NewGeography.com blogs

For decades taxpayers have paid billions to finance major transportation project cost overruns far exceeding the routinely low-ball forecasts available at approval time. This has been documented in a wide body of academic literature, the most important of which was conducted by Bent Flyvbjerg of Oxford University, Nils Bruzelius University of Stockholm and Werner Rothengatter of the University of Karlsruhe in Germany (Megaprojects and Risk: An Anatomy of Ambition).

Major project advocacy, however, has descended to a new low of unprecedented and absurd exaggeration. This is evident in the current public policy debate about the Sunrail commuter rail project in Orlando. Two examples make the point

Exaggeration #1: Job Creation: The Central Florida Partnership claims that Sunrail will create 10,000  jobs. "almost immediately." This would be quite an accomplishment. The Sunrail project is currently projected to cost approximately $850 million for just the first segment. Every cent of the likely cost overruns will be on a blank check drawn the account of Florida taxpayers.

At Sunrail's claimed rate of job creation,  the Obama Administration's $800 million "shovel ready" stimulus program (enacted in 2009), would have "almost immediately" produced more than nine million jobs. By now, the unemployment rate would have been reduced to little above 2 percent, lower than at any point in the more than 60 years of available data. Of course, and predictably, the stimulus program did no such thing, not least because a job created by public spending is likely to destroy more than one sustainable job in the private sector.

Exaggeration #2: Sunrail Will Make a Difference: The proponents imply that Sunrail will carry a significant number of trips in the Orlando area, claiming that the line will carry one lane of freeway traffic and that it will give central Florida residents an alternative to high gasoline prices. In fact, even if Sun Rail reaches its ridership projections, it would take a full day of train travel to remove less than an hour's peak hour freeway volume. Needless to say, no one will notice any fewer cars on the freeway (Figure).

Further, Sunrail will not provide an alternative to the overwhelming majority of central Floridians, since it will attract only 1,850 new round-trip riders per day by 2030 (Sunrail's number). Spending $850 million on Sunrail is the same as the taxpayers giving each new rider a gift of $450,000.

The Need to Set Rational Priorities: All of this is occurring in the face of an national fiscal crisis so severe that even the AARP has expressed its willingness to consider cuts to Social Security. As an AARP spokesperson put it "You have to look at all the tradeoffs." Indeed.

The Federal government is again offering money it does not have to entice a state (Iowa) to spend money that it does not have on something it does not need. The state of Iowa is being asked to provide funds to match federal funding for a so-called "high speed rail" line from Chicago to Iowa City. The new rail line would simply duplicate service that is already available. Luxury intercity bus service is provided between Iowa City and Chicago twice daily. The luxury buses are equipped with plugs for laptop computers and with free wireless high-speed internet service. Perhaps most surprisingly, the luxury buses make the trip faster than the so-called high speed rail line, at 3:50 hours. The trains would take more than an hour longer (5:00 hours). No one would be able to get to Chicago quicker than now. Only in America does anyone call a train that averages 45 miles per hour "high speed rail."

The state would be required to provide $20 million in subsidies to buy trains and then more to operate the trains, making up the substantial difference between costs and passenger fares. This is despite a fare much higher than the bus fare, likely to be at least $50 (based upon current fares for similar distances). By contrast, the luxury bus service charges a fare of $18.00, and does not require a penny of taxpayer subsidy. Because the luxury bus is commercially viable (read "sustainable"), service can readily be added and funded by passengers. Adding rail service would require even more in subsidies from Iowa. The bus is also more environmentally friendly than the train.

Further, this funding would be just the first step of a faux-high speed rail plan that envisions new intercity trains from Chicago across Iowa to Omaha. In the long run, this could cost the state hundreds of millions, if not billions of dollars. Already, a similar line from St. Louis to Chicago has escalated in cost nearly 10 times, after adjustment for inflation, from under $400 million to $4 billion.

