What most voters probably don’t know about Austin’s upcoming big bucks transportation
[Roger Baker joined Austin community activist Bill Oakey and host Thorne Dreyer on Rag Radio, Friday, August 1. They mostly discussed issues raised in this article. You can listen to the podcast here.]
- Major problems with the billion dollar bond proposal
- CAMPO and politics of Austin growth
- The role of Austin public private partnerships
- Austin growth forecasting
- A look back at rail planning
- The road lobby meets the rail lobby
- The billion dollar bond campaign
- ‘Austin Strategic Mobility Plan’ bond details and documentation*
*The last section, ‘”Strategic Mobility Plan” bond details and documentation’ is rather long, takes a deeper look at the major bond problems, and has additional background documentation, links to click, video clip sections, and more.
On June 26, 2014, the Austin City Council unanimously approved a billion dollar “Austin Strategic Mobility Plan” (the Plan). This plan and its bond proposal are expected to become the basis for a $1 billion dollar November transportation bond election, when the Austin City Council decides on August 7 just how they want to put it on the ballot, likely to be titled “Proposition 1.”
“This is kind of a once-in-a-decade opportunity,” Mayor Lee Leffingwell, who sits on the Central Corridor Advisory Group, said about the project following the vote.
The day of the vote on the Plan, the Council knew that the issue was unpopular and they anticipated dissent. They were in no mood for debate at the only public hearing held on this singularly expensive bond proposal. So they shut down debate before most of the speakers signed up (including the author) could speak.
How did Austin property taxpayers ever find themselves faced with such a costly plan, aimed at acquiring local funding for the same kinds of projects that TxDOT and the feds mostly used to fund? How sound is the mobility strategy behind this plan, assuming that we decide to borrow and spend a billion dollars this way? What is the downside, and why is the Austin City Council so determined to push this thing through just before the new city council takes office? Should this bond package and its approval be seen as a decision for or against rail, as the “Rail or fail” bond promotion slogan maintains?
These kinds of questions should probably be near the top of the list of things that Austin voters should be thinking about and discussing before they vote for a billion dollars in new Austin property tax debt in November. I have made my strong reservations about the Project Connect rail proposal known previously on The Rag Blog.
Many other serious rail advocates, like my 50-year friend and light rail expert Lyndon Henry have raised similar objections to what looks like an exceptionally expensive rail system compared to alternative Austin starter routes that don’t try to cross the river. Another old rail pal, David Dobbs, has put together a vision of what the City could actually do with rail for about the same billion dollars, assuming the money were spent wisely on rail to match existing demographics.
The most important aspect of the whole bond story is the influence of real estate interests in shaping the proposed billion in transportation bonds.
The most important aspect of the whole bond story, in my opinion, is the influence of real estate interests in shaping the proposed billion in transportation bonds. Private business interests like the Real Estate Council of Austin (RECA) play a major role in influencing Austin’s growth and development policy but not without the help of supportive policies on the state level from Gov. Rick Perry’s business recruitment efforts.
Without an understanding of the role of such various special interests, sometimes in competition, we might find it hard to understand why the city would issue a bond debt package that would nearly exhaust Austin’s ability to issue new debt for about a decade, just before a new City Council takes office. Widening IH-35 as an answer to traffic congestion makes no sense. Nor does tying $600 million in rail bonds to future matching funds from a bankrupt federal agency, the Federal Transit Administration.
If we look at CAMPO (Capital Area Metropolitan Planning Organization), which has assumed the leading role of the federally sanctioned planning agency in charge of planning growth in the Austin area, we see an MPO planning process that lets a financially troubled state agency (TxDOT, the Texas Department of Transportation, now fully controlled by Gov. Rick Perry’s appointees) create an imaginary 2040 transportation future, with double the current Central Texas population, using a $32 billion hypothetical future transportation budget. Meanwhile, two bankrupt federal agencies, the FHWA and the FTA, are supposed to be acting as the regulatory watchdogs over this CAMPO planning process, which is costing about $2 million.
When the cat’s away the mice will play. As a result of the ensuing feeding frenzy of road project submissions, over 800 road projects seeking future funds were submitted in the CAMPO area, far more than San Antonio area project submissions. The data overload crippled the CAMPO travel demand modeling software! Acting CAMPO Director Joe Cantalupo described this problem at the May CAMPO meeting in Part 2, about 29-37 minutes into the meeting.
Welcome to Texas transportation politics. Once you understand how Rick Perry’s pro-business policies prevail, filter down, and play out on the regional levels below, including TxDOT, the CTRMA and CAMPO in the Austin area, it is easier to understand how Austin transportation planning got to be the way it is.
An ex-UT professor, Dr. Elliot Tretter, now at the University of Calgary in Canada, is writing a book about Austin politics. He covers some of the same territory in a People United interview with Alan Campbell on KOOP-FM. An important part of this interview, made over a year ago, is from 49-54 minutes where Tretter points out that the Austin City Council doesn’t really have much local control because so much Austin growth policy is being imposed from the state level.
With Rick Perry’s policies prevailing through his appointments of loyalists to state agencies, and with a business friendly Republican Texas Legislature, it is easy to see how business interests dedicated to maximum growth would come to prevail. This in a city that has a reputation to much of the world as being run and managed by green liberal Democrats.
There is a downside to this situation. With fast unregulated growth you get side effects like gentrification and Austin’s notorious traffic congestion. With all these factors at play, we are now proceeding toward one giant budget busting bond blowout for both roads and rail. One sector of the business community, RECA, recently demanded that as many roads as we can afford be put in the same bond proposal, and that the rail must be tied to an uncertain category of future federal transit funding.
Major problems with the billion dollar bond proposal
1. Is the billion dollar bond package affordable? It hasn’t made the news headlines, so very few voters have a way of knowing that adding a billion dollars to Austin’s general obligation bond debt will take a six cent tax increase that would use up almost all of Austin’s future high rated bonding capacity for the next decade.
This maximum level of new debt ties the hands of future city councils and threatens our current AAA bond rating.
This maximum level of new debt ties the hands of future city councils and threatens our current AAA bond rating, according to the Austin Financial Services Department. The video to watch is Asst. Austin Financial services Director Greg Canally speaking from 17-32 minutes in this video clip, at the end of which Elaine Hart chimes in and says the Austin debt burden would be quite high with six cents added: Open this clip, then open item D, on General Obligation bonds.
This transportation bond debt proposal would approximately double Austin’s general obligation bond (GO) debt from about $1 billion to about $2 billion. In fact, a billion dollars in new bonds is equal to more than half of the entire $1.8 billion in total general obligation debt issued by Austin, for all purposes combined, over the last 30 years.
This much new debt would prevent future city Councils from issuing new bonds for much of anything, assuming we want to maintain good bond rating.
Why would intelligent voters want to approve one giant bond package that uses up about 96% of the city’s total bonding capacity immediately, just before the new council is seated, while the next whole decade of City Councils are left with only 4% that much? The graphic accompanying the discussion illustrates how six cents of sales tax added to the existing rate of about 11.5 cents, would limit the new debt than can be issued to the hatched green wedge, which appears to be only about $40 million by 2024.
