal cost to the consumer covers the marginal cost to the provider and away we go. Except that hidden from every fare is the 50-70 percent of operating costs that are covered by the public. Since we don't get a receipt saying "70 of your ride has been brought to you by the taxpayers of your city and state," it's even easy to imagine that the people who use public transportation can, and do, just pay for it themselves.

These assumptions complement the fallacy that riders are the only beneficiaries of the system. But as we have seen during this recession, public transportation's benefits are more than vast enough to justify public intervention. Buses and trains rescue people who can no longer afford to drive, and they enable urban economies to function by matching employees with employers -- which is the whole (economic) purpose of cities. This is why a certain radical fringe contends that the benefits to free transit -- that is, transit with a 100 percent subsidy (a la schools) -- would pay for itself many times over.

That might sound a little nuts, except that it's hard to define a substantive difference between the argument in favor of fare-free transit and that in favor of toll-free roads. It's tempting to imagine that, through the magic of elasticity, if you divide the quantity demanded by a price of zero you get infinite demand and therefore an infinite reduction in traffic. The math doesn't work out quite like that, but without the burden of pulling out a wallet, a great many discretionary riders would have a few bucks left over for food and rent.

Which brings us to the recession: All the great ideas in the world matter little if transit agencies have no money to spend and more riders than they know what to do with, which is exactly the state of affairs today, as the nation's transit agencies face a collective deficit well into the billions. My article approached these deficits from a distant, abstract perspective, as if to assure everyone that, indeed, misery loves company. But let's not forget that the real misery is that which afflicts the riders, forced to abandon jobs, remain housebound, or suffer interminable waits while the bus plies its route.

Many agencies don't quite know what they're going to do to close their budget gaps, save raising fares and eliminating service. No matter what, one encouraging outgrowth of this crisis -- from a reporter's standpoint -- is the outpouring of candor from these agencies. While government bureaucracies are notorious for obfuscation and euphemism, my reporting uncovered very little sugar-coating, as if the global crisis has finally allowed public officials to let down their guard.

Their collective message is clear: Transit agencies are asking for patience, understanding, and even a little sympathy. Whether or not we're willing to give them any more of our money is, however, another matter.

Josh Stephens’ article, “Mass Transit’s Reversal of Fortune,” appeared in the fall 2009 issue. He is a freelance writer based in Los Angeles.

Transportation Sector Bonded to Credit Crisis

By Karl Vilacoba

Jim Calpin is a successful public finance banker on Wall Street, but don’t ask him what’s next in this turbulent economic climate.

“We don’t know. The crystal ball at Merrill Lynch is broken,” Calpin told an audience of about 200 at “Beyond the Gas Tax: A Symposium on Funding Future Transportation Needs,” held Tuesday in Syracuse, N.Y. As he spoke, the Dow Jones was well on its way to a 508-point plunge for the day.

What Calpin can say for sure is that the credit crunch crisis is beginning to hamper transportation agencies’ ability to do business. If it continues, he said, it may cripple them.

Even agencies with AAA bond ratings are having trouble getting bond financing now, according to Calpin, who specializes in transportation infrastructure for Merrill Lynch. The funding they’ve been able to secure doesn’t stretch as far as it did a few months back. Calpin displayed a graph showing the dramatic rise in interest rates banks charge public agencies for bonds – the 5 or 6 percent charged in recent months is now closer to 9 or 10 percent in many cases. With their buying power sinking, agencies are going to have to do even less with their already tight budgets.

The indicators he’s seeing are not encouraging. Some of the financial sector’s largest bond insurers are going under fast. America’s financial fears are contagious and spreading globally. Not even tolling revenues are immune. In Orlando, collections are down about 15 percent, in part because unemployment is so bad, he said.

None of this is bound to make Congress’ job any easier drafting the next transportation funding bill.

“Something’s got to give,” Calpin said. “We’ve got to get a new playbook in Washington when we look at [SAFETEA-LU] re-authorization.”

Subway Extension Would Make More than a Token Difference for L.A.

By Josh Stephens

Covering what could be the largest infrastructure investment in one’s hometown is naturally a challenge in journalistic objectivity. On the one hand, it would have been difficult for a writer not from Los Angeles to comprehend three decades of background information as well as the present-day complexities of funding, traffic, land use patterns and political wrangling at the Los Angeles Metropolitan Transportation Authority. On the other hand, one of the proposed portals would be a half-mile from my front door.

Metro serves 88 constituent cities – of which Los Angeles is only one – totaling 10 million people. The Westside, which is the object of the proposed subway – is, in turn, only one part of Los Angeles. But by some measures, it is the largest informal urban region in the country, on par with the New York boroughs and all but the country’s very largest center cities. I describe it as an amorphous Manhattan, a dynamic area of wealth, global prominence and traffic. But it’s even more complicated than that, because Los Angeles city government does not correspond with the transportation authority, and, moreover, the proposed subway would pass through three other entirely independent cities: West Hollywood, Beverly Hills and Santa Monica.