Unplanned cost overruns are the rule, rather than the exception in rail projects. European researchers Bent Flyvbjerg, Nils Bruzelius and Werner Rottengather (Megaprojects and Risk: An Anatomy of Ambition) and others have shown that new rail projects routinely cost more than planned (Note 1).

Flyvbjerg et al found that the average rail project cost 45 percent more than projected and that 80 percent cost overruns were not unusual. Cost overruns were found to occur in 9 of 10 projects. Further, they found that ridership and passenger fares also often fell short of projections, increasing the need for operating subsidies.

Iowa legislators may well identify ways to spend their scarce tax funding on services that are actually needed.

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Note: Flyvbjerg is a professor at Oxford University in the United Kingdom. Bruzelius is an associate professor at the University of Stockholm. Rothengatter is head of the Institute of Economic Policy and Research at the University of Karlsruhe in Germany and has served as president of the World Conference on Transport Research Society (WCTRS), which is perhaps the largest and most prestigious international association of transport academics and professionals.

The sustainable biking craze seems to keep rolling as more and more cities encourage commuters and wanderers to bike across town instead of drive. New programs, such as Nice Ride in Minneapolis, offer an innovative service where one can rent out a bike for a small fee and ride it across town to other stations, or continue to hold onto the bike and continue making payments.

Other cities are turning their spokes with similar programs: B-Cycle in Denver, a program in D.C., and Bixi in Montreal all have enough riders to sustain the businesses. While profit from these bikes may be viable, the question of sustainability and more improved quality of life still remains.

The way Nice Ride functions is endearingly simple: one signs up for a fixed subscription (with discounts for university students) and receives a special key that can be used at any Nice Ride station. The user slips in the key, and unlocks a bike. The bike can then be ridden across town to any station in the city, any time from April to November. In June 2010 when Nice Ride began, this simple plan garnered 10,000 trips in in its first month of use. So has this new model (and increased biking in general) for urban transportation provided any gains for the public other than fatigued legs?

It seems that the program is a perfect fit for the city’s infrastructure. The city already has 46 miles of on-street bike lanes and 84 miles of bike trails to support such a project. On top of this, the city’s bicycle culture is one of the strongest in the nation, second only to Portland, whose more temperate climate has an edge for those cyclists hoping to commute regularly.

Something that both cities have experienced is a drop in bicycle/motor vehicle crashes as more and more people decide to utilize biking as their main source of transportation. This “safety in numbers” concept has potentially attracted more and more cyclists each year leading to not only a wider understanding of the bicycle culture present, but safer roads as respect is paid to the cyclists braving the busy roads of Minneapolis and St. Paul as well.

The biking craze in the Twin Cities has also lead to the area being one of the cleanest cities in the world according to an article featured in Forbes. The research examined many different facets of a city’s infrastructure, including the emphasis the city places upon transportation, including biking. The article cites the city’s extensive use of bike lanes (as well as its transit and bus systems) as the major reason the Minneapolis/St. Paul area is so clean. The Twin Cities ranked fifth on the list, behind the likes of Calgary, Honolulu, Helsinki, and Ottawa.

So while other cities may stick to the classic emphasis on automobiles, Minneapolis has shown that biking is not only a safe mode of transportation, but one that can help to clean up the urban environment as well. Not to mention the cult cycling craze that many biking cities possess seemingly unifies an active demographic into a hopeful mode for future American transportation.

Anaheim Convention Center, Southern California, last week was a hot bed of one of the ultimate forms of renewable energy. The “fuel” used by wind turbines (really the wind) is free for the 30 year life span of the windmill installation, is considered inflation proof, and is 100 % domestically available.

Just a brief walk through the trade exhibition convinces any visitor of European as well as Chinese commitment to wind energy. One guest speaker, Ted Turner put it: “Just do not look at the next 30 years, look for at least a few hundred years of human energy needs.”

Conventional energy lobbyists claim that wind is unreliable and will harm operation of the grids. However, grid operators have observed that wind power is more reliable and predictable.

