Thursday, April 08, 2010

Madam Mayor and me on the Metro mess

I've been wanting to do a "big picture" post on Metro since the transition committee reports came out (see below for links), and after a blogger conference call with the Mayor last night I think I finally have all the pieces I need.  I originally expected it to be a post of despair:
  • Massive debt for extreme rail construction costs hobbling Metro for a decade or more, with budgets running out before the most-critical, job-center-connecting Universities line is built.
  • Shady dealings.  In fact, Metro offices were raided today by the district attorney.
  • A study for a 290 commuter rail line ending at 610, connecting to an Uptown line that probably won't exist from a lack of money, and still providing no meaningful commuter service for anybody going downtown or the the TMC.
  • With continued local and global growth, commute times and gas prices will reach intolerable levels, and Metro won't have any money for a desperately needed expansion of express commuter bus service from more neighborhoods to more job centers with more frequency and more capacity. Employers are likely to speed up their exodus to suburbs like The Woodlands, Katy, and Sugar Land - further deteriorating Houston's tax base.
  • Logical prioritization would focus on the Universities line and expanded commuter bus service first (with signature bus service on the other lines until they can be comfortably paid for), but $900 million of use-it-or-lose-it federal funding will force us to focus instead on the secondary N and SE rail lines that do not add any new connectivity among job centers.
In other words, we're going to build the least critical pieces for the most money, leaving nothing for innovation or adaptation to a rapidly changing and growing city.  Overstressed budgets will leave Metro a zombie agency.  Summing up the Mayor's Metro transition committees:  

"Iceberg approaching. Full steam ahead!"

It's enough to make even a staunch Houston booster like me pessimistic about our future.
But after talking with the Mayor, I feel (a bit) better:
  • Her new board members will bring much needed transparency, credibility, new leadership, and fresh thinking to the agency.
  • She realizes the critical need for regional expansion of transit, and is ok if Metro is not in charge - a key condition to bringing the surrounding counties on-board.
  • She agrees we need a substantial expansion in express commuter bus service as well as circulator systems (like the former downtown trolleys).  Unfortunately, she's also supporting commuter rail, which I'm less of a fan of.
  • They are willing to consider postponing the non-federally-funded East End line to move up construction of the higher-priority Universities line.  I really hope to hear more soon about investigations into this option.
So what's the net-net?  I've moved from despondent to cautiously hopeful, but certainly not optimistic or enthusiastic.  We'll just have to see how it develops.

Here are links to pdfs of the Powerpoint charts produced by the transition committees to brief the Mayor.  Thanks to the CTC for hosting these on their server:
On an unrelated note, during the call she also mentioned the possibility of privatizing city parking meters to raise funds to close the budget gap.  Chicago was able to bring in over a billion dollars this way, although not without controversy.  Properly handled with a few lessons-learned from Chicago, it could be a relatively pain-free solution to at least some of our budget problems.  Then again, a budget crisis is a terrible thing to waste if we can use it to push through much-needed pension reforms.  The easy way out may cost us longer-term.

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At 9:20 PM, April 08, 2010, Anonymous kjb434 said...

Here's a solution. Remove METRO from all the park and ride activities. Let HCTRA (which has no financial problems whatsoever) take over the HOV system transitioning one freeway at a time to a HOT configuration replacing the existing HOV system. HCTRA has the bond rating and the income to easily finance HOT lane development and provide the distance commuter service that would bankrupt METRO by building commuter rail.

Removing METRO from park and ride operations will free up some money (from buss operation, police surveillance, and PnR facilities operation) that can be utilized for improving point to point transit to connect PnR's with destination between.

Since for some reason METRO and the County Judge still want commuter rail, why not let HCTRA also take over commuter rail. The will leave METRO to focus on light rail, signature, express, and regular bus lines.

At 9:26 PM, April 08, 2010, Anonymous kjb434 said...

Thinking a little more, HCTRA may need to have it's original mission adjusted either by Commissioners Court or by the State Legislature which created it, but I don't see why it couldn't happen.

Harris County TRansportation Authority

Why not? It would be a great move of cooperation. The H-GAC can work out the concepts in study since it actually views transportation as a regional focus and connects each entity's projects in the TIP.

At 10:17 PM, April 08, 2010, Blogger Tory Gattis said...

I think that idea has a lot of potential. It might also somewhat address the regional issue, since HCTRA is authorized to build outside the county (like the Grand Parkway). The problem is that HCTRA doesn't have a tax base - all of its revenue comes from toll roads - so we'd be explicitly diverting toll money to transit instead of much needed new toll roads.

At 10:36 PM, April 08, 2010, Blogger Alon Levy said...

But... if gas prices go up, doesn't it mean fewer people will be driving, which would mean less need for roads?

At 8:51 AM, April 09, 2010, Anonymous kjb434 said...

My main support behind HCTRA taking over is that they have shown to be somewhat more responsible with money and focusing the HOV to HOT conversions with operation of the buses will allow them to maintain revenue stream while moving commuter en mass.

