Rag Radio 2014-08-01Austin Community Activists Bill Oakey and Roger Baker

Rag Radio 2014-08-01


Austin Community Activists Bill Oakey and Roger Baker on Transportation Politics (August 1, 2014)
Thorne Dreyer‘s guests on Rag Radio were Austin community activist and affordability blogger Bill Oakey and transportation writer and activist Roger Baker, contributing editor of The Rag Blog. They discussed a number of community issues affecting Austin, including affordability and gentrification, but focused on Austin’s controversial proposed billion dollar transportation bond election.
Bill Oakey, a retired accountant who, in the 70s and 80s wrote about country music for national publications, has been active in local politics since the 80s Oakey worked for various state agencies for 36 years and served on the City of Austin’s Electric Utility Commission. Now, when he isn’t fighting for the taxpayers at City Hall or the Travis County Commissioners, he wors as an artist photographer.
Roger Baker is a long-time transportation-oriented environmental activist, an amateur energy-oriented economist, and amateur scientist and sience writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is a driector of the Save our Spring alliance and the Save Barton Creek Association in Austin. He is a regular contributor to The Rag Blog.
Host and Producer of Rag Radio: Thorne Dreyer; Engineer and Co-Producer: Tracey Schulz; Apprentice: Ken Martin; Photographer: Roger Baker. Rag Radio (koop.org/ragradio) is produced in the studios of KOOP 91.7-FM, an all-volunteer, cooperatively-run community radio station in Austin, Texas, in association with The Rag Blog (TheRagBlog.com) and the New Journalism Project, a Texas 501(c)(3) nonprofit. The show is broadcast (and streamed) live Fridays, 2-3 p.m. (Central) on KOOP, and is rebroadcast and streamed on WFTE-FM in Mt. Cobb and Scranton, PA., Sundays at 10 a.m. (Eastern time) and on Houston Pacifica’s KPFT HD-3 90.1 on Wednesdays at 1 p.m. (Central). Contact: ragradio@koop.org. Running time: 57:14.


METRO|Roger Baker: Is Austin’s ‘Strategic Mobility Plan’ smart planning or a billion dollar boondoggle?

Conclusion
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…
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?
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.
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. 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…
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!…
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.

…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…
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”.”…

3. Would the proposed $400 million in road projects relieve congestion?
The short answer is no…
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…
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…
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…
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…
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.
Here a rail timeline is helpful. In fact two timelines, first from RECA, the politically influential Real Estate Council of Austin . Next is a timeline from a rail advocacy group.
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…
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 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…
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…
For this reason [was not polling very well] 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…
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…
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…
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.

References:

The Rag
Roger Baker: Austin Drowning in Traffic Growth? Think Again. Part 1
METRO|Roger Baker: The proposed Austin light rail plan as I see it

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