There are rumors that sound of operating wind will cause a variety of dangerous health effects, including headaches and disturbed sleep. The studies have shown that wind turbines at a distance of 2,000 feet (normal building codes for Wind Mills) have a dB rating close to 45 (comparing that to 55 in an average home in the USA). Normally, two people can carry on a conversation on any wind mill farm. Please remember: this energy source has no side effects such as air or water polluting emissions, no hazardous waste, and has a direct impact on reducing the public health impact of any other energy generation.

Are birds get affected by wind energy? A very legitimate question by the American Bird Conservancy needs to be addressed with honesty. The bird loss caused by buildings is about 550 million, by power lines 130 million, vehicles 80 million, poisoning by pesticide 67 million, and radio and TV towers close to 4 million. The tabulated loss by wind is under 150,000. Special attention is being paid to bats: The bats and wind energy coalition was formed in 2003 by Bat Conservation International, the U.S. Fish and wild life Service, and the National Renewable Energy Laboratory.
The view of a wind energy facility or the distance of a home from a wind mill farm had no consistent, measurable or significant impact on home values.

The current worldwide installed capacity gives a snap shot of Wind energy penetration in a given region. By 2010, the European Union was leading the world with 84,000 MW, China with 42,000 MW and the USA was at 40,000 MW. However, Denmark leads the world as percentage of total power needs fulfilled by Wind Energy: close to 20 % in 2010.

The potential of up to 20 % electricity generation that can be derived from Wind Energy is feasible, both technically as well as financially by 2030. Most land used to construct wind farms can be used for its original purpose of harvesting, grazing and farming. The actual foot print of turbine farms, roads and generating and transmitting facilities is under 3 percent of total land taken out of commission.

Wind Energy should be debated in the public forum with both energy independence and long term sustainability for our planet beyond the next election cycle.

A friend was explaining some philosophy to me the other day and he used an analogy to make his point: If you can get a cannibal to use a knife and fork, is that progress? Of course, the answer is "no". So when I heard the next day that transportation infrastructure performance in the US improved significantly at the height of the worst recession since the great depression I had to ask: is that progress?

We do not want to stop all economic progress just so that a privileged few with access to resources may enjoy an easier ride on the I-95 interstate highway between Wall Street and Congress. Stopping economic growth is not a solution to the problem of crumbling infrastructure in America.

In fact, my economic analysis shows that transportation infrastructure is a “leading indicator” of economic activity. In other words, infrastructure performance has to improve for a while – and stay improved – before economic activity will pick up in an area. Alternatively, infrastructure performance would have to decline for a while before businesses would leave that location, too. Think about it this way. From the perspective of a company already in business in a particular location, they would not pack up and leave town the first day that, for example, traffic congestion slows down the delivery of products to their customers. Companies like FedEx Freight plan distribution locations 20 years in advance. For a while, they will find a way around congestion. FedEx Freight uses elaborate technology to “route trucks around huge bottlenecks, but this adds circuitous miles and costs”. Their policy is to “minimize the impact as best you can.”

We see evidence of how business finds a way to make it work even when government and infrastructure try to stand in their way. California ranked 43rd in 1995 and fell further to 47th in 2000 and 2007 among the 50 states (plus D.C.) in the U.S. Chamber of Commerce’s transportation infrastructure performance index. Although California’s infrastructure is crumbling, businesses are finding a way to work around it. California’s economy could grow faster than the rest of the US economy this year.

In economics we talk about the efficient use of resources – getting the most out of what you have to work with. In a new study getting underway at the University of Delaware, early results indicate that businesses are operating successfully in the United States despite being hampered by problems like congestion and the lack of intermodal-connectivity (that is, being able to move products from trucks to trains and from trains to ships). California, in fact, may be a benchmark state for economic efficiency. They rank at the bottom for infrastructure performance but business is finding a way to make it work.