That, when compared to the full billion in debt proposed now, would only be about 4% as much. This would prevent Austin from building a better rail system for a long time, or anything else Austin needs.
2. Is the “Austin Strategic Mobility Plan” behind these bonds based on an intelligent mobility strategy? Amazingly enough, the “Austin Strategic Mobility Plan” has no mobility strategy to back it up! The only strategy is political, the plan to bundle a bunch of un-prioritized roads, some totally unfunded, together with the rail to sweeten up a conspicuously special interest-oriented rail system.
To try to sell these bonds as a mobility strategy is false advertising trying to promote by far the biggest voter approval of new property tax debt that Austin has ever seen. Neither the roads nor the rail portion has been planned with the goal of solving Austin’s existing traffic congestion problems.
3. Would the proposed $400 million in road projects really relieve congestion? Congestion relief will be minor, if any. The planned roads would not relieve congestion, nor is that their goal. The road projects are largely crossovers to allow the widening of the central city portion of IH-35 by two lanes, and to benefit rail. The modest IH-35 capacity increase would soon be filled by latent travel demand waiting to fill the added capacity. What widening IH-35 would do is to allow more total commuters to participate in the existing level of congestion, or worse.
The truth is that IH-35 cannot be fixed, according to the state’s top experts.
The truth is that IH-35 cannot be fixed, according to the state’s top experts. It is a lot smarter to change our basic approach to transportation planning, and to focus on managing demand, as compared to widening roads. Travel demand management is cheaper than the costly brute force approach of widening roads. As they say, widening roads to relieve congestion is like buying a bigger belt to cure obesity. A recent Austin Chronicle article, “Getting off the Road,” debunks road widening as a workable basic approach to helping to alleviate Austin’s traffic congestion.
Current Austin road capacity is being completely overwhelmed by the fact that 110 people move into the area every day, many of whom locate in the suburbs and commute into town jobs to save money. There’s no way we can afford to build ourselves out of decades of sprawl-generated problems, but especially not if we try to shift the road shortfalls onto property taxes to do it.
According to road policy gurus like the Texas Transportation Institute, IH-35 can probably not be fixed at any price, meaning that planners need to change their basic transportation strategy to a multifaceted approach that includes demand management, staggered work hours, working from home, and most important, integrating land use planning with affordable transportation planning. If the whole bond package is approved by voters, then the $400 million in road bond money, unlike the rail money, is likely to be spent fast, since TxDOT’s politically influential road contractors are itching to build roads again.
4. Will the $600 million Project Connect rail plan relieve congestion on IH-35, or even reduce current congestion at all? The $600 million rail proposal was largely designed to serve the future growth of a medical complex planned along a Red River and Trinity corridor near Brackenridge, plus another proposed dense development corridor across the river on East Riverside Drive.
However, building rail to solve future congestion problems in a limited area does nothing for most current Austin congestion and its most cost-effective relief. When Travis hospital district taxes were approved in November 2012, there were surely those who understood that there would not be enough road capacity to serve their proposed $4 billion in anticipated future development that the promoters of the medical district envisioned.
The Downtown Austin Alliance has mapped out three central Austin future development districts for Technology, Medical, and Creative Arts in the May 15 Austin Innovation Zone study. The medical district is a tall north south rectangle bounded by MLK on the north, Trinity on the west, IH-35 on the east, and 3rd street on the south (Graphic D). See page 19 for the districts map. Page 22, titled “Whats Missing?” points out that the Project Connect light rail line is a missing element that the developers will need.
Austin needs to plan a smart rail start to serve current needs.
Austin needs to plan a smart rail start to serve current needs, whereas the Project Connect rail proposal focuses on serving future development interests and solving predicted future problems.
There is another currently unfunded mandate for rail debt on the part of Cap Metro, beyond just the $600 million in rail bonds. The working assumption is that Cap Metro could issue about $118 million in its own bond debt to cover the roughly $22 million in yearly operations and maintenance costs of the Project Connect rail, which are the type of expenses that general obligation bonds don’t cover. Given the control of the City over Cap Metro affairs, this should probably be seen as a de facto City debt burden, with this part of the rail cost being added to Cap Metro’s ledger.
The really risky part of the Project Connect proposed $600 million in rail bonds is that they are to be tied to future FTA “new starts” matching funds, with the funding decision not expected for another three years. That matching source may have seemed like a slam dunk a few years ago when Project Connect started the planning, but as we learn now, “both the Highway Account and the Mass Transit Account of the Highway Trust Fund are nearing insolvency.”
The RECA demand that Austin rail bonds must be tied to future FTA matching funds thus constitutes a huge uncertainty for Austin rail, and a victory for the road lobby over the rail lobby at a time of shrinking funds.
CAMPO and the politics of Austin growth
Austin is a city facing rapidly rising living costs, terrible peak hour traffic, and gentrification. Part of the price we pay for decades of maximum unregulated sprawl growth in the Austin area. Fast growth has favored land development interests with the goal of profit from land deals, both inside and outside Austin. In Austin real estate interests commonly lobby for publicly funded roads, and now we see the same thing happening with rail.
Austin’s severe traffic congestion is the end result of decades of suburban sprawl development around roads approved by CAMPO, in the past primarily funded by TxDOT and the feds using state and federal fuel taxes, and more recently by making the roads toll roads. These traditional road funding sources are running very short, which shifts the political pressure downward onto local property taxes. In this context of prevailing land development politics in the Austin area, these transportation bonds make sense.
CAMPO is the federally sanctioned transportation planning body that has taken charge of long range growth planning for the Austin region, as I have explained. Since CAMPO determined the Austin area’s future growth rate by a vote over a year ago, Austin city planners have saluted and are now preparing to double the Austin area population to 4 million by 2040.
Page 2 of the Strategic Mobility Plan reminds us that this CAMPO decision that the Austin area will double by 2040 is accepted as a planning policy assumption by the Austin Transportation Department. These bonds don’t require close inspection to see that they represent special interest politics as usual, closely tied to CAMPO policy at the regional level in the past, and now with new RECA demands being added.
The way the politics works, CAMPO is predicting perpetually rapid sprawl growth in the Austin area for decades to come, so Austin government is saluting and trying its best to issue enough debt to handle the predicted growth, keep development interests happy, and still afford the promised rail. To do that is impossible, but this bond package is looking like a mismanaged best attempt.
If we accept at face value CAMPO’s $32 billion plan to double the Austin 2040 population with 70% of this growth planned in suburban counties ringing Austin, then the CAMPO travel demand models can be depended on to project nightmarish future driving delays. These can be used to argue for building both roads and rail as fast as we can under the assumption that there will always be plenty of future Austin area growth to pay off the debt.
