AFFORDABLE PUBLIC TRANSITThomas A. Rubin, CPA, CMA,

CMC, CIA, CGFM, CFM

American Dream ConferenceAustin, Texas

November 7, 2015

Affordable Public Transit –Where to Start?

• What do you (and your community) want transit to do for your community?

• Start with informing yourself as to what transit can do – and can’t do

• Then make decisions based on what is possible, practical, and achievable, not on what would be nice in an ideal world, or one without fiscal limitations

• Focus on the Greatest Good for the Greatest Number

• … and, always remember: First, Do No Harm

What Can Transit Do Well?

• Provide a means of mobility, particularly for those that are mobility-limited due to:– Age• The young who are not old enough to drive• The elderly who are no longer able to drive

– Physical condition– Financial status

• Provide service to and in a central business district • Add transportation capacity to some corridors or in

some areas

What Can’t Transit Do,or Can’t Do Well?*

• Relieve traffic congestion for a region• Increase economic activity and jobs• Promote development or “superior urban form”• Provide good service to suburbs• Save energy• Reduce greenhouse emissions• Pay for itselfREMEMBER: Always look for alternatives before

agreeing to anything – particularly if it is expensive* In general; there are always exceptions.

Transit Can’t Relieve Congestion

• See my paper for Reason, Transit Utilization and Traffic Congestion: Is There a Connection?

• New York City Region:– Over 50% of NYC residents use transit for home-work– NYC region has 40% of total U.S. transit usage– MTA-New York City Transit, the largest transit agency in

the U.S., has had huge swings in transit ridership • If anyplace in the U.S. would show a change in

traffic congestion due to changes in transit utilization, it would be the New York City region

So, if major changes in transit utilization in the most transit-

dependent urbanized area in the U.S. doesn’t have any significant

impact on traffic congestion, then what does?

(Do I really have to say it?)

Does Transit Drive Development?• First, other than stimulating the total or regional

economy, there isn’t much that will impact the total amount of construction activity in the U.S. or a state

• If cities implement programs to promote development in a specific area, this can move development from one place to another – but not do much, if anything, to increase the totals

• To be sure, this can be an important consideration for those trying to promote the interests of the Central Business District over the suburbs (well, it would be if it worked)

Does Transit Drive Development? II• For those that tell you that light rail, or streetcar,

has promoted huge amounts of development in their city, ask them how they adjusted for:– Real estate tax abatements– Zoning to direct development into only specific areas– Floor-area ratio bonuses to allow taller buildings– Taxpayer-funded infrastructure, like parking structures– Governments using eminent domain to acquire parcels

for commercial developers– Sale of government land at discount prices

to determine how much of what these don’t explain can be attributed to rail transit.

WHAT IS THE DEVELOPMENT VALUE OF A STREETCAR PASSENGER?

• According to the Streetcar literature, very high• Let’s use data from Streetcars’ Economic Impact in

the United States, equilibrium capital, May 26, 2010• Ridership: National Transit Database 2012

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City Kenosha Little Rock Memphis Portland Tampa

Development Investment

$150 million $400 million $2,000 million $3,500 million >$1,000 million

Daily Passengers

62 168 1,889 5,006 418

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But What About All The SpendingFor Construction of Rail Lines –

and the “Multiplier Effect?”• The real question should be, “is this the best use of

residents’ money?”• If a public works project is worth doing because it is a

good project, than it should be done – but, a justification that spending taxpayer money creates value in and of itself is extremely misguided

• The idea that value can be created by taxing people and spending money on public works projects has been around forever, but, does anyone really think that paying people to dig holes – and then paying them to fill them in – adds value to anything?

But What About All The SpendingFor Construction of Rail Lines –and the “Multiplier Effect?” II

• The “multiplier effect” holds that, since a project employee will spend his/her earnings on housing, food, clothing, goods, etc. in the region, this will mean more sales and more employment

• It is not at all uncommon for transit plans to show that spending money for a more expensive project is superior than spending less money for a comparable project

• But – the multiplier effect goes on top of everything – a dollar spent by a taxpayer for something that the taxpayer wants also has a “multiplier effect.”

