Chicago's dire warning for Houston
Judge Glock has a very sobering piece in the City Journal on "How Debt Ate Chicago - Mounting liabilities are the greatest threat to the city’s survival." Chicago is a few decades ahead of Houston on the urban maturity curve, but it's critical that Houston act now to make sure we don't end up on the same path to stagnation (which is almost impossible to stop once momentum builds). Some key points to indicate just how screwed they are, some of which I think you'll recognize as starting to happen in Houston as well:
- Chicago faces a severe police shortage, with over half of high-priority 911 calls going unanswered due to a lack of available officers.
- The city's financial woes stem from a massive debt burden, reaching $43,000 per taxpayer, the second-worst in the nation, further compounded by Illinois's own high debt load.
- Chicago's tax burden is among the highest in the nation, with combined city and state taxes exceeding 12% of a median family income, placing a heavy strain on both residents and businesses.
- Chicago's economic fundamentals are weakening, with downtown office vacancies reaching record highs and companies relocating due to high taxes, leading to a shrinking population and a decline in median household income.
- Newly elected Mayor Brandon Johnson, a former Chicago Teachers Union member, has pledged to increase spending on progressive initiatives, including a "Green New Deal" and expanded social programs, despite the city's dire financial situation.
- Johnson's plan to raise revenue through taxes on the "ultra-rich" and a "mansion tax" has faced resistance and has been deemed impractical or politically unfeasible.
- Chicago's financial woes are exacerbated by a high percentage of its budget being dedicated to fixed costs like pensions and bond interest, leaving little room for flexibility.
- Chicago's pension debt is particularly concerning, reaching $34 billion, with assets covering only 25% of obligations, placing a significant burden on the city's finances.
- The city's complex governance structure, with overlapping agencies and bodies like the school district, park district, and county, further complicates the debt situation and adds to the financial burden on taxpayers.
- Chicago has a history of using debt to finance political projects and social causes, leveraging its financial distress to push for progressive agendas, leading to concerns about the long-term sustainability of its financial strategy.
Concluding:
"Chicago has been bailed out by miracles before, but its current problems are structural and seem to have no clear solution. That doesn’t mean that the city will necessarily suffer Detroit’s fate and find itself in bankruptcy. The dangers of insolvency are real, but, just as with the exploding federal debt, too much focus has been put on the possibility of a single disaster and too little on the more obvious cost: deepening decline. Chicago could keep paying off its bondholders and retirees by bleeding public services, hiking taxes, and driving out still more residents, but it would become a shell of its former self. A debt-ridden Chicago wouldn’t be the first, or last, great American city to become a byword for lost possibilities."
Labels: corruption, governance, government transparency, pensions, public debt
Does the Gulfton BRT extension make any sense?
Under the new Whitmire administration, METRO seems to finally be coming to its senses on the horrendous cost-benefit ratio of BRT projects, this week indefinitely suspending the Universities BRT line because it's so expensive it financially imperils their operations! Continuing the theme from last week's post on the Universities Line BRT, Bill King has written a follow-up on the proposed Uptown BRT extension through Gulfton, which generated a city council and media brouhaha when Mayor Whitmire suggested Gulfton residents don't typically want to go to the Galleria. Key excerpts:
"What Councilman Pollard, nor anyone else at Council, nor any of the media coverage, addressed was whether the extension actually makes sense from a cost-benefit analysis. ...
Metro estimated the cost at $220 million, which is almost certainly a gross underestimation. The most recent estimates for the University and Inner Katy BRTs are now right at $100 million per mile. So, this project would likely be closer to $400 million. ...
The bottom line is that the capital acquisition cost of each new rider would likely be well above $100,000, before we even start looking at ongoing operating costs. At this cost and with anemic ridership, it is highly unlikely the FTA would provide any funding.
The proposed alignment would also create a nightmare on Chimney Rock from Westpark to Gulfton. ...
But what is most disappointing to me is that City Council has increasingly turned into a performance stage for councilmembers to audition for their next office when they are term-limited, instead of a serious deliberative body that tackles the difficult challenges our City is facing."
I will note that this is a major growing challenge at all levels of politics, and why I prefer mayors and county judges at the end of their careers focused on their legacy rather than using those positions as stepping stones to potential higher-level state and federal positions.
