Engineering in the dark

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Image via the Old Urbanist

The similarities of urban design across American neighborhoods is no coincidence, but neither is it the result of city planners’ uniform adherence to best practices. Infrastructure is often built based on shockingly little information about the demands of its users. And while poorly reasoned infrastructure policy in one city is bad enough, the United States’ broad adherence to poorly reasoned policies has resulted in a nation in which swaths of neighborhoods are built on poor design foundations.

Parking Requirements

In The High Cost of Free ParkingDonald Shoup explains the origin of municipal parking requirements. Municipal planning offices do not have the resources to study the amount of parking that businesses should provide. Even with more staff, it’s not clear that planners would be able to determine optimal parking requirements unless they allowed business owners themselves to experiment and choose the amount of parking on their own in a learning process of how to best serve their customers.

The Institute of Transportation Engineers is one of the only organizations that provides estimates of the number car trips that businesses generate. Given the lack of information planners have to determine parking requirements, they often rely on ITE’s information to set their parking requirements. However, ITE studies are often conducted at businesses that already provide ample free parking, ignoring the potential for businesses to manage demand for parking on their property through prices. Furthermore, ITE estimates of trip generation are typically based on a very small sample of locations, which are unlikely to be representative of businesses and cities in general.

In the example below, the ITE provides a recommendation for fast food parking requirements based on their floor area. Even though the chart includes a line of best fit for the plot of peak parking spot occupation and floor area, the ITE hasn’t demonstrated a correlation between these two variables. Shoup points out:

We cannot say much about how floor area affects either vehicle trips or parking demand at a fast food restaurant, because the 95-percent confidence interval around the floor-area coefficient includes zero . . . This is not to say that vehicle trips and parking demand are unrelated to a restaurant’s size, because common sense suggests some correlation. Nevertheless, factors other than the floor area explain most of the variation in vehicle trips and peak parking occupancy at these restaurants.

 

Parking R2

Even though this study fails to show much of anything about parking at fast food restaurants, the ITE parking requirement recommendations carry heavy weight with city planners. Shoup finds that “the median parking requirement for fast food restaurants in the US is 10 spaces per 1,000 square feet–almost identical to the ITE’s reported parking generation rate of 9.95 spaces per 1,000 square feet. After all, planners expect minimum parking requirements to meet the peak demand for free parking, and parking generation rates predict this demand precisely. When the ITE speaks, urban planners listen.”

An inefficient quantity of parking at one business is a trivial problem that can be easily rectified when the business owner observes that his customers would be better served by more or fewer spots. But when an inefficient practice is mandated across most cities in the country, it’s a regulatory burden in the hundreds of billions of dollars enforced in spite of shockingly poor knowledge of the issue.

Street Width Standards

Like their counterparts in city planning offices, transportation engineers often have to set street width requirements without reliable information about the width that best serves street users. As Streetsblog reports, the Federal Highway Administration recently published a document explaining that, contrary to many state and local transportation agencies’ beliefs, federal highway funds can be used for streets that do not follow the FHWA guidelines published in A Policy on Geometric Design of Highways and Streets, known as the “green book.”

While this may be a new found freedom for state DOT’s and local transportation agencies, it doesn’t result in a system in which transportation engineers get feedback about how their infrastructure is serving its users. A study from the Mineta Transportation Institute states:

Street standards are normally developed by engineers in departments of public works or transportation, based on various guidelines provided by county, state, or professional organizations, such as the Institute of Transportation Engineers and the American Association of State Highway and Transportation Officials. The standards are either published as a separate document or as part of a jurisdiction’s development ordinance.

Like parking requirements, street width standards adhere closely to this guideline even though it’s not binding. In their analysis of 97 cities, the study authors found that “the average minimum street width was 30.6 feet, and the median minimum width was 30 feet,” just under the ITE’s recommendation of 32- to 34-foot wide streets dating back to 1965. Some states, such as California, even have state wide minimum street widths for public streets of 40 feet.

The ITE recommendation is based on the assumption that wider streets are safer for drivers. While this is true in highway design, narrower street are in fact safer in neighborhoods, discrediting the false assumption that has led to dangerously wide streets in suburbs across America.

