Tuesday, February 23, 2010

Fare wars at Metro

You may have read in the Chronicle about the tiff between the Mayor and the Chairman of Metro over whether or not to consider eliminating fares. I've been a proponent of fare reduction or elimination for a while to maximize ridership and reduce traffic congestion, especially considering that fares are less than 20% of revenues at Metro (Bill King also had an op-ed advocating this a while back, predicting a possible 50% increase in ridership). The reality is that it would definitely postpone or eliminate much of the light rail plan without that revenue to cover the huge capital costs. But here is the argument on plus side, courtesy of my friend John:
  • Fares are only a small part of a budget that is mostly subsidy from the 1% sales tax.
  • The real measure of Metro's efficiency should be how many people they move per public dollar spent.
  • Eliminating fares would directly encourage ridership because of the lower price (and 'Free!' gives an extra bump).
  • Eliminating fares would also speed up trips by eliminating the delays as people pay during boarding, further encouraging ridership and allowing more rides for the same budget.
  • Eliminating fares would reduce expenses for fare collection, managing those rider cards, dealing with transfers, etc.
  • Thus, there is a plausible case for elimination of fares resulting in an increase in rides per dollar spent.
One counter-argument that comes up is homeless living on the buses. There are various strategies for addressing this problem, including forcing everybody off at each end of a bus route.

John concluded his email, "Obviously the actual strength of the argument depends on how the numbers work out, but it should totally be looked at." And I agree. I'd like to see an independent third-party - like maybe the Mayor's Metro committees - ballpark what might be possible with the elimination of fares and what the benefits might be. I think we could keep the Universities line, convert the other lines to free and frequent signature buses, and still be able to accommodate the increased demand from fare elimination, especially on express commuter buses - which would also reduce freeway traffic congestion. The benefits may be well worth the cost.

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Monday, February 15, 2010

My advice to the Metro committees

Most of you may have heard that Mayor Parker appointed transition committees to take a hard look at Metro, and she wants them to think outside the box, including the possibility of free fares (farebox revenues make up only 20% of Metro's budget - the rest is their 1% sales tax). My regular readers know I've written a lot on Metro and transit over the years, so I thought I'd try to sum up my advice to the committees in a single post. If you know anybody on the committees, please consider forwarding this over. Thanks.
  • Transit agencies all over the country have consistently overestimated revenues and underestimated costs, esp. for rail projects, eventually leading to a fiscal crisis with bus service for the poor and transit-dependent held hostage to a taxpayer bailout. Don't let it happen here. Here's a counter-example about a prudent transit agency.
  • Don't let federal subsidies over-warp your thinking about what the right answers are and are not for Houston. Chasing federal money often leads to bad decisions and boondoggle projects.
  • Given current fiscal realities, it is unreasonable to expect the Metro communities to give up their 1/4% sales tax for general transportation improvements.
  • If we simply can't afford the Metro Solutions rail plan, and it must be stretched out or even canceled, the low-cost alternative is to replace those lines with frequent, free signature bus service. I've heard that the FTA wants to spread limited funds around and they will only strongly subsidize a single major project in each city. If we can only afford one line, make sure it's the east-west Universities line, which connects the most important destinations in central Houston not already connected by the Main St. line. More here: Adapting Metro Solutions to the new realities
  • On the long-term Metro Solutions plan: Why rail to the airport doesn't make sense
  • Commuter rail rarely works in a post-WW2 car-based city. Old cities in Europe and America were built with dense cores for the primary mobility mode of the time: walking. Rail allowed people to move to the suburbs and still commute to the single dense core of jobs (like Manhattan or downtown Chicago). Newer, mostly post-WW2, car-based, Sunbelt cities like Houston have decentralized jobs spread over many different centers, like Downtown, Uptown, the Texas Medical Center, Greenway Plaza, the Energy Corridor, Westchase, Greenspoint, Clear Lake, and more. Less than 7% of our jobs are downtown. Trying to connect commuters to these job centers with rail would not only be astronomically expensive, but would lead to impractically long commute times with multiple transfers and long walks for people to reach their final destination buildings. The better solution: express buses. They whisk commuters nonstop at 65mph directly to their job center and then circulate to get them right to their building. No transfers, no waits, and no walking in our unpredictable weather. They also compliment technology trends to be the ideal commute of the future.
  • Push the conversion of all HOV lanes to HOT lanes, and add HOT lanes to the 610 Loop (see the fourth point here on how).
  • Open up the express commuter bus/shuttle market to private competition by offering a flat subsidy per passenger-trip + per passenger-mile and letting private companies compete on service, routes, schedules, and amenities (like wi-fi). Let them use the existing Park-and-Rides or cut deals with private parking lots like churches and malls. This is the fastest way to not only improve commuter service, but also maximize ridership to reduce rush hour congestion.
  • To encourage more dense inside-the-loop living (i.e. transit-oriented development) and reduced congestion, make Metro buses and rail free inside the loop (with high-frequency service). It might also make sense to eliminate all fares at Metro, but this could be a good first step in that direction.
  • Wherever we do decide to build rail, listen very carefully to Christof to get the details right.
Some more principles, ideas, and details here: A Pragmatic Approach to Houston’s Future (part 1, part 2)

Thanks for your time and consideration.

