Why the T is Broke

The Boston MBTA, the city’s public transportation agency which operates public ferries, buses, the subway, and commuter trains, is broke. The agency’s budget for last year was patched by a one-time payment of $160 million funded by a state sales tax increase, and the agency has over $8.5 billion dollars in outstanding debt. In addition, the system is falling into disrepair. The agency estimates they’d have to spend over $3 billion just to bring the subway up to a “state of good repair.” In FY 2010, $543 million in safety-critical maintenance projects were not funded.

Of course, transit watchers know despite record ridership in recent years, two other of the nation’s other large, old transit systems are in equally dire straights — Chicago and New York. Although some of the problems are similar, I wanted to know the causes of the crisis in Boston. A recent report by a gubernatorial-appointed commission laid out the stark facts. The report, completed by a group headed by former finance industry executive David F. D’Alessandro, was published in November. This post relies largely on this recent report, readers with alternative perspectives are welcome to post comments below.

In 1999, the Massachusetts state legislature dedicated 20% of the State’s sales tax collection, excluding meals taxes, to the MBTA. Starting in July 1, 2000 this “forward funding” plan meant the MBTA would have a regular revenue source going forward. The agency adopted a financial plan for a balanced budget for the years 2001 through 2008. In the words of the report, “The Forward Funding Finance Plan proved unrealistic in many of its assumptions and nine years later can be deemed a failure.” The authors conclude the main driver of why the plan failed was “unavoidable cost explosions.”

• Fuel and utilities: cost $256 million more than anticipated due to increasing energy costs for the agency’s vehicles. The agency buys huge amounts of fuel and electricity for buses and trains.
• Payroll and employee benefits: $113 million more than anticipated. Wage increases were comparable to the 3.5% rate of inflation, but health care costs increased by 73%.
• The Ride (a federally mandated door-to-door paratransit service for disabled riders): $95 million more than planned.
• Sales tax revenue: $150 million less than expected. The forward funding plan projected an annual growth of 3%, it has actually only increased at around 1%

The only categories where there was good news was Commuter Rail ($37 million under budget) and nontax revenues were $95 million higher than expected. The report concludes the additional revenue is the result of three fare increases, the report authors observer “the last (2007) fare hike actually exceeded the Plan’s target, in part because ridership grew despite the fare hike.”

The cumulative total across the eight years? A $558 million deficit. The report concludes, “A private sector firm faced with this mountain of red ink would likely fold or seek bankruptcy.” In short, to keep operating the agency balanced their budget by pushing off debt, restructuring $238 million in the last three years alone. They also neglected maintenance. Among 56 maintenance projects with a “10″ — the highest — on an internal safety rating, only 6 were funded last year. The authors conclude the agency tool other steps to control costs:

Contrary to not trying, we found evidence that the MBTA did make some hard expense choices. Across-the-board cuts were routinely made to departmental budgets. Periodic layoffs and hiring freezes restrained the headcount. Individual managers took pride in eliminating inefficiencies and redundancies, while embracing a new organizational ethic of customer service. Yet in the end, they could not pare staff below the number needed to move hundreds of thousands of riders across hundreds of routes each workday. Add the complexity and cost of sustaining the system’s aging infrastructure, and it became evident that the cost inflation and savings assumptions in the Finance Plan were never tested against the daily grind.

Against such a bleak picture, finding a “solution” seems like an insurmountable task. However, if any urban institution is “too important to fail” it’s the MBTA. I haven’t done a financial analysis, but the list below presents some steps that could be taken to improve the agency’s solvency.

1. Higher Fares, Pegged to Inflation
There are two general philosophies related to transit fares. One is to support transit from sales taxes or other general taxes, and keep fares low. (Transit as a public good) The other is to use fares to cover a much higher proportion of the actual cost of running the agency. (Transit as a private good) Massachusetts, like most places, has taken the first approach. However, as we have seen, this introduces problems with general tax revenues increase too slowely, and it restricts the agency’s ability to adjust fares to cover the increasing real costs of the inputs to transit (worker benefits, electricity, etc). I’ve struggled with this issue, and concluded I think fares should be increased, and at the very least pegged to inflation. In order to mitigate the equity effects, special subsidies could be implemented for low-income riders. Although I believe in the principle of transit as a public good, Americans generally don’t support the level of taxation to support high quality transit. Using fares for a larger proportion of revenue also means increasing ridership will increase revenues. (By raising the cost of transportation it can also have interesting land-use effects – something for another post.)

