Category Archives: transit

Is this why CTA can’t coordinate?

Tracks 1 and 2 at Howard Station (Transit Riders’ Authority photo)

The failure of the Chicago Transit Authority to coordinate its services is evident to regular riders. I have long attributed this to misplaced priorities, which seek to serve the interests of contractors, politicians, and certain employees, rather than passengers or the public in general.

But this picture implies that I’m wrong.  CTA do a pretty poor job of facilitating convenient transfer from Yellow and Purple Line trains to Red Line trains at Howard Street,   but this may have nothing to do with priorities or competence.  Rather, the problem seems to be that Track 1 is in a different time zone from Track 2, so if passengers actually were able to transfer between trains on these two tracks they’d enter some sort of time warp, perhaps endangering their very existence and ability to pay taxes.  Safety has always been CTA’s number one priority.  (In the photo, both tracks are occupied by Red Line trains, so no transferring takes place.  The practice of putting Red Line trains on both southbound tracks enables CTA to hold Yellow and Purple Line trains outside the station, preventing the dangerous practice of passengers transferring directly.)

Another reason passengers get delayed

click image for a bigger one

View north from Fullerton

It’s not just CTA’s suboptimal management that causes passengers to be delayed.  Fire yesterday just west of the Red Line near Altgeld, trains blocked for something like three hours.  The train on Track 4 pulled back to Fullerton shortly after this photo.

After about twenty minutes it was clear service wouldn’t resume soon.  A bus shuttle was promised, but downstairs there was just one empty bus labeled “not in service.”  Even if buses were available, closure of Sheffield meant traffic was even more of a mess than usual.

So, a nice walk to Belmont, I do wonder how the CA there would have responded to a demand for free admission but as it happened I had a valid transfer and no CA was in sight anyway, just a lot of folks waiting for that mythical bus.

Can’t really blame CTA for this one, doubtless there’s plenty of blame for other agencies but I’m not privy to the details.

A three-hour delay didn't prevent the "information" display from promising six trains coming thru Fullerton in nine minutes.

Why do cab medallions go up?

image:Mister-E via flickr (cc)

image credit:Mister-E via flickr (cc)

Last time we looked, Chicago taxi medallions were going for slightly over $250,000, far higher than a few years earlier.  In the subsequent 17 months, they’ve continued their rise, and here are the most recent transactions reported on the City’s web site:

4/27/12    6601    $325,000
4/27/12    5594    $345,000
4/30/12    6182    $348,000
5/3/12      1839     $360,000
5/4/12      2297     $370,000

Now, I do not follow taxi matters in great detail, as I am not of the economic class which can regularly use cabs.  But it’s hard to believe that, in less than two years, the economic value of the privilege of operating a taxi has increased by anything like 50%.

The best explanation, I think, came from a driver who styles himself Samuel Langhorne Insull.  He explained that medallions aren’t used by taxi passengers, but by taxi drivers.  And who are the taxi drivers?  For the most part, they’re people unable to get work in their chosen or more lucrative professions, who drive a cab for survival.  And are there more of those people nowadays, or fewer?

That makes sense as the main cause.  Of course, additional pressures are the general levitation of financial asset prices due to the FRB’s zero-interest-rate policy, and perhaps anticipation of future increases in value.

Planned office tower may take double subsidy

rendering of 444 W Lake St proposal

rendering from Chicago Sun-Times

Two or three developers (depending on which source you read) plan a new 45-story, 900K sq ft, $300 million office tower at 444 W Lake Street. In the world most of us were born into, this would mean they’d purchase the site, continue to pay taxes on it, and on the building when constructed. Thus the prior landowner would benefit from the transit and other infrastructure that we all provide, some part of this cost being offset by taxes resulting from the project.

This particular building, tho, may be a special case, to be built on air rights over the north approach to Union Station, tracks owned by either Metra or Amtrak. So public transportation would benefit, right?  It doesn’t appear so, because, I think pre-Amtrak, the old Chicago Union Station Co. sold off the air rights. The Sun-Times says Larry Levy owns the “site,” presumably including the air rights.

Still, the building will yield taxes which help the comunity pay, right? Not in today’s Chicago.  Blair Kamin says we’ll pay $29 million in real estate tax money to the developer, to build a park.  A commenter elsewhere suggests it might be $40 million. Whichever, of course, that’s on top of all the subsidies we pay to provide transit service and maintain infrastructure without which this building would be infeasible.

The Tribune helpfully notes that the project “is expected to generate … 3,400 permanent office jobs.”  Apparently those office jobs will be created to fill the building and would not otherwise exist in Chicago. The details of this mechanism are beyond me.

Almost the best use of CTA rail map for political purposes

from Chicago Spring

Cute automation at the Chicago Spring site. Best thing: your visit restores the East 63rd Street ‘L’.  Second best thing: Click on a link, it takes you around the map to a destination.  Less good thing: the destination seems to have nothing to do with the subject treated.  Still, it’s a cool presentation.

Somebody somewhere can do something equally original, and even more functional, for the Henry George School.