In the real world, congestion is unavoidable and self-limiting. People simply avoid the urban core in one way or another, perhaps by leaving Austin and living somewhere else that does better long range transportation planning. Congestion is a function of growth seen in all large U.S. cities. If unavoidable, it can provide a useful incentive to shift to transit-oriented development.
By disregarding the importance of integrating land use with transportation planning and funding, profitable unregulated suburban sprawl growth has clogged Austin’s major roads, and led to gentrification and higher living costs. Austin’s political support of maximum growth, while beneficial to development interests which benefit from fast growth, leads to gentrification inside the city, where sharply rising property taxes are hitting residential property taxpayers hard.
Sustained fast unregulated sprawl growth has predictably overloaded the main access highways.
Sustained fast unregulated sprawl growth has predictably overloaded the main access highways, threatening Austin competitiveness in the tech economy. The cost of infrastructure to serve future growth can kill current growth if you get it wrong. The current council has funded forewarned growth infrastructure disasters like Water Treatment Plant #4. Now, Travis taxpayers are being expected to front the money for a new SH 45 SW toll road over an environmentally threatened part of the Edwards Aquifer, for no better reason than to handle Hays County commuter traffic.
Perhaps some day, Austin will succeed in convincing CAMPO that transportation planning needs to take into account water planning. Austin’s water crisis can never be truly resolved without an end to our denial that West Texas is experiencing gradual desertification (the end of the state from whence Austin’s water supply flows) due to climate change, with this being superimposed on our naturally severe Texas droughts.
Both CAMPO and TxDOT have been ignoring current changes in the economics of driving, and the per capita decline in driving, much as they are ignoring climate change, and the water resources needed by the projected sprawl growth that CAMPO has adopted as policy. Right now, CAMPO is in conspicuous denial of almost every warning sign that we need to shift to a wiser, more sustainable and affordable mode of transportation planning.
A new CAMPO Director, Ashby Johnson, has recently been chosen. He knows first hand how MPOs work, but with CAMPO future growth and planning policies already firmly established, the latitude for much policy change in the 2040 CAMPO plan is limited and probably politically unwelcome.
Upon taking the reins from former CAMPO executive director Maureen McCoy, who retired in February, Johnson will examine CAMPO’s resources and immediately get involved with the organization’s 2040 long-range transportation plan, which is slated for approval next May. “He’s going to take a hard look at our operations and where we’re investing our money, and he’s going to have to get involved with the planning process immediately and steer us down the right path,” Conley said.
Whatever FHWA and FTA federal watchdogs are responsible for refereeing Austin’s federally mandated planning process are threatened with their jobs due to the current Congressional transportation gridlock; they can ill afford to make waves by challenging the local shortcomings of the federal planning process that they are in charge of regulating. TxDOT recently did a deal with the feds to effectively weaken NEPA law, by means of taking enforcement of federal NEPA law inside TxDOT, which agency is now in solid control of Gov. Rick Perry appointees.
The role of Austin public private partnerships
The current transportation bond package is a prime example of a public-private-partnership pattern that now operates widely on the city level. A business-friendly pattern of governance that Austin has been using for some time.
The City of Austin Economic Development Department works closely with private growth interests tied to the Chamber and Opportunity Austin, together comprising a public-private coalition. RECA is in the picture too. Austin city government now operates in many ways as a coalition between the City and private business interests that profit from Austin’s rapid growth. This is a political era when such public-private partnerships abound, with Gov. Rick Perry’s approval, although sometimes these don’t work out very well.
Texas appeared to be a leader in the public-private partnership movement when it passed the 2011 law, said Rodney Moss with the Association for the Improvement of American Infrastructure. However, Texas stumbled out of the gate with unsolicited projects, including a proposed 47-story tower in the Capitol complex, that prompted a backlash when legislators returned to Austin in 2013.
At any rate the new billion dollar proposal for roads and rail — the Plan — has resulted from this same kind of alliance between the City, operating through Project Connect, the Greater Austin Chamber of Commerce, and sundry other business partners and interests. Without a doubt, the City of Austin, the Austin business community and the Chamber of Commerce are solidly lined up in favor of the billion dollar rail and road bond package.
By June 26, the Council votes were obviously lined up.
By June 26, the Council votes were obviously lined up. Votes on things like this don’t happen unless they are lined up in advance. Leffingwell had conveyed the urgency of a November vote at the June 10 meeting that reviewed the Mobility Plan. With council approval expected, the story was primed for release and publicity. The Austin Business Journal covered the situation the day after the City Council approved the Plan: “Why Austin Chamber backs rail plan: ‘Improving traffic congestion is critical.”
The plan for a $1.4 billion urban rail line in Austin got a boost this week when both the City Council and the board of the Greater Austin Chamber of Commerce voted to support the city’s $1 billion strategic mobility plan. The plan funds both the rail line and a number of road improvements.
The strategic mobility plan recommends $1 billion in locally funded projects. When combined with federal matching funds, $600 million will go to fund an urban rail line running from Riverside Drive in the south to Highland Mall in the north — though it’s not quite clear if the tracks will get all the way to Highland before the funds run out at this point. The remaining $400 million will go to fund a range of road projects, mostly along I-35.
With the Austin business community and the Chamber of Commerce solidly lined up in favor of the bond package it is hard for any group to resist the pressure. The Daily Texan has blessed the rail part of the SMP with faint praise, without mentioning the roads at all, saiying, “we offer our grudging support for the current plan.”
Austin growth forecasting
A story from earlier this year reveals that Austin economist Jon Hockenyos helped with forecasting Austin growth. He was prety extravagant in his future growth projections, whereas the Finance Services, in charge of advising the city on debt, was more cautious.
…consultant Jon Hockenyos of TXP, Inc. painted an extremely rosy picture of the city and region’s short-term economic prospects. He was followed by the budget staff, led by financial officers Elaine Hart and Ed Van Eenoo, who explained at length that ongoing expenses plus a brace of rising costs mean the city’s finances remain quite constrained…
The end result of these considerations was the official Austin growth forecast.
Those who follow Austin city politics know that when the Greater Austin Chamber of Commerce, Opportunity Austin, RECA, the University, and other influential Austin business allies want something, the Austin City Council rarely resists the pressure.
As one might expect of a city which is being told to try to grow as fast as CAMPO anticipates, those assigned to do Austin’s economic forecasts understand that they need to paint a rosy picture of Austin’s economic future, based on a perpetual tech job boom, and more recently medical industry jobs. Perpetual growth forecasts come easy if you hire the right economist. In fact, the city would probably not hire economists who are not seen to be economic optimists by established inclination. Some local economists make money from advising the city on growth poliicy, like here. And some do economic consulting for private investors that benefit from city growth policy like here.
Here is a video clip where we can see Austin’s public-private partnership in action. The City’s Austin Economic Development Corporation, the Greater Austin Chamber of Commerce, and Opportunity Austin sit in a line and explain Austin’s growth expectations to a City Council growth subcommittee, with Mayor Leffingwell officiating. Watch part 3, which is the 53 minute clip.
Austin economic growth planning and forecasting has become sort of a perpetual growth boom echo chamber.
