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.

Transit advocates get more options

Not more transit options; we’re still stuck with CTA bus, CTA rail, Pace bus, and Metra rail.  But now we have more advocacy options. None of them is easy to join. A biased summary (listed in descending order of web site quality) is:

  • If you believe transit’s main problem is that it doesn’t have enough money to spend, you can support the (newly-announced) Riders for Better Transit. It seems that you can’t exactly become a member; you can only click a box to show your support, and/or join the parent organization, Active Transportation Alliance.
  • If you believe that transit workers are good, kind, noble, and generous, but management is foolish, and, yeah, more money is probably needed too, you can join Citizens Taking Action.  The site gives no indication about how one could join, but does announce, and by implication invite one to, their next meeting.
  • If you think transit riders’ main problem is that transit investments and operations are poorly planned and poorly managed, a lot of money is wasted, and, if any more money is needed, it should come from a tax on land value, because land value reflects (among other things) the quality of public transportation, then you’re invited to support The Transit Riders’ Authority. Find where  it says “join TRA! Here’s a membership application:”  There is no membership application, but a PO Box, phone number and email address are given; perhaps they work.



Are San Franciscans fatter than Chicagoans?

Many have complained about cattle-car conditions aboard CTA trains, exacerbated by the few, small, and uncomfortable seats. The newest 5000-series cars are probably the worst in this regard, as nearly all the seats are longitudinal, so, if you manage to snag a seat, you’re stuck in a 17.5″ space with cta-rider-bodies on each side of you.  If you’re only 17″ wide (including your arms, unless you detach those for transport), you’ll fit OK provided that you remain quite stationary. And altho the total number of seats is said to be the same as was provided in the 3200-series cars, that’s fewer than any earlier models.

Not that CTA conducted any surveys or hearings prior to deciding on this seating configuration.  For comparison, consider BART, the Bay Area Rapid Transit serving north-central California. Their seats are 22″ wide.  Riders have indicated a willingness to cut that down to 20″, but no further. How does BART know this?

Because they conducted a survey. They took some seats around and asked folks what they thought. They also provide comparisons to seats in other cities, as indicated on this pdf.

Perhaps this has something to do with the fact that the BART board is elected, not appointed.

Have CTA apologists anything to say here?


Who needs federal transit funding?

Not the Washington DC streetcar project, which at a cost of $1.5 billion is expected to raise land values by $5 to $7 billion.  (This is the increase in value of “existing properties.” Double it to include the value of new construction.) So collecting just 30% of the increase should be sufficient to pay the cost.

A lot of details are missing from the source article, and so far I don’t know how to get the  study which it describes.

Thanks for Alanna Hartzok for the tip.


Short term loan at 0%, and how you can get one

Not from the Federal Reserve; surely none of my readers are “too big to succeed” and therefore qualified for direct quantitative easing. But an arm of the U S Government actually will sell you cash, in $250 increments, accepting credit cards without surcharge (you get any usual rebates or bonuses that your card provides) and with free shipping. The only catch: Your cash is in the form of dollar coins.

Stated purpose of the program is “to make $1 coins readily available to the public, at no additional cost, so they can be easily introduced into circulation—particularly by using them for retail transactions, vending, and mass transit.”  (Your government does not want you to just deposit them in the bank, but CTA farecard machines accept them.)  Altho coins cost more to produce than dollar bills, they save your government money because they last a lot longer.

For those of us who do not love the Federal Reserve, there is also the consideration that the coins are issued directly by your government, the closest thing we have to greenbacks (more about the advantages of greenbacks).

This program apparently has been going on for a couple of years; I learned about it recently from this old post.  It really works; I placed an order January 17, it arrived (by ordinary U S mail!) about a week later, and I will pay for it next week.  Presumably you could roll it over by placing another order.

Of course, what with credit cards, checks, direct bank transfers, etc., I don’t spend $250 cash in any month.  But maybe we’d all be better off if there was more use of the anonymous cash economy, which this seems to encourage.

Housing costs and land use regulation

Steve Keen did the great service of reading the FCIC report and confirming my impression (obtained without reading it) that it was not worth reading.  And a few posts prior, he reported that Wendell Cox and friends are out with another edition of their annual Demographia report, showing, once again, that the ratio of house cost to income tends