Monday, April 30, 2007

Investment Criteria for Public Transit Capital Projects

An anonymous comment on the post on the first (and only?) meeting of the Suburban Transportation Commission (no website), co-chaired by two federal legislators, Representatives Bean and Kirk inspires today's post. Anonymous quoted Metra's Executive Director to the effect that Metra does a bad job serving the rapidly growing numbers of reverse commuters and suburb to suburb commuters.

Anonymous then argued that Metra's current capital program is not well aligned to serve these new markets. Instead, Metra's program is directed at buttressing its current hub-and-spoke system. Anonymous discounted Metra's suburb-to-suburb STAR Line:

The STAR Line is intended to serve the intersuburban and reverse commute, but is not very compelling for that purpose. The STAR line in part will use railroad tracks laid down by the EJ&E Railroad - formerly a unit of United States Steel to move material between its plants in Gary Indiana and Waukegan. It cuts a wide arc around the region and was designed to bypass people and jobs over 100 years ago - which it still does to a large extent today. Consider that in DuPage alone, only about 20% of the jobs and people fall within a five mile buffer of the STAR line. Surely there are more compelling locations to begin a transit system for the suburbs.

The full comment is pasted in below. Its conclusion that Metra's capital program is misaligned is certainly fair game for discussion. Go to it.

The comment is especially interesting because it begs a larger question, namely, what investment criteria should guide the allocation of capital dollars in the region's transit system. It may come as a surprise that the RTA does not have (of if it has it doesn't use) such criteria even though it is statutorily charged with the primary responsibility for the public transit capital program and must approve each service board's capital program. You also might be surprised that the region's federally-chartered MPO--once CATS and now CMAP--has no published criteria for transportation investments and fails to rank or prioritize proposed projects in its regional plans (see links to 2030 plans at right). Even though we live far from the big forests, log rolling is well-practiced when it comes to public transit investment decisions.

Here's my list of criteria for allocating capital money to transit agencies:

1. Expected ridership per capital dollar invested.

2. Congestion relief benefits per capital dollar invested.

3. Reduction in vehicle miles traveled per capital dollar invested.

4. Incremental cost of operating and maintaining the capital investment per capital dollar invested.

5. Passenger miles (or trips) generated on other transit services (e.g., Pace feeder service to new Metra station) per capital dollar invested.

6. Degree of commitment to transit supportive development in the area served by the proposed investment.

If the RTA and/or CMAP develop and apply investment criteria for transit capital decisions, what should those criteria be?


Anonymous said...

In a recent statement to the newly formed Suburban Transportation Commission, Metra Executive Director Phil Pagan acknowledged that Metra does not do a good job serving reverse or intersuburban commute markets. Nor will it in the future if Metra's current program of system expansions is any indication

1. Union Pacific West Line upgrade - $596 million
2. Union Pacific Northwest Line upgrade - $223 million
3. SouthEast Service - $941 million
4. STAR Line - $2,000 million.

The Union Pacific lines are existing radial routes to downtown Chicago. The upgrades are no doubt needed to serve the traditional commute, but these lines are not proximate to major suburban employment centers and have few city stations; and are not well suited to serve the reverse and intersuburban commute.

The SouthEast Service is yet another radial line to downtown CHicago, in close proximity to an existing line - the electric district.

The STAR Line is intended to serve the intersuburban and reverse commute, but is not very compelling for that purpose. The STAR line in part will use railroad tracks laid down by the EJ&E Railroad - formerly a unit of United States Steel to move material between its plants in Gary Indiana and Waukegan. It cuts a wide arc around the region and was designed to bypass people and jobs over 100 years ago - which it still does to a large extent today. Consider that in DuPage alone, only about 20% of the jobs and people fall within a five mile buffer of the STAR line. Surely there are more compelling locations to begin a transit system for the suburbs.

The future of transit in the collar counties is probably in bus - specifically high performance Bus Rapid Transit which does not yet exist in the region, but is taking hold in other North American cities. Bus is more flexible than a railroad, and can rely on on an extensive network of tollways and arterials as shared use facilites.

The DuPage J seems to be a logical place to begin a suburban transit system at least in DuPage. It is proximate to major employment centers and appears to match up well with intersuburban travel patterns. Adding a connection tothe CTA Blue line would bring in reverse commuters from CHicago.

The STAR Line is a speculative boondoggle whose benefits have not been demonstrated. Can any readers shed light on how it emerged as a top priority for the region?

Thursday, April 26, 2007

RTA Debt Aversion and Service Board Capital Needs

It is safe to say that whether you are a homeowner or a public agency, all things being equal the less debt you have the better. But all things are not equal. When the cost of underinvestment in capital assets in form of higher maintenance costs, operating inefficiencies and customer dissatisfaction outweighs the cost of the debt necessary to bring those assets into a state of good repair then issuing more debt makes good sense.

It is a given that certain parts of the region's public transit system are showing the costly effects of such underinvestment. The slow zones on the CTA rail lines are one dramatic example. A less dramatic but quite costly example of underinvestment is the fact that many CTA buses have missed their mid-life rehab, burdening the CTA with more mechanical breakdowns and higher maintenance costs.

Has the RTA been too conservative with respect to leveraging its cash flow to raise more capital money by issuing more debt? The RTA's 2007 Budget Book indicates (pg. 40 of 146) that the RTA is spending just 8% of its total annual funding on debt service.

The RTA Act mandates that the RTA's sales tax revenue must be at least 2.5 times as large as its debt service requirements (2007 Budget Book at pg. 70 of 146). In 2005, 2.5 time the RTA's debt service was $448,840 while the RTA's sales tax revenue was $700,395. This means that the RTA had $251,555,000 available but unused for debt service in 2005. By way of comparison, RTA's actual debt service requirement in 2005 was $179,536,000.

In other words, the RTA potentially has available a quarter of a billion dollars each year to service additional debt. If we assume that $1 of debt service can cover $10 of debt, the the RTA could in theory raise an additional $2.5 billion in capital for the service boards by leveraging its existing sales tax revenue to the maximum extent allowed.

I stress that this is in theory. There are at least three obstacles in the way of the RTA fully leveraging its sales tax revenue to raise more capital:

First, the RTA Act limits the amount of debt that the RTA can have outstanding. Presumably, the General Assembly would be happy to raise this debt limit if it was informed that the RTA would look to its own resources, rather than an increased State subsidy, to service the newly issued debt.

Second, the RTA has been forced to use most of its discretionary funds to make up the sales tax revenue shortfall the CTA faces under the statutory formula for allocating sales tax dollars to the service boards. The RTA would be robbing Peter (CTA operating funds) to pay Paul (RTA bondholders) in order to raise capital funds that presumably would be shared among the three service boards. The CTA would probably prefer slow zones and long-in-tooth buses to having its operating funding be diverted to provide capital funding for all three service boards.

Third, the RTA generally has not been inclined to view the shortage of capital for certain segments of the region's public transit system, namely the CTA, as a priority issue so long as Metra's capital needs were met. By giving Metra a preferential share of capital funding year after year the RTA could both keep its favored service board in good shape and limit the overall demand for its capital funding. This approach allowed the suburban interests that controlled and likely still control the RTA Board to be able to deliver top-notch commuter rail to their constituents and appear to be fiscally prudent.

In sum, with some creativity and a willingness to assume more risk the RTA might be able to leverage an infusion of operating dollars to obtain more capital. It would do so by using the additional money to free up its discretionary sales tax money to back more bonds. The new operating dollars would replace the discretionary money that now goes to the CTA. Whether the RTA has the will to move beyond its arbitrary distribution formula for capital funds to a needs-based allocation process is another matter.