Austin economic growth planning and forecasting has become sort of a perpetual growth boom echo chamber, wherein anything other than the fastest possible growth is regarded as subversive. But the faster the growth, the higher the living costs. In-migration is supplying the labor for these mostly low wage jobs. Most Austin jobs are actually held by commuters living outside the city.
The accepted party line at the Chamber and City level is that the faster the growth, the more jobs will be created. Therefore Austin needs to grow as fast as possible, and the friendly real estate land development interests are ready to do everything they can to help make that happen.
But any rational analysis of the benefits, for Austin property taxpayers to offer their property as collateral for nearly half a billion for roads in an era of severe global warming is pretty crazy to begin with. A slow growth policy designed to benefit current residents would tend to suggest less suburban sprawl and a deliberately sustainable rate of Austin area growth, based on such factors as increasingly limited water and a sustainable infrastructure budget.
A look back at rail planning
Before the 2000 rail line on Lamar was defeated, a lot of federal money was spent showing that to be an excellent place for a starter line. The the city got other ideas. In 2008, the ROMA group was contracted to design a new rail system which suddenly jumped from Lamar over to something similar to the current proposed alignment, first weaving through the Mueller development, going south through the medical district, on the Red River Trinity corridor to Riverside and on out to Bergstrom Airport. (Many people think that airports match up nicely with rail. In fact it is airport employees who tend to use it most.)
After incorporating public feedback, ROMA will make a presentation to City Council May 8 and to the CAMPO group May 12. The ambitious goal is to take the project to the full CAMPO board for approval (or not) by June. Project champions Will Wynn and McCracken wear multiple hats as City of Austin elected officials, CAMPO board members, and Transit Working Group members, which makes the politics tricky; having the proposed system come from ROMA thus provides a degree of third-party objectivity.
By 2008 Senator Kirk Watson was taking a fairly active role in rail support and the Austin planning group ROMA was actively planning Austin rail.
Principal Jim Adams said ROMA and its subconsultant, LTK Engineering Services, are still evaluating the various available technologies. (No, it hasn’t been decided whether to use light rail or ultralight rail.) They also are assessing the benefits of a shared-lane (true streetcar) system vs. dedicated transit lanes. ROMA’s assigned scope of work was to evaluate only links between downtown and three key destinations – the airport, Mueller, and the Long Center/Zilker Park. As urban designers, ROMA will address improved connectivity with planned and future regional commuter rail service and improving overall mobility — pedestrian, bicycle, and vehicular. LTK has planned streetcar systems for Portland, Oregon, Seattle, and many other cities.
Mayor Will Wynn originally led the streetcar initiative, calling for a voter rail referendum in November. But when Wynn agreed to submit the city of Austin’s transit initiative to a CAMPO evaluation process, he essentially handed over the political reins to CAMPO and Chair Kirk Watson. While there’s no legal requirement that the city get CAMPO’s blessing, it is widely seen as in the best interests of regional transportation planning.
The politics in support of transit were congenial in 2008, when politicians like Watson thought that they had put together one big happy family with everyone including environmentalists on board.
Before standing-room-only crowds, a historical brokering of a regional Central Texas transit system — focused on rail, not roads — has been taking fascinating shape at a series of Monday morning work sessions at City Hall. The Transit Working Group convened by the Capital Area Metropolitan Planning Organization is going boldly where the region has never gone before. For the first time, all of the many transportation and governmental powers-that-be are talking collaboratively about partnering to create a comprehensive system of appealing rail (and rapid bus) alternatives to cars and congestion… Last year the chamber’s Take On Traffic campaign pushed hard for toll roads; after attending last week’s Transit Working Group meeting, former campaign Chair Gary Farmer said the chamber hasn’t forgotten its commitment to think comprehensively and now pursue transit as well.
The road lobby meets the rail lobby
Some agencies like TxDOT, CAMPO, the CTRMA, and RECA are more focused on providing roads to meet future suburban development needs. The recent RECA demands indicate a policy split in what in 2008 was a solid united front of business interests supporting both roads and rail, while another sector of local development interests has been pushing for transit, especially since the end of the Austin Dotcom growth bubble in 2000.
Gary Farmer’s Opportunity Austin group started “Take on Traffic” in 2003, with a strong emphasis on regional transit. Since the defeat of the Austin rail plan in 2000, when Kirk Watson was Austin mayor, he has become a vigorous rail supporter. Of course there was a lot more road and rail money in 2008, and it is running out of money that often leads to flaring tempers and political splits among political allies.
The Austin American-Statesman ran a very revealing story on Saturday, July 26, which helps to make sense of recent events. In this story, they reported that Real Estate Council of Austin (RECA) had decided to use its considerable political influence to demand that roads must be included in the rail bond package, and second that no rail bonds were to be issued unless they are matched by the 50% in federal matching money being assumed by the Project Connect planners, despite the fact is that the FTA is now broke.
The Real Estate Council of Austin voted Friday to support the city’s $1 billion proposal because it’s meant to address the area’s growing traffic congestion with large-scale road improvements as well as urban rail, council President Ward Tisdale said. The City Council is expected to decide in August whether to put $600 million for rail and $400 million for roads on a single bond proposition in November. But the real estate group’s continued support for rail comes with two conditions that illustrate the major hurdles still facing the project. First, the city must commit to spending at least 40 percent of taxpayer money from the bond proposition on road improvements. Second, no taxpayer money can be spent on building the rail line until the Federal Transit Administration agrees to pay for half of the estimated $1.4 billion total cost of the rail line.
This corresponds closely with what Mayor Leffingwell had said at the June 10 work session. If you listen to Leffingwell on the June 10 video clip and compare the Statesman story, it is apparent that RECA had by then given Leffingwell its demands on the billion dollar bond package, with regard to both roads and rail. The RECA folks probably had a serious meeting with Mayor Leffingwell, so he decided to include roads as part of the bond package, which he said would help the unpopular rail bonds pass.
The Project Connect rail plan has historically been the force driving the November bond issue.
The Project Connect rail plan has historically been the force driving the November bond issue. Years ago it had become apparent that the $4 billion in proposed future development for the medical district would absolutely need rail to build out as planned.
Presumably Project Connect was selected to do the planning because of their expertise in securing FTA “new starts” funding and a willingness to plan around hypothetical future growth, as opposed to current needs. But now the RECA demand on the rail bonds ties the rail bonds to future FTA funding three years from now. This belongs in the riverboat gamble category of optimistic outcomes.
Ben Wear, reporting in the July 28 Statesman, put it this way:
And remember, the only reason this bond proposal has any road spending at all is that business interests pretty much demanded it — at a 60-40 ratio — in return for their money and active support of the light rail proposal.
Wear points out that some of the roads, like the $120 million Riverside/IH-35 interchange, are meant to help rail. A $34 million interchange at Riverside/U.S.183 appears to make no sense it all. The fact that property owners would be hit hard for road projects that don’t make sense is not the sort of reporting that helps to win bond elections.
