Rail cost-benefit analysis

Peter Gordon, Robert Cervero, and I discuss the cost-benefit analysis of Los Angeles rail investment in this issue of Public Works Management and Policy.
Here are the citations

Peter Gordon and Paige Elise Kolesar. A Note on Rail Transit Cost-Benefit Analysis: Do Nonuser Benefits Make a Difference?
Public Works Management & Policy April 2011 16: 100-110, first published on March 24, 2011 doi:10.1177/1087724X10397380

Robert Cervero and Erick Guerra
To T or Not to T: A Ballpark Assessment of the Costs and Benefits of Urban Rail Transportation
Public Works Management & Policy April 2011 16: 111-128, first published on March 24, 2011 doi:10.1177/1087724X10397379


Lisa Schweitzer
Benefit-Cost Analysis of Rail Projects: A Commentary Public Works Management & Policy April 2011 16: 129-131, doi:10.1177/1087724X11401035

Here are first few paragraphs of my commentary.

The debate in this issue of PWMP reflects a hardy perennial in the transportation community. With some consistency, rail transit fails to meet benefit–cost criteria or ridership forecasts. Planners and transit advocates—often these are the same—respond that benefit-cost analysis is only a partial measure of a project’s worthiness. How, they ask, do you monetize the benefits of something like a trolley that reinvigorates a slumping downtown? Some of the things we could never imagine living without—like the Brooklyn Bridge—would probably have failed a benefit–cost test back in 1866
when the New York legislature authorized it. And now the bridge is an architectural icon in a region whose economic health has come to rely at least in part on the aesthetics of investments made more than a century ago.

As vocal as transit advocates have become in dismissing those who question rail investment based on benefit–cost evaluations, rail advocates have more than earned the suspicion that surrounds them. Promise after promise accompanies the push to get federal dollars for local rail transit projects: for example, transit cleans up the air (not so much); it clears up congestion (not even close); it makes us thin (even though study after study demonstrates transit’s minuscule effects on obesity). Whenever anyone points out that projects have not delivered on their promises, then comes the next flood of promises: Jobs, jobs, jobs! Climate change! Building social capital! Economic development! Retail revitalization! At some point, investments have to be accountable for the promises made on their behalf. Cervero and Guerra contend that the mobility benefits accrue to future generations—future riders. If so, that is an empirical claim we can and should test. Some systems over time will jump over the bar their advocates set for them while others are unlikely to do so.

Tony Judt and Bringing Back the Rails, with Clark Gable thrown in

Tony Judt passed away far too young, and he was a remarkable prose stylist. The New York Review of Books has been running a series of his last writings, and his latest essay calls us to Bring Back the Rails!

The photo they use to accompany the story pretty much says it all: Judt is nostalgic for the days of intercity rail, with it’s romantic, slower pace and perceived comforts. As a result, he’s a bit overly romantic even while he’s right about the basic theme: with the pain of security at modern airports, it’s impossible for romantic scenes of a cupid-lipped girl to lean languidly out of the window to blow kisses to her trenchcoated man. Judt’s writing is good, his sentiment is valid.

But he’s romanticizing the wrong industry. US railroads, even when they did offer intercity services, hardly seem to be great conveyers of romance. Pulling away from the station is one thing, but we don’t see this young woman after she’s slept for three days upright because she wasn’t wealthy enough to able to afford a sleeper. Nor do we see the relatively high costs of food on the train for passengers who didn’t manage to bring enough money with them–money, of course, was no object for 007 on the Orient Express on his way from Istanbul to Paris in his luxurious car.

Nor were railroads the bastion of public space that Judt romanticizes them as being. There was a big difference between intercity rail companies and New York City subways, which are actually publicly owned. The intercity US railroads helped bring about “Separate But Equal” into US law in 1982: regulated under the Separate Car Act, train companies refused to honor Ida Wells’ first class ticket (she didn’t want to sit in the smoking car, where black passengers were required to sit) or Mr. Plessy’s first-class ticket because he was a “free person of color.” Private company, public regulation—neither good for an authentic public.

By the time intercity passenger service evaporated in the US, train companies had had to be forced to provide it—they made their money then, as they do now, shipping commodities. So when deregulation came about, companies dumped their passenger service as quickly as they could: why put your rolling stock into less profitable services?

So if we are going to insist on intercity rail, let’s not bring back what was. Let’s reinvent.