Wednesday, April 25, 2007

New Approach to RTA Governance: Some Numbers

In a previous post I outlined a new approach to RTA governance. Under that approach, each of the three areas that make up the six-county RTA region--the five collar counties, suburban Cook County, and the City of Chicago--would have a nearly equal voice on the RTA board. Each collar county would have a representative on the board. Suburban Cook County and Chicago would each have four representatives on the RTA Board. The CTA Chairman no longer would sit on the Board. The Governor would choose the RTA Chairman, giving the State of Illinois a direct stake in--and hence a sense of responsibility for--effective management of the region's public transit system, which serves roughly two-thirds of the State's population.

The exact number of Board members from each area is not that important. The proposal would work just as well, for example, if there were five representatives from each area or fewer. This is because voting power would be allocated among the three areas based on each area's contribution of RTA tax revenue and fare revenue. This approach rewards more voting power to those areas that provide more support of the region's public transit system while guaranteeing that every area has a roughly equal voice on the Board.

To determine how this system would work in practice, I used the following from the RTA's 2007 Budget Book: (i) 2005 RTA tax collections and (i) 2005 operating revenue from each of the service boards. I then allocated the service board operating revenue to the three areas using the "Percentage Distribution of Boardings by Residence of Each Jurisdiction" data contained in the Auditor General's Report (pg. 325 of 450).

There are some obvious methodological issues with this approach. For example, fare revenue rather than total revenue might be a better measure of the local effort to support the region's public transit system through fares. Likewise, because of Metra's commendable distance-based fares, the collar county riders pay a higher percentage of Metra's fare revenue than is indicated from their share of Metra boardings. These things likely have a limited effect on the ultimate distribution of voting power and could be fixed by folks with access to more data and much more skill than I can bring to the table.

The current distribution of voting power among the three regions is as follows (the vote of the RTA Chairman is being ignored for purposes of this exercise):

Chicago: 41.7%
Suburban Cook: 33.3%
Collar Counties: 25%

Under the current RTA taxing system, with the collar counties paying at a 0.25% rate and Cook County paying at a 1.0% rate, the distribution of voting power would be calculated as follows:

Chicago: $214,134 (tax) + $535,298 (fares) = $749,432: 41.3%
Suburban Cook: $373,317 (tax) + $304,585 (fares) = $677,902: 37.4%
Collar counties: $112,944 (tax) + $273,284 (fares) = $386,228: 21.3%

The allocation of voting power based on the contribution each region makes to supporting the public transit system is dynamic on purpose. When an area increases its relative share of tax revenue or fares paid by its residents, that area is rewarded with more voting power on the RTA Board. For example, if the RTA tax rate in the collar counties was increased to match the 1.0% Cook County rate, then the voting power of the collar counties on the RTA Board would go up by almost 60%, from 21.3% of the voting power to 33.7% of the voting power.

Chicago: $214,134 (tax) + $535,298 (fares) = $749,432: 34.8%
Suburban Cook: $373,317 (tax) + $304,585 (fares) = $677,902: 31.5%
Collar counties: $451,776 (tax) + $273,284 (fares) + $725,060: 33.7%

Likewise, if a service board raised its fare revenue through a fare increase or increased ridership, the allocation of voting power to the areas where that service board's riders live would increase, all else being equal.

The proposed governance structure has a built-in incentive for local governments to increase both the use of public transit and the financial support of the transit system in their area. As discussed in the earlier post, the RTA Act should be amended to allow counties to increase their RTA tax rate or to impose other revenue measures that provide financial support for the region's public transit system.

Similarly, service boards might be less hesitant to rase fares and more aggressive in putting out service designed to attract maximum ridership and revenue--all good things--if they and the local governments in their service area knew that such good actions would yield more voting power on the RTA Board.

In contrast, the current population-based allocation of voting power on the RTA Board does not provide an incentive for any area to increase RTA tax collections, transit ridership or fare revenue. Nor does it reward areas whose residents must pay fare increases, which makes it even harder for service boards to push through fare increases to cover their increased costs.

What's not to like about a system that gives each area a substantial voice on the RTA Board, but allocates voting power based on each area's tangible support for the region's public transit system?

Tuesday, April 24, 2007


Traditional transportation planners for the most part seem to hate bikes. Highway folks tend to see bicyclists as pesky road obstructions. Indeed, rumor has it that even today--the 21st Century--the Illinois Department of Transportation is actively lobbying against a bill that would direct IDOT to simply consider bicycling as a transportation option when planning transportation improvements.

It is not much better on the transit side. For years Metra viewed bicyclists as akin to lepers. Metra fought tooth and nail against allowing bikes on its trains. This is in direct contrast to the approach taken in other areas, where entire commuter rail cars are dedicated to carrying bikes and bicyclists. Transit folks tend to view bicyclists as competitors, believing that transit riders are more likely to shift to biking than drivers. Certainly the sight of bicyclists passing your bus drives home just how slow bus travel is, especially in the central city. (To his credit Frank Kruesi helped make the CTA much more bike friendly.)

As some European and Asian cities demonstrate, however, bicycling can be a viable transportation option for thousands of people each day. Since bikes take up less space and fuel than Hummers, the congestion relief and environmental benefits are substantial when more people travel by bike.

Pasted in below is an article that sets out a relatively simple and low-cost strategy for encouraging more people to travel by bike. Reading it, I envisioned local governments and the RTA subsidizing such spaces where bicyclists could store their bikes safely and perhaps shower and get some bike repairs done. This would be a good use of space in new buildings that have yet to be leased and a great way to utilize older, less desirable buildings that are in heavily traveled areas. One can even envision a chain of privately-run bike centers that would include a coffee shop, free Wi-Fi and lots of two-wheeled social networking.

Might investments in such bike centers yield more congestion relief and environmental benefits on a per dollar basis than many of the hugely expensive projects contained in the RTA's Moving Beyond Congestion wishlist?

Here is the link to the article from the L.A. Times and here are the contents:

Cities peddle parking for bicycles
Communities hope that valet and other services will encourage residents to use bikes for commuting and doing errands.

By Deborah Schoch, Times Staff Writer
April 23, 2007

Pity the cyclist with the $4,000 titanium road bike attempting to park at the Sunday farmers market in Santa Monica.

After 10:30 a.m., the meters and street signs were already claimed by early rising cyclists who chained their bike frames to the poles, and that hefty, pricey Kryptonite lock simply wouldn't fit around the nearest fence post.

Now, cyclists in search of heirloom tomatoes and organic cilantro can enjoy valet parking of the sort offered to BMW-driving diners at Ivy at the Shore or Chinois on Main, handing over their wheels to polite attendants who park them at a nearby bicycle stand.

In California bicycle circles, this kind of service is the coming thing.

Long Beach residents can check their bikes at the downtown Bikestation, where they can get free air for their tires and on-site repair service. A Santa Barbara self-service bike center opening May 1 will feature hot showers and a locker room for changing from sweaty nylon-spandex jerseys to suits, ties and heels.

Valet bike parking would seem a quintessentially Californian response to clogged freeways and overflowing parking lots. By encouraging more cyclists, cities are promoting environmental consciousness and outdoor cardio workouts.

Most important, for some cyclists, is knowing that someone is watching over their bike.

"You can have all the bike lanes you want, but when you get to your location, you need a place to park," said Russ Roca, 29, of Long Beach.

Roca, a freelance photographer, travels exclusively on a bike retooled to carry 200 pounds of camera equipment. He is a regular at the local Bikestation, which, he says, has become a social spot for area cyclists.

These centers for cycling aficionados are largely public-private partnerships, modeled after facilities in Europe and Asia.

In 1996, the Bikestation in downtown Long Beach, near the MTA's Blue Line station, was the first to open in the United States. Its founders have created the Bikestation Coalition, an umbrella group that helps open other centers on the West Coast.

The concept has spread to the usual progressive hot spots: Berkeley, Palo Alto, San Francisco and Seattle.

Most of the centers offer valet and self-service parking. Some contain small repair shops, and some offer classes. They were built largely with public funds, and revenue covers most operating expenses.

The new Santa Barbara center, for example, is funded by downtown car parking fees. It contains $80,000 in equipment and is expected to cost $25,000 a year to operate.