The billion dollar bond campaign
These bonds don’t require a lot of close inspection to see that they represent special interest politics as usual, closely tied to CAMPO policy at the regional level, but now struggling to keep both rail and road interests happy in a time of severely limited public funds.
There is likely to be a considerable gap between what the current Project Connect promotion blitz has been promising as broadly usable transportation versus what spending this billion dollars is likely to deliver in terms of mobility. Project Connect has recently been running what looks an awful lot like a city bond promotion campaign. The scale of their advertising indicates that the bonds may not be polling very well. Otherwise why the big media blitz?
Using city money to conduct such a campaign is legal when framed as a public education campaign, but only until the rail and roads bond proposal is officially put on the ballot on August 7. At that point, bond promotion will presumably switch to the Chamber of Commerce, etc., with a big private campaign fund to promote the bonds.
For those who understand politics, the current advertising blitz probably means that this bond proposition is not polling very well. Some political observers expect that a million dollar campaign might be used to support these bonds, with much less on the other side. It should be noted that the rail opponents succeeded in defeating the year 2000 rail plan (when I was a rail supporter) even though outspent six to one.
Some honest rail advocates like the Sierra Club, have endorsed the Plan.
Some honest rail advocates like the Sierra Club, have endorsed the Plan. I imagine they didn’t check the fine print very closely, and thought that these bonds would at least fund rail, even if the roads wouldn’t solve many mobility problems.
To try to lead Austin voters to approve such a deeply-flawed, budget-busting, and ineffective plan as the “Austin Strategic Mobility Plan,” which lacks even a mobility strategy, takes a lot of brass. Surely Austin voters are too smart to approve issuing so much tax debt that it would cripple future Council spending. This billion in bond debt would exhaust Austin’s GO bond capacity and preclude better smarter cheaper and less politicized projects of any kind for a decade or more. This is at a time when all sorts of worthy social needs are hurting for money, and local Austin and Travis county funding are increasingly being called on to fund things that the state and the federal government used to do.
Austin should gamble away its entire remaining bond capacity to widen IH-35 and bail out a medical center, encourage high dollar high rises on Riverside, yet never see progress toward current congestion relief, nor even a shift towards wiser and less politicized growth planning?
Smart planning requires a smart approach led by experts rather than self-interested politicians. We need a transition away from roads to serve sprawl and toward bare bones rail and bus solutions to solve current problems. Lets start with the Lamar-Guadalupe corridor, the most rail-friendly corridor that can be chosen for a new rail start.
For those who think globally and try to promote the best local policies, I will conclude by citing several recent analyses dealing with why global oil supplies have a local impact. When the global oil price (Brent is the benchmark) changes, local fuel prices strongly tend to follow.There is effectively one global oil market linked by tankers headed to the tight markets. This can soon threaten our local ability to afford driving more than most people would prefer to believe.
Especially see this analysis of global fuel security by Gail Tverberg, well written and aimed at intelligent non-economists. Figure 13 in particular compares the rising global cost of fuel production meeting with the decreasing global fuel customer’s ability to pay, with this gap rapidly growing wider.
With oil prices remaining relatively flat, importers become complacent because they don’t understand what is happening. It looks like we have no problem when, in fact, there really is a fairly big problem, lurking behind the scenes.
Looking ahead, say five years into the future, lets assume we do approve the billion in bonds in November. Let us think positively and assume that we recover from the current drought so Austin continues to grow as fast as ever. Assume that Congress comes to its senses and starts funding the FTA properly so that it can supply matching funds for the Project Connect rail plan. And that IH-35 is being widened as planned, to handle a bit more congestion. Assume likewise that the Mideast calms down so that the global price of fuel doesn’t spike before then.
When the global price of oil rises, it forces up the price of nearly everything made with or transported by oil.
All of that good news would have little effect on what Vodra and Tverberg are trying to warn us about, because their analysis is based on a continuation of the same global oil depletion factors that already caused the global price of oil to rise from about $20 a barrel in 1998 to over $100 a barrel now. When the global price of oil rises, it forces up the price of nearly everything made with or transported by oil, meaning that oil causes prices of basic necessities to rise while depressing other sectors. A syndrome that James Kunstler has called “The Long Emergency.”
Then what? What if the countless commuters who are already struggling to just drive should now have to pay $5 or more for gas? A lot of the current population could not keep driving, so Austin would need to try to scramble to provide high capacity transit fast. But Austin Finance Services has already told us that we wouldn’t be able to issue any more bond debt, having maxed out our credit rating on one big bond blowout that costs too much but does too little.
‘Austin Strategic Mobility Plan’ bond details and documentation
1. Is the billion dollar bond package affordable?
Let us go to a useful and important lesson in Austin’s general obligation (termed GO bonds) bonding capacity, which comes from city property taxes. This was prepared by the Austin Finance Services Department. Our debt capacity calculations are, quite naturally based on predicting fast Austin growth forever. The video clip below is a key to understanding the true precariousness of the Austin GO bond debt situation whenever the current growth boom slows down.
This is a good basic city bond finance course, a 76 minute video clip worth watching if you really want to understand city finances. Open this clip, then open item D, on General Obligation bonds. The slides in the video are fuzzy, but here is a link to clear and readable slides that are used to illustrate it.
Elaine Hart is CFO of the Finance Department and Greg Canally is her top assistant. They explain that Austin is totally tapped out on new bonding capacity right now, without a tax increase, assuming that we want to preserve our top AAA rating from all three bond houses. In effect, the billion in bonds under consideration will use up all of Austin’s ability to issue new general obligation debt and still maintain the city’s currently enviable AAA bond rating.
Hart explains that if we want to add a billion in new GO bond debt for transportation, we will be obliged to raise property taxes to the maximum possible level, in a city which is already becoming gentrified and getting harder to afford pretty fast.
The proposed billion in new transportation bond debt is the maximum possible debt that the city can issue without risking the Austin bond credit rating.
The proposed billion in new transportation bond debt is the maximum possible debt that the Finance Department staff says the city can issue without risking the Austin bond credit rating. The proposal effectively leverages Austin’s rising property values to borrow to the max. If the City wants to issue more debt for roads and rail while still preserving our good bond rating, there can be an increase in the tax rate up to a maximum of six cents, which would give the City $965 million in new bonding authority. A billion dollars in new property tax debt bundled into one bond proposition would approximately double Austin’s current GO debt.
In fact, a billion dollars in debt from one bond package is an unprecedented amount of new Austin debt, equal to more than half of the $1.8 billion in total general obligation debt issued by Austin for all purposes combined over the last 30 years. Why should we stop at $965 million that the six cents gives us, when the City can brag about spending an even billion fixing Austin’s horrible transportation problems?
