Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Tuesday, March 24, 2015

What it will take to get WMATA out of crisis

Reprinted with a new date due to additions to the original text.

At GGW, David Alpert reprinted his remarks at a forum on "What it will take to get Metro out of crisis."

I wrote about this recently (and have written about it for many years) here, "WMATA and two types of public relations programs."

I don't think most of the people discussing the issue really have a good handle on what the issues really are.

(Note that this post doesn't even address quality and frequency of service issues, emergencies, failures in emergency response, etc.  Or my proposal to split transit planning responsibilities from transit operations.)

Here are my comments in response to David's remarks, responding in part to one of the lead comments, by charlie.  These comments are slightly expanded from my comments on GGW, with the addition of point 5 and subsequent renumbering.

... the problem is management, not dedicated funding.

I'm sure WMATA could use more money. But it doesn't need dedicated operating funds. It already has dedicated capital budgets to plan for. I can't think of any organization that can tell you with a high degree of certainty what investment and budget needs will be -- and that they are 100% funded -- in a five year window.

The problem is management. You've got an entire organizational culture that wants to turns operating problems into capital ones so the capital budget will take care of it. Don't take care of an escalator properly for 20 years and you can include a replacement as part of the capital budget.

I tend to agree with charlie, however I do think the issue is more complex than either he or David makes it out to be.

1. It's not just "management", if by that I presume charlie means "within the agency," it's also "management" as it relates to the way that the "owners" of the agency, DC, Maryland and Virginia, plus the federal government "manage" the agency via their control of the board.

Note that that failures to properly manage federally-funded contracts is the primary cause of the agency's current cash flow crisis ("Metro seeks to borrow $220 million to cover loan," Washington Post ).

2. But it's financing too, although not like how David stated it. I agree with charlie that lack of a dedicated funding stream is mostly a chimera.  But it is an important issue.  (Although that funding stream tends to be good in good times and bad in bad times.  Transit agencies with dedicated funding sources were crushed by the 2008 recession/depression and still haven't recovered.)

But it is true that no other major transit agency is the US is in the same situation that WMATA is, lacking a dedicated funding stream

3. WMATA is somewhat unique in the way that it gets such a huge amount of farebox revenue from the federal transit benefit, which is up to $130 of FREE MONEY-EQUIVALENT given to federal workers each month. (It's extra income basically.)  For a long time this meant that a significant number of daily riders were somewhat unaffected by fare increases, so WMATA could raise fares with limited negative impact.

4. Another element of WMATA's revenue structure is the distance based fare, which most systems other than BART don't do, giving the system more farebox revenue as well, compared to their peers.

5. Plus, WMATA charges two fares for bus+rail or rail+bus when many other systems do not (SF MUNI, Sound Transit+King County Metro, NYC Transit, etc.), which further increases fare-based revenues compared to peer transit systems. Another way to put this is that other transit agencies charge once for a complete one-way trip, while WMATA charges for each segment if the mode changes.

6. Combined, the comparatively high proportion of fare-related revenue has allowed WMATA to build a higher cost structure than would normally be sustainable compared to a peer transit agency.

7. And up to now, the comparatively high proportion of fare-related revenue has allowed the jurisdictions to pay less into the system than normally would have been required.

Related to charlie's point, capitalizing budget items that should be covered by the operating budget also helps to reduce the amount of annual funding provided by the jurisdictions because part of this cost is covered by federal government funding programs for transit systems.

8. Now that the Washington Metropolitan area is no longer in full growth mode, the agency can't maintain that kind of cost structure, especially as the federal government is both shrinking and dispersing, costing WMATA riders and revenue.  (For example, in past years, the response to labor arbitrators choosing between lower cost and higher cost contracts has been to choose the higher cost proposal with the statement that the agency can increase fares.)

9. Similarly, fares are pretty damn high, and there isn't a lot of room, to increase fares -- a bus+rail trip can be as high as $7.40 one-way.  But the jurisdictions have slid somewhat on being concerned about the fare structure, because higher fares allow for lower appropriations.

10. and this doesn't even raise the issue of what we might call "transit as a utility" with if not flat pricing, at least zone pricing, and significantly discounted monthly or weekly passes, to promote high transit use by patrons to discourage automobile use. WMATA doesn't do this at all.

Passes are more than double the cost of what they are with NYC Transit or SF MUNI--because they are priced to keep fare revenue comparable to the cost of one daily round trip Metrorail fare at peak fare (rush hours) pricing.

Offering severely discounted passes would reduce the farebox recovery ratio significantly, thereby requiring higher general fund-based appropriations by the jurisdiction.

11. But, while I think that WMATA's "financial issues" must be addressed, I don't think that the jurisdictions calling for a "financial turnaround specialist" fully understand what the issues are or their own responsibilities in both making the mess (management and funding) and getting out of it (management and funding by the jurisdictions, and management of the agency as separate issues).

They don't believe that they have been underpaying in terms of financing the system.