Pasadena, meanwhile, is preparing plans for a bike center near the Gold Line light-rail stop in Old Town. The city hopes to use $180,000 in state grant money to build a facility that will hold 40 bikes.

Santa Monica hopes to build a downtown bike center with room for 300 bikes. In the meantime, the city parks 200 to 250 bicycles at its crowded Sunday market and is bracing for up to 350 bikes this summer. The city funds the valet service.

Planners hope that these service-oriented parking centers will encourage residents to use their bikes to do errands and commute to work.

On Sunday on Santa Monica's Main Street, trusting shoppers were handing over their sleek racing bikes and rusty beach cruisers to attendants who by noon had filled spaces designed for seven cars with more than 70 bicycles. Although the service is free, most people left tips of $1, $3 and more.

Kristin Mongiello, 35, of Santa Monica sped up to the valet table, her bike pulling her son, Riley Egan, 5, who was behind her on an attached wheeled contraption called a "Trail-a-bike."

They were rushing to a super-hero themed birthday party, and Egan was dressed in a blue and gold hero costume. On the way, they needed a few things from the farmers market, where she has become a regular valet parker.

"Parking here is dreadful," Mongiello said, "and we've had two bikes stolen." She and others said they felt more secure using the free parking service launched by the city last year to ease parking congestion at the Sunday market.

Some owners initially were wary of leaving their bikes guarded by strangers.

"I actually came and scoped it out, looked at the people who were taking care of it," said Jason Puerto, 35, of Santa Monica. He felt so comfortable with the valet service that he left his $1,700 Felt S22 with the attendants for the first time Sunday.

As often happens with good intentions, success has come with a cost. The Santa Monica project has cut severely into the income of a white-bearded man known only as Johnnie who started watching over bikes and dogs two years ago at the market's Main Street entrance.

"I'm the one who started this business. They come here and just put up their thing," said Johnnie, who said he once had as many as 40 cyclists as customers. On Sunday, he was guarding two bikes and four dogs and said he was falling behind on his rent. "But I'm not worried. God will bless me," he said.

These parking services are not simply for upscale cyclists, said Andréa White, executive director of the Bikestation organization, which now has centers in six different communities and is consulting with other cities, including Washington, D.C., where a bike center is due to open at Union Station next year.

Service workers and other low-income residents use the centers, and the Bikestation is starting an outreach program to teach cycling skills to women who have recently been released from prison or drug rehabilitation, she said. Those who complete the program will get bicycles to help them find jobs.

The Sunday crowd in Santa Monica, by contrast, was largely focused on finding basil and breakfast croissants.

Mary Ann Cummins, 70, has equipped her bicycle with side bags large enough to hold her artichokes, greens, broccoli and fresh Gaviota strawberries. "My God, I forgot my eggs," she said, and hastily returned her bike to an attendant.

Monday, April 23, 2007

New York City's Moving Beyond Congestion Plan

The New York City area is wrestling with the same issues of congestion and population growth that face this region. An ambitious congestion relief plan for New York was released at about the same time that the RTA released its first draft of what became the Moving Beyond Congestion Plan.

On Sunday, Mayor Bloomberg announced New York City's somewhat awkwardly named PLANYC. It is an ambitious plan to Green and grow New York over the next 25 years. It makes every regional plan done for this region by our local public agencies seem positively antediluvian.

The Plan is very comprehensive, covering housing, air and water quality, open space, transportation, and the like. (Report is available here.) The non-transportation sections of the Plan are outside the scope of this blog, but well worth reading by anyone interested in urban issues.

The transportation section of the 2030 Plan is at least as creative as the other sections. Highlights include:

Congestion Pricing

The Plan proposes a three-year pilot congestion pricing program. Under the program autos driving into Manhattan south of 86th Street would pay $8 on weekdays (6 a.m. to 6 p.m.). The charge for travel by auto from points entirely within the zone would be $4. Trucks would pay $21 for travel into the zone and $5.50 for travel entirely within the zone.

The congestion charge would be collected through E-ZPass transponders (e.g., the Tollway's I-PASS) and through license plate photographs of vehicles lacking an E-ZPass.

New Regional Transit Financing Authority

The congestion pricing fees would fund a new Sustainable Mobility and Regional Transportation (SMART) Financing Authority. SMART would serve as the transportation infrastructure bank for the New York region, funding a wide variety of transportation-related projects, ranging from the Second Avenue subway to bike paths.

SMART will be governed jointly by the City and the State. It will be funded by the net proceeds from the congestion pricing program, estimated at $380 million in the first year, plus matching $220 million contributions from the City and the State. These contributions will be indexed to grow each year, helping to ensure a stable funding source to support bonds.

Moving People Not Vehicles

The Plan relies on a wide variety of strategies--e.g., bike lanes, ferries, improved connections between buses and subway stations, parking space pricing changes, bus rapid transit in some corridors--to accomplish its goal of improving mobility in New York. This is a welcome contrast to the Moving Beyond Congestion Report, which seems to view mainline mass transit as the solution to all transportation problems.

This Plan, and the willingness of Mayor Bloomberg to step up, take the lead on such an important and creative undertaking, and spend much political capital pushing useful but costly initiatives like congestion pricing makes me quite envious. Maybe Chicago gets the Olympics and New York gets a transportation system that ensures its long-term competitiveness in the global economy. Is is possible for Chicago to have both? It certainly risks getting neither.

Sunday, April 22, 2007

RTA Governance: A New Proposal

Under section 3.01(h) of the RTA Act the 12 board seats are allocated among the City of Chicago, suburban Cook County and the five collar counties based on population. (The Chairman's slot is not subject to this process.) Every 10 years the board seats are to be reallocated based on the results of the decennial census.

As we pointed out and as the Auditor General's Report confirmed (pgs. 107-08 of 450), the 2000 census indicates that the collar counties should gain one seat and the City of Chicago should lose one seat. This reallocation will leave the City with only four votes on the RTA board, which is insufficient to block even important RTA actions that require a super-majority vote (e.g., approval of service board budgets).

Allocating the board seats of a public transit oversight agency by population alone in a sprawling metropolitan region makes little sense when much of the population in this region lives in areas that--by considered choices of local governments and their populace--lack the density necessary to support a sizable public transit system at reasonable prices. Shouldn't the area that consumes and produces the most public transit service--namely the City of Chicago--have control of the RTA?

But wait a minute, says suburban Cook County, we contribute over half of the RTA sales taxes, so shouldn't we be in control of the RTA board? And why is the CTA represented on a service board oversight agency, but Metra and Pace are not? Do service boards have any place on the board of the agency that oversees them? Isn't that setting up the fox/chicken coop problem?

However we allocate board seats on the RTA or (hopefully) its successor agency, passions will be high. Here is a proposal that I think is both workable and fair. It creates positive incentives for local governments to provide financial support for public transit operations and to encourage transit use at reasonable fare levels. My proposal has four parts:

Part #1: Governor Selects RTA Chairman

Currently, the other RTA Board members select the RTA Chairman. Under this proposal the Governor selects the RTA Chairman. Given the large financial contribution the State of Illinois makes to the public transit system, the power to appoint the RTA Chairman seems minimally appropriate. Giving the Governor a stake in the success of the RTA should have important long-term benefits. Currently, for example, RTA requests for increased State funding are perceived to be a State "bailout" of a troubled local agency because the State has no direct stake in the RTA. In contrast, if the Governor's choice of the RTA Chairman is making the pitch for more money that pitch "reads" more like a request for more State dollars to further the State's transportation priorities, a much easier sell.

Part #2: An Equal Voice For All Areas

Every part of the region wants to have a substantial voice on the RTA Board. It makes some sense to allocate RTA Board seats--but not voting power--by population. I propose the following composition of the RTA Board: City of Chicago--4 seats; suburban Cook County--4 seats; collar counties--5 seats, one for each collar county. This distribution roughly tracks the existing population splits between the three regions, but is a bit more generous to the collar counties for two reasons: (1) the collar counties are growing relatively rapidly and (2) there is some benefit, namely, less whining, when each county has their own representative on the RTA Board.