As to using movies to inform your idea of passenger transportation pre-Interstate, there is one movie that has always struck me as being informative: Billy Wilder’s It Happened One Night with Claudette Colbert and Clark Gable. They have to make their way from Florida to New York with no money–and they spend part of their time on an intercity bus. Watching that bus dive in and out of dirt-road, flooded potholes might help contemporary people understand that paved highways didn’t just help suburbanites or vacuous car-dependent auto owner of today, nor was paving just a sinister military defense strategy: it was an opportunity to substantially improve intercity goods and passenger movement for people too poor to ship their farm goods on monopoly railways or to buy a rail ticket. The main story is about two people from different worlds who fall in love, but Wilder uses transportation to help us understand what different worlds looked like.

Judt is simply wrong about a whole bunch of things that he asserts in the essay, as though he couldn’t be bothered to actually read up on his topic. Railways didn’t make cities any more than any other technologies did–even though he is right in that some train stations are breathtaking architecture. Plenty of cities had million+ populations centuries before the first omnibus even, let alone rail. Commerce makes cities; culture makes cities. Rail moves people around–let’s keep it factual; if anything, rail helped up make suburbs rather than cities.

Edited: Richard Green reminds me that It Happened One Night was a Frank Capra film, not a Billy Wilder film. For some reason, I have a brain problem with this fact because I went out to IMDB to look up the director this morning, saw that it was Frank Capra, and I STILL WROTE Wilder. Distractions, distractions.

The Expo Line and Who is Overpaid in Transit Construction Contracts

Richard Green notes on his blog that:

A light rail line going by USC–the Exposition Line–has been under construction for some time now. For a considerable time, the site featured a sign that said the line would open in 2010. Now the estimates are that it will open some time in 2011 or 2012. At the same time, when I walk by the project, I can’t say that the workers building it show a great deal of, shall we say, urgency about getting the thing done.

At the same time, I don’t hear a lot of people who are upset about how far behind schedule the project is. Maybe this is because no one is planning to take the Expo Line. Maybe it is because peoople have such low expectations of LA Metro that they are not surprised, and therefore not outraged. Either way, it suggests a problem.

First off, it’s a bad idea to conclude anything about work effort based on what you observe by walking by. That’s like the people who judge professors by saying we “only teach two hours a week.” It’s not a valid sample, and it’s very had to evaluate other people’s work effort when you have never done the job yourself— and that’s particularly true of white collar workers passing judgment on blue collar workers engaged in dangerous and often tiring work–during a recession, no less, where anything that extends their work hours has direct implications for their family’s ability to eat and pay rent (unlike salaried work).

More to the point, Richard is mistaken when he concludes that people are not upset. The LA Weekly recently published a story called L.A.’s Light-Rail Fiasco which eviscerates the CEO of the Exposition Metro Line Construction Authority, Rick Thorpe, for salary and his conduct. Rick Thorpe is exactly the sort of transit guy who becomes a free agent and CEO: relentlessly self-promotional and confident, any previous successes get attributed to his leadership. So he picks up stakes, gets recruited away, commands an enormous salary, and builds a brand for himself that he delivers projects on time and on budget.

From the LA Weekly Story:

The reasons behind the fiasco are as numerous as they are complex. But at its core, it’s a simple story: Somebody had a clever new idea, and it backfired.

In this case, that somebody is Rick Thorpe, CEO of the Exposition Metro Line Construction Authority and one of the leading lights in light rail. He sold elected officials on a new type of contract, which he said would bring the project in cheaper and faster than it could be done by traditional means.

Colleagues from other transit agencies warned that the idea might not work. In the name of holding down costs, it could inadvertently create incentives that would drive costs up. But Thorpe pressed ahead anyway, and the elected officials charged with overseeing the line put their faith in his expertise.

Now, four years into the project, the results are plain.

“It just doesn’t work,” says Dan Peterson, an arbitrator with 50 years of experience in public works projects. “They’re trying to save 20 cents and it’s costing them $20 million.”

Thorpe and the MTA board argue that the contracting approach does, in fact, work. It is a process of negotiated design-build that, in Thorpe’s mind, prevented contractors from getting windfalls as they sometimes did under the design-bid-build process that has been industry go-to contracting process for a long time. However, the project where Thorpe’s innovation is supposedly working is not just behind schedule: it’s now 40 percent overbudget (to the tune of $260 million).

Now, you would think that Thorpe would know better than to be too fussy about contractors making money, based on this bit of info:

As CEO of the Expo Authority, Thorpe oversees a staff of 15 and earns a salary of $334,000. He makes more than the CEO of the Metropolitan Transportation Authority, who is responsible for 8,000 employees.

Thorpe’s self-branding that captured this salary is one of the major flaws of leadership both in the public and in the private sector. Once shareholders or board members believe you are some kind of magician, and they will if you are fortunate and if you blow your horn hard enough, competence is no longer enough. And as anybody who has built anything or completed any public project knows: 1) given all the barriers and problems, it’s amazing that anything gets built, ever, let alone on time and on budget, and 2) nobody, no matter how smart, confident, or charismatic gets anything built all by themselves. It takes a team, and while teams need managing, it is really easy to overstate and overcompensate the contributions of management when things go right and to make excuses when things go toes up.