Labels: Metro, mobility strategies, transit
METRO BRT: 'The most colossal waste of taxpayers’ money in the history of the City'
Bill King has written one of the most impressive analytical take-downs of any proposed transit project I've ever seen - in this case the Universities and Inner Katy BRT lines. If this doesn't seal their death, I don't know what would. As an alternative, can you imagine what we could do with $3 billion dollars to rehabilitate our street and drainage infrastructure?!? Here are my highlights/excerpts:
"Metro’s previous leadership proposed the construction of two bus rapid transit (“BRT”) lines. At an estimated cost of over $3 billion, these two projects, if constructed, would be the most colossal waste of taxpayers’ money in the history of the City.
If you are not familiar with the term "bus rapid transit", it is the construction of dedicated lanes for buses. The only example we have in Houston is the disastrous Silver Line in Uptown. After spending about $200 million to construct the project, and who knows how much to operate, it is attracting about 800 riders per day, just over 5% of the 14,000 Metro had projected. The ridership is so bad that Metro recently announced it intends to reduce the service. Based on this rousing success, Metro has proposed to build these two additional BRT lines. ...
Let me pause for a moment to comment on ridership projections. Generally speaking, transit ridership projections are almost always too high. But Metro has been in a category of its own when it comes to overestimating projected ridership. This 2020 FTA study, comparing projected costs and ridership to actual results on about 20 projects around the country, found Metro’s ridership projection for the Purple Line to be, by far, the worst of any project they studied. The Purple and Green light rail lines are carrying about 25-30% of their projected ridership. And, as I mentioned earlier, the Silver is running a little over 5% of its projections today. So, we certainly have every reason to be skeptical of any ridership projection just based on Metro’s history. ...
While Metro’s current estimate for the University and Inner Katy projects are $2.43 billion and $735 million, respectively, Metro’s previous estimates of the cost to construct fixed guideway projects have also been unreliable. The cost of the Purple Line, for example, came in 33% higher than estimated ($591MM→$787MM).
Metro has already made massive changes to the estimates for both of these lines. Just 18 months ago, in a request for funding Metro filed with the FTA, it represented that the total cost of the University Line would be $1.57 billion, which is only about two-thirds of the current cost estimate. In 2018, Metro told HGAC the Inner Katy Line would cost $281 million, barely a third of the current estimate. So, there is no telling what these projects would actually eventually cost. ...
$188k per new rider + $11k/year!! "We could easily buy a car for every new rider and pay for their insurance, gas and maintenance for the rest of their lives, and not come close to spending this much money. ...
Metro’s updated ridership projections also projected that the end-to-end travel time on the University Line would be 1:28 during peak and that the buses would travel at an average speed of about 17mph. (p.17) This morning at 7:30AM Google Maps estimated that trip using the existing Metro service would take 1:29 and by car it would take 40 minutes. In other words, after spending $2.4 billion we would save transit riders one minute and someone in a car would get there 48 minutes sooner. ...
The plan currently calls for Richmond to be reduced to one lane each direction from downtown to Edloe. The left turn across Richmond at Edloe alone would be a nightmare. I think it is quite telling that the very people the project is supposed to serve are either ambivalent or vehemently opposed to it.
...
I have never seen this stark of a case against a public investment. Frankly, only a financial illiterate would support such an irresponsible expenditure of taxpayer money. And to make matters worse, after spending this reckless amount of money, few people would use the system and it would cause all sorts of collateral problems because it is so ill-conceived.
Fixed guideways are not the future of mobility. The paradigm of attempting to gather a large number of people on a single vehicle is rapidly becoming obsolete. The future is going to be door-to-door, on-demand service, which will eventually be provided autonomously and directed by AI controlled smart grids. Metro needs to be looking to that future, not building more white elephant projects. We already have enough of those."
Labels: Metro, transit, transportation plan
New Zealand learns from Houston, why airport rail doesn't make sense, Tokyo vs HTX High Lines, crazy housing reforms, and more
Some more smaller items this week:
- The 2024 Demographia International Housing Affordability reportThe 2024 Demographia International Housing Affordability report is out (Antiplanner discussion here). Houston is surprisingly high at a median price-to-income ratio of 4.4, but still better than other Texas Triangle metros and one of the most affordable growing metros in America (vs. the stagnant ones mainly in the Rust Belt). The more interesting note is that New Zealand's affordability is rapidly improving after adopting supply-side reforms that they learned on a visit to Houston!