The City's loss of one seat would result from the elimination of the CTA Chairman from the RTA Board. Note that under this proposal the RTA Board would now have more members--13 members, not including the Chairman. As discussed in the next Part, however, expanding the RTA Board to include more collar county representatives and eliminating the CTA Chairman from the Board does not necessarily mean a shift in voting power to the suburbs generally and the collar counties in particular.

Part #3: Voting Power Allocated Based On Each Area's Support For Transit

The key part of this proposal is that voting power would be allocated among the Chicago, suburban Cook County and collar county representatives based on the (1) RTA sales tax collections and (2) transit fares paid in each of those areas relative to total RTA tax collections and fare collections. Thus, let's say that the collar counties' contribution to running the RTA system via RTA sales tax collections and transit fares paid equaled 25 percent of the sales taxes and fares collected systemwide. The five collar county representatives would be allocated 25 percent of the voting power on the RTA Board, giving each collar county representative a vote worth 5 percent. If suburban Cook County contributed 40 percent of the sales taxes and fares, then each of its four representatives would have a vote worth 10 percent.

The appeal of tying voting power to the support an area gives the public transit system via its RTA sales tax collections and the transit fares paid by transit riders in that area is that this incentivizes local governments to support and encourage public transit. The next and final Part is designed it make it easier for local governments to act on this incentive, provide more support for the region's public transit system and, as a result, obtain more voting power on the RTA Board.

Part #4: Local Governments Empowered to Increase Their Support for Public Transit

Under the current RTA Act, the RTA sales tax rates (1% in Cook County and 0.25% in the collar counties) are the statutory cap. Under this proposal, these tax rates would become a floor. Each county, plus the City of Chicago, would be empowered through corporate action or voter referendum to increase their RTA tax rates. Any such increases, of course, would increase the voting power of the representatives from that county (or City of Chicago). And that is precisely the point. If an area does good by increasing its support for public transit by raising the applicable RTA sales tax rate, that area gets more voting power on the RTA Board.

This proposal satisfies the various interests articulated by the parties in the debate over RTA governance. First, it guarantees that every area has a direct and substantial voice on the RTA Board. Second, it allocates voting power by how much effort an area is making to support the public transit system via RTA sales tax collections. Third, this proposal takes into the account the effort made by the transit riders in each area to support the system through payment of fares. Finally, this proposal creates incentives for local governments to financially support public transit and to encourage transit ridership that are lacking from the current allocation of RTA Board voting power on the basis of population.

In an upcoming post I will outline some of the real-life implications of this proposal. I hope you will give this idea of weighted votes on the RTA Board tied to each area's efforts in support of the region's transit system careful consideration.

Thursday, April 19, 2007

Frank Kruesi

Frank Kruesi has resigned as President of the CTA after 9 1/2 years.

The invective hurled against him in the blogosphere is both understandable and unfortunate. It is understandable because of the reality and perception that the CTA system is deteriorating. It is also understandable because his personality rubbed people the wrong way. It appears that he is someone who has a hard time listening--really listening--to people and he earned a reputation for deviousness.

The invective is also unfortunate. Kruesi is a very smart person who appeared to be utterly dedicated to his work. He took over the CTA at a low point in its history and had a good run for the first few years of his tenure. Ridership came back as service improved and Illinois FIRST pumped enough capital money into the system to spark a variety of improvements, such as the Blue Line reconstruction.

Lately, however, his run of good luck ended. Whether through bad advice, bad luck, bad labor arbitrators, an overly combative personality, or a combination of all these factors, the CTA got hammered on the labor relations front. The underfunded pension and the high levels of absenteeism are illustrative of this shortcoming. Capital funding started to dry up with the end of Illinois FIRST and the system deteriorated as a result.

The CTA also has been guilty of poor financial management. The Auditor General's report lays out how the CTA in recent years has continued to roll out more service that it can't afford, setting up the current funding "crisis." On the capital side, the CTA focused on exciting new projects like the Circle Line and the Airport Express when its resources needed to be directed as more immediate needs.

Kruesi faced some real obstacles, starting with a suburban-dominated RTA largely hostile to the CTA. He did us all a service by pointing to the funding problems inherent in formulas built into the RTA Act. He also faced a big problem closer to home--a Mayor of Chicago who does not appear to "get" public transit and fails to understand how transit could be an integral part of the "green" city that Chicago supposedly is becoming.

Kruesi's departure marks yet another changing of the guard on the public transit front. In the past two years the RTA, Metra, Pace and now the CTA have seen a change in board and/or executive management.

Wednesday, April 18, 2007

CTA For "Sale"?

The price tag on the Brooklyn Bridge too high? Florida swamp land not your cup of tea? How would you like to buy a money losing urban transit system? If a recent article in Pensions & Investments magazine is to believed, some lucky investor may soon get that opportunity.

The article discusses how various classes of publicly-owned and run infrastructure in the United States, including state lotteries and toll highways, are being viewed by private investors around the world as attractive assets. The article cites Governor Blagojevich's proposed sale of the Illinois Lottery and the City of Chicago's long-term lease of the Skyway.

The article also includes this interesting tidbit:

In Chicago, Mayor Richard M. Daley is behind a move to privatize Midway Airport. This month, Mr. Daley also proposed selling parts of the Chicago Transit Authority, the city’s mass transit system, to provide the cash needed to fund the CTA’s pension fund, which is 33% funded.

At first blush the notion that a savvy investor would buy some or all of the CTA system seems daft. Why would any sane investor want to buy a money-losing transit operation plagued by dysfunctional labor relations and saddled with large unfunded pension obligations? Here's how and why.

First, the how. Let's assume that the CTA and/or the RTA pledge a steady and growing stream of operating subsidies to the investor. The CTA retains its pension obligations and uses the upfront payment from the investor to fund these obligations. The investor agrees to keep on all existing employees with their wages and benefits intact. However, with respect to new employees the investor is allowed much more flexibility in setting wages, benefits and work rules. Given the turnover in the CTA workforce, this will yield significant potential savings in a matter of a few years.

The investor is also allowed to set fares within certain economic parameters such as the rate of increase in the Consumer Price Index. At some point, the potential financial return from the combination of guaranteed subsidies, escape from under the weight of the CTA's pension obligations, reduced long-term labor costs, and the ability to set fares in a captive market will make such a deal attractive to investors.

Second, the why. There are a variety of reasons why privatizing the CTA through a Skyway-like transaction makes sense. First and foremost, the current institutional arrangements that have resulted in the current CTA "crisis," indicate that reforms and good intentions plus lots of new money are unlikely to result in significant, sustained improvements in the CTA system. It will take a fundamental shock to the system--akin to the formation of the CTA from the wreckage of several private transit companies in the middle of last century--to yield such improvements. (A risky proposition I admit.) Second, the CTA might realize a higher rate of return if it is the first transit system to market. As the P&I article mentions, returns tend to be higher for early deals in a new market. Third, the RTA and the service boards may be unable to extract sufficient money from the General Assembly and the Governor through traditional political means.

There are three key obstacles to such a transaction. First, there is high political risk to the investor inherent in a long-term pledge of RTA operating subsidies to the CTA when it is under private control. What if the General Assembly suddenly repeals the RTA's power to tax. There may be some ways to mitigate this risk, such as a pledge by the City, Cook County and/or the State to pay these subsidies if the RTA spigot runs dry. The adverse impact of such a pledges on the credit agency ratings of these public entities, however, makes such pledges unlikely.

The second risk is labor costs. Labor costs are a relatively insignificant portion of the cost of running tolled assets such as highways and bridges. Labor costs are a much higher proportion of total costs in the case of public transit agencies. High labor costs and difficult labor relations makes any transaction much riskier for a private investor than a plain vanilla tool toll bridge acquisition, for example.

