Monthly Archives: November 2011

Detroit Light Rail

Detroit’s plan to spend $550 million building a nine-mile light-rail line on Woodward Avenue would be laughable if it weren’t wasting so much money that could actually do something useful if spent on something else. Detroit leaders have convinced themselves that light rail is world-class transportation, that it will be the lynchpin of Detroit’s recovery, and that it will keep young people in the city.

A shadowy group of so-called private investors known as the M-1 Rail group have actually agreed to put up $100 million of the cost of the project. They aren’t expecting any financial return on this money; more than a third of this amount is coming from the S. H. Kresge Foundation and is being donated as an act of charity. Strangely, the arrangement almost foundered on the seemingly trivial question of whether the tracks should go down the middle of Woodward Avenue (as local residents preferred) or be in the curbside lane (as the M1 group preferred). One pundit went so far as to call this the “Lincoln-Douglas debate of our time.” So serious is this debate that one more transit agency leader has lost his job over rail transit.

Somebody in Detroit should ask some more serious questions about light rail. If light rail can help urban revival, why did Portland need to spend hundreds of millions of dollars subsidizing development along its light-rail lines? If light rail keeps young people in the city, why does Portland need an urban-growth boundary to do the same? Except for the claim that light rail is far more expensive than buses, about all the other claims for light rail are a bunch of lies aimed at draining the taxpayers (and, in Detroit’s case, some gullible foundation directors) of their money.

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A Recipe for Decline

Thanks to high housing prices and a poor economy (which is also partly due to high housing prices), more Americans are leaving California than are moving to the state. In the last decade, 1.5 million more people moved out than moved in from other states, and the poor economy is also reducing foreign immigration, leaving the state’s future in doubt. For the first time in more than a century, a majority of the state’s population was actually born in California.

Back in the 1970s, when California cities were adopting anti-growth policies, it was all the rage for people to talk about a “steady-state” economy rather than a growth economy. But, says historian Mike Davis, “A steady-state California is both a contradiction in terms and a recipe for decline.”

High housing prices are “driving out working-class families,” says a representative of the center-left Public Policy Institute of California. Not just working-class families: young college graduates find lower living costs in other states and so the state is suffering a “brain drain.”

California Governor Jerry Brown persuaded the state legislature to eliminate local redevelopment agencies, and now the state is trying to seize $1.7 billion in assets held by those agencies. If the state is willing to take such drastic action to save itself, maybe it will also be willing to revoke some of the insane land-use laws that are the underlying cause of its economic doldrums.

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Creative Financing Bites Muni

San Francisco Muni may have to pay $68 million to banks and insurers as a result of some “creative financing” done 8 and 9 years ago. As previously described in the Antiplanner, in the early 2000s the Federal Transit Administration encouraged transit agencies to sell their equipment to banks and then lease it back. The banks would get the tax advantages of depreciating the equipment (which, as government agencies, the transit agencies wouldn’t get), and the banks and agencies would split that advantage.

As the Antiplanner noted before, this meant that, for each $100 million worth of capital purchases, transit agencies would get about $3 million more, but the cost to taxpayers would be about $6 million (because the banks would get the other $3 million). The problem today is that the transit agencies also insured the lease payments and the funds were tied to the insurer’s credit ratings. IF and when those ratings fall, the transit agencies are on the hook to repay the entire amount to the banks.

The good news is that the IRS ruled such tax shelters illegal in 2004. The bad news is at least 30 transit agencies are in the same boat as Muni and may be scrambling for funds to cover their bets. This so-called creative financing was nothing but a dirty little scam that the FTA and local transit agencies played on unwilling taxpayers–just one more reason to privatize transit.

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Reviving California High-Speed Rail

The California High Speed Rail Authority has reason to be thankful this week as the U.S. Department of Transportation gave it another $900 million, keeping hopes alive for the state’s rail program. That means the feds have given the state a total of about $4.5 billion which, when matched with state bonds (which can only be sold when matched by other money) brings the authority’s total funds to $9 billion.

That’s less than 10 percent of what it will cost to build the San Francisco-to-Anaheim line. The authority plans to start building in the Fresno area next year; if it fails to start by September 30, it loses the federal dollars.