There is another side. Why shouldn’t public managers good at their jobs make more than doctors or other professionals? Thorpe is a CEO, after all, and this is a major project, and major projects are tremendously hard to deliver, and private-sector CEOs make much much more.

However, the management and incentive contradictions emerge quickly. If you are paid $300+K a year to run something, your desire to finish it on time–particularly when you still have a board that rushes to your defense and you are no longer a hungry young guy building your brand–is low. Unless there are bonuses in Thorpe’s contract for on-time performance, he has little reason to protect the project from delays at this point, given all many reasons why projects get delayed in construction and the halo surrounding him personally.

Moreover, if you make your money because you are such an excellent manager, there is also the desire to innovate practices that reinforce the need for *management* on this project and future projects.

And from the what the LA Weekly reports, this “make management work” approach is right at the center of the problem. Instead of hammering out the details of the contacts up front–as with traditional design-bid-build contacts–Thorpe’s “negotiated design-build” requires the agency to keep their hands in project management more so than under traditional design-build where they would have been managing the contracts primarily–instead of negotiating as they go along.

In the end, I’ve always argued that there is very little wrong with the design-bid-build process.The US built most of the Interstate system with the approach and most existing transit, water, sewer, and other infrastructure this way. Where Thorpe sees the potential for “windfalls”, I see an incentive for construction companies to keep costs down so that they can increase profits. In the hands of a competent agency contract manager keeping track of the as-builts and project specifications, you shouldn’t end up with a poor-quality project. Instead, you provide an incentive on the part of the construction companies to keep employees hopping and to strike hard bargains with suppliers in the hopes of getting in under budget so that you can walk away with that the built-in cushion. The bidding process keeps companies from building in too much of a cushion. Innovations here have almost always struck me as cases of fixing something that wasn’t broken–to the overall detriment.

Railroads and emissions in southern California

Argh. I am writing a paper right now on how planners can and should win more often in public conflicts.

They could learn a lesson from the railroads. The LA Times reported a few days ago that, in order to avoid emissions regulation in southern California:

The lawsuit filed by the Assn. of American Railroads and the BNSF and Union Pacific railroad companies challenged restrictions imposed in 2005 and 2006 by the South Coast Air Quality Management District, which covers Los Angeles, Orange, Riverside and San Bernardino counties.

link: Local agencies can’t limit train emissions, court rules – latimes.com

This would be known as an end-run around the communities and the state and regional air quality management agencies.

So much for collaboration and win-win solutions.

This ruling in general worries me; I’ve fretted for some time about whether all sort of local air quality measures–likely to be more efficient for many sectors than federal regulations–were going to get hit with these types of challenges.

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Shifting money from roads to transit

via Streetsblog

In a well-intended attempt to try to get people to rethink the “jobs creation” logic of infrastructure spending, a new report from the Transportation Equity Network has released a report that talks about how shifting money from highways to transit—and, in particular, operations—would make more jobs.

The report then goes on to project the potential job creation of a 50% shift in present highway spending to transit for each of the 20 metropolitan areas. The shift would create 1,123,674 new transit jobs over five years, for a net increase of 180,150 jobs — all without a dollar of new spending.

link: More Transit = More Jobs: New Report

In some ways, this report exemplifies everything that is wrong about the transit dialog. Tons of good intention, but with so much hyperbole that nobody can credit their findings. Even Streetsblog people seem to reading with raised eyebrows, and you are not going to find a more sympathetic audience of people. Transit will, according to this argument, revive local economies. Another unrealistic expectation heaped upon my favorite, already overburdened mode.

So we’ll take money away from highway spending and use it for transit spending based on the jobs created? Not on mobility needs met or customers served….but jobs created. I understand that we are in a recession and “jobs created” is the political currency they want to draw on, but, people, honestly, I need passengers served in the benefits metric, at least tangentially, when we are talking about transit investment. Please?

However, I do respect that they are willing to shake up the “jobs jobs jobs” dialogue to some degree by pointing out that you can and would save jobs by helping agencies deal with their operating deficits. The unchallenged dialogue of “creating jobs” around transit is almost always around capital investment. So we’re building new things while we are cutting operations. It makes little sense. The TEN authors at least try to direct the “jobs jobs jobs” in a direction that it needs to go: asking why the goal of keeping CURRENT drivers and maintenance workers employed is less of a priority than shoveling money into construction to create jobs. Preservation rather than creation. It’s a good issue to take up.

Of course, those existing jobs in operations could also be saved, in theory, by cutting back on transit capital investment, too, just as easily as taking money away from highways, but I am assuming that isn’t quite what these authors want.