The third risk--or reality--is that some of the CTA's assets already have been conveyed to third parties. Before the IRS crackdown (and here) on leveraged leases the CTA conveyed at least one of its rail lines to private parties under a long-term lease arrangement. (Metra did the same with some of its rolling stock.) (Article here.)

These risks and the larger structural deficit associated with public transit agencies make privatization of the CTA an unlikely proposition. Never underestimate, however, the creativity and persistence of investment bankers in putting together complicated and fee intensive deals!

It is possible that the Mayor's remarks were limited to the CTA's proposed Airport Express to Midway and O'Hare Airports. The CTA has been exploring ways to interest the private sector in taking on this project. If news reports are to be believed, the immediate prospects for a true Airport Express are not that great. However, with time, and long-term investors have all the time in the world, even an Airport Express venture might make some real money.

A final note about the P&I article. The article mentions that the Illinois State Board of Investment has put together an infrastructure investment fund. Wouldn't it be interesting if the State finds itself investing in the very infrastructure projects that involve sales or long-term leases of Illinois public assets. I guess that is one way to mitigate risk. If the CTA, for example, gets skunked in a privatization deal the State of Illinois will get some of that upside. If the CTA gets a great deal at the expense of the investors, at least some of the State of Illinois' loss will be spent in Illinois on CTA projects. What goes around comes around.

Tuesday, April 17, 2007

Metra Bolting The Moving Beyond Congestion Coalition?

The WBBM article discussed in recent post contains a strong hint that Metra may be ready to bolt the Moving Beyond Congestion coalition.

The article reports that the RTA has directed the service boards to prepare plans to achieve a balanced budget in the event the Governor and the General Assembly do no fund the $226 million operating deficit in 2007 alone. The directive was from Steve Schlickman, the RTA's executive director, who warned the service boards to discontinue the practice--heretofore approved by the RTA (!)-- of diverting capital funds to cover operating needs:

"There are three basic options," Schlickman said. "There are service cuts, there are fare increases, or we can continue our past practice of stealing from our capital program to pay for operations."

Schlickman said the ongoing diversion of capital funds would undermine the "basic stability" and reliability of the system by reducing the amounts available to pay for construction, rehabilitation and the purchase of new trains and buses.

The article goes on to report that Metra plans to balance its budget by just such a diversion of capital funds to cover its relatively small operating deficit:

Metra officials said earlier this year, and reconfirmed Thursday, that they would address any such request by postponing certain capital projects. Plans that would be put on hold include locomotive remanufacturing, new radios for locomotives and cab cars, the final phase of bridge rehabilitation between 18th and 60th Streets on the Rock Island District, systemwide retaining wall rehabilitation, installation of fiber-optic communications cable, Electric District substation upgrades, signal upgrades on its Union Pacific and Milwaukee District West Lines, and work on several interlocking plants, junctions and train yards.

Metra's approach speaks volumes about the financial challenges facing the region's public transit system:

1. Metra's ability to plug its operating deficit by diverting some of its capital money underscores the fact that its financial condition is much stronger than either the CTA or Pace, both of which will have to use major fare hikes and service cuts on top of diversions of capital funds to balance their budgets.

2. The fact that Metra can so easily divert some of its capital funds without impacting service levels underscores the fact that for years it has benefited from a much higher level of capital investment than the CTA. The comparative state of the Metra rail lines and the CTA rail lines reveals the effects of years of underinvestment in the CTA's rail system.

3. Metra's willingness to ignore the RTA's directive that the service boards rely on service cuts and/or fare increases rather than diversion of capital funds to balance their budgets underscores how toothless the RTA's financial oversight is. Can anyone envision this RTA board rejecting Metra's revised budget because it relies on diversions of capital funds? Not likely.

4. Metra's unique ability to balance its budget and flaunt the RTA's directives underscores how it is the primary beneficiary of the status quo under the current RTA Act, at least with respect to capital funding.

If the Moving Beyond Congestion ship is sinking--and it truly is too soon to tell if this is the case--it looks like Metra and the RTA are the only one with life jackets. Metra's life jacket is its favorable allocation of capital funding under an unwritten RTA policy, plus its commendable ability to manage its operating costs. The RTA's life jacket is the 15 percent it takes off the top of RTA's sales tax collections, including the State match of those collections.

As for the CTA and Pace, good luck on your own Metra seems to telegraphing.

Monday, April 16, 2007

How Much Financial Support for Public Transit is Enough?

The key premise of the RTA's Moving Beyond Congestion effort and the other related initiatives is that the region's public transit system is underfunded. It is undeniable that current operating funding levels are insufficient to support the current service levels, at least under the current fare and labor cost structures. But how much funding is sufficient? What are the indicia of sufficient funding for a public transit system in a given urban area? Is there an optimal level of funding relative to factors such as population density, urban wealth and the like?

A recent report on the gross domestic products (GDP) of the world's cities prompted me to attempt to derive one benchmark. I took the top 10 U.S. cities on the GDP list and then obtained the 2005 operating expenditures figures for the public transit agencies serving those cities, net of depreciation and debt service. (I excluded San Francisco/Oakland because of the difficulty in obtain operating expenditure information from the multiple agencies serving that area.) I then calculated the amount of money spent to operate each transit system as a percentage of the GDP of the urban area served by the system.

Here are the results (in billions of dollars):

New York
GDP $1133
Transit Operating Expenses $6.347
Percent 0.56%

Los Angeles
GDP $639
Transit Operating Expenses $1.053
Percent 0.16%

GDP $460
Transit Operating Expenses $1.879
Percent 0.41%

GDP $312
Transit Operating Expenses $0.903
Percent 0.29%

Washington D.C.
GDP $299
Transit Operating Expenses $0.978
Percent 0.33%

GDP $290
Transit Operating Expenses $0.967
Percent 0.33%

Dallas/Fort Worth
GDP $268
Transit Operating Expenses $0.322
Percent 0.12%

GDP $236
Transit Operating Expenses $0.381
Percent 0.16%

GDP $235
Transit Operating Expenses $0.323
Percent 0.14%

The analysis indicates that the amount spent to operate the Chicago area public transit system relative to this area's GDP is in line with the amounts spent on public transit by other urban areas relative to their GDPs. Indeed, it appears that this area invests a greater percentage of regional GDP in public transit than all other large U.S. cities except New York. The analysis certainly does not support the notion that the transit system in this area is underfunded relative to the transit systems in other U.S. urban areas.

I stress that this is a very rough analysis. I'm not a trained accountant and the financial statements from the transit agencies are not laid out in the same way. Consequently, my operating expense figures could be off. Likewise, I cannot vouch for the accuracy of the GDP figures, which come from PricewaterhouseCoopers. Certainly, transit system operating expenditures as a percentage of urban area GDP is but one of many possible measures of the optimal level of public transit funding in an urban area.

My primary purpose in putting forth this analysis, however, is to encourage some capable and enterprising souls to do much more thorough and rigorous analyses to help answer the question of what is the optimal level of public transit funding in this region.

It is, after all, quite possible for an urban area (and state) to over-invest in public transit. Putting a significantly larger share of an urban area's wealth into public transit relative to other urban areas may put that area at a competitive disadvantage. After a certain level of investment in public transit, there may be other public investments--both in hard assets (e.g., school buildings) and in human capital (e.g., health care)--that may provide a greater return for the urban area than more money in public transit.

Are we currently at a level of investment in public transit in the the Chicago area such that the expanded investments in education and health care proposed by the Governor and others will give this area a greater return than an increased level of investment in public transit?

Wednesday, April 11, 2007

The (North) Suburban Transportation Commission--First Hearing

The Suburban Transportation Commission, with U.S. Representatives Kirk and Bean as co-chairs, held its first hearing last night. News reports are here, here and here.

Representative Kirk opened the hearing with a bang:

The region's transportation needs have for too long been Chicago-centered, and funding discussions have been dominated by the needs of the CTA, U.S. Rep. Mark Kirk (R-Ill.) said.