My old pal, Larry Summers – former Economic Advisor to President Obama and subverter of all things economic – took a last final swipe at spending on transportation infrastructure in April 2011. In his first public appearance at Harvard University after leaving the White House, he talked about investment in infrastructure as a way to “…tackle high levels of unemployment, especially among the low-skilled.” He just doesn’t get it. He continues to believe that the way to stimulate the economy is to give tax breaks to business – as if they will build their own roads. He just didn’t get that infrastructure is what supports all economic activity. It’s the stuff that business does business on, not the classical economic “capital” that business brings to the table.

In fact, it costs businesses to have to work around the crumbling infrastructure. When you ask academic, government and researchers to measure that cost, you get a wide range of views about what constitutes a direct or an indirect cost to business from traffic congestion. But some of these costs are undeniable. There is a cost of computer technology for monitoring congestion; the cost of employees for communicating with drivers about alternate routes; the cost of extra fuel; driver overtime resulting from congestion; refunds to customers for missing guaranteed delivery deadlines, etc. etc.

So, there’s a benefit to business from improving the performance of transportation infrastructure. They will be saving the money that they are spending now to work-around the infrastructure. And money not spent is at least as good as a tax break.

Disclosure: Dr. Trimbath’s research on the economic impact of transportation infrastructure performance was supported by the National Chamber Foundation and sponsored in part by FedEx Freight. The 2009 Transportation Performance Index will be released on July 19, 2011 in Washington, D.C. It will show a substantial improvement over 2008.

For California’s high-speed rail boosters including their chief cheerleader, U.S. Transportation Secretary Ray LaHood, the month of May must have felt like a month from hell. First came a scathing report by California legislature’s fiscal watchdog, the non-partisan Legislative Analyst’s Office (LAO), questioning the rail authority’s unrealistic cost estimates and its decision to build the first $5.5 billion segment in the sparsely populated Central Valley between Borden and Corcoran. That segment, the LAO noted, has no chance of operating without a huge public subsidy, yet the terms of the voter-approved Proposition 1A, explicitly prohibit any operating subsidies.

These concerns were echoed by an eight-member Independent Peer Review Group. "We believe the Authority is increasingly aware of the challenge of accurate cost estimating," wrote its chairman Will Kempton in a letter to the California High-Speed Rail Authority’s CEO, Roelef van Ark. The Legislative Analyst‘s Office had concluded that if the cost of building the entire Phase I system were to grow as much as the revised HSRA estimate for the Central Valley segment (an increase of 57%), the Phase I system would end up costing not $43 billion as originally estimated, but $67 billion.

The two reports unleashed a torrent of criticism from the press. In sharply critical editorials, The Wall Street Journal and the Los Angeles Times questioned the project’s fiscal viability and the Authority’s poor decisionmaking. The project is "a monument to the ways poor planning, management and political interference can screw up major public works," opined the LA Times. ("California’s High Speed Train Wreck," May 16). "If the state can’t come up with enough money to finish the route, a stand-alone segment in the Central Valley would literally be a train to nowhere and a big drain on taxpayers," said the Wall Street Journal ("California’s Next Train Wreck," May 18). "The legislature needs to kill the train now. Once this boondoggle gets out of the station, the state will be writing checks for decades," added the Journal in its most recent editorial ("Off the California Rails," May 30). The San Francisco Examiner and The Sacramento Bee also have been critical in their reporting. Governor Brown needs to "squarely address the issues raised by the legislative analyst’s report," a Sacramento Bee editorial urged.

Even some of the state’s former legislative supporters, such as state senators Joe Simitian, Alan Lowenthal, Anna Eshoo and Mark DeSaulnier have expressed reservations and urged the Authority to rethink its direction. "I don’t want to see an EIR (Environmental Impact Report) completed for a project that will never be built," Senator Joe Simitian told Roelef van Ark at a Senate Budget Subcommittee hearing on financing the first rail segment in the Central Valley.