HCTRA also is flush with cash that they are allowed to divert to rebuild any road (primarily major thoroughfares) that connects to a toll road. Looking at a map, the Beltway, I-10 toll lanes, Westpark, and Hardy cover much of the region. Some of this money could be utilized for operation of the buses and PnR facilities. Technically the toll facilities just need to make enough to cover bond payments. The Beltway and particularly the West Belt and Westpark Tollway are big revenue generators. The Hardy Toll road which was a bust needed the West Belt to cover its bond payments, but recently it has made a much larger increase in traffic to become solvent. The extra cash just sits there to fund engineering fees for designing new roads and maintenance improvements, but they have more flowing in than they need for that. Some people would say the tolls should be lowered because of this, but that would destroy the level of service that people paying for use of a toll facility expect (especially toll tag customers).

As for bus fuel, if there is any place a government agency should go "green" in it is this area. Diesel-hybrid buses have become common in several cities. The hybrids are best on surface streets, but more efficient diesel could be utilized on the PnR buses.

At 7:53 PM, April 09, 2010, Anonymous Anonymous said...

Tory, Houston should feel worse after your Post.

Perhaps, Mayor Parker needs to hire a business person who understands executed contracts and financing.

1. Contracts have been signed on Harrisburg, construction has begun.
2. MTA has bought 103 rail cars. If MTA does not buy that amount of cars, the costs goes up.
3. The North / SE can not delayed or fed funding goes away. This is cast in clay. Having said that, Federal funding is not assured. (we hope)
4. MTA is dead broke. (even their Investment Portfolio in under water to their commercial paper borrowing) Without the retention of the GM money, debt service on 5 alignments can not be met. (Mayor will be giving up 6-7-8 Billion in Revenue from 2015- 2040) ( MTA Sept 30, 2009 audited financial will be dismal -- MTA can not hide these forever. They will show .5 -1 Quick Ratio)
5. Metro KNOWINGLY gave the FTA a financial plan for 5 alignments in Nov 2009 that was "under water". (eliminating the general mobility expenditure as of 2015) How does the new Mayor explain the impossible task of financing 5 alignments, from 2010 -2015 as presented less than 90 days ago to the FTA? Page 1 of that plan stated as per the 2003Referendum, all 5 alignments needed to be built........where is the new Mayor's work around? The time frame is also fixed.

On the other side:

1. Voters approved 5 alignments with 4 being completed by 2012. MTA can not pick and choose.
2. MTA is attempting (having trouble) on approval for about $600 million Revenue/Appropriation bonds with the State of Tx (not sales tax bonds) This may not fly. MTA needs to find a way to raise $2.6 -3.0 Billion minimum.
3. MTA can expect little help from Congressman Culberson on the alignment on Richmond Ave.
4. Uptown alignment is filled with many MTA land mines from TDOT (W.Loop) to tenants on Post Oak Rd.
5. The University Alignment Appeal court review is in about 60 days. Decision by early summer. What will MTA (Parker/New Board) do WHEN the Appeal Judges let the University alignment go to trial?

A normal Politician, inheriting these issues would blame the real culprits -- White, Wolff and the entire old MTA board.

My opinion:
By the way, Houston's new Mayor should NEVER consider selling Houston's assets like Parking to a 3rd Party. Or selling airport run ways. Or, allowing toll roads to go private.

The above innovative Pilot thinking finance scenarios are the new sub prime mortgage or credit default swap disasters for tax payers in the future.

The best thing that can happen to the Mayor on MTA is that the DA rides in on her horse.
The sooner the better. I hope to see Mayor Parker casting the MTA blame on the appropriate parties not attempting to inherit their malfeasance.

Paul Magaziner

At 2:04 AM, April 10, 2010, Blogger Alon Levy said...

KJB434: well, in a few years METRO might want to test-run plug-in electric hybrid buses. I'm not sure if it's a problem in Houston, but in New York the asthma rates are higher near bus depots.

At 6:41 PM, April 10, 2010, Anonymous Anonymous said...

why not raise the meter rates instead of leasing the infrastructure to a private company that will double or triple those rates? chicago left close to a billion dolllars on the table after that fiasco.

leasing the meters can only hurt the city long-term. the city needs to make tough decisions.

At 7:38 PM, April 10, 2010, Blogger Tory Gattis said...

Leasing will generate a large up-front payment as the value for the future stream of cash flows from the parking meters. It can only be used once, but can be a good way to bridge a couple of bad budget years. The city can limit increases, but that limits the value, of course.

The private company does have an incentive to not make rates too high, or people will use private lots instead (or not pay). There is a strong theory out there right now that the ideal parking meter rates leave 10-20% of spaces empty at any one time, so people can always find a space when they need one instead of circling (they determined 30%+ of downtown traffic in Chicago was people circling looking for a parking space). If all the spaces are full all of the time, the prices are too low. If too many are empty too much of the time, rates are too high.


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