Finance staff thinks the city can squeeze out a little extra debt by assuming a steady increase in property valuations. Assuming that all goes well, we assume that Austin property valuations will keep going up by 3% a year. Thus the SMP anticipates taking it up to a 6.25%, to reach exactly a billion. See page 21: “At 6.25 cents/ $1 billion in new debt – the city would still be in compliance with its debt related financial policies.” This level of debt would exceed the Fitch bond rating criteria by going above .75 % of valuation per year to about 1.5%, but they don’t think Fitch would care, given factors like Austin’s perpetually fast growth.
See page 11 here. Also see page 14, which shows that even if Austin keeps increasing 3% a year in its property valuation as anticipated, the billion in new debt now would allow only roughly $40 million of new debt to be issued over the next 10 years by future City Councils. The green hatched area on page 14 shows that if the city does issue a full billion in debt now, this would prevent future councils from issuing any more than about $40 million in new debt during the next 10 years.
This limit effectively ties the hands of the future city councils that might need more bond capacity to fix anything important. We should ask why the current City Council has the right to issue 96% of the City’s total allowable bond credit right now, when this would mean the next 10 years of City Councils would only get to issue 4% as much?
What if the current 3% annual rise in Austin appraised property value slows down? What if the current tech boom growth falters? Perhaps this could happen because of a continuation of the current severe drought for another two years.
A major financial risk here is that whenever the currently remarkable rate of Austin growth slows down for any reason, then the per capita taxes will have to rise in step to keep paying tax debt which has to be paid for schools plus a growing list of city county and utility bonds. But higher per capita taxes tend to slow growth and that can lead to a debt trap. The Austin water utility, which issues its own revenue bonds, has now gotten itself into an Austin water rate debt trap, where the more the public cuts back on their water use, the higher their water bill goes (given high utility debt for projects like Water Treatment Plant #4).
But Austin is certain to grow forever, right? The reality is that decades of car-addictive unregulated sprawl development ring Austin, growth encouraged and funded through gas tax money by groups like CAMPO and TxDOT when funds were flowing more freely. This has been very profitable for land development interests, which tend to dominate Texas politics as we now know it. However, over time, sprawl development has clogged Austin highways, raised Austin area living costs, and is rapidly making Austin economically less competitive compared to Austin’s rival tech hubs like Charlotte, Denver, Seattle, and wherever.
There is a growing concern that we are seeing another national tech bubble.
Beyond the local economy and its rising costs, there is a growing concern that we are seeing another national tech bubble like that which led to the Dotcom crash of 2000. What about Austin’s diversification toward medical jobs? While it is true that the medical industry and jobs and treatments tied to that have been profitable for decades, this sector of the U.S. economy probably cannot thrive any more than tech growth without a genuine and broad economic recovery that helps American consumers cope with rising medical costs. Treating medical training and bio-med technology as a driver of decades of future growth is likely to fall short of expectations.
2. Is the ‘Austin Strategic Mobility Plan’ behind the bonds based an intelligent mobility strategy?
Amazingly enough, there is no “Austin Strategic Mobility Plan” strategy to back up the City Council’s approved billion dollar bond plan, despite the title! If there is any strategy it is primarily political, as we can see from Mayor Leffingwell’s comments at the Council briefing on the SMP below. It sounds better and impresses voters more when you call the bonds part of a “mobility strategy” but that doesn’t mean there actually has to be one. In the realm of politics, appearance is reality.
The political strategy was to add roads to get the billion dollar bond package passed. The roads were added because of political pressure from road promoters and as a bond election sweetener, as Ben Wear reported in June.
The Austin City Council, looking to broaden the appeal of what could be a $700 million urban rail bond election in November, is considering tacking on road improvements from among $480 million in possible projects. That number, about two-thirds of it devoted to improving Interstate 35 interchanges, likely will be cut more or less in half over the next couple of weeks before the council votes on it. But the proposal from city staffers indicates that Austin voters almost certainly will have a mix of rail and roads to vote on this fall.
The Austin Business Journal commented on the same deal.
The plan, which was discussed at the City Council’s work session Tuesday, would be to bundle the two projects together on the ballot in an effort to ensure the latest rail bond election doesn’t follow the city’s 2000 rail bond into the loss column. At the meeting, Council members explored a menu of about $480 million in projects to choose from, most of which were targeted at I-35. The Council is expected to pick about half the total $480 million in projects before votes are cast, the Austin American-Statesman‘s Ben Wear reported.
You can’t call an intent to fund $480 million in roads, which actually need to be trimmed further to $400 million or less, a meaningful strategy since it lacks both priorities and enough money. Important pieces of the plan, like the US-183 interchange with IH-35, lack ANY foreseeable funding source, or even a cost estimate. A road wish list is not a strategy. There is no idea of the road timing, nor any idea of just how much congestion relief would result if there were enough money to do everything on the menu, or how much good it will do if we can only spend $400 million.
Most of that which is publicly known about the Austin Strategic Mobility Plan is to be learned from the June 10 Council Work session, which meeting was pretty open, candid, and informative. Go to Item D, here: “2014 Strategic Mobility Plan Briefing”.”
From minutes 26-30, Mayor Leffingwell reveals some key facts. First, that the bond package is being crafted to have broad the broadest possible political appeal by adding roads. At 29 minutes he discloses that federal rail approval won’t come for about another three years, and that NO rail bond money will be spent unless FTA federal matching funds are available!
Especially see the section 27-32 minutes into the clip where Mayor Leffingwell explains key political considerations behind promoting the bond package and time frames and promises behind it. Leffingwell makes it clear that he wants to increase taxes by a full six cents. Councilwoman Sheryl Cole asks about the city debt, and Austin Financial Services CFO Elaine Hart is brought forth to explain that six cents is the maximum bond debt that Austin can now afford.
At 32 minutes, Sheryl Cole makes the brave observation that “We have a 50 year problem that we’re trying to address in November.”
Finally at 41 minutes, Leffingwell describes how the whole package is being crafted to maximize its voter appeal. Whereupon Chris Riley complains that the bonds don’t appear to be consistent with the City’s Imagine Austin master plan. Leffingwell concludes by reminding Riley that the bond package has been developed for maximum appeal to voters, known to be focused primarily on congestion. From this exchange, we might well conclude that the political appeal strategy behind the bond package has been prearranged.
3. Would the proposed $400 million in road projects relieve congestion?
The short answer is no. The public probably hopes that the $400 million in roads in the “Strategic Mobility Plan” were carefully selected, as part of a careful strategic analysis meant to preserve or improve Austin’s decreasing mobility in cost-effective ways. Since the Plan’s bonds started out as rail bonds for the Project Connect system, and the roads were only added recently, the roads are designed do things that TxDOT already had waiting in the pipeline, as opposed to strategic projects selected to relieve Austin congestion. All the easy cheap stuff has already been done.
For the best and most revealing documentation of the role of the roads, go to this 45 minute video clip, part D, on the billion dollar “Austin Strategic Mobility Plan”.
The video clip features Robert Spillar in about the first half of the clip describing the roads, which are in large part rebuilding a string of IH-35 intersections to widen them and accommodate two more vehicle lanes on IH-35.
By widening IH 35, the Austin taxpayers are really bailing out TxDOT.