2. Debt Relief
The agency needs a large, one-time injection to pay off its sizable debt, some of which was “given” to the agency as part of the costs of the Big Dig. Paying it off now will save taxpayers money in the long run.

3. Federal Funds for Maintenance and Capital Costs
Lots of interests are already lining up for funding from the federal government’s next transportation bill. It should contain a revenue source for transportation infrastructure maintenance and improvement that can be used by agencies like the MBTA. The MBTA Review report describes how a huge proportion of the agency’s rolling stock of buses and trains will need to be upgraded or replaced in the coming years, with no funds in sight to pay for it.

4. Greater Rider Awareness
As I ride the T daily, I often wonder whether the other riders know about the agency’s shaky finances and massive maintenance backlog. I suspect most take the system for granted. Transit advocates — and perhaps the agency itself — should explain in clear terms why the numbers aren’t adding up. This work is as necessary as the others to create the political will for painful, long term solutions. Doing nothing means the discussion about solution will occur in response to a crisis such as an accident or strike. Crises can produce quick fixes, but rarely the type of long-term solutions that are needed.

How do you think the MBTA’s finances can be improved?

> MBTA Review Report (November 2009)
> U.S. PIRG Report – Derailed by Debt (October 2007)

Which Big City Has the Greenest Transportation Profile?

When I was in San Francisco in October, I met Chava Kronenberg, a bay area transportation planner and Metro Boston native. During our conversation she commented Boston’s quite extensive alternative transportation profile is often overlooked in national discussions. Instead, usual suspects like Portland, Oregon get all the credit for their green transportation systems. I decided to take a look at several transportation metrics to see just how green Boston was among big cities. Could it be the greenest city in America, as she claimed?

The three measures I chose were the overall percentage of workers using transit, bikes, and walking to work. I limited the analysis to the largest 30 “places” in the U.S. Census and used data from the 2006-2008 American Community Survey. Technically this is sample data, but I did not calculate margins of errors since for large cities they are generally small. Also, there’s an extensive and heated debate about exactly how green transit is. Most studies I’ve seen conclude busy buses or trains emit less pollution (including CO2) per passenger than private vehicles, but I won’t wade into the debate here. Here’s what I found.

Transit
For overall transit ridership to work, New York City (55%) and Washington, D.C. (37%) were winners, with Boston in third at 32% with San Francisco (32%) and Chicago (26%) rounding out the top five. Since this metric is for the center city only, I think Boston’s getting a bit short shrift. The region’s truly expansive commuter rail system (it goes all the way to Rhode Island — see below) carries an average of over 138,000 riders a day, more than all but two other similar systems in the nation — New York and Chicago. (Source: APTA ridership report (PDF))

Biking
What about zero-pollution biking? On this measure, the top five are Portland (4.7%), Seattle (2.5%), San Francisco (2.5%), and D.C. (2%) (which launched a bike-sharing system in 2008) and Denver (1.7%). Boston is only a few slots down at #7 with 1.2%. However, the city only recently saw the light and began pursuing bicycle planning aggressively. In fact, in the past it has been named one of the least bicycle-friendly cities in the U.S., although despite this bad reputation ranks way above dozens of other large cities.

The city’s 2009 State of the Hub report (PDF) reports 15 new miles of bike lanes (up from 0 in 2007), 500 new bike racks, a new bike map, and plans for a new bike sharing system moving forward. I should note plenty of smaller cities have larger shares of bike commuters. If Minneapolis were on the list, it would rank second with 3.5% of its commuters biking to work. If it were included, Boston’s neighbor Cambridge would be 5.8%, easily topping Portland.