But What About All The SpendingFor Construction of Rail Lines –and the “Multiplier Effect?” III

• “How about all that money we get from the Federal government if we build this project?”

• A Federal dollar is nothing more than a local dollar sent to Washington for a haircut – and then sent back with a huge number of strings that delay the project by years and drive the price up – and the Federal share has been dropping for decades and is now usually well under 50%.

• “But the spending really helps the local economy.”• Everyone who took the tour remember the Austin Steel

Company, which makes the rails, and Travis County Rail Car, Inc.? Generally, much of the money, even the majority, winds up not being spent locally.

But What About All The SpendingFor Construction of Rail Lines –and the “Multiplier Effect?” IV

• If you really want positive economic impact from transit spending:– Look at expanding bus and demand-responsive service– Far less expensive, can be done much faster – and will

actually be moving people in one to two years, not a decade or longer

– The vast majority of the spending will be for labor – for people who work and live, with their families, locally

– Compared to expensive guideway transit projects, very low risk and, if it fails, can be easily cancelled

Transit Cannot Provide Decent Service to and in Suburbs• American Community Survey, percentage of residents that use transit for home-work

commute, selected large and medium-large urban areas

Urbanized Area Core City/Cities Suburbs

Atlanta 12.9% 3.2%

Austin 4.9% .8%

Boston 32.5% 9.1%

Dallas/Forth Worth 2.8% 1.3%

El Paso 2.3% .2%

Houston 5.1% 1.6%

Los Angeles 10.5% 3.7%

New York City/Newark 53.7% 12.5%

Portland 12.5% 4.9%

San Antonio 3.3% 1.6%

U.S.A. 15.7% 4.6%

TRANSIT IS NOT MORE FUEL-EFFICIENT THAN AUTOMOBILES – AND WILL FALL FURTHER AND FURTHER

BEHIND OVER TIME

Transit is “Green” – Just Not “Bright Green”

• While there are cases in the U.S. where transit is both very energy-efficient and reduces greenhouse gas emissions, these are in places like NYC that grew up around transit and have very high load factors

• Energy efficiency and GHG savings are driven very much by vehicle occupancy – and the absolute worst transit vehicle occupancy is from new services added in suburbs

• When a major share of electricity is generated from burning coal – as in Texas – reductions are … ?????

OK, If Transit Can’t Do Any of Those Very Well, What Can It Do (At a Reasonable Cost)?

• Provide mobility for those who have few or no other transit options – this is the prime justification for transit in the U.S. and we should never lose sight of it

• It is not that adding service for rich people is bad, but, the truth is, it takes a whole lot more money to provide service to a rich person than a poor one – if the quality is not very good, you will never get the Yuppies out of their BMW’s, and that takes a lot of money, particularly in service to suburbs (mostly)

OK, If Transit Can’t Do Any of Those Very Well, What Can It Do (At a Reasonable Cost)? II

• One of the most frustrating things about light rail and streetcar projects is that they frequently have very negative impacts on the most transit dependent

• Construction and operating costs are frequently understated and ridership is overstated, and the huge costs of capital renewal and replacement never even mentioned

• And, when things get bad, and money gets short, the common response is to raise fares and cut bus service

OK, So What Does Work When it Comes to Making Public Transit More

Productive and Cost-Effective?

• Fare reductions• BRT-Lite instead of BRT-Heavy and/or Light Rail• Circulator Bus instead of Streetcar• Long-haul Commuter Express Bus service instead of

Commuter Rail• Vanpools• Competitive contracting of transit services

Fare Reductions• The three largest gains in transit agency ridership in

the U.S. since WWII have all been due to fare reductions

• Has anyone in this room ever heard that before?• Remember the New York City transit utilization vs.

traffic congestion graph? While credit must be given to the huge work done, beginning in the late 1970’s, to fix and cleanup the basic transit infrastructure, that was the “necessary” condition – and fare reductions were the “sufficient” condition