By widening IH 35, the Austin taxpayers are really bailing out TxDOT. TxDOT used to fund this kind of stuff before they effectively went broke due to trying to build and maintain more roads than their relatively declining fuel tax could fund. But the road money portion of the bonds, unlike the rail money, could almost certainly be easily and quickly spent by TxDOT. TxDOT recently “streamlined” the federal NEPA law by putting its environmental enforcement inside TxDOT, an agency now solidly controlled by Gov. Rick Perry appointees. And TxDOT’s politically influential road contractors are as anxious to build as ever.
With TxDOT itching to start building new roads to serve CAMPO-led development, the road money portion of the bonds, unlike the rail money, would almost certainly get easily and quickly spent by TxDOT, which recently weakened the NEPA law by putting the legal enforcement under TxDOT control.
About eight minutes into the clip, Austin Transportation Dept Director Robert Spillar starts telling about trying to manage traffic on IH-35, from San Marcos to Georgetown, by increasing capacity on its central portion through downtown Austin, where peak hour congestion is bumper to bumper nearly every day. He continues talking about relieving IH-35 congestion as the major focus, barely mentioning bikes and peds, in his comments extending to about 18 min. Most of the roads proposed for the bond package are for new IH-35 interchanges that are designed to widen IH 35 by two vehicle lanes.
The road money part of the SMP is largely intended to fund new overpasses over IH-35. But why is that? TxDOT is itching to build roads, as always, but it lacks money so TxDOT expects local matching funds. But TxDOT is essentially broke, overextended in trying to build enough roads to serve the sprawl development of a highly urbanized Texas population. Locally, TxDOT has been working on designing a string of IH-35 overpasses along IH-35 that are bigger and wider to add two more lanes to the central part of IH-35.
Due to a high level of latent demand for IH-35 peak hour capacity, traffic engineers know that widening a congested road like IH-35 will soon attract more drivers until it becomes as congested as ever. However, more total drivers than ever can then be actively participating in this congestion which is good. Progress to TxDOT is more drivers driving.
Recently the Austin Chronicle ran a really insightful story “Getting off the road,” which points out that building all the roads we can possibly afford won’t relieve congestion. It explains why IH 35 is going to be a mess no matter what we do. One reason is a high level of repressed or latent demand for peak hour road capacity. Also because we can’t build our way out of Austin’s fast growth, a fast growing road demand due to 110 people moving into the Austin metro area each day. We need to plan our transportation differently, to solve our current problems, and less as a public funding subsidy for hypothetical future growth.
By widening IH 35, the Austin taxpayers are really bailing out TxDOT, which used to fund this stuff before they effectively went broke, due to building the land developers more roads than their fuel tax could support. But this road money portion of the bonds, unlike the rail money, would almost certainly be easily and quickly spent by TxDOT. They recently streamlined (weakened?) the federal NEPA law by putting that environmental enforcement inside TxDOT, an agency now solidly controlled by Gov. Rick Perry appointees.The road money is likely to get bonded and built fast since TxDOT’s politically influential road contractors are hungrier than ever these days. TxDOT has weakened NEPA law by taking its environmental enforcement inside TxDOT, now a solid Rick Perry fiefdom.
Let’s assume that we REALLY want to fix the congestion problems along the central portion of IH-35 as it appears that these SMP road projects are largely attempting to do. What would it take? You probably don’t want to know because IH-35 is broken and resists any realistic peak hour congestion relief approach. The Texas Transportation Institute actually did a careful study of what it would take to fix IH-35, given CAMPO’s projections. Here is the master link leading to this to that study and and more.
In particular go to this link.
Long-Term Central Texas IH 35 Improvement Scenarios, August 2013
The MIP modeling analysis for IH 35 analyzes the “big picture” of travel patterns and congestion for IH-35.Page 9-11 of the Executive Summary says we can only solve the IH 35 congestion problem by assuming we do ALL of the following things, INCLUDING adding new capacity! These measures are listed on page 11.
• Adding and managing capacity similar to Scenario 2.
• Shifting 40% of region-wide work commuter trips to work-at-home jobs.
• Reducing university commuter trips by 30% region-wide, assuming, for instance, technology options replace the in-class experience.
• Reducing retail shopping trips by 10% region-wide, for example being replaced by online shopping.
• Shifting trips to off-peak periods.
• Increasing HOV, transit, and non-motorized usage each by 25%, decreasing auto vehicle usage.
4. Will the Project Connect rail plan relieve congestion on IH-35, or reduce current congestion at all?
The media slogan “Rail or Fail” has been adopted as the road and rail bond package promotion slogan. The implication is that voting against a bond package that bundles ineffective roads with special-interest rail should be scorned as an urban planning failure.
How did the Project Connect rail get to be the central focus of the proposed bond package?
How did the Project Connect rail get to be the central focus of the proposed bond package? And how much congestion relief would we expect if we build the entire $600 million in rail bonds?
The year 2000 light rail plan, which was narrowly defeated by the suburbs, had put rail along the logical corridor, the highly congested and centrally located Lamar-Guadalupe corridor, approximately midway between the currently highly congested IH-35 and MoPac freeways. In 2008, Austin planning consultant ROMO suggested that the rail jump to the east, over to a new alignment just west of IH-35, that would have crossed the Colorado River to Riverside drive.
Project Connect’s proposed Highland to East Riverside rail line would do little to reduce current traffic congestion because it is being primarily designed to handle decades of hypothetical future growth. Relief of future congestion is a primary feature of the current FTA new start application.
Was rail to serve a future medical center already a done deal by early 2009? There is pretty good evidence for that. In November 2013, the Highland corridor rail alignment was chosen by Project Connect. It was based heavily on both medical center growth projected by Project Connect, and the proposed East Riverside growth that had been incorporated into the Imagine Austin Plan.
The Project Connect rail plan has been carefully crafted to score high with a Federal Transit Administration (FTA) 50% matching funds category known as “New Starts.” This approach might have been more appropriate a few years ago when the FTA actually had money, but now the FTA transit fund is nearly broke. The rail project has been carefully crafted by Project Connect to score high as an FTA New Starts application, expected to be decided on and the top projects chosen in about three years.
But the FTA and the FHWA are both now out of federal funds, unable to reach a compromise for an extension, and the House Republicans may prefer to fund roads over rail as hard times continue. If the the FTA New Start money is not there three years from now when the final FTA decision is expected, the Project Connect rail may never happen.
We know that by February 2009, a growth recruitment group closely allied with the Greater Austin Chamber of Commerce, Opportunity Austin, had raised about $16 million to promote its second five year Austin growth plan titled “Opportunity Austin 2.0.” On page 11 of this link we see as a top goal to “Ensure development of Austin medical school.”