Walking
Walking is another green mode available to most travelers, often overlooked for more exciting trains and bike facilities. However, making a city walkable can be tricky, as it depends on a subtle combination of good public facilities, urban design and density, and mixed land uses. On this measure, Boston tops the list at 14%, with Washington, D.C. just behind at 11.7%, and the rest of the top five New York (10.1%), San Francisco (9.52%), and Seattle (8.6%). It turns out some of the factors that make Boston such a bad city to bicycle — congested streets and a dense street grid — make it excellent for walking. Walking is so popular the city boasts an active walking advocacy organization — WalkBoston — and extensive trail networks along the harbor and through parks.

Next, I created a composite score for all three indicators. For each indicators, the cities were ranked with 1 going to the city with the highest (best) value and 30 to the worst. I then added the rankings together, weighing each equally. The lower the resulting score, the better. This score gauges the diversity of the mix, and isn’t an objective measure of pollution output. In this measure, Washington, D.C. ranks first with a score of 8, San Francisco and Boston tie for 2nd at 11, and Seattle fourth with a score of 15. New York, strong on transit and walking, falls to an overall place of seventh due to it’s low biking score (16th with just 0.7% of commuters reporting biking).

What can we conclude from this simple comparison? First, as Chava suspected some very bike friendly places like Portland may not have many transit riders or walkers. Any evaluation that stresses diversity, like this one, will rank them lower than older cities with well-developed transit and street networks. And although it comes as no surprise to me, Washington, D.C.’s high ranking may surprise some. Indeed, it is the result of many factors: excellent “bones” in a good street and sidewalk grid, decisions by city leaders in the 60s and 70s to stop as many highways as possible and invest heavily in transit, lots of government-related jobs concentrated downtown, and a city government aggressively pursuing improvements to bicycle, walking, and transit infrastructure in recent years.

Finally, I think Boston’s high walking score and surprisingly high biking statistics (despite little infrastructure and bad weather) show it is somewhat underrated. But is it the greenest city in America? That’s for you to decide.

Transit Apps, Visualizations, Data Plans Announced

Today I attended the MassDOT Developers Conference on transportation apps and data. The conference was organized by Chris Dempsey and Josh Robin, two Massachusetts state employees who have been spearheading work to publish transportation data and encourage third party developers to create apps in the state.

The big news at the conference was their announcement of a pilot project to provide real-time bus arrival data for several MBTA bus lines. They also announced the winners of competitions for apps and visualizations that used the published data. In addition to scheduling and spatial data, the data for the visualization competition included two datasets containing the time, method of payment, and location (bus route or subway station) for every rider payment for two days.

The winning applications were two iPhone apps containing schedule data. The winning visualization was this animation showing activity in the transit network. The runner-up, “A Day In the Life of the MBTA,” featured striking visualizations of the data showing activity patterns at different stations throughout the days. I also appreciated another entrant, “A Day of MBTA” who created a website with histograms for riders entering each T station.

During his talk, the NextBus’s Michael Smith observed RFID payment cards such as the CharlieCard can improve the bus riding experience by speeding passenger boarding. Riders of busy bus lines know how much one or two riders paying with cash can slow down the system. Although the visualization contest data included payment data, none of the entrants analyzed it. According to the key the state provided, the various payment types are:

• MBTA Old Tickets – This refers to magnetic tickets that are pre-encoded by a third party vendor and then distributed to T sales offices for sale to the general public. They are also distributed to Cubic, which is the vendor in charge of completing on-line and Corporate Program orders.
• Triplex Roll mag. Stripe (Large and Small) – This is the type of stock used to encode magnetic tickets that are issued from Fare Vending Machines and bus Fareboxes.
• PreCut Triplex w. mag. Stripe – This is the type of stock used to encode magnetic tickets that are issued for bulk production of magnetic tickets and retail sales terminals at 7-Eleven, Stop and Shop, etc.
• Smart Card Mifare 1k – This is the type of media on which Charlie Cards and IDs are issued.
• Regular Charlie Cards are purchased pre-encoded from a third party vendor and then distributed to subway stations, select bus terminals, T sales offices and retail locations for further distribution to the general public. Student Charlie Cards and IDs are issued from back-office devices located at 10 Park Plaza.