Jeff Speck explains the central role of the green book in influencing American traffic engineers:

For traffic engineers, AASHTO is the keeper of the flame. Its “Green Book,” . . . is the primary source for determining whether a road design is an accepted practice. As such, it is useful in protecting engineers against lawsuits; if something is in the Green Book, it’s “safe.”

Given the protection it affords, nobody questions the Green Book. Never mind that very little of it is evidence-based, and that there are no footnotes justifying its pronouncements. I mean, does the Bible have footnotes?

While state and local traffic engineers are free to deviate from the green book’s recommendations, even while spending federal funds, they rarely do because they have few other sources to base street widths on. The collective consequence of wide-laned neighborhood streets that increase the distances between destinations is a country in which its difficult for many people to live without a car. The Mineta study finds that wide neighborhood streets cost taxpayers an estimated $20 to $177 billion in maintenance costs alone.

Inescapable Knowledge Problems

Decades of planning for making car travel as easy as possible are giving way to new experimentation at the local level. For example, some cities have reduced or eliminated parking requirements in their city centers. Others, like San Francisco and Fresno have adopted “road diets” in which one traffic lane is eliminated in order to create space for bike lanes and a left turn lane. This break from lock-step planning at the local level may create opportunities for cities to learn from one another. However, as the problems with the current practices in parking requirements and street widths show, poor results can come from cities copying one another’s regulations.

While city planners and traffic engineers with new urbanist bents may feel compelled to update their city’s regulations, they won’t have good information about whether their changes are making people better or worse off. Design guidelines inspired by Smart Growth or new urbanism will face many of the same challenges that have plagued the implementation of regulations influenced by the ITE or the FHWA. When municipalities copy a set guidelines, mistakes go on unnoticed for decades. When problems come to light, it takes additional decades to begin correcting them.

The history of damage done by planning to accommodate cars without consideration for the costs that car infrastructure imposes on others should not lead planners to do an about face in favor of plans that they think will better accommodate pedestrians. Rather, a key lesson from the twentieth century planning should be humility in city planning with the recognition that it’s difficult to foresee the long-term consequences of regulations and that monotonic regulations impose a systemic risk of unforeseen consequences.

It’s Time To Reform Jaywalking Laws

1. I wrote three Forbes articles this week: about how black churches were burning across the South, perhaps in response to the Charleston shooting and Confederate flag takedown; about how new presidential candidate Chris Christie has handled his 5-year control of Atlantic City; and about a new app that aims to help people find bathrooms in New York City.

2. There are two layers in the ongoing debate about whether cities should cater to cars or pedestrians. The first concerns the design of roads themselves—should they be one-way, as to ease traffic flow, or two-way, as to slow it? Should they dedicate space for alternative, presumably less dangerous modes like bikes and transit, or be used mainly for private autos? Should they be entirely asphalt, to maximize road capacity, or have “calmers” like medians and parklets?

The other layer of the debate concerns the conduct of pedestrians–and central to this is jaywalking.

For decades, U.S. cities have taken a uniform approach to jaywalking. Most policies are rigid, allowing pedestrians to cross solely in designated crosswalks when given the walk sign. But because these laws contradict the way pedestrians actually move, they are routinely broken, with most people sneaking across when cars aren’t coming, and some taking this liberty anywhere along the street. In the worst cases, this has created tension between pedestrians and police, but mostly just ambiguity.

Some sustainability advocates have thus called for “legalizing jaywalking.” Here are the different arguments they’ve made.

a.   One is the historical argument. In January, Vox published an extensive history of jaywalking laws in the U.S. Author Joseph Stromberg explained that as recently as the 1920s, the notion of jaywalking scarcely existed, as urban streets were meant for pedestrians. But attitudes changed with the rise of the automobile, and so too eventually did the laws, urged on by the car industry. As attitudes have shifted back to favor pedestrians, however, it is worth reevaluating these laws.

b.   Jaywalking is an organic form of traffic calming that doesn’t require the government expenditures used for other calming measures.

c.   The social justice argument, which posits that jaywalking fines are disproportionately expensive—and enforced more—against poor blacks, often as an excuse to search them. This seems plausible, since jaywalking fines have been one part of the broken windows policing strategy.

d.   And there is the argument, made recently by Michel Lewyn in a 2-part series for Planetizen (here and here), that confining pedestrians to crosswalks isn’t even safer:

The basic assumption behind these policies is that pedestrians are safe if they don’t jaywalk, and unsafe if they do. But this claim is not necessarily correct.