The jurisdictions don't believe that one of the solutions to WMATA's funding crisis is more annually appropriated monies coming from the general fund revenue stream of the jurisdictions. (I have to admit that I don't have a detailed financial understanding of all the elements of WMATA and the ins and outs of the Compact agreement.)

The calls for a "financial turnaround specialist" -- although one is needed -- remind me of when former Councilmember Graham was quoted in the NY Times stating that DC WASA's need to increase rates to pay for EPA-mandated infrastructure improvements was ridiculous, that WASA should just "reform."

How do you "reform" a deteriorating or nonexistent sewer pipe?  

Reform isn't capable of pulling $2 billion out of a hat to build a full system of separated storm sewers (and probably green infrastructure can't be fully relied to do it either).

Similarly, while there are big issues with WMATA's personnel costs--the union contracts, pensions and health benefits--that a "financial turnaround specialist" can address and impact, even if all those elements are addressed in the agency's favor, WMATA will still have funding problems.

12.  Interestingly, other systems are going through similar problems now, and of course, no one is pointing this out. MBTA is in the same crisis situation as WMATA, for different reasons -- the snow -- but the massive snows and the inability for MBTA to respond revealed that systematic underfunding has pushed the agency to the breaking point in terms of being able to provide reliable service.

TTC in Toronto has many issues, both in terms of funding the current system, how the financial and governance responsibility for the system rests within the City of Toronto, with limited support from the Province, expansion needs and the political circus around planning and funding expansion, plus being pushed to the breaking point in terms of successfully managing construction projects.

Both the Boston Globe and the Toronto Star have been covering extensively the issues of MBTA and Toronto/TTC/Metrolinx.   Plus public policy organizations in those areas are far more active in these discussions than are happening in DC.

And in Chicago, the organization and funding of transit is called into question as well ("Study criticizes Chicago transit system," Chicago Tribune; Metropolitan Governance of Transport and Land Use in Chicago, OECD Regional Development Working Papers).

WMATA farecard13. So while David is right that the agency needs more than a CEO nearing retirement, and more than a "financial turnaround specialist" as [the need has been] conceptualized by some of the jurisdictions, the agency actually needs three things:

a. a re/new/ed consensus for what the role of transit is in the metropolitan area, something I've been suggesting since 2009

b. a new agreement on how to fund transit going forward.

c. to hire a truly world class transit executive, someone who has experiencing running the biggest and most challenged systems in the world, from Japan, Hong Kong, London, NYC, Paris, maybe Melbourne or Zurich, Germany, etc.

Jay Walder would be good, but obviously he's in cash-out mode now, working for REQX.

But I think that it would be very difficult for a "foreign" executive without great English skills to run WMATA.

The kind of person I'm thinking of would be the equivalent of the car industry's Carlos Ghosn, a French-Brazilian-Lebanese national not speaking Japanese, and his turnaround of one of the stalwarts of Japanese industry, Nissan. cf. article from Forbes.

But they'd probably have to be paid two to three times higher salary than has been paid out thus far, and it's highly likely that the kind of people who are qualified, wouldn't want to take the job.

Given the turmoil amongst the jurisdictions concerning governance, politics, leadership, funding, and questions about the role of transportation within those communities:

- Arlington dropping streetcars
- Arlington considering cuts to bike and pedestrian planning and funding
- DC questioning streetcars
- DC's massive execution failures concerning streetcars
- Maryland's new Governor and lack of commitment to light rail, which threatens the creation of the Purple Line light rail in Montgomery and Prince George's Counties
- Montgomery County's failures in the construction of the Silver Spring Transit Center
- issues with funding the construction of the Silver Line's second phase
- etc.

my confidence that WMATA will move in the right direction on these matters is not high.

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At 7:38 PM, Anonymous Anonymous said...

"But I think that it would be very difficult for a "foreign" executive without great English skills to run WMATA."

I can't imagine it could be any worse than the typical railcar operator or station manager.

At 10:53 AM, Blogger Richard Layman said...

LOL. but that's the issue.

In the early 1990s, the New Yorker had an amazing article about the hyper dysfunction of the Chicago post office system. It made the point that at the city level, the postal service functions more like a municipal government agency, not a distant federal bureaucracy.

All the kinds of issues about the employees running the show for their own purposes are relevant to WMATA's employee culture, how well placed employees get their under-qualified friends jobs, etc.

The great level of insularity that you highlight is used to ostracize "outsiders." Maybe it is the case that the general base of employees doesn't realize how desperate the position of WMATA is within the community, the base of riders, etc., and how the way employees act impacts our attitudes toward the agency.

I've written about this before. E.g., the union claims that management is so bad how can we expect employee attitudes and behavior to not be impacted.

Sure, that could be true. But I would aver that a goodly amount of the dysfunction is produced by the old school municipal culture of "getting by" and that isn't being generated by a reaction to management.

getting back to Carlos Ghosn, the reason he was able as an outsider to shake up Nissan is because Nissan was on the ropes. The employees understood and possessed a level of desperation that is not yet present within WMATA at many different levels.


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