At the urging of the Legislative Analyst’s Office, the rail authority asked the U.S. DOT for more flexibility about where and when to build the initial "operable" segment. The LAO went as far as recommending that "If the state can’t win a waiver from the federal government to loosen the rules and the timing for using high-speed rail grants, it should consider abandoning the project." Not only would the Central Valley segment, by itself, have insufficient ridership and revenues to stand on its own, the Legislative Analyst wrote, but "the assumption that construction of the Central Valley segment could move quickly because of a lack of public opposition has already proved to be unfounded." The LAO suggested several alternative segments that could be more financially viable and economically beneficial than the Central Valley segment. They included Los Angeles-Anaheim, San Francisco-San Jose and San Jose-Merced.

But in a remarkable exercise of inflexibility and delusion, the U.S. Department of Transportation turned a deaf ear to the request. "Once major construction is underway...the private sector will have compelling reasons to invest in further construction," the DOT letter stated in an assertion totally unsupported by any evidence.

"California is a test case for whether high-speed trains can succeed in the U.S. — and so far, the state is failing the test," the LA Times editorial concluded. The feds’ refusal to reconsider their position has substantially magnified and accelerated the likelihood of that failure.

LATE-BREAKING NEWS 6/6/2011: In the wake of the LAO report, both houses of the California Legislature have passed legislation that, in effect, is a vote of no confidence in the California High Speed Rail Authority (CHSRA) and its Board. The bills place the Authority within the state's Business, Transportation and Housing Agency, thus giving the Governor decisionmaking power over the project. The Senate bill would "vacate" the appointments of the current Board members and provide for the appointment of a new advisory Board with special expertise in construction management, infrastructure finance and operation of rail systems. The House bill would retain the current Board but only in an advisory capacity. The two bills will have to be reconciled before they are sent to the Governor for signature. However, with the bills sponsored by three Democrats, the Governor is expected to sign the final bill into law [SB 517 (A. Lowenthal), passed on June 1 by a vote of 26-12; AB 145 (Galgiani and B. Lowenthal) passed on June 3 by a vote of 50-16].

There is a possibility that a change of leadership at the Authority, coupled with mounting grassroots opposition in the Central Valley, might delay the project past September 2012 --- the federal deadline to start construction--- and thus disqualify the project from federal grant assistance extended under the stimulus (ARRA) legislation. The deadline was reaffirmed in a letter from U.S. DOT's Undersecretary for Policy, Roy Kienitz. "U.S. DOT has no administrative authority to change this deadline, and do not believe it is prudent to assume Congress will change it," Kienitz wrote to Roelof van Ark.

Results from the US Department of Transportation's 2009 National Household Travel Survey indicate that transit's work trip market share in the United States was only 3.7 percent in 2009. This is a full one quarter less than the 5.0 percent reported by the Bureau of the Census American Community Survey for 2009. Further, the NHTS data does not include people who work at home. If the work at home share of employment from the American Community Survey is assumed, the transit work trip  market share would be 3.5 percent.

Much of the difference is due the differing questions asked in the two surveys. The American Community Survey asks how people "usually" got to work last week, while the National Household Travel Survey (NTHS) data is based upon actual diaries of travel kept by respondents. The NHTS reports that among people who respond that transit is their "usual mode" of travel to work, transit is used only 68 percent of the time. In contrast, the daily trip diaries report that commuters who drive alone are a larger share of the market than those who indicate driving alone as their usual mode of travel. People who report their usual mode as "car pool" actually use a car pool to get to work only 55 percent of the time, an even lower rate relative to "usual" mode than transit.

The daily trip diaries from the NHTS also a large difference in travel times between automobile commuters (including car pools) and transit. The average automobile commute time was 22.9 minutes, while the average transit commute time was more than double, at 53.0 minutes.

On Tuesday, January 25, 2011, the leaders of the Egyptian protest group, April 6 Youth Movement (A6Y), led hundreds of thousands of protesters chanting, “Bread, Freedom, Human Rights” into Cairo’s Tahrir Square. The events that followed completely surprised the economic elites gathering for the annual World Economic Forum meeting in Davos, Switzerland. Few put much stock in the importance of the actions of young people in Egypt until the protests overturned that country’s entrenched power structure in a matter of weeks.