Why not? Because traffic lights are not very accurate guides to safety. Suppose you are at an intersection, and the light across the street from you says “Walk.” That usually means that there is a red light above you, and that the traffic heading towards you cannot move…But that fact alone does not make me safe from cars, because a motorist turning left or right into Ninth Avenue might be governed by a green light which allows him or her to turn. So if I cross when the light says “Walk”, I can easily be crushed by a driver making a turn. In fact, turning motorists may be even more risky for pedestrians than a head-on attack, since they are harder to notice.

Lewyn continues that “crossing midblock may actually be safer when traffic is light, because a pedestrian need only look in two directions (or only one, where each side of the street is separated by a median) at a time to be sure that there are no cars coming.” It’s also possible that pedestrians, in hand, are more visible to drivers when crossing mid-block, than when in a driver’s turn radius at intersections.

e.   But there’s one argument that I haven’t yet heard: legalizing jaywalking on behalf of economic development. Nowadays, the stated goal of every city is to increase downtown livability. Improving the pedestrian experience has been one part of such revitalization efforts, and wouldn’t reforming jaywalking laws advance this goal? Specifically, it would decrease the wait times required to get from place to place, thus increasing productivity. After all, many of the highly-skilled professionals who locate in downtown areas do so because they desire proximity to other industry professionals, a concept advanced by Richard Florida. For many, walking from function to function is imperative to daily business, and being able to do so quickly is key to mobility, just like good roads and transit. Growing the residential population is also vital to downtown development, and the same concept applies–people who walk to get morning coffee, nightly dinners, or any array of errands must be able to do so quickly, if living downtown is to become worthwhile.

It is thus bizarre to read about the ongoing efforts to ticket jaywalkers, for example, in downtown Los Angeles, where minor violators are being charged $197. Here is a city that is spending billions to repurpose its downtown into a 24/7 urban destination filled with bars, pro sports, entertainment, artists, and rich young professionals. Do officials not understand that targeting jaywalkers contradicts these goals, by making it difficult to walk quickly in the very areas that are being sold as “walkable”?

In places like Los Angeles, these laws either shouldn’t be enforced, or, more to activists’ point, should be diminished. How might this happen? I’m not in favor, like others, of abolishing jaywalking laws altogether, as this might create yet more ambiguity in a nation so accustomed to automobile use. But I do favor using common sense–by allowing pedestrians to cross the street as long as they are not endangering themselves nor obstructing automobiles. This would mean crossing at any part of the road when cars aren’t coming, and walking in-between cars when they are backed up at lights. Many people already do this, and legalizing it would erase the grey area, while opening up streets to people who were previously intimidated by law enforcement. Cities might even install more crosswalks halfway down certain blocks, as to create the safer and more visible experience described by Lewyn. I’ve already seen such crosswalks—often equipped with flashing lights–installed in many cities, and building more would further help legalization.

Interview with Alain Bertaud

alainAlain Bertaud is probably the most interesting urbanist you’ve haven’t heard about. He is a senior researcher at the NYU Stern Urbanization Project next to names such as Paul Romer and Solly Angel. Bertaud used to be the lead urbanist at the World Bank, and Ed Glaeser has said that everything he knows about land use restrictions in developing countries he has learned from Alain. Bertaud has also worked as a consultant and/or resident urbanist in cities such as Bangkok, San Salvador, Port-au-Prince, Sana’a, New York, Paris, Tlemcen and Chandigarh.

Our Brazilian collaborator Anthony Ling, editor of Caos Planejado, met Bertaud at the NYU DRI conference last year entitled “Cities and Development: Urban Determinants of Success”, who gave us the following interview:

AL: You are currently writing a book tentatively titled “Order Without Design”, which in some way relates to the title of our website, “Planned Chaos”. What do you mean by the title of your next book – what should readers expect of it?