- Chronicle: Why isn't there a train to Houston's airports? I've made similar points on my blog: it always makes more sense to invest in work transit over airport transit. It's a ridership disaster in DFW. There used to be a fast, frequent nonstop express bus from the downtown transit center to IAH but they shut it down from low demand. ~1-2 riders per bus, which is why even slower multi-billion$ LRT there is a massively bad investment.
"Now count how many times you go to the airport versus how many times you drive or take a bus to the office.
“Even if they use the train for every airport trip they take, that might be eight trips a year,” Spieler said.
Business travelers, some of the most frequent fliers, meanwhile have different considerations.
“They are on expense accounts and not price-sensitive,” Spieler said."
...
Three recent rail projects to airports are illustrative, Spieler said, for how a train's service, location and the layout of the airport make a difference. In Washington, the train to Dulles Airport, which opened in 2022, gets around 2,500 boardings per day, less than half that of the train to Reagan National Airport, which is closer to the metro core but also a smaller airport. In Dallas, fewer than 1,100 riders daily hop on the train to Dallas-Fort Worth International Airport.
Labels: affordability, governance, growth, home affordability, migration, mobility strategies, rail, rankings, transit, zoning
Mayor Whitmire's HPD opportunity, Chicago's debt warning for Houston, Strong Towns takedown, 15-min city economics don't work, and more
Backlog of smaller items this week:
"The economics of the 15-minute city don’t really work...
What hasn’t been said is that the economics of 15-minute city planning go against foundational principles of how urban markets function....
Employment markets are even less localized. The very raison d’etre of cities is as a vehicle for labor pooling and sharing — this cannot happen effectively at the neighborhood scale. Setting up an expectation where people live within 15 minutes of their place of work will at best result in bad matches between workers and jobs, and at worst no matches."
- Bill King: Over 90% Of U.S. Population Growth Last Year Occurred Outside Of Largest Cities
- Arpit Gupta's "Contra Strong Towns" critique focuses on challenging the Strong Towns movement's assertion that suburban growth operates as a "Ponzi scheme." Gupta argues that the evidence does not support the claim that suburban development is inherently financially unsustainable. He emphasizes the need for rigorous accounting and empirical data to substantiate such arguments, which he finds lacking in Strong Towns' narrative. Hat tip to Zoabe.
- Antiplanner: "But today’s density policies depress fertility rates and the anti-immigration movement make it more difficult to compensate for those policies. Fortunately, some are getting the message that “maybe we should rethink” YIMBYism."
- Twitter: "There's a growing consensus on YIMBY Twitter that we need to build a lot of new high density housing in the biggest cities. Maybe we should rethink that idea." Or go with the Houston free-market model: allow lots of high-density housing in the core for those that want it (typically non-families) as well as plenty of low-density suburban housing for those that prefer that (typically families). Best of both worlds.
Labels: crime reduction, economic strategy, growth, market urbanism, pensions, public debt, public safety, sprawl, YIMBY
Why Do Democrats Support Transit?
Some good excerpts, bold highlights mine:
“What drives Republican opposition to transit?” asks Governing magazine. I’ve often wondered the reverse of this question: Why do Democrats support transit?
...
It doesn’t seem to occur to Governing that some people may have legitimate reasons to oppose current or increased subsidies to transit, such as that subsidies are way out of proportion to the benefits they provide and that in many cases increased transit subsidies have resulted in decreased transit ridership. Against all experience, for example, Los Angeles insists on building more light rail even though the more it builds the more riders it loses and it only recovered riders when it stopped building rail for ten years.
Democrats claim to care about low-income people. Yet less than 5.5 percent of urban residents who earn under $25,000 a year took transit to work in 2022. Urban workers in this income class were actually more likely to drive alone to work than urbanites who earn more than $75,000 a year. Since the taxes used to support transit tend to be far more regressive than taxes used to support highways, people who care about low-income workers should oppose, for example, dedicating general-purpose street lanes to bus-rapid transit, which is an issue raised in the Governing story.