Update: Thanks for the backup Tom, Cory, and Evan. Much appreciated.
Update 2: A relevant classic post from my first year that the committees should definitely read: A hypothesis on the deeper psychology of rail

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Wednesday, February 10, 2010

What Houston can learn from the Israeli model to boost entrepreneurship

While Houston is not a Silicon Valley, or even an Austin, it has come a long way in cultivating a small but vibrant entrepreneurial scene in the last decade. But there's always room for improvement, and we might be able to learn some lessons from Israel, of all places. First, there is this conclusion from an Economist article on the mostly-sad story of government strategies for cultivating entrepreneurship:

The country that has led the world in promoting entrepreneurship has also done the most to plug itself into global markets. The Israeli government’s venture-capital fund, which was founded in 1992 with $100m of public money, was designed to attract foreign venture capital and, just as importantly, expertise. The government let foreigners decide what to invest in, and then stumped up a hefty share of the money required. Foreign venture capital poured into the country, high-tech companies boomed, domestic venture capitalists learned from their foreign counterparts and the government felt able to sell off the fund after just five years.

Last year Israel, a country of just over 7m people, attracted as much venture capital as France and Germany combined. Israel has more start-ups per head than any other country (a total of 3,850, or one for every 1,844 Israelis), and more companies listed on the NASDAQ exchange, a hub for fledgling technology firms, than China and India combined. It may not have the same comforting ring as “the Swedish model” or “the polder model”, but when it comes to promoting entrepreneurship, “the Israeli model” is the one to emulate.

What's Israel's 'secret sauce'? This book review from Newsweek lays it out:

How does Israel—with fewer people than the state of New Jersey, no natural resources, and hostile nations all around—produce more tech companies listed on the NASDAQ than all of Europe, Japan, South Korea, India, and China combined? How does Israel attract, per person, 30 times as much venture capital as Europe and more than twice the flow to American companies? How does it produce, for its size, the most cutting-edge technology startups in the world?

There are many components to the answer, but one of the most central and surprising is the Israeli military's role in breaking down hierarchies and—serendipitously—becoming a boot camp for new tech entrepreneurs.

While students in other countries are preoccupied with deciding which college to attend, Israeli high-school seniors are readying themselves for military service—three years for men, two for women—and jockeying to be chosen by elite units in the Israeli military, known as the Israel Defense Forces, or IDF.

I goes on to detail the elements of the military culture there that carry over into the entrepreneurial world: innovation, improvisation, flat, anti-hierarchical, informal, flexible, multi-disciplinary, diversity, challenging, meritocratic, and intense 'crucible leadership experiences' to forge deep social bonds and networks that are later leveraged to create startups.

Now obviously Houston (or Texas or the U.S.) won't be instituting mandatory military service anytime soon. But could we form a local civilian corps of high school and pre-college youth to create a similar environment, focused on tough social problems and charitable work. If we modeled the corps on Israel's military culture, and made sure to craft the experience to be very attractive to college admissions departments, there's a lot of potential here to attract youth, work on some of the city's toughest problems, and cultivate a generation of entrepreneurs to add economic vibrancy to our city for decades to come. Oh, and we could match them up with older philanthropists and retirees to provide both funding and mentorship.

Combine that with new sources of local venture capital, and we could really turbocharge the local startup scene. I'd love to hear your thoughts on how we might structure such a corps and the problems it might work on in the comments.

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Wednesday, February 03, 2010

Houston Strategies meet-up this Friday

Several readers have been asking for an in-person meet-up for a while, so I've decided to schedule one to match one of Kuff's monthly lunches - that way attendees will get a two-for-one whether you want to discuss politics, urban strategies, or both. It'll be at the Amazon Grill on Kirby just north of Bissonnet, this Friday Feb 5th at 11:30am. Amazon offers order-at-the-counter lunch, and hopefully it won't be too hard to keep putting tables together as-needed to accommodate everybody who shows up. See ya there.

Monday, February 01, 2010

Houston accolades, criticism, and a crisis

A whole 'nother bunch of smaller items:
Finally, check out this very cool new Texaplex Houston video by David Winans. That led me to this video, which has a title that I think could be a good alternate nickname for Houston (instead of Bayou City or Space City): "Texas' Powerhouse" - a play off the energy capital thing as well as the vibrancy and growth.

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