Fare Reductions II• The next two largest ridership increases were in Los

Angeles, from 1982-1985 and 1996-2007, and both were due in large part to major fare increases

• Despite the huge successes of these three well documented cases, it is totally unknown to evaluate fare reductions as way to increase transit ridership – in fact, it is almost never even considered

• This does require money – but, while total subsidies will increase, subsidies per passenger and per passenger mile will decrease

• This is incredibly more productive and cost effective than building new guideway transit projects

BRT-Lite Instead of BRT-Heavyand/or Light Rail

• BRT-Heavy– Dedicated Guideway; may be new or converted lanes on

streets or repurposed rail lines– Long distances between stops compared to normal

urban bus; one mile is common– Dedicated stations, generally with prepaid boarding area– Usually some type of traffic signal priority or preference

• BRT-Lite– Similar to BRT-Heavy, but not dedicated guideways and

generally without stations with prepaid boarding area

BRT-Lite Instead of BRT-Heavyand/or Light Rail II

• BRT-Heavy generally (but not always) faster, but BRT-Lite often provides over 80% of the speed advantage over regular bus

• BRT-Lite will have greater schedule variance because it operates in general traffic

• BRT-Lite guideway generally costs under 5% of BRT-Heavy, which now run tens of millions/mile; BRT-Lite costs are mainly for traffic signal work and stations

• BRT-Lite needs no environmental clearance and needs, at most, only minor outside funding – so, it can be up and running in one to two years, instead of a decade

• Due to lower cost, you can do several BRT-Lite lines for the capital cost of one BRT-Heavy line

Circulator Bus Instead of Streetcar• Since you have already heard about why you don’t

want Streetcar, I’m just going to talk about the very logical – and inexpensive, and easy, and effective – alternative: circulator buses

• Generally operated with smaller buses, 25-30 feet, on short, often loop, routes

• Often multiple routes through a downtown area• Generally, slightly faster than Streetcar• Very easy to change, or add, or delete, routes• Don’t need environmental clearance, can be up and

operating as soon as you can get buses and drivers

Circulator Bus Instead of Streetcar II• Circulator Bus is very low risk – at most, the route

turns out to not work very well, the fixes didn’t help much, so you stop the service. You can even hire a contractor to operate the service and have them provide the vehicles, operating site, and personnel.

• While rail advocates claim that more people will ride rail than bus, even if this is accepted, the increase is relatively minor – and the cost difference is huge

• You can get several times the coverage area, per dollar, with Circulator Bus than with Streetcar

Circulator Bus Instead of Streetcar III• So, good idea: If someone wants to do Streetcar, try

Circulator Bus first to see if the route works – low cost, low risk, much value in the trial

• If the ridership is good, then, who needs Streetcar?• If the ridership is not good, then, should we do

Streetcar?– Maybe the route isn’t right – let’s try changing it (think

about trying that after you build a Streetcar line and the ridership, to use the transit technical term, sucketh)

– If we can’t get good ridership with a Circulator Bus, why do we believe we will get double, triple, or whatever the ridership with Streetcar?

Long-Haul Commuter Express Bus Service Instead of Commuter Rail

• Commuter Rail generally runs long-distance peak hour commute service from distance suburbs to a commuter rail hub in or near the central city operated primarily on freight rail lines

• Riders generally have to access Commuter Rail stations by other modes at both ends; some can walk, particularly at the downtown end, but others will park-and-ride, kiss-and-ride, take a feeder bus, or bicycle for access at the suburban end, and bus or urban rail at the destination end in the morning

Long-Haul Commuter Express Bus Service Instead of Commuter Rail II

• Long-Haul Commuter Bus operates on mostly on freeways, but, more often in recent years, it is operating on HOV and/or HOT lanes

• It can serve as its own feeder and distributor service– At the suburban end, it can operate on surface streets to

collect riders near their homes before it hits the freeway– In the CBD, it can run on city streets through downtown

letting off the riders near their destinations• The major capital expense is the buses; which can

be contracted for, along with the operating yard(s)

Long-Haul Commuter Express Bus Service Instead of Commuter Rail III

• One very long-standing “matched pair” is the Commuter Rail service, mostly into Manhattan, operated by the New Jersey Transit Corporation, and the Long-Haul Commuter Express Bus Service operated under contract to NJTransit by several private sector bus operators – most of whom have been operating their lines for decades

• How do they compare? I’ve been following this for many years and, although there are minor changes in absolute values over time, the ratios have been very constant.