Why were the leaders of the global economy so surprised by the events that have come to be known as the Arab Spring, and why did they feel so threatened by them? Why did the protester’s demands spread so quickly throughout the Arab world after decades of suppression by autocratic regimes? 

The answer to these questions lies in an understanding of the complex interaction between technological and generational change, fueled by a hunger for a better future, that continues to be the underlying source of the institutional instability and that will reshape the entire region. In a new Kindle Single, Headwaters of the Arab Spring, NDN fellows Morley Winograd and Mike Hais explain how these intertwined forces are destined to undermine institutions and leaders in every corner of the world.  

While the misreporting of city population density comparisons commented on by  Wendell Cox was probably inadvertent, it is indicative of a general problem relating to contemporary planning – misrepresentation of facts.

We are repeatedly told of the wonderful results of infill high density policies in locations such as Portland, USA or Vancouver, Canada which on investigation are found to be non-existent or applicable only to a small locality instead of to the city as a whole.

Quantitative data is frequently misrepresented. To give one example, a 2008 Canadian study is often quoted as proving high-density reduces greenhouse gas emissions. Inspection and interpretation of the data provided reveals this to be negligible.  Without any evidence to the contrary, it seems reasonable to assume that the Canadian fraction of total household emissions that relate to transport is similar to that shown on the Australian Conservation Foundation's website, being 10.5%. Applying this value to the data in Chart 2 of this Canadian study one finds that for those living within 5 km of the city centre there would be a transport difference attributable to increased density of only 1% in total annual emissions per person. For people living 20 km or more from the city centre the difference would be much less at 0.2%.

We are told that high-density imposed on areas originally designed for low density is good for the environment; that it provides greater housing choice, that it reduces housing cost, that it encourages people on to public transport; that it leads to a reduction in motor vehicle use and that it saves on infrastructure costs for government. Not only do none of these claims stand up to scrutiny in any significant way, the contrary mostly prevails.

Movements advocating high-density show characteristics of an ideology, their members’ enthusiasm resulting in a less than objective approach. The desire by these individuals to be socially and environmentally responsible and to identify with a group marketing these imagined benefits is understandable. Some may even benefit professionally. However the result is policies for which no objective favorable justification can be provided and which are not wanted by the greater community who have to live with the consequences.

If you work in L.A. in film, tv, radio, music, news, live or “new” media, there’s a very good chance you’re in a union.

That’s true if you’re an actor, camera operator, broadcaster, hair stylist, electrician, costume designer, truck driver, writer, production manager, art director or stunt man or woman.

It’s one of last industries in America with what’s called “union density,” in which collective bargaining determines wage scale, residuals, medical and pension coverage; and sets work rules and jurisdiction (who does what).

Some members earn a fortune, others a decent living, many barely – or don’t – get by.

I can’t think of another field, however, where people will pay to get into the union even before they have a chance to put their talent to work.

And though there’s a mixed historical legacy to the Hollywood labor movement – anti-communism, race and gender discrimination, corruption and complicity – these unions have mostly cleaned house, adapted to changing conditions, and (to varying degrees) have learned to organize new work.

Industry employers include some of the most powerful corporations on the planet. But despite intense fights over nonunion and “runaway” productions, you don’t hear talk about getting rid of the unions.

That’s partly because the unions help manage the “freelance” workforce. It’s also that powerful people in the industry – labor and management – accept the system, flaws and all.

More than 90 percent of private sector American workers are nonunion. For most, the idea of making their job union never crosses their mind.

But here in L.A., many workers know someone who’s “gotten in” to “the business” and one of its unions.

And, over the past 20 years, both “above and below the line” unions have integrated into the region’s labor movement, recognizing the value of solidarity in organizing and contract campaigns, politics and strikes.

It’s too bad most American workers – stuck in low wage jobs with marginal or no benefits – know virtually nothing about how this industry really operates; and – in particular – the role its unions play in sustaining the region’s middle class.