Democrats also claim to care about the environment and greenhouse gas emissions. Yet in 2022 transit emitted more greenhouse gases per passenger-mile than the average SUV, and much more than the average car, in every urban area except New York. Even before the pandemic, driving was greener than transit in all but a handful of urban areas.
...
So why do so many Democrats continue to support transit? The answer differs from person to person, of course, but for many Democrats the answer includes strong union support. The Amalgamated Transit Union represents more than 200,000 transit workers and the union contributes more than $1.6 million per election cycle to political campaigns, most of which no doubt goes to Democrats.
Support from the unions and environmental groups are really only political cover for many Democrats who get even more contributions from rail transit contractors. Engineering firms such as HDR, railcar manufacturers such as Siemens and Alstom, and construction companies such as Balfour Beatty collectively spend millions of dollars a year on lobbying and campaign contributions.
Labels: mobility strategies, transit
Here’s (NOT) the Real Reason Houston Is Going Broke
Strong Towns posted "Here’s the Real Reason Houston Is Going Broke" earlier this month, ironically on April 1st because a lot of what they said was absolutely foolish. The core of their argument is the same argument Strong Towns always makes: that sprawl is somehow fiscally unsustainable, despite it being the default form of development since Ford made the Model T for the masses with incredibly few municipal bankruptcies over that century+.
It includes this excerpt:
"That’s 37 feet of street per person, on average. I don’t know the going rate for a foot of street in Houston, but when utilities are included, it must be well into the thousands. That means that part of the wealth of each Houston resident, as collected through taxes and fees by the municipal corporation, is expected to maintain six figures worth of infrastructure. Every single person. A family of four has a generational liability of at least a half million dollars just to maintain essential infrastructure."
This is exactly the kind of hand-waving that makes me lose respect for Strong Towns: somehow 49 yards of asphalt plus a bit of water and sewer pipe is a "half-million dollar liability" for each homeowner instead of easily paid for by 30-50 years of normal property taxes for lifetime replacement?? Somehow it costs more than replacing their entire ~$300k house?? 🤔🙄
And if the suburbs packed full of homes are so uneconomic, then how is every rural county in the country not bankrupt?? They have *way* more infrastructure per person at much lower property values per acre!
The core fiscal problem is not sprawl - it's that it's too tempting for politicians to take money that should be going to infrastructure renewal and siphon it off for other programs, including police and fire raises. Kick the can to the next guy...
All I'm saying is that a bit of asphalt and pipe is a very small expense relative to the cost of building an entire house, and it is definitely affordable to replace it every 30-50 years. Whether politicians manage the taxes properly to do so is another issue...
Labels: affordability, development, governance, home affordability, infrastructure, sprawl
Houston tops affordability and innovation, big US homes, Houston's winning secret sauce, and more
A few smaller items this week:
- US vs European homes graphic below: "A good visual showing how huge US living spaces are compared to European. The average person below the poverty line in the US lives in more square feet of living space than the average European." (HT Michael). This is an often unsung advantage of Texas and especially Houston: not just lower home prices but how much home you get, plus the amenities of master-planned communities. But wow, those Mormons in Utah build some big homes for some big families! (click the graphic to enlarge it)
- A great tweet from John Arnold: "Houston has bad weather, no natural beauty, and little history. But that’s a feature, not a bug. It means government has to be responsive to the people to create a place people and businesses want to locate. It must be efficient with taxpayer money and consider tradeoffs. It must create an ecosystem that leads to a high quality of life for its residents. Lose this focus and the city fails. There is no presumption that residents must acquiesce to the city; the city must work for the residents. Turns out there’s great demand for this concept: the city has gone from the from the 45th largest in the US to the 4th largest in 100 years. It's a simple concept but one I find wanting in many legacy cities with more natural advantages."
- Houston needs this - more private operators covering suburb-to-work center routes that METRO doesn't.
- Houston #6 on Top Metro Areas for University Innovation Impact, just barely behind the SF Bay Area and the only metro in the southern US in the Top Ten.
- High interest rates don't help, but Houston still requires the third-lowest income in the country among major metros to afford a mortgage (behind St. Louis and Detroit). HT Oscar. (click the graphic to enlarge it)
Labels: affordability, home affordability, Metro, quality of place, rankings, tech, transit