If I’m guilty of anything, it’s hometown pride, except without the real town. The subway might change that. It might finally knit together the Westside’s parts while, at the same time, introducing perhaps the most profound symbol of serious urbanism that policy and engineering has ever devised (even more so than skyscrapers, and certainly more so than freeways -- which are, many would agree, downright anti-urban).

I could wax poetic about either subways or the Westside ad nauseam, but the poetry is beside the point. What matters for my contribution to InTransition are, one the one hand, things like accuracy, balance and objectivity, and, on the other hand, expertise and familiarity. It’s hard to fulfill both.

I readily admit that if the subway gets built to the Westside, I will be first in line at the turnstile (assuming that Metro goes forward with an asinine plan to abandon its current honor system). Even my Libertarian anti-subway sources admitted that the extension would be “nice.” For me, it would be more than nice; it would be a revelation.

But, as one of the three largest public transit projects in the country, it would also cost $5 billion. And let’s be real. If ever it gets approved, it would be more like $10 billion or $12 billion. Who knows.

The fun thing about pursuing objectivity in the face of one’s own interests is that you learn a lot. Some of my sources who were most skeptical about the subway were the most eloquent and indeed most cogent. The cost-benefit analysis results in some pretty daunting calculations, mainly because Los Angeles’ entire subway system will always pale in comparison to single lines in New York. One source even noted that historically, the construction of rail projects in L.A. County has correlated with a decrease in overall transit ridership. Aw, snap.

But that doesn’t mean that Metro should not pursue it and that the federal government should not fund it. Whenever my mind wanders into the billions, I think about all the money that is wasted on things that aren’t very nice: inefficiency, misguided subsidies, and, of course, wars. A subway will last generations, and it will not kill anyone. In fact, it might even save a few lives through less pollution and fewer chances for unfortunate meetings between vehicle and pedestrian on the pavement up above.

And as gas ratchets towards $5 and beyond with hardly any chance of ever coming down, the Los Angeles subway – as “nice” as it might be for me and my fellow Westsiders right now – may become every bit as essential for us as our cars once were.

Ultimately the Federal Transportation Administration’s New Starts program will decide whether the subway extension deserves federal funds. And, failing that, Congress may work its magic. In the meantime, we in Los Angeles have to decide whether a little pride and a little less traffic is going to be worth it. Worth $5 billion, that is.

Josh Stephens is the author of “An Underground Movement Forms in L.A.,” published in the Summer 2008 issue of InTransition.

Despite Spike in Paying Riders, Transit Providers Struggle

By Karl Vilacoba

We’ve all seen the reports – public transit ridership is up significantly nationwide. So how are transit agencies responding to this good news? Cutting service.

The Associated Press reported this week that many bus and train service providers are being forced to cut underperforming routes in order to cope with high diesel and gasoline costs. You’d think the rise in paying riders would offset the fuel expenses, but as the story notes, it’s not that simple. One of the reasons is that sales tax revenues that help subsidize these services are flagging, also because of the fuel prices. People just don’t have expendable income these days because they’re giving it all to the gas stations.

The Denver-area’s Regional Transportation District (RTD), which we profiled in our winter issue, was among those forced to trim services, despite record passenger numbers.

“Everything that we do is being undermined by the fuel crisis,” RTD CEO Clarence Marsella said. “It’s really diabolical. The tentacles are everywhere.”

If there’s a bright side to this fuel crisis, it’s that it’s causing Joe Public to take part in serious conversations he wouldn’t have bothered with before. Topics like alternative energies, transportation funding, the nation’s infrastructure and climate change are getting play on the news shows every night now, in part because the people have pushed them into the presidential campaign dialogue. People are realizing, albeit slowly, that the old way of doing things can not be continued forever. The importance of transit as an alternative to single occupancy vehicle trips is a big part of these discussions.

We may soon find out how committed people are to their new commuting habits. Gasoline prices typically peak in the summer, when demand is highest, and drop in the fall. Lately we’ve seen prices slide a little bit due to market forces. If gas plummets back to around $3 per gallon or the high $2s, will the ridership gains be maintained, or will people get back behind the wheel, as if it were all just a bad dream?

If not, transit agencies will have a new base of paying customers with less overhead to pay. We’ll also know the bus and train trips they’ve been making were about more than just sticker shock.

Long-Range Planning Symposium Multimedia Files Available Online

By Karl Vilacoba

In "the snap of a finger,” energy costs have dramatically changed long-range planning goals and demographic expectations, according to Anne Canby, president of the Surface Transportation Policy Partnership and a member of InTransition’s editorial board.