Some members of Congress from California want to take back the rail grants. But it is more likely that the only way to stop the authority from spending billions building a train to nowhere is for the legislature to deny its approval of bond sales.

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Happy Thanksgiving

Here in central Oregon, Smokey got a taste of his first powder snow a few days ago. Though it has mostly melted at our elevation, there is plenty at Santiam Pass a few miles away.

The Antiplanner and his companions wish all readers of this site, faithful allies and loyal opponents both, a wonderful and safe holiday.

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New Concept: Compare Benefits with Costs

The San Francisco Bay Area Metropolitan Transportation Commission (MTC) is considering the possibility of using benefit-cost analyses to decide how to spend federal and state taxpayer dollars. This “new” technology dates back to 1848, so you can see why regional planners might be just discovering it now.

As presented in the San Jose Mercury-News, benefit-cost analysis sounds very objective and scientific. The problem, however, is that most of the “benefits” in the analysis, including such things as “Road fatalities and injuries, emissions reductions, the cost of owning and operating a car and even the health effects of physical inactivity,” are almost completely speculative. How do you put a price on those things? How do you measure the effect of building a BART line vs. building a HOT lane on physical inactivity? The answers to these questions will be as political as any other decision, meaning the benefit-cost analysis will be just as politicized as whatever previously passed for analysis at the MTC.

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Reauthorization or Gridlock in 2012?

Speaker of the House John Boehner announced last week that House Republicans will soon introduce a surface transportation reauthorization bill called the American Energy and Infrastructure Jobs Act. The good news is that the plan (now available only in outline form) would eliminate New Starts and other slush funds that encourage cities to waste money. The bad news is that the plan would create a new slush fund that will encourage states to waste money on highways and bridges.

As Antiplanner readers know, Congress was scheduled to reauthorize surface transportation–meaning spending of gas taxes and other federal highway user fees–in 2009. But recently Congress has been gridlocked between Tea Party Republicans, who oppose new taxes and wasteful spending, and Senate Democrats, who want to increase spending to “create jobs” but don’t know where the money would come from.

Boehner proposes to resolve this by increasing production of oil & gas on federal lands, including Alaska’s Arctic National Wildlife Refuge, and dedicating the revenues from such production to highways and bridges. Boehner’s plan continues to include no more earmarks; ending or consolidating nearly 70 transportation funds such as New Starts; removing requirements that gas taxes be spent on non-highway projects; and streamlining transportation planning.

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The Technology That Changed Small Business

The Antiplanner hasn’t finished reading Marc Levinson’s The Great A&P and the Struggle for Small Business in America, but the story he tells is essentially the same as that told by former A&P executive William Walsh in The Rise & Decline of the Great Atlantic & Pacific Tea Company, a book the Antiplanner discussed nearly three years ago. Despite the similarities, the two writers have very different slants, one essentially pro-capitalist and one subtly anti-capitalist.

To Walsh, A&P is a classic American success story. Founded by George Hartford as a tea shop in Manhattan in 1859, the company was grown by his children, George and John, to more than 16,000 stores that dominated the grocery trade in much of the United States. The average store was small by today’s standards, selling only 400 to 500 different products. When the first supermarkets were developed in the 1930s, the Hartfords jumped on the bandwagon and quickly replaced their shops with a smaller number of much larger stores. Like WalMart today, A&P in the 1930s through the 1950s was considered an unstoppable juggernaut.

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Technology-Neutral Energy Savings

The EPA estimates the Toyota Prius gets 50 miles per gallon. But, judging from other cars that are made in both hybrid and regular versions, much of that high efficiency is not due to the hybrid engine. The Toyota Camry hybrid, for example, gets 39 mph on the highway, while the non-hybrid version gets 35 mph–not a big difference. In town, due to regenerative braking, the hybrid performs much better: 43 vs. 25.

Despite the minimal advantages of hybrids, particularly on the highway, many people want to give hybrids all sorts of legal preferences, such as free use of HOT lanes even if the hybrid has only one occupant.

Now a new report written by former Secretary of Transportation Norman Mineta argues that government energy policy should be “technology neutral.” As New York Times writer Jim Motavalli points out, it is anything but neutral today, favoring electrics, plug-in hybrids, and hybrids over hydrogen, pure gasoline or pure Diesel vehicles.

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