AB: “Order without design” is a quotation from Hayek that he uses in a different context in “The Fatal Conceit”: “Order generated without design can far outstrip plans men consciously contrive”. In the context of cities it means that cities themselves are mostly self generated by simple rules and norms applied to immediate neighbors but with overall design concept designed by one person or a group of designers. The spatial structure of large cities is a mix of top-down design and spontaneous order created by markets. Spontaneous order appears in the absence of a designer’s intervention when markets and norms regulate relationships between immediate neighbors.  Most evolving natural structures, from coral reefs to starlings’ swarms, are created by spontaneous order. The objective of my book is to show that top-down design should be reduced to a minimum and much more room should be given to spontaneous order.

AL: Brasilia is almost a national token for urban planning, in this case with design. On top of that, its strict modernist “Plano Piloto” was landmarked only thirty years after being built, becoming probably the youngest city considered a heritage site. Today it suffers a lot of criticism from Brazilian urban planners, who usually take a stance against modernist urbanism. Many of them point out the lack of mobility as the main problem: the automobile is almost a requirement to live in Brasilia, as urban and architectural form limits access to pedestrians and public transit. There is a lot to say about Brasilia, but could you summarize your view on it? Do you think urban mobility its biggest problem or are there bigger problems with a planned city?

AB: I have written several articles on Brasilia, in particular: “Brasilia spatial structure: Between the Cult of Design and Markets” presented at a seminar in Brasilia in 2010.

I think the problem with Brasilia is the design process itself and the lack of markets. While buildings and apartments can be sold, the land belongs to the government and is therefore not subject to market forces that could recycle it to respond to changing conditions. The transport problem is only one aspect of it.  The idea from the start to design a city as a finished product is a terrible mistake. Incredibly arrogant.

I wrote also an earlier paper on Brasilia, Johannesburg and Moscow titled “The Cost of Utopia” that summarizes my views on government designed cities. It is not that a better designer would have done a better job, it is the concept of design without market feedbacks from the users themselves that become a permanent flaw that cannot be corrected by more design.

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“The land use of Curitiba is designed to make BRT viable, not to transport people to their job in a minimum time.” (Photo by mariordo59 @ Flickr)

AL: In both Brazilian and international urban planning literature, Curitiba is frequently referred to as a “green city” practicing “sustainable urbanism”, in large part due to the introduction of the BRT (Bus Rapid Transport) system. However, BRTs are being built in Brazilian cities gradually showing a number of problems: the system centralizes transit on a single operator – which frequently fails to deliver – and previously scattered routes are designed into a single fixed infrastructure. Are the several Brazilian cities currently building BRTs doing the right thing? And from what you have seen does Curitiba deserve its title as an international reference of urban planning?

AB: I think that the people who managed Curitiba in the last 30 years had many good ideas, for instance recycling water to irrigate public parks. Even the concept of BRT is interesting while limited in its application. However, Curitiba’s original sin has been to design an urban land use that will make a preselected transport system work, instead of looking at the land use and trying to find a transport system that would increase mobility. The land use of Curitiba is designed to make BRT viable, not to transport people to their job in a minimum time.

The idea, of course, that one mode of transport could solve the mobility problems of all its inhabitants for ever is also wrong. I think that BRTs being installed now in many very large and dense cities of Asia are creating more problems for their future and are in reality reducing mobility. See my paper on Danang (Vietnam) and the unfortunate plan for a BRT.

Of course fantastic public relations is one of the major achievements of Curitiba. No city has spend as much on it. At the Istanbul second Habitat conference in June 3–14, 1996 , the Curitiba municipality exhibited an entire BRT bus and bus station shipped from Curitiba to Istanbul!

AL: Rio de Janeiro gives us some of the most striking views of urban inequality: Leblon and Ipanema, two of the most expensive neighbourhoods in the country, are surrounded by favelas, the poor informal communities that usually occupy public land but lack public infrastructure. What do you think is the best way to help the lives of residents of these communities through urban policy? Is land formalization a good solution?