Canby was among a half-dozen panelists at a June 26 symposium held as part of the North Jersey Transportation Planning Authority’s (NJTPA) effort to update its 25-year regional plan. (The NJTPA publishes InTransition in partnership with the New Jersey Institute of Technology.) Canby said the rising cost of energy means that people will decide where to live and work based on the combined cost of housing and transportation, rather than simply assuming transportation will be affordable, as in the past.

“Energy is clearly a front and center issue and has to be incorporated into anything we do with transportation from here on out,” she said.

While a few of the experts addressed specific local issues, others delivered presentations that were highly relevant to anyone in the planning and transportation fields, if not any resident of the country.

One of the most compelling speakers of the day was Daniel Lerch, author of the first major municipal guidebook on peak oil and global warming and a program manager at the Post Carbon Institute, which advises government officials how to end their reliance on fossil fuels. Lerch gave a thought-provoking presentation on how much trouble the country is in with its foreign oil dependence. The gas prices we’re seeing are just the beginning, he warned, and the time is now (if not yesterday) for America to fundamentally change its consumption patterns.

Public policy expert and Northeastern University (Boston) Professor Joseph Giglio advocated that the government widely reform how our transportation network is funded and administered. He discussed a number of interesting alternative funding strategies that have been tried or are under consideration around the country.

Audio files of the speakers are available online here. In some cases, Powerpoint files corresponding with the presentations were posted.

One Man's Dream Is Another's Nightmare

A CNN.com article headlined, “Is America’s suburban dream collapsing into a nightmare?” has proven to be pretty provocative, judging by the volume and tone of comments posted in response.

The author proposes that in the not too far off future, market forces like the mortgage crisis, gas prices and a housing surplus will change homebuying tastes so drastically that the idyllic suburban McMansion may become the new American slum.

According to the article, demand will rise so sharply for walkable, transit-accessible housing in urban areas that the poor could be priced out of today’s ghettos and forced to move to the outlying suburbs. The writer conjures up visions of abandoned cul-de-sac neighborhoods swamped with for sale signs and overgrown grass. These large homes will be split into multi-family dwellings, and neighborhoods will be in danger of street gang infiltration.

Perhaps more fascinating than the glum future outlined in this article was the feedback it generated. I’ve read theories along these lines before on websites geared toward hardcore planners, but not on CNN, one of the most widely trafficked mainstream news sites in the world.

The interactive comments section became an entertaining battleground between those who view the New Urbanist movement with an almost religious seriousness and suburbanites and country folk who view the word “urban” as code for crime, pollution and a hostile way of life. At last check, there were hundreds of comments posted, apparently so many that they shut down the interactive feature.

Color by Numbers: Site Maps Affordability of Areas by Transportation + Housing Costs

By Karl Vilacoba

A new interactive website constructed by the Center for Neighborhood Technology (CNT) estimates the cost of living in 52 metro areas by considering housing and transportation costs. Neighborhood by neighborhood, these areas are mapped out and color coded according to their affordability.

Visitors can view the areas with one of three maps:

• Housing: Neighborhoods where housing costs more than 30 percent of median household income are blue, yellow where it’s less


• Housing + Transportation: Areas where the combined cost of housing and transportation are estimated as more than 48 percent of household income are blue, yellow where it’s less


• A Goal for Affordability: Areas where housing and transportation costs are more than 45 percent are blue, yellow where it’s less

Census data was used to determine housing costs. Variables like residential density, transit availability and location of jobs and amenities were used to predict car ownership, car usage, transit usage and ultimately total transportation costs. The site can be used as a tool for home seekers, urban planners, policy-makers and transportation and housing advocates looking for information on housing costs, according to CNT.

The website is part of the Housing + Transportation Affordability Index research project being completed by CNT in partnership with the Brookings Institution and the Center for Transit Oriented Development. InTransition carried a piece in 2007 about the development of the index and map.

The overall conclusion of the research, according to the CNT and its research partners on the project, is that living in the burbs is not the great deal it’s cracked up to be.

“The real estate pages may list 2- and 3-bedroom homes for under $175,000 in suburban communities. That sounds affordable, right? But once you factor in transportation costs, the bargain goes away,” CNT President Scott Bernstein said. “Transportation costs can be as much or more than housing costs. The index protects consumers by divulging those costs and helps planners and decision-makers work toward providing truly affordable housing.”

Naturally, when I checked the site out for myself, the first place I looked was my home area. With the easy rail, bus and major highway access we have, my neighborhood was safely in the yellow for each map.

It was interesting switching from map to map and seeing which areas changed colors once you factored in transportation. I imagine we’d be seeing plenty more blue neighborhoods if/when gas hits that feared $4 mark this summer.