"Suburb-to-suburb commuting has increased by 56 percent, while traditional suburb-to-city commuting increased only 9 percent," Kirk said.

"Our transportation plans should set a priority on the needs of the new suburban majority where our economy is growing fastest."

. . .

Kirk took aim at the CTA's pension funding shortfall.

"No one is arguing against helping the CTA, but not at the expense of suburban commuters," he said.

Other speakers from Lake and McHenry Counties pitched the need for greater suburban representation on the RTA Board and for expanded paratransit service.

As one reporter summarized the meeting:

The gist of the proceedings at the Lake County Division of Transportation headquarters in Libertyville was the suburbs are the population and job centers of the Chicago region and deserve special attention.

Representative Kirk, for example, expressed concern that "of the sales tax revenue generated for transportation in Cook and the collar counties, the CTA receives 58 percent, Metra, 31 percent, and Pace, 11 percent." That may be true, but the CTA provides 80 percent of the public transit trips in the region. The speakers likewise pressed for more capital investment in suburban transit projects, again neglecting to mention that public transit ridership most likely will continue to be concentrated in high population density areas of the kind abhorred by most suburbanites, especially, it seems, in Lake County. Nor did anyone point out to the Commission that the RTA has been investing a much larger portion of transit capital dollars in Metra for years relative to Metra's trip share.

The Suburban Commission seems to be proceeding from the assumption that the population growth in the suburbs is sufficient to justify the kind of investment in public transit that makes sense in dense, urban areas. But even with this population growth, population density throughout most of the suburban region is still insufficient to support a sizable public transit system.

It is possible to foresee expanded and intensified Metra rail service linking suburban downtowns that are redeveloped for higher population densities using transit-oriented development principles. I suspect when the suburbanites say "transit" they really mean "Metra" for the most part. As noted previously, there is a suburban push to expand paratransit service, but the high cost of this kind of service will limit the amount of service that can be provided. As we see from Pace's anemic passenger trip performance, even with the high growth in population and jobs in the suburban areas over the past few decades, the demand for mainline bus service appears to be limited.

It is clear that suburban transit operations, be it by Metra rail, Pace bus, or paratransit, are very expensive because of the greater distances that must be traveled and the relatively low passenger loads. From published reports it does not appear that anyone on the Commission or who testified proposed how to fund the high operating costs that will follow on the heels of greater capital investment in suburban transit.

In addition to Representatives Kirk and Bean, the members of the Commision are state Sen. Michael Bond, D-Grayslake, state Rep. Ed Sullivan Jr., R-Mundelein, Long Grove Mayor Maria Rodriguez, Round Lake Mayor Bill Gentes, Charlie Eldredge, director of the McHenry County Economic Development Corporation, and Chris Robling of Jayne Thompson and Associates. (Note that Representative Bean's press release does not include Robling, who drinks from the Pate Phillip well when it comes to city-suburban matters.)

All the public officials on the Commission hail from Lake and McHenry Counties. There are no representatives from DuPage, Will, Kane or suburban Cook Counties. Either last night's meeting was the start of a group that will grow to encompass suburban representatives from other areas, or the group should be renamed the "North Suburban Transportation Commission." If the exclusion of these other counties was deliberate, then the split between the north suburbs and the south suburbs, which was exposed by the appointment of Richard Kwasneski from Will County as Pace's chairman, may be more serious than imagined.

One last note. Representatives from Metra, Pace and the RTA testified before the Commission. Frank Kruesi, the CTA's President, was in attendance but apparently was not even invited to speak. The absence of several of the collar counties from the Commission and the Commission's apparent refusal to take testimony from the CTA call into question the Commission's claim to represent suburban interests and its professed desire to treat the CTA and the City of Chicago fairly. While Jim Reilly, the RTA's Chairman, made conciliatory gestures stressing regionalism and urging the focus to be on funding rather than governance, these words rang a bit hollow when the CTA--which I believe carries almost as many suburban riders as Pace and Metra combined--was denied an chance to address the Commission.

If I were Kruesi and got a earful of how the suburbs--living with the physical legacy of their low-density zoning decisions, its riders already enjoying a much higher per-trip public subsidy than Chicago riders, and in control of the Metra and Pace boards and but one vote away from completely controlling the RTA board--want more money for transit projects and more control over the region's public transit system I would be thinking one thought. That thought would be, should Chicago and some or all of the Cook County suburbs find a way to pull out of the RTA. How will the City of Chicago and the CTA benefit if the RTA concentrates its capital investment on the suburbs for the foreseeable future and the cost of running that expanded suburban transit system eats up operating subsidies that might otherwise be used to support the CTA and transit throughout Cook County. In other words, if the City of Chicago and suburban Cook County banded together would those areas be better off than if suburban Cook County allied itself with the collar counties and continued to subsidize transit investment and service in the collar counties.

Now, I'm all in favor of a regional transit system, but not at the price of continuing to under invest in the CTA, the core of the system. If McHenry and Kane Counties want to secede from the RTA system because of their dissatisfaction with the status quo, maybe the Suburban Transportation Commission and all it represents gives the City of Chicago and many of the Cook County suburbs reason enough to secede themselves.

Tuesday, April 10, 2007

Get Ready for the Doomsday Scenarios

Under section 4.10(b)(2) of the RTA Act the RTA board is not supposed to approve service board budgets unless they are balanced and based on "reasonable and prudent" assumptions. The RTA board failed to fulfill this legal obligation when it approved 2007 budgets for all three service boards that were not balanced and showed a total 2007 service board operating deficit of $226 million.

Was it "reasonable and prudent" for the RTA and its board to assume that the Governor and the General Assembly would step up and fill this budget gap with new money. It is evident from the reception they have given the RTA's Moving Beyond Congestion program that the answer is no. At the time it approved the budgets with $226 million in deficits the RTA had failed to line up any firm support for this sharp increase in operating subsidies. In other words, the RTA's 2007 budget is based on the unreasonable and imprudent assumption that the General Assembly and the Governor would spend their political capital to fix the RTA's $226 million operating deficit problem.

WBBM reports that in light of the less than enthusiastic reception the Moving Beyond Congestion plan has received thus far, the RTA has directed the service boards to prepare plans for the service cuts and fare increases that will be necessary to bring those budgets into balance by the end of this year. These scenarios will be particularly draconian because the measures necessary to bring the budgets back into balance will have to be concentrated in the last six months of the year.

In the article RTA Chairman Jim Reilly all but admits that the RTA approved the deficit budgets without a reasonable basis because the RTA had not lined up any political champion for the RTA's cause:

RTA Chairman Jim Reilly said, had work on new funding sources been further along in Springfield, or given footing by legislative leaders or Gov. Rod Blagojevich equal to that afforded education, health care and pensions in the proposed state budget, the step would not be necessary.

"The one thing I think we don't have yet, in a public way, is one of those people just adamantly saying transit funding has to happen," Reilly said.

The service boards are to get back to the RTA later this week. The RTA and the Moving Beyond Congestion proponents no doubt will use their "doomsday" scenarios to attempt to galvanize the public and their elected representatives to at least bail out the public transit system for another year.

Ironically, CTA President Frank Kruesi took a lot of heat the past two years from the RTA and others when the CTA rolled out such doomsday scenarios in an effort to focus the Governor and the General Assembly on both the CTA's immediate cash needs and the structural funding problems that affect the region's public transit system. It looks like the RTA will now be championing the same tactics this year.

Will another round of doomsday scenarios succeed in goading the Governor and the General Assembly to take action. Perhaps. But the RTA may have made a major strategic miscalculation by abdicating its legal responsibility to approve only balanced service board budgets. Had the RTA held firm last year, the service cuts and fare increases necessary to balance the service board budgets would have been rolled out by the service boards in January of this year. This would mean that the traveling public and the schools and employers that depend on a good public transit system would have felt the full force of those measures just when the General Assembly was in its current spring session.