AB: I think that the favelas are not there by chance. The denser they are the more demand it indicates for their location.  They should be made permanent. The first step is to provide infrastructure, water supply, sewer and storm drainage and a convenient way to go up and down. The need to provide formal tenure depends on the country. Establishing a formal cadaster is long and costly. Sometime an informal tenure works well. In Indonesian kampongs one year water bill (which has an address) serves as tenure a document and allows the transfer of title with very little discount compared to cadaster registered tenure. If an informal tenure title allows real estate transactions and is recognized by the state then formal tenure is not necessary. What is important is for the state to recognize the rights of residents, whether they are renters or owners. Being next to expensive neighborhoods is an advantage for the poor residents. More formal jobs are available nearby and probably a better access to high level primary infrastructure.

AL: Brazilian cities are gradually enforcing a “progressive property tax” on unnocupied real estate: owners of empty buildings or lots pay higher taxes the longer they remain unoccupied. A frequent reason given by urbanists who defend this policy is that the owner of this real estate would be failing to deliver the “social function of property” (a concept established in our legislation) by devaluing adjacent properties and restricting access to housing in order to profit by real estate speculation. Are you in favor of this kind of progressive progressive tax? In what scenarios might it be applicable?

AB: I think that urban land should pay a property tax “ad valorem”. Buildings should not be taxed.  An empty lot fully served by urban infrastructure should pay a tax to cover the amortization of primary infrastructure networks and road maintenance.  Empty lots should therefore pay the same tax as a built lot, but just based on its land value.  Rents from built property should pay a tax as part of the income tax of the recipient of the rent.  The decision to build on an empty lot should left to the owner. Sometime it is an advantage to society when land owners delay construction as they may build a structure that is more responsive to demand. William Fischel documented well this apparent paradox. I do not see the point of a progressive property tax.

AL: What cities – or periods of development within a city – do you consider your favorite examples of good urban policy?

AB: Hong Kong has many very positive aspects. In particular because they try to maximize land values by having land use regulations that reflect demand. Shenzhen also has some impressive achievement. I like more and more Indonesian land use policy, Surabaya in particular. None of these cities are perfect models, all of them have some bizarre regulations that are detrimental to the welfare of their inhabitants, but in general they are doing well.

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“Hong Kong has many very positive aspects. In particular because they try to maximize land values by having land use regulations that reflect demand.” (Photo by cyalex @ Flickr)

AL: A large part of your work explains how city planning, the attempt to control the apparent chaos of our urban environment, leads to negative unintended consequences, many times being the source of problems cities face today. Being so, what should be the role of urbanists in urban policy and working with city governments?

AB: Urbanists have a very important role to play in city development, but they are not playing it. They usually adopt unmeasurable slogans like “smart growth”, “sustainability”, “livable cities”.  Do not use slogans, use measurable indicators and indicate what action will be taken to  move these indicators in a given direction.

  • Objectives: They should concentrate their effort in insuring mobility and housing affordability as a city develop.
  • Monitoring changes in indicators: They should develop and monitor indicators, for instance, average commuting travel time. Here is a reference to an interactive data base providing the number of jobs accessible from any area of Buenos Aires using transit cars or bicycles. Planners should also monitor changes in land prices, housing prices and household incomes. They should identify the affordable type of housing by income groups and current housing consumption per group. Monitor land and housing supply: how many ha develop every year, how many building permits are given, how long does take to obtain a building permit. Monitor pollution.
  • Action: Infrastructure – Plan road development to insure a steady supply of land and reduce travel time (reducing distance travelled is not a good proxy for travel time). Regulations – audit regulations and remove all regulations whose objective is unknown or has been forgotten. Submit any land use regulations to cost test: what impact has this regulation of land development and floor area cost. Change regulations to allow all income groups to have legal access to land and housing. Take any action related to changes in indicators mentioned before, for instance, increase land supply if land prices are climbing too fast compared to income.

AL: In your opinion, what are three essential books an urban planner or a city enthusiast should read in order to understand how cities work and thrive?

AB: Read a lot, any type of book. For planners who have been trained traditionally (like myself) without much understanding of urban economics, read books on urban economics, Jan Brueckner “Lectures on Urban Economics” for instance. But best of all, walk around cities for hours and look around, and ask yourself “why is this building there? Why was it build that way?” nothing in a city is random or haphazard. A palnner needs to understand why a city is the way it is. Here is a link on my methodology to understand how cities work from a blog from Jon Stewart from NYU.