Rail advocate Dave Dobbs recently related a meeting he and Lyndon Henry had with local officials while trying to promote light rail along Lamar during 2009:
This plan was presented to Lyndon and I at a lunch meeting with Rob Spiller, Gordon Derr, and Karla Taylor Villalon at Corazon on September 4, 2009 and the map looked just like the ones above. We were told then that the plan was essentially immutable, that other corridors would not be considered for the first phase. Cut ABIA, the link to Seaholm and the Long Center, and switch out Mueller for Highland and that is the Project Connect 9.5 mile, $1.38 million plan.
Several years later, in the fall of 2011, Sen. Kirk Watson had gotten got his Senate Bill 7 hospital district bill passed. This sanctioned the creation of a Travis property tax-supported hospital district, but without state funding. Watson then started to aggressively promote a hospital district bond election.
You don’t plan $4 billion in development without choosing a development area, which needs to be near U.T. The favored area was near Brackenridge and the Erwin center and to the south, which area clearly lacks much spare road capacity. This Chronicle story is probably the best single account of this whole situation, as seen in September 2012.
Ever since Austin state Sen. Kirk Watson first unveiled the idea at a Real Estate Council of Austin event last September, regional agencies and governments have scrambled to find funding possibilities for the massive project, which could run the involved parties (all told) as much as $4.1 billion over 12 years. At last check, the University of Texas is on board for at least a $25 million annual contribution that would climb to $30 million over the first eight years of the school’s existence. Central Health, according to the Statesman, would cough up about $35 million annually over 12 years — or a total of $420 million. The Seton Healthcare Family expects to provide nearly $2 billion, including $250 million that would ultimately result in a replacement of its aging but centrally located Brackenridge hospital facility.
When RECA, the Chamber, and Opportunity Austin, and the growth recruitment staff inside Austin city government unite in political support of $4 billion dollars worth of future medical center development, they are not going to ignore the transportation issues.
In late 2011 Mayor Leffingwell picked and appointed Project Connect representatives. This is about the same late-2011 time frame when Watson was gearing up to promote his hospital district, easy to sell as a Democrat promoting a liberal public health care benefit.
In November 2012, the voters approved Travis taxes for a new hospital district, in an area that was clearly known not to have sufficient road capacity at the time the hospital district was promoted and approved. The rail would perhaps solve the problem of handling future medical district growth but it would not solve current traffic congestion problems. One reason for this is that the congestion on IH-35 is regional travel, with most people who work inside Austin now living outside the city.
Federal law demands a complete examination of alternatives for expensive rail projects.
Federal law demands a complete examination of alternatives for expensive rail projects, but it doesn’t spell out details like how existing development and congestion should be weighed against planned future development. The Project Connect team decided to focus on the projected future growth proposed by the Imagine Austin plan. Their analysis projected a huge future work trip travel demand (their criteria for success was based on peak hour work trips only) for the Highland corridor, based on the projected medical center travel demand growth.
There was likewise an enormous amount of future dense high rise growth proposed on East Riverside Drive, which the Project Connect planners even stated could not occur without rail. According to these planning standards, the rail on Riverside has became like a self-fulfilling prophecy; the future growth being assumed by Project Connect-demanded rail for the proposed Riverside buildout.
The Project Connect rail and its Highland Mall to Riverside alignment were thus headed to be on the November 2014 ballot as a rail project at the end of 2013 and until just a few months ago. Likely it wasn’t polling very well, so somebody associated with RECA decided that roads were needed to sweeten up what then became a very big bond proposal.
For this reason we are now looking at a $1 billion “Strategic Mobility Plan” intended to approve $600 million in rail plus another $400 million in unprioritized roads to give the $1 billion bundled bond package. The original motivation for the rail, the medical complex remains a major factor with a lot of political clout.
The problem with the Project Connect rail, which is heavily geared to hypothetical future development, is that it is carefully tailored to match an FTA category of 50% “New Start” funding decision to be made years from now. In fact Mayor Leffingwell says no rail bonds will be issued if this match can’t be had! But the reality is that both the FTA and the FHWA are effectively dead broke. If the FTA survives three more years, what is the likelihood that this particular category of FTA funding match will still be in place, despite the strong influence of the Republican road-loving House of Reps?
But we do get the rail system, without which the future medical could not build out, right? Probably not and here is why. Mayor Leffingwell makes it clear, in the clip, that the bond money won’t be spent unless the 50% FTA matching funds are available. The rail project has been carefully crafted by Project Connect to score very high for an FTA New Starts application, expected to be evaluated for funds in about three years. But with FTA and the FHWA both out of money, and Congress unable to reach a compromise for an extension, with the House Republicans likely favoring roads over rail.
To assume there will be FTA New Starts matching money around three years from now requires a huge leap of faith. So with the $1 billion bond package, we will certainly get IH 35 partially widened. And we may possibly get rail. It looks very much like the city might lose rail, by having put put all their eggs in the FTA New Starts basket several years ago, then dancing too hard to that tune, and now waiting too long as the FTA matching money has run out.
The RECA demand that the rail bonds must be tied to the shaky FTA federal funding source is a rail killer, and Mayor Leffingwell has affirmed that the bond money won’t be spent on rail unless the 50% FTA matching money is available. Good planners never want to hitch their wagon to a falling star, as FTA appears to be doing.
Capital Metro operations and maintenance debt for rail
Rail, while quite socially beneficial when done properly and on a strong corridor, is a broadly funded government service that doesn’t pay for itself, any more than roads or even toll roads do. But rail can come a lot closer if it is on a strong travel corridor so that a high ridership exists from the beginning. Consequently, the $600 million for light rail bond funds proposed for the November election isn’t the only rail debt, but only the money needed to physically construct Project Connect’s proposed starting line.
That doesn’t count an estimated $22 million a year to cover operations and maintenance costs, proposed to be funded by an additional $118 million in new Cap Metro debt implicitly needed to complement the Project Connect rail start. This rail-related Cap Metro debt is probably legally an Austin tax obligation, since the City appoints most of the board and Cap Metro chair and vice chair are City Council members. Austin has a strong influence over the funding decisions of the Cap Metro board.
In this video clip, “Open Items 3 & 4,” we can see the Project Connect team making it quite clear that the rail plan has been carefully crafted to rank as high as possible as an FTA “new starts” project. The City is discussing rail plan basics with Project Connect and Cap Metro, with John Langmore handling the finance discussion.
At 17-21 minutes in, John Langmore, chair of the Cap Metro finance committee, says they hired PFM to estimate future O&M funds for the rail and buses to complement rail, and to talk to bond credit agencies. The peak Cap Metro debt would be about $118 million. Langmore says he thinks Cap Metro would probably get a AA bond credit rating, so the debt could be issued.
The Strategic Mobility Plan says much the same thing on page 21.
Operational and Maintenance Funding – As stated above, the annual costs to operate the Urban Rail system in 2022 are estimated to total about $22 million. Funding sources will be Capital Metro sales tax, FTA operating assistance (5307 funding), operations savings, fare revenue, the remaining/unallocated one quarter (1/4) cent funds, parking revenue, potential Public Improvement districts, etc.
[Rag Blog contributing editor Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Alliance and the Save Barton Creek Association in Austin. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog. ]