Of course, it is possible that the public would have gamely accepted the real-life consequences of service cuts and fare hikes spread over a full year, just as it adjusted nicely to the most recent CTA and Metra fare increases. Maybe the RTA did not want to run this risk and figured that doomsday scenarios concentrated in the last six months of the year would give its program more political appeal.

We know, however, from the RTA Act what the General Assembly intended. That was for the service boards to begin the year with balanced budgets based on realistic projections of revenues and costs and not on mere hopes for a legislative bailout. When faced with the doomsday scenarios that will soon be coming, the Governor, the General Assembly, and the public must consider RTA's central role in causing this "crisis" and whether it is prudent to continue to entrust the RTA with managing the region's public transit system's finances.

Monday, April 9, 2007

The Federal Interest Is What, Exactly?

The Daily Herald reports the most surprising news that United States Congressman Mark Kirk (R) and Melissa Bean (D) have put together a "bipartisan panel to provide a suburban counterweight to Chicago influence on road and commuter train financial decisions."

According to the article "the Suburban Transportation Commission will be dedicated to keeping the current funding formula among Metra, the CTA and Pace, ensuring that tax and fee increases to fund the three first are approved by voters and preserving suburban parity in the makeup of the Regional Transportation Authority."

It is apparent from the article that the Commission will be focusing on protecting the current operating funding formula and the transit governance status quo in the RTA Act:

"We want to make sure decisions are focused on where half of all citizens in Illinois live, which is the suburbs. And especially where the economic growth is taking place,” said Kirk, a Highland Park Republican.

The suburban push is being made now because the CTA is seeking a bailout of its employee pension problem from state lawmakers. The CTA soon will start owing $200 million a year to shore up its pension fund. Chicago Mayor Richard M. Daley told reporters last week he’s concerned the issue isn’t on anyone’s radar screen in Springfield. And when the powerful Daley makes concerns public, often the ball starts to roll.

“It’s a hot topic,” Kirk said. “We want to make sure we do right by the CTA, but not at the expense of suburban commuters.”

A couple of years ago, then-Cook County Board President John Stroger led a push to get the makeup of the RTA board — which is currently evenly divided between city and suburban members — changed to benefit the city. One proposal would have allowed the governor — who currently is a Chicago Democrat — to appoint a powerful chief who then would have been able to change the funding formula. The RTA doles out money to the CTA, Metra and Pace according to the formula.

The involvement of two federal congressman in putting together this commission begs the question: What interest does the federal government have in how the State of Illinois and the various local governments in the region choose to raise and distribute operating funding to the service boards? Likewise, what exactly is the federal interest in how the State and the region organize the governance of the public transit system in Northeastern Illinois?

The federal government, after all, stopped providing operating funding for major transit agencies a decade ago. There are no, and to my knowledge never were any, federal requirements or even guidelines for how States and local governments divide up operating funding among various transit modes serving urban, suburban and exurban areas. Likewise, the federal government does not oversee how states and localities govern their transit systems. Indeed, except for certain selected instances (e.g., Bush v. Gore, 531 U.S. 98 (2000)), Representative Kirk's party has professed a hand's off attitude for how states and local governments manage themselves.

Representatives Kirk and Bean may justify their intervention into the RTA's Moving Beyond Congestion process because of the large federal capital investment in public transit systems like the CTA, Metra and Pace. It might make sense, for example, for them to examine why for many years Metra has been getting a far larger share of federal capital funds than the CTA relative to both ridership share and the condition of their infrastructure. They might look at whether the much higher per trip operating subsidies for Pace and Metra riders square with the federal civil rights laws.

While they are at it perhaps they can discuss why the federal government continues to require that public transit agencies provide paratransit service even though their buses and trains are largely handicapped accessible without providing these agencies with any federal operating funding support for these services. In this region alone, paratransit operating costs will soon top $100 million a year.

But somehow I don't think these questions will be at the top of the Kirk/Bean Commission's agenda. Rather, the Commission's goal appears to be to preserve the local status quo, which means that suburban Cook County will continue to subsidize transit service in the collar counties and the City of Chicago. It means that capital investment decisions will be tilted heavily in favor of suburban transit, even though the cost of operating suburban transit assets is much higher relative to Cook County transit assets because of lower population densities and ridership.

The Commission does not yet have a website, but it is getting to work quickly and has its first hearing at 10 a.m. tomorrow (4/10):

The group will hold its first meeting at 10 a.m. Tuesday at the Lake County Transportation Center in Libertyville. Democratic state Sen. Michael Bond of Grayslake and Republican state Rep. Ed Sullivan Jr. of Mundelein will be among those hearing testimony from RTA Chairman James Reilly, Metra Executive Director Phil Pagano and Pace Executive Director Thomas Ross.

It is interesting that despite Rep. Kirk's statement that "we want to make sure we do right by the CTA," no one from the CTA will be giving testimony at this meeting even though Metra and Pace will be appearing and giving testimony. I wonder if the CTA was even invited. If not, it was shameful for Jim Reilly, the head of the RTA's Moving Beyond Congestion effort, to put professed bipartisanship aside and lend credence to this bit of political grandstanding by the two Representatives. If the CTA was invited and chose not to attend, then it missed a golden opportunity to lay out the case for why its many woes are in part--and I stress in part--due to structural problems in the way operating and capital funds are distributed among the three service boards. Does anyone know the facts here?

Sunday, April 8, 2007

Hints of Changes Ahead?

In every season there is a day that gives a hint of the season ahead. In January it might be a day that hits 50 degrees and points to the coming of spring. In August it might be the first arrival of crisp cool air from the northwest that pushes aside the oppressive humidity of summer and reminds us that fall is coming. You get the idea.

Could we be at one of those points in history where there are hints of shift to a new way of doing transportation and more? The 20th Century, of course, saw the triumph of the automobile, that totem of individualism and freedom that radically changed our lived-in (and driven-in) environment. Call it sprawl or call it the triumph of individuality and affluence, the way we live is very different from the relatively densely populated central cities of a century ago.

Every epoch has its day and its decline. Could we be witnessing the very beginning of the end of the automobile/sprawl era? Consider some signs:
  • For the first time in decades, travel via public transit has been growing faster than travel by automobile.
  • Ridership growth is strong on intercity passenger trains despite Amtrak's admittedly poor service.
  • The Supreme Court recently held that the carbon dioxide is something that the EPA can regulate as a pollutant, which opens the door for the next federal administration to get serious about reducing the nation's production of greenhouse gases--many of them from tailpipes--that contribute to global warming.
  • A growing number of states already are taking steps to reduce the production of greenhouse gases and pushing for increased gas mileage standards for automobiles.
  • The pace of discovery of new oil fields is dropping and production levels of some of the key oil fields around the world are dropping.
  • As indicated by the UN report released last week, global warming is becoming widely acknowledged as a serious problem by most governments and scientists.
Even though the general populace may not share the apocalyptic outlook of James Howard Kuntsler, maybe people are awakening from the dream/mania of ever greater consumption. Maybe at some instinctual level they are beginning to make adjustments so that their environmental footprint is just a bit lighter by, for example, taking public transit.

I recognize that this may be wishful thinking. However, I bet there was a point in the first decade of the 20th Century when most people were still in horse and buggies but it started to become clear that the automobile and all it enabled would transform our transportation system and our culture. Maybe we are witnessing a similar moment with respect to a greener future that will be much more hospitable to public transit.

Thursday, April 5, 2007

New Transit Campaign In Town

There is the Moving Beyond Congestion effort organized by the RTA and the Transportation for Illinois Coalition co-sponsored by the Illinois Chamber of Commerce and the AFL-CIO. Now there is the Transit Future Campaign, a "coalition to bring better transit to the Chicago region" that is being organized by the Center for Neighborhood Technology. That's one transit campaign per service board.