BART, Josefowitz, and Mass Transit in the Bay

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Last week, Nick Josefowitz unseated a multi-decade incumbent for a spot on the BART board of directors. Normally I don’t pay too much attention to elections, but Mr. Josefowitz might actually have some good ideas.

For everyone outside the Bay Area, the BART (Bay Area Rapid Transit) system is a commuter rail line that constitutes the vital transportation link between the East Bay and San Francisco. On a typical weekday it provides 400,000 rides and that number is increasing as the regional economy continues to boom. Suffice it to say that BART is a big deal to a lot of people who rely on it every day (myself included).

While Josefowitz’s campaign website talks about cleaning up dirty stations and increasing late night train availability, I had the privilege of hearing him outline an interesting proposal during a private, small group discussion some months ago.

According to Josefowitz, BART sits on a substantial amount of real estate in the form of station parking lots. His proposal was to repurpose some of this space as high density housing. This would help with the region’s housing shortage and support BART ridership by clustering population around the system’s stations and the lost spots could be offset by building parking structures on the remaining lot space (many BART parking lots are ground level only as opposed to multi-level parking structures). This sounded a lot like Hong Kong’s integrated rail-property development approach which has proven to be an unqualified success, so my interest was definitely piqued.

As always, there’s plenty of which to be skeptical. The fact that the proposal was brought up in a private discussion, but isn’t listed on the campaign website may say something about where it falls in Josefowitz’s priorities. Also, it’s difficult to tell how effective the incoming director will be in pitching new ideas to the incumbent directors on the board. And finally, any plan to build housing on BART property will be sure to include some kind of “affordable” housing requirement, the beneficial effects of which remain questionable to say the least.

But, if Josefowitz is serious about the proposal and he manages to find support amongst the other members of the board, it could be a step in the right direction. More housing would be better than less in the supply constrained Bay Area and allowing for greater density around BART’s stations could contribute to a more sustainable regional transit system.

For the record, I did not vote in this election and this post does not equate to a political endorsement of any kind.

 

How Hong Kong Pulls Off Transit Oriented Development

Integrating rail and property development is the cornerstone of the MTR’s success. In the U.S., coordination between transit authorities and developers tends to be mediocre at best. In Hong Kong, however, the MTR is both the transit authority as well as the property owner, and this makes all the difference.

Coordination Problem

Most attempts at transit-oriented development in the U.S. involve multi-party negotiations. The agency responsible for the transportation system haggles with different developers interested in undertaking projects along the line. Instead of implementing a unified plan, the transit agency has to negotiate specific agreements with each developer. And, because the priorities of the transit agency and the developers are never perfectly aligned, development agreements become subject to second-best compromises. Further, any disputes that arise once significant capital has been committed are costly to resolve.

This arrangement makes leveraging land values difficult as well. Developers frequently get tax breaks as an incentive to undertake projects. Whether abatements on property tax or straight-forward rate reductions, tax incentives typically preclude the use of land values to help fund transit. And, even without special incentives, major property owners who stand to benefit from proximity to a transit system have every reason to resist tax increases of any kind if there’s a chance of free-riding.

Kowloon_Station

The MTR, on the other hand, uses the integrated rail-property development  approach which combines the two roles of landlord and transit developer. The MTR owns the right-of-way as well as the surrounding properties. This removes the necessity of extended negotiations, having to settle for second best solutions, and the potential downside of disagreements partway through a project.

By combining the functions of landlord and transit developer, the MTR is also able to internalize land values. The rail line drives up the value of the MTR’s properties and that value covers the capital costs of the MTR’s rail lines.

Coase On Mass Trasnit

In 1937, the economist Ronald Coase asked why, if market exchange is such a good way to allocate resources, do firms even exist?

The short answer? Transaction costs.

Participating in a market comes with a price, and in some instances, the cost of participation is more than it’s worth. When transaction costs are too high, firms avoid them by internalizing specific functions and allocating resources at the discretion of management. This is not unlike the way in which socialist command economies deployed resources, albeit on a much smaller scale, and within an organization that’s actually responsive to external price information.

In many industries, falling transaction costs have brought about a wave of decentralization, supplanting the old paradigm of Fordist vertical integration. Younger companies now specialize in a narrower range of core competencies and outsource the rest. Apple, for example, is really a design firm that uses a global network of manufacturing and logistics partners to get its products into consumer hands.