But, if operations is the comparison, then let’s get very honest and start opening the options: spending no money at all and given the tax back, putting transit against college stipends for foster kids, dental care for impoverished kids, etc, building local parks and any other of the dozens of worthy things we can do with public money.

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Prisons or High Speed Rail?

One of my favorite virtual colleagues, Joseph Cordes, sent me a link from Marginal Revolution this morning about why Tyler Cowen is still skeptical of High Speed Rail.

The arguments surrounding High Speed Rail are well-worn ones, and certainly I’ve talked about them enough here. Either you think the projects are worth the money, or you don’t.

I don’t, personally. I would love to have a system of high speed trains. I hate airplanes, all the more with all the security nonsense. I hate cars, too. Don’t get me wrong. But when cities are laying off fire fighters and teachers because Americans refuse to pay an extra few pennies of petrol tax or modernise property taxes, I just don’t know where the money is going to come from.

I’ve heard all the arguments, and nobody has at any point said anything that didn’t strike me as the equivalent of “we’re going to borrow the money from rainbow-colored unicorns from outer space.” Here’s a sample:

—Private companies are going to do it (if they were, they would have done so some time ago. The first thing US rail companies did with deregulation was dump their intercity passenger rail. Am the only one who remembers that? It’s not like we didn’t have HSR lobbies before that would have advocated for the subsidies needed. Ray LaHood is no kid.)

—The Feds will appropriate funds for it now that the war is “over” (What funds? We’re at a point where even *I* am worried about deficits and I have never particularly worried about deficits even when others were screaming about them. But you need a way out of deficits and I am not seeing one.)

—We’ll get the money by closing tax loopholes. (How do you think those loopholes happened? By accident? Which politically disempowered group is going to sit still while we effectively raise their taxes?)

—We’ll get the money by making drivers pay the full cost of their choices. (Great in theory, but if I can’t get a higher gas tax how in the heck am I going to get a VMT fee or some other corrective tax on driving? )

—We’ll decrease spending on auto infrastructure in favor of HSR. I think this is the one that the smart HSR advocates actually believe. Certainly, transit spending has consumed a larger and larger portion of the Highway Trust Fund (HTF). Everybody has their sites on federal money: people advocating for *walking* infrastructure think there should be Federal funding for it because I guess property owners are rather tired of paying for things that benefit them and the rest of us need to do it for them. How far do we think we can stretch traditional sources before we so dilute the fund that we get little out of it? At some point, HSR funds won’t be displacing highway spending; it will be displacing transit funds.

One of the comments over at MR has me wondering:

But one wonders – how much does America’s prison system cost? After all, European countries seem strangely unable to be as dedicated to locking away people at high expense. while seemingly being able to afford less than profitable HSR sytems.

link: Marginal Revolution: One reason why I’m still skeptical about high-speed rail

Yes, but in California’s budget crisis, prisons took their hit, too. And they will continue to take hits. We are are out of money, present and future, unless we do something different than we are on the revenue side.

The misperception out there is that governments waste money all the time on silly things like prisons. As a very sharp friend of mine pointed out: I’d rather have government spend money on HSR than defense spending. Sure, well, yeah, great. But we’re in a pickle there, too. Ending the war wasn’t just a moral and political imperative, it was also a financial imperative. We’re not in a position of shifting funds or even future revenue streams around. We’re in position where cutting back is the only way we’ll have any long-term budget stability whatsoever.

At some point, these kinds of arguments–that we can just forego prisons or wars in favor of HSR–hit the hard brick wall of our public financial crisis in the US. It’s not that we can easily trade funds back and forth: it’s that those funds, too, have dwindled. It’s like arguing over a bucket of water with a big leak in the bottom–when that water is all you’ve got to put out a forest fire.

I don’t like what I see, but I can’t help but see what I see.

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Bike sharing and job centers

Yonah Freemark writes:

But most American cities have no choice but to include their primary, monofunctional, business districts in their bike sharing plans simply because those business districts are in the center of the city. It will be interesting to watch Washington, D.C. and other cities attempt to cope with the problem of the unidirectional commute as their inhabitants get used to biking to and from work, but London’s experience makes clear what they’re likely to experience.

link: Can Bike Sharing Work in Cities With Monofunctional Job Centers? « The Transport Politic

So this is one of the bottom-line conundrums of the sustainable transport connection. Because in general, this sort of unidirectional commute is *perfect* for rail transit. You want to load up linear corridors. It’s just that you need need bikes and walking to fill up the spaces in-between transit stops.

So maybe one of the answers is that you create a subscription service that includes a transit and bike pass. You use the train for line-haul, you hop off and the same pass gets you a bike to share.

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