Securitizing the banksters, with cameras and contracts

Image credit: J D Abolins via Flickr (cc)Just in case there was any doubt, Pam Martens in Counterpunch gives us a report on the Lower Manhattan Security Coordination Center, where feeds from sophisticated spy cameras are integrated to essentially track anyone and everyone on the streets who might interest our supervisors. What’s news here, tho I suppose I already suspected it, is that partners in this operation are not just the NYPD, but also “the same firms under investigation in 50 states for mortgage and foreclosure fraud and widely credited with causing the Nation’s economic collapse.”  Presumably they have added some of the proceeds of their crimes to the $150 million public money that’s been used for this project.
It’s difficult to believe that Chicago doesn’t have something similar.
Meanwhile, and I suppose it’s more relevant to us here, the CTA will be paying up to $58,000/month, plus commission, to Goldman Sachs and other “financial advisors.” The Authority assures us such amounts “are comparatively very small compared to the billions of dollars in much-needed funding CTA would secure” if such commissions are paid. “Funding” more likely means “loans” or “new ways of packaging existing streams of money” rather than any actual additional resources or capture of land value which transit could create.

Land value impacts of Minneapolis light rail

image credit: Steven Vance via Flickr (cc)

In 2010, the University of Minnesota’s Transitway Impacts Research Program released two studies of the impact of the Minneapolis light rail (“Hiawatha Line”) on real estate values. The residential study (pdf) estimated that houses near rail stations gained a total of $29.4 million more than houses outside the area, and multi-family properties gained a total of $17.7 million.  The  commercial/industrial study (pdf) estimates an increase of $20 per square foot (pdf) of building space, tho they do not extrapolate this to estimate the total impact.  Assuming for the moment that the commercial/industrial impact (which includes much of downtown Minneapolis) is double the total residential impact, we have a total land value gain of $141 million.

Now, that’s a nice amount of money, but building and equipping the rail line cost $715 million in total tax money, and it seems per page 32 of this big pdf to require about $15 million in annual operating subsidy from taxes.  Assuming the construction cost to be financed with bonds costing 4%, that’s an annual cost of about $44 million (in addition to fares collected.)  Can this be justified by a land value increase of $141 million?

It’s a question worth asking, but there are reasons the answer may be “yes, easily.” First, a big shortcoming of the studies is that they compare prices before the line started operating, in 2004, with prices afterwards.  It stands to reason, and has been established elsewhere, that real estate values start rising no later than the beginning of construction for a new rail transit line.

Second, real estate sales price may be the capitalized value of future expected net rent, after taxes, but is only indirectly related to gross rent.  The difference is taxes, not only the real estate taxes collected against the parcel, but also other taxes which operate to reduce rent.  Thus, increased real estate tax, sales tax, state income tax, and other taxes which may occur as a result of the transit line should be recognized as a benefit which the community receives (and collects!).

Finally, the studies look only at the localized effects within a mile of the station. Of course the greatest concentration of benefits will be found in this area, but a small percentage value increase regionwide, which could result from the rail line, could sum to a large amount but would not show up in these studies.

In conclusion, it is certainly possible that the community benefit of the Hiawatha Line, as measured by actual land value, far exceeds the cost of building and operating the  facility. Unfortunately, these studies do not actually test the proposition.

None of this is to say that transit investment always increase land value.  A project whose main purpose is to provide jobs and contracts, with little transportation benefit, might cost far more than the resulting increase in land values (if any).

Thanks to Bill Batt for the lead to these studies.

Secret to adequate transit funding in half a sentence


New York image credit: Mo Riza via flickr (cc)

New York image credit: Mo Riza via flickr (cc)


Hong Kong image credit: theloneconspirator via flickr (cc)

Hong Kong image credit: theloneconspirator via flickr (cc)

New York’s transit system, like those here on the U S mainland, finds itself in a financially unsustainable position.  Despite huge subsidies from taxation of productive activity, its managers claim a need for $10 billion additional capital funds, and the current year’s budget assumes a docile union as well as $35 million that appears imaginary.

And, like private-sector corporate managers, its chief has departed the troubled system for triple the compensation at a more prosperous organization, in this case the Hong Kong Mass Transit Railway.  Would you blame him?

For those of us who seek reliable transit funding from a source which does not burden productivity, the important point is what this relocated executive calls Hong Kong’s “sustainable financial model.”  And what is that? Simple, and no surprise to those who have been paying attention here.  The Hong Kong Mass Transit Railway Corporation “earns millions of dollars from real estate developments along its rail lines.”  That’s all it takes.  Collect some of the land value, which public transportation supports, to fund the operation at reasonable fares. [Oh, yeah, and get competent managers for the transit operation, but they don’t mention that here.]

Source: Former M.T.A. Chief Recounts His Ups and the System’s Downs, New York Times, by Michael M. Grynbaum, Jan 4 2012.  Thanks to Metro Magazine for the link.

North America’s only full service railroad collects land rent

It’s not just in Japan (and Vancouver, sort of) that land rent is used to fund railroads.

Photo Credit: Gator Chris via Flickr (cc)

Originally built by the Federal government and now owned by the State, the Alaska Railroad is “North America’s last full service railroad” because it operates, on its own tracks, with its own rolling stock, freight and passenger service. Revenue is just a bit more than enough to cover operating costs, but how to pay for the capital expenditures– equipment, track, facilities– which must be constantly renewed and improved to run the railroad smoothly? Part of the answer is collecting the land rent. The Railroad owns some 18,000 acres of real estate (see source below), for which it last year received just under $13 million in land rent (see page 34 of this pdf).   This compares to total capital expenditures last year of $73.1 million, with the balance covered from various kinds of grants, as well as operating profit.

ARR provides more information about their leased and leasable land here.

Of course, this is collecting only a tiny part of the economic rent the railroad generates, but at least it’s a source that will grow as the railroad improves.

Thanks to Trains magazine for the original tip.