In the case of transit development, however, transaction costs remain high. Technological innovation hasn’t made construction much less capital intensive or shortened time horizons for investment. This means that the costs of coordinating transit and property development mentioned above have remained persistent. What the integrated rail-property development model suggests in theory, and the MTR demonstrates in practice, is that a little centralization could bypass these costs entirely. To paraphrase Coase, there’s a price to pay for using prices; and in the case of transit development, that price may still be far too high.

Part 2 of 2 covering the policies and institutions behind mass transit in Hong Kong

Why No One Drives to Work in Hong Kong

Need to get 4 million people to the office every day? Hong Kong has you covered.

The Mass Transit Railway (MTR) is a rail system in the city of Hong Kong, currently managed by the Mass Transit Railway Corporation Limited (MTRL). The system opened in 1979 and now operates over 135 miles of track as well as more than 152 stations in Hong Kong. The average trip costs somewhere between .50 cents and $3 USD, and the system makes back 186% of its operational costs on fares alone.

Hong Kong Metro

Much of the system’s success can be attributed to urban density. Denser development means people live, work, and play in smaller geographic areas, meaning that more people are travelling between a fewer number of points. This is a huge plus for a fixed-route system like a railway. The MTR, however, hasn’t been a passive beneficiary of its environment.

The MTR owns real estate around each station in the system and integrates rail and property planning so that the development of one supports the development of the other.

Construction around each MTR station is incredibly dense, so it can put as many potential riders as close to a station as possible. Over 41% of the population in Hong Kong (2.78 million people) lives within a half-mile of a station. Additionally, the company’s real estate strategy emphasizes walkability; some residents of MTR owned properties can walk from their homes to a station entrance without ever even going outdoors. Clustering potential riders around each station–and making sure passengers have an easy time getting there–helps support high levels of ridership.

While fares cover the costs of operations, it’s really property development that pays for maintenance and expansion. The rail line, in turn, increases the property values of parcels adjacent to each station. This augments the land rents which are siphoned off to cover capital costs.

Ultimately, building effective mass transit is all about embedding the system within a friendly urban environment. High-density, mixed-use development is a must, but so is the ability to leverage land values as a means to finance capital investment and outlays.

Part 1 of 2 covering the policies and institutions behind mass transit in Hong Kong

The importance of driverless trains

Vancouver's driverless Skytrain

Vancouver’s driverless Skytrain

As Honolulu is making progress on its driverless elevated rail system under construction, Washington, DC is finally beginning to return to computer operation on its red line after a 2009 crash brought an end to reliance on the computerized system. While the move in DC will facilitate smoother driving and braking, WMATA still relies on train operators in the cabs, forgoing the cost-saving opportunity that driverless systems provide. It’s difficult to overstate the importance of driverless trains in the effort to bring U.S. transit operations down to a reasonable price.

Driverless systems currently operate successfully in cities from Vancouver to Algiers, and the world’s most financially successful intracity transit systems in Hong Kong and Tokyo have embraced the technology. In spite of WMATA’s high profile accident that happened while the trains were computer-operated, a well-designed driverless system is actually safer than human operated one. Driverless systems offer a better ride quality, stay on time, and face a lower marginal cost of extending service hours.

Labor costs make up huge shares of U.S. transit systems. In DC, for example, personnel costs make up 70% of the agency’s operating budget. In 2010, WMATA spent $38 million on the salaries of 611 train operators, and this does not include their retirement and health benefits. In New York, personnel costs make up $8.5 billion of the agency’s $11.5 billion operating costs, and in Chicago labor takes up 73% of CTA’s operating expenses. Obviously not all transit workers jobs can be automated (all of these systems have more bus drivers than train operators) and some operating costs would rise under a driverless system. But taking steps toward reducing labor — that comes at a premium in high-cost-of-living cities where transit is most important — is crucial for reducing transit’s operating costs and making transit systems financially sustainable.