The TFC claims its mandate for action is as follows:

The significant drop in quality of service is a result of a veritable transit crisis in Northeastern Illinois, due both to lack of funding at the state and local levels and the overall funding mandates of the Regional Transportation Authority. Limited funding has left our transit system sorely lacking appropriate maintenance, sufficient operating costs, and investment for expansion projects.

As operating funds have dwindled in recent years, capital funds have been used to fill the gap, resulting in poor maintenance of the current system. This method of financing is not sustainable for much longer, and it has left the Regional Transportation Authority—the parent agency for the CTA, METRA, and PACE—almost entirely void of operating funds.
Congress provided capital funds for Illinois in the 2005 SAFETEA-LU Act, but these federal dollars require a local match in order to expend the funds. The state has failed to provide the capital match, which costs the state money while our infrastructure continues to deteriorate. Consequently, the President ordered a $116 million rescission for the state of Illinois, a process that sends federal money back to the US Treasury. The General Assembly has the power to prevent rescissions, which would allow those federal transportation funds to go towards transit.

In addition to the funding crisis, there is a huge and inequitable funding disparity within the RTA that needs to be addressed. For over 20 years, the RTA has not been structured to provide equitable transit funding throughout the region. In 1983, the method of funding was changed, ignoring transit ridership and other system performance measures in favor of an arbitrary formula based on geography.

As a result, the CTA is facing a structural deficit with no way to get to black, and it has not been able to maintain its commitment to provide quality service. The funding formula needs to be changed and equity restored to the system.

The TFC plans to combine advocacy of some short-term service improvement measures with a more ambitious agenda. Its short-term goals are as follows:

• Priority bus lanes for buses;
• Restricted parking on major bus routes paralleling rapid transit construction corridors;
• Cooperative traffic and incident management planning;
• Improved cleanliness on buses and rail cars and on rail stations and platforms.

TFC's larger agenda is as follows:

Our ultimate goal is to reform transit governance and planning. The RTA must exert financial and planning authority for CTA, Metra, and Pace in order to ensure exemplary service. Our transit system requires adequate funding of a 21st century transit system based on clear measures of performance, which will be determined through public input on quantifiable and qualitative performance measures.

TFC states that as part of its work it will do an analysis of transit benefits and costs by legislative district:

Transit Future will conduct research that seeks to document the stake of every Illinois legislative district in transit reform. We will develop a series of maps depicting the transportation costs in each legislative district in the region. These maps will expose the real cost of transportation as compared with the relatively small tax burden of transit, and will examine transit’s impact on household income, property values near transit, local retail near transit, and available transportation options for residents.

This could be a very interesting analysis. While TFC states that "there is a huge and inequitable funding disparity within the RTA" and indicates that the CTA is the service board that has been shortchanged, the TFC analysis might find that both the collar counties and the City of Chicago are paying significantly less than the transit benefits they receive. This was the conclusion of a study done for the House Mass Transit Committee, now unfortunately unavailable from the website of Representative Julie Hamos, the chair of the Committee. (I can email a copy on request.)

The TFC speaks favorably of Representative Hamos' bill to "reform" the RTA, HB 1841. As demonstrated here and here, it is unlikely that the bill will do much to improve the RTA's performances in any fundamental way. Perhaps the TFC will realize this in time and push for a true restructuring of the public transit system.

The TFC was kicked off on March 23. It does not appear that the TFC has done anything of public note since then. Let's hope that the TFC becomes an effective presence. As noted here, we need someone to push for a transit agenda around grassroots/social justice themes. The current alliance between the RTA and the Transportation for Illinois Coalition is not likely to be productive for transit given that the TFIC is closely associated with the folks who are leading the charge against the Governor and his tax/health care/education plan.

Wednesday, April 4, 2007

"The Politics That Are Holding Mass Transit Back"

Yesterday the Sun-Times had a pretty inane editorial calling on the Mayor of Chicago and the Governor to get beyond "the politics that are holding mass transit back" and come up with some more money for public transit.

In today's Sun-Times we got a glimpse at some of those politics. (Crain's article here.) At a press conference designed to promote his slate of aldermanic candidates for the upcoming runoff election the Mayor "warned of more painful CTA service cuts unless lawmakers provide both capital and operating assistance and relax rules governing pensions, health care and private contracting."

Political hurdle #1: The CTA apparently cannot contract out work being performed by its heavily unionized workforce. Doing so presumably would violate collective bargaining agreements and further alienate organized labor from the Mayor. Yet, the potential cost savings from contracting out some of the CTA work likely are significant. The Mayor cautiously opened the door for some legislative (or negotiated) way for the CTA to contract out some of its work:

The mayor stressed that he's not talking about turning low-ridership bus routes over to private companies. CTA bus drivers "do a good job," he said.

But Daley said there's money to be saved by privatizing "some of the internal stuff."

Political hurdle #2: The second political hurdle is even more substantial. CTA management and its unions have together presided over the financial decline of the CTA pension fund--the CTA to have more money for operations and the union to get more money into the paychecks of its members. Years of insufficient contributions have finally caught up and the CTA pension fund is running out of money.

Last legislative session, Speaker Madigan pushed through a requirement that the CTA put sufficient money into the pension fund so that it reach a 90 percent funding level in 2058, fifty-one years from now. To get there, the CTA claims it needs $200 million more each year, which just illustrates the poor current condition of its pension fund.

In today's press conference the Mayor claimed this requirement was "unbelievable" and urged that it be rolled back:

Then last year, the General Assembly passed a bill that they have to come up with x-amount of money to fill the pension right from operating costs of the CTA. It's impossible...Where do they get their money? They're not in the lottery business. They don't have toll road business ... It's unbelievable.

A representative for the Speaker replied that the Speaker had no patience for rolling back the pension funding requirement to allow the CTA to again use its pension funds as cash reserves for operations:

Last year, House Speaker Michael J. Madigan (D-Chicago) issued a harshly-worded letter warning the CTA not to expect any more money to cover its pension obligations. If the CTA fails to make the $200 million payment, the state will take money out of CTA operating funds, the speaker said.

In light of that demand, rules changes governing CTA pensions are not in the cards, Madigan spokesman Steve Brown said today.

"That's how they got themselves into the problem that exists today--by diverting pensions contributions to use them for operating" expenses, Brown said.

Political hurdle #3: As if the CTA versus unions and Mayor versus Speaker is not enough, neither the Governor nor the General Assembly appear all that interested in the kind of comprehensive and expensive public transit fix being touted by the RTA and its allies. As the spokesperson for the Speaker explained:

Asked to assess the chances for any mass transit funding, Brown said, "I've not seen it in the plans the governor has talked about. The House has really focussed more on education than anything else."

It reminds me of a saying from one of Werner Hezog's films (?) --"Every man for himself and God against all."

Tuesday, April 3, 2007

It Could Be Worse: California Cutting Transit Funding?

Governor Blagojevich has publicly expressed his admiration of California Governor Arnold Schwarzenegger. Fortunately for public transit advocates in northeastern Illinois our Governor's admiration for his California counterpart is not absolute.

Recent reports from California (here, here and here) indicate that Governor Schwarzenegger's proposed FY 2008 budget has about $1.1 billion in cuts in State funding for public transit. The cuts are expected to hit the Bay Area transit system, the most developed system in California, especially hard. The cuts reduce State operating subsidies for transit by over $400 million, a 70 percent cut, and reduce capital dollars for public transit by $700 million.

California transit advocates are especially steamed at Schwarzenegger's proposed budget because in November 2006 California voters approved a big transportation capital funding package that includes a sizable transit component. A month later, California adopted legislation directed at reducing greenhouse gases. The inconsistency between the Governor's proposed budget cuts for transit and these initiatives was not lost on these advocates.

Governor Blagojevich's proposed FY 2008 capital and operating budgets for public transit show slight increases from the previous year and can hardly be considered generous for transit. However, he looks like Santa Claus compared to Governor Schwarzenegger's proposed $1.1 billion cut in transit funding in California.