Friday, April 16, 2010

What to do if Metro fraud costs us $900 million Fed$

Adding to the Metro mess, KHOU 11News Defenders have an expose this morning on how Metro deceived the FTA in its rail funding application (hat tip to Barry). It intentionally used out-of-date pre-recession sales tax revenue estimates to "prove" it could afford to build all five lines (which was required).  UH Dr. Barton Smith gave them updated numbers in June 2009, but they chose to submit the old June 2008 numbers with the November 2009 application.
"In fact, for the next 15 years combined, Smith downgraded his tax revenue projection by $2.4 billion, but KHOU discovered Metro never shared that information with the federal government."
The FTA is unhappy and has asked for and received the updated data.  Two local congressmen are calling for a fraud investigation and a Metro house-cleaning. It's unclear if the $900 million in federal funding for the North and SE rail lines is in jeopardy.

While I'd hate to see Houston lose out on federal funding, the loss might force us to do a much-needed rethinking of the Metro Solutions plan.  A whole lot has changed since the 2003 referendum.  Not only have revenue estimates plummeted, but cost and debt estimates have skyrocketed.  Traffic congestion has increased noticeably.  And gasoline prices went from $1.50 to $4 - and now temporarily down to $3, but the expectation is they will rise again as global growth gets back on track.  That has, and will, dramatically increase the demand for long-distance commuter solutions, especially frequent express buses from all neighborhoods to all job centers with an improved and expanded HOV/HOT lane network.  If we don't do it, I think we're going to see more employers considering places like The Woodlands, Katy, and Sugar Land (see bottom) to cut their employees' commutes while still giving them nice, new, affordable homes in good school districts - to the detriment of the core City of Houston tax base and vitality (like Exxon's potential move to The Woodlands).

Where is the money for those new commuter solutions going to come from? My proposal would be to scale back the core LRT network to connecting just the major job centers and destinations. That network would free up money by temporarily switching the North, East, Southeast, and (probably) Uptown lines to fast, frequent signature bus service.  They have relatively low ridership projections and are through neighborhoods with uncongested streets (except Uptown, of course, but it can ill-afford rail disruption on Post Oak) where buses work just fine for the demand. We can no longer afford speculative rail lines through uncongested low-density neighborhoods without major destinations, while hoping for long-term densification.

Ultimately this short-term setback could be a long-term blessing in disguise.

Update: The Chronicle Politics blog is reporting that there was no deception, the FTA knew what it was getting all along, and the N and SE federal funds are not at risk.
Update 2: KHOU followup story: Feds scold Metro and take action to protect taxpayers on rail lines

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At 10:27 AM, April 16, 2010, Blogger googlegrants said...

So are you suggesting building the University line first?

At 11:09 AM, April 16, 2010, Blogger Tory Gattis said...

Yes. It's the most critical line of the set, providing E-W connectivity to go with Main Street's N-S. It connects major transit centers on the east and west ends, 3 universities, The Menil, Greenway Plaza, and, with a small walk, The Galleria.

Then, if Metro's finances strengthen, we can go back and reconsider the secondary lines. IMHO, they're probably still not worth it (the Uptown line is a question mark), but we can make that decision down the road.

At 2:29 PM, April 16, 2010, Blogger Rail Claimore said...

The University Line is a no-brainer, which is why it didn't receive funding priority... Oh the joys of piggyback politics.

At 3:00 PM, April 16, 2010, Blogger Tory Gattis said...

You said it. Run out of money building the least important lines, then go back to the taxpayers to build the most important one. Sad political manipulation.

At 10:08 PM, April 18, 2010, Blogger Justin said...

Wow, you REALLY jumped the gun on the Metro-hating. Did it occur to you (or KHOU?) that the sales tax funding would bounce back once the economy did? Or that serving transit-dependent communities before richer areas isn't "sad political manipulation" but serving Metro's mission?

At 10:34 PM, April 18, 2010, Blogger Tory Gattis said...

I'm sure Dr. Smith accounted for that in his projections.

Metro's mission should include matching the mode to the demand and prioritizing for the highest demand (which is why the Main St. line was first). And the Universities line does serve two poor and transit-dependent neighborhoods, one on each end.

At 8:15 PM, April 19, 2010, Anonymous Anonymous said...

Your transit-planning instincts are in this case very sound - BRT is absolutely the right solution for the North, SE, and East corridors - but your political antennae have failed to consider the political impossibility of building University LRT without comparable improvements in minority neighborhoods. Also, Uptown is no question mark; they have and will continue to reject any rubber-tire solution.

At 9:27 PM, April 19, 2010, Blogger Kevin Whited said...

** The Chronicle Politics blog is reporting that there was no deception, the FTA knew what it was getting all along, and the N and SE federal funds are not at risk. **

Mark Greenblatt has won numerous, significant awards for his watchdog reporting. I wouldn't be so quick to dismiss it, certainly not because one of the least skeptical reporters at the Chronicle simply reposted METRO's talking points. Recall that Greenblatt was vindicated on his investigative reporting of HPD's misreporting of homicides, even though HPD initially went after him HARD.

On the other hand, the Chronicle doesn't win awards for investigative reporting, because it prefers cheerleading.

At 10:52 PM, April 19, 2010, Blogger Tory Gattis said...

I'd like to point out that the Universities line connects two very poor, minority neighborhoods on each end. And I've heard that numerous businesses in Uptown are very upset about the LRT line as they learn the implications. There may be a revolt against the Uptown TIRZ.

I don't know who is right/wrong in this case - I just wanted to pass along both sides. I don't know if this is the case, but I wouldn't be surprised if the FTA tacitly went along with the outdated sales numbers because they want to build rail as much as Metro does. They're claiming now that all they care about is enough money to build the N and SE lines - the lack of funds for the other lines is irrelevant to their decision.

At 11:00 PM, April 20, 2010, Blogger Rail Claimore said...

Maybe Metro can get some of the $70 million the FTA pulled from BART due to some "racially insensitive" planning.

At 1:18 PM, April 28, 2010, Anonymous kjb434 said...

The Dallas Morning News had an interesting article on DART.

Essentially DART will likely have no expansion for the next 20 years and will have cut back service to save $30-50 million a year to say afloat.

So to all those that say DART is what METRO should do, heed the warning.

Credit should go to BlogHouston for posting the link to the article.

At 12:13 AM, April 29, 2010, Blogger Alon Levy said...

Don't worry, once the economy recovers they'll find the money for expansion again. And then in the next financial crisis they'll say it was unforeseen and dramatically cut service.


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