In all sorts of industries automation reduces the cost of goods and services, but transit systems face particularly high returns on automation because several institutional factors inflate their high personnel costs. As Stephen and Alon have explained, union work rules play a role in driving transit costs by requiring eight-hour shifts. Transit agencies face peak demand during the morning and evening rush hours. If transit agencies were run on a for-profit basis, they would staff more bus drivers and  train operators during these times of peak demand and fewer during the work day and night time. However, transit unions’ work rules make it impossible to staff according to demand.

In addition to the premium that transit agencies guarantee their employees through relatively high wages and union work rules, their pensions and benefits make up a large part of their employment costs, and these costs are not transparent. For example, BART, with its high profile strikes this summer, reports a $187 million unfunded pension liability. This means that future operating costs will have to rise to cover benefits accrued in the past. Transit agencies’ pension liabilities are based on their discount rate assumption with 7.5% or higher being typical. If these agencies’ pension funds fail to realize compound annual returns greater than or equal to their assumed discount rates, their pension liabilities will actually be higher than what they report.

A City Lab post posits that mainland cities are unlikely to follow Honolulu’s driverless lead because converting existing trains to driverless would be prohibitively costly. But a commenter on her post points out that the change to a driverless system would be a capital cost, typically covered by the federal government. What better use for the Federal Transit Administration’s Core Capacity dollars than making the transition to driverless trains in large systems? Moving to a driverless system could create a virtuous cycle better service increasing ridership, begetting further service improvements. While making the transition to a driverless system entails short-term political and financing challenges, maintaining bloated operating expenses year after year is an unacceptable outcome.

During BART’s infamous strikes over the summer, a San Francisco tech entrepreneur quipped“Get ‘em back to work, pay them whatever they want, and then figure out how to automate their jobs so this doesn’t happen again.” His sentiment may come off as cold-hearted, but transit agencies should have one mission: providing adequate transit service at a reasonable cost. Their mission should not be to provide well-paying jobs to workers who might not be able to earn such high wages and benefits in the private sector. While the transition to driverless would be difficult for transit workers and agencies, in the long-run the advantages of substituting relatively inexpensive capital for expensive labor are too high to ignore.

 

Six Shooters and Bullet Trains: High Speed Rail in Texas

California might have some competition in the race for high-speed rail.

Texas Central Railway wants to begin construction on a high-speed line from Dallas to Houston as early as 2017. The current plan is to go from downtown to downtown, with possibly one stop along the way in College Station. An environmental impact assessment is under way and the hope is to be operational by 2021.

Vancouver's driverless Sky Train

Vancouver’s driverless Sky Train

The company claims that the price per ticket will be competitive with airfare and that the run will take a mere 90 minutes. To give that some context, current travel time from Houston to Dallas by car is about 3.5 hours according to Google (but closer to 4.5 according to my prior experience).

While there’s a lot to be skeptical about here, the impact of connecting the nation’s 4th and 6th largest urban economies could be significant. If a high-speed line does get built and if it does manage to deliver on its specs (two major “ifs” already), it would be the equivalent of a magic portal…or a stargate…or a warp pipe…or a tesseract…or…well…the point being it would make the two places functionally much closer together, and that’s a big deal.

Cities become economically vibrant through agglomeration. Bringing people closer together lowers search costs for both employers and employees. It also increases the likelihood of “creative collisions”. What high-speed rail could do is combine the benefits of agglomeration that each of these two cities already enjoy.

And, as early in the day as it is, there’s already speculation that a line connecting Dallas and Houston would be a precursor to additional lines connecting all four of the state’s pillars of civilization: Dallas, Houston, San Antonio, and Austin. The unbridled optimist in me imagines high-speed rail as the embryonic bones of a future mega-city encompassing the entire Texas Triangle.

…but…I’m still skeptical.

Texas Central Railway is backed by private investors. It claims it can pull off the project without resorting to either government subsidies or land development. This means total reliance on fares to cover operational costs as well as recoup capital investment. To my knowledge, no mass transit system in the U.S. covers operational costs on fares, let alone operational and capital costs combined.

That said, it’s a cool project and I’d love to see my home state get a little more diverse in terms of transportation infrastructure, especially if it’s being paid for out of private pockets. And hopefully, if there’s a bait and switch, it’ll turn into a land play rather than politicking for subsidies. Combining transit and land development works pretty well in Hong Kong, so I wouldn’t mind seeing the same approach tried back home.