Saturday, December 13, 2008

We want more congestion, not less

President-elect Obama has set forth an ambitious agenda to reshape our transportation priorities. The AP article provides some of the details. The story lays out Obama's reasoning that if we solve congestion we will put people to work. I have my doubts that this is what the President-elect said, but if he did he's got it backwards.

There are a few important points about congestion. First, it is a result of people driving around to go places. This means that when there is a lot of economic activity there is an increase in congestion. We should hope for a lot of congestion as that will signal that the economy is growing again. A second point is that we can build all the roads and light rail lines we want, but until drivers start paying the marginal costs of travel through user fees of some sort we won't see a meaningful drop in driving compared to transit. Since most of transportation money is spent on roads, that's what we are mostly prepared to build on short notice through an economic stimulus package.

On a related note, a bailout of the auto companies will further assert the primacy of autos for personal transportation for the foreseeable future. This outcome is at odds with Obama's stated goals of improving transportation choices and transit use, and may have lousy consequences for responsible urban growth. Auto use is already heavily subsidized through parking regulations and other financing tools such as sales taxes for transportation investment. Many people used mortgage products to buy cars over the past decade, representing a subsidy for the purchase of autos. Now we will subsidize the production of cars. This collection of policies favor autos as our primary mode of personal transportation, and in turn we will plan for more cars. As such, we should hope we end up with congested roads filled with all those cars we're supposed to buy.

Thursday, December 4, 2008

Mobility taxes versus parking requirements

The New York City MTA is in dire financial straits, as are many transit agencies. The state has just announced a plan to avoid deep service cuts that involves bridge tolls and a "mobility tax" that equals 33 cents per $100 of payroll. This tax will be paid by businesses.

Some may scream about this, but this tax does get to the heart of how we pay for our transportation systems. In addition, it's a far better way to finance transportation than the current "mobility tax" on businesses, which is minimum parking requirements. Consider that the proposed tax on payrolls is .0033 percent (.33/$100). Compare this tax rate with what an employer has to pay in order to supply their employees with a parking space. For instance, a reasonable (and conservative) estimate of the cost of constructing a parking space is $75,000 in an underground garage. Not including any maintenance or financing costs, that parking space amortizes to $2,500 per year for 30 years. Now that space is provided to an employee making $50,000 per year. That works out to a "tax" of 5% on payroll ($2,500/50,000). Under this scenario, the employer would save $2,335 per year per employee! And because of network effects the overall transit system would improve due to higher ridership and investment as opposed to the problems associated with people driving everywhere by themselves. Everybody wins! And it's a much better way to pay for transportation.

Tuesday, December 2, 2008

Experiential marketing or better bus stop design?

Kraft Foods is trying to recreate the warm feelings of goodness that people get when they eat stuffing by blowing hot air at people waiting for the bus in Chicago. This seems like a good idea to increase transit use during a cold Chicago winter by making the waiting time, which is perceived by riders as lasting much longer than it actually is, less daunting. Though if the air smells of stuffing they should probably let people eat on the bus.

As for the experiential marketing, they should probably hire a new advertising company. Bus stop ads are not directed at people waiting for the bus. They are designed to attract passing traffic, who will be nice and toasty in their cars with or without the hot air.