Using the data key provided, I created summary statistics for payment methods by bus route:

The result seems to show relatively high usage rates on most bus lines. The busy 1 bus, running from Cambridge to Dudley Square, had 77% riders paying with CharlieCards on September 8. I don’t know enough about the routes to pull out any other findings — but there are some curious patterns. (Why does the 429 have 32% paying with “other,” presumably cash?)

CharlieCard use on the subway is also high, ranging from 58% on the Silver Line to 72% on the Red Line. At the station level, the stations with the highest CharlieCard use rates are Wollaston, Davis Square, and Bowdoin, all at over 80%.

Do any readers see interesting patterns in the CharlieCard data? Did anyone else attend?

Notes and other materials will be posted on the following websites next week:

> MassDOT Developers Page
> MassDOT Developers Conference Website

High Speed Rail: Getting Our Money’s Worth

Advocates for passenger rail in America are excited. The stimulus bill provided $8 billion for high speed rail construction, California has passed a bond for nearly $10 billion to build a system in that state, and other projects from Florida to Chicago are moving forward. The Federal government is planning to issue the grants to “jump-start” development of a national system this fall. In this climate, Harvard Economist Edward Glaeser posted today the second in a series where he says he will attempt to conduct an economic analysis of high speed rail.

“Personally, I almost always prefer trains to driving,” Glaeser wrote in his introductory post to the series last week, but quickly added, “the public must be wary every time our leaders decide to spend billions of our tax dollars,” citing economists who have long argued passenger rail is rarely worth its cost.

The result of the first analysis is unsurprising: an unfavorable finding to a conventional cost-benefit analysis evaluation. Some will quibble with the assumptions or methodology, and they are very rough. (Ryan Avent posted this scathing critique on Streetsblog earlier today, the Transport Politic also evaluated the assumptions)

However, I’m not going to attack the math. I’m not overly worried about the outcome of a cost-benefit analysis calculation, because we almost never make big transportation infrastructure decisions through this kind of analysis. We built the interstate highway system because it was deemed a suitable national goal. Cities are building light rail transit because they want it for a variety of reasons. Certainly, economic analysis informs many specific aspects of the system design, such as weighing possible routes, deciding on service levels, and sometimes selecting the mode. However, experienced transportation planners know because of the future’s uncertainty, even the most rigorous analysis can be wrong. And on many of the big questions, such as what mode of transportation to invest in and where it should go, are decided through the political process regardless of whether they make economic or practical sense. Finally, even the most brilliant and accurate cost-benefit analysis is only meaningful if the actual cost is somewhere close to the estimate cost. It turns out creating accurate estimates — and ensuring the project is built for a similar price — is very difficult.

For large infrastructure projects like high speed rail, accurate cost estimates almost never happens. According to Bent Flyvbjerg’s Megaprojects and Risk, the cost overruns can truly be spectacular:

That means the total actual cost of Boston’s Big Dig was nearly three times the original estimate. A 100 percent cost overrun means it was double. On average, out of the study of 258 total projects in the book, the actual costs were 45 percent higher than estimated.

The causes of what they call this “calamitous history” are many and diverse. For the list above, I selected a variety of projects, from different times and cultures, to show it’s not uniquely an American problem. They’re not even all government-led projects, most notably the Channel tunnel was a private initiative. Private ownership does help, but cost overruns for a selection of private transport projects in the book run from 80% for the Channel tunnel to 15% for France’s Pont de Normandie bridge.

Much of the rest of the book is a detailed discussion of the causes for error in the creation of estimates, and possible reforms to improve the efficiency of megaproject construction. On the cost estimate side, the authors argue project studies rarely incorporate sufficient accounting of the inevitable risk, and are often skewed to meet political needs.