Long-Haul Commuter Express Bus Service Instead of Commuter Rail III

• Bus has a significant advantage on every indicator• Starting at the right, note that the bus operating speed is a

little lower and the trip length a little longer than commuter rail – this is due, in part, to the buses operating on local streets to pick up passengers near their homes and at designated park and rides. Considering this, the operating speeds and trip lengths are very comparable – these two services are offering the same types of service to the same types of riders.

• Bus averages 22.3 passengers in ~51-seat buses; commuter rail is averaging 36.1 passengers in ~110-seat passenger cars – on a percentage of seats basis, advantage, bus, 44% to 33%

Long-Haul Commuter Express Bus Service Instead of Commuter Rail IV

• Now let’s look at the financials:– On both passenger and passenger-mile comparisons, bus costs

are lower and fares are higher– Bus has a 89% farebox recovery ratio, rail 51%– Rail subsidy/passenger – what the taxpayer pays – is $4.42, over

five-and-one-half times the $.80 for bus– Rail subsidy/passenger-mile is $.157, over seven times the $.022

of bus• Capital cost data is not readily available, but it is far less for

Long-Haul Commuter Express Bus than for Commuter RailARE THERE ANY QUESTIONS?(Didn’t think there would be.)

Vanpools• Vanpools are the Rodney Dangerfield of the transit

industry – they never get any respect• Vanpools generally carry seven to fifteen passengers who

generally live close together in a suburb or along a direct line to one or multiple sites in close proximity, such as a large company or medical complex

• Operating costs are very low because the vans are driven by passengers

• If fares are charged (which is not always the case), farebox recovery can approach 100%

• This is a niche player, but a very simple one to set up with very low costs to the taxpayers – and one of the best benefit-cost ratios in the transit industry

Vanpools II• It is not at all uncommon for vanpools to be subsidized by

employers, relieving the taxpayers of much of the capital and operating costs

• Vanpool operations generate Federal 49 USC 5307 “formula” funding, which provides specified grant revenue for each revenue mile – and, due to the way the Federal law works, a vanpool earns the same as a 60-foot articulated bus

• The “formula” grant funding is often enough to cover the capital costs of the vehicles

• While many major transit agencies totally ignore this, Los Angeles, San Diego, and Seattle all have well over 1,000 vehicles; Minneapolis/Saint Paul and suburban Chicago have over 700 – and Austin has over 100

Competitive Contracting of Transit Services• Up to, or more than, 70% of the operating costs of a

transit system are salaries, wages, and benefits – and this has been going up significantly as pension and other-post-employment-benefit costs continue to expand.

• One way to react to this is contracting out for the provision of transit services – literally hiring a contractor to operate the vehicles, maintain them, and do various other activities (the “champion” is Foothill Transit District in Los Angeles County, which doesn’t have a single employee)

Competitive Contracting of Transit Services II• Transit bargaining units are very well aware of this

(and similar methodologies, such as part-time operators) and have been working very hard, and often very effectively, to oppose, limit, or make it totally impossible to implement.

• So, this is something worth looking into, but has to be done with expert assistance – people who know the law and the rules, know how things are done, and know what can be done – this is definitely no place for amateurs

Conclusions• While rail and other guideway transit most definitely

has a place in the U.S., in many cases, it is an extremely expensive and non-productive way to try to move people

• Alternatives to expensive and not worthwhile guideway transit projects need to be carefully studied wherever guideway transit is proposed

• What is essential, of course, is a fair and unbiased expert professional evaluation of alternatives

• Please let me know if you think you have actually run into something that might remotely resemble this somewhere – I will get right on my flying pig and travel there as fast as I can