On the construction efficiency side, the authors propose four basic “instruments of accountability”:

• The involvement of risk capital: At least one-third of the project’s budget should come from private investors with no sovereign guarantee – i.e., they would lose money if the project goes over budget or has lower revenue than anticipated.
• Explicit formulation of regulatory regime: identifying all associated costs, even non-obvious ones like access ramps and stations, creating independent environmental review and other necessary oversight committees, and define the project financial and decision-making structures. They suggest a state-owned enterprise approach or build-operate-transfer approach, which place the government at arms length and minimizes conflicts of interest where the government is working both as an active booster and trying to meet public-interest objectives.
• Performance specifications: Define performance targets instead of specifying the specific approach for technical and environmental goals.
• Transparency: Enhanced transparency and public involvement to scrutinized plans and minimize opposition.

Our conventional project planning system could stand to gain from some of these reforms, and the time is now to incorporate them into the selected high speed rail projects. I still believe it’s important to try to create accurate estimates of total costs and benefits, and bring them into the decision-making process. However, since cost-benefit models are limited by uncertainty and often disregarded by the political system, we must also focus our attention on how to complete projects in the most cost-effective way possible.

> Edward Glaeser series: Part 1, Part 2
> Flyvbjerg, Bruzelius, and Rothengatter: Megaprojects and Risk

Planetizen Post: Why is it so hard to build a train?

I consider how our regulatory process affects transit planning in my latest Planetizen post.

National Journal Asks: Gas Tax $ For Bike Trails?

Here’s my answer to the question “Should the next surface transportation bill allow states and municipalities to use a greater share of scarce Trust Fund dollars on non-highway projects such as bike lanes and pedestrian walkways?” on the National Journal’s Transportation “Expert” Blog.

For more background, see my post “Fixing America’s Federal Transportation Policy.”

Shared Vans Already Here … and Illegal

Over a year ago I described Cape Town’s minibus shared van transit system, where licensed drivers provide shared rides along designated routs. At the time, I suggested such a system, common in many countries around the world, should be considered in the U.S. I was wrong — there are examples of similar service in the U.S., although here they’re generally antagonized by the very agencies dedicated to providing public transportation. Miami, Atlantic City, and San Diego have shared taxi, or jitney, services. However, like in so many other areas, New York city is the most notable case.

Since the late 1970s, thousands of unlicensed “dollar” vans (they now charge $1.50 or $2) have provided rides in several New York City neighborhoods. The industry got started in earnest during the 1980-81 transit strike, and have proliferated despite occasional crackdowns by authorities. In the 1990s, the MTA estimated some 5,000 feeder vans operated in the city, shuttling passengers to subway stations in boroughs where conventional taxis are hard to find. The vans often run in direct competition with busy bus lines, providing faster, more convenient service. Robert Cervero’s 1997 book Paratransit in America features a rare scholarly examination of these vans, illustrated with this map describing the parts of Broolyn, Queens, and The Bronx where the vans are active.

A Brooklyn friend confirms the Flatbush corridor is alive and well, New Yorkers are welcome to chime in about the others. Generally operated by Caribbean immigrants, criticism often focuses on ethnicity and safety since the unregulated vans do not have to be inspected or carry insurance. The MTA and city officials accuse the vans of “poaching” bus riders and unsafe operations, and have sought to curtail the vans through occasional crackdowns over the years. Nonetheless even critics concede the operators are providing transportation services with no public subsidy.

The latest crackdown effort came after a hit-and-run accident in Brooklyn involving a dollar van driver who fled the scene fearing arrest. In response, the city began a ticketing blitz and began the process of designing a sticker to clearly identify which of the vans are among the 279 officially licensed carriers, who are prohibited from picking up passengers on-demand by city rules. For now, at least, an uneasy truce exists. “Some van operators argue that one-size-fit-all standards are wrongheaded,” observes Cervero, who asks “Should everyone be forced to ride in vehicles that are fairly new, meet high liability insurance requirements, and have comfortable, padded seats, paying a premium fare for these provisions?” For the time being in most U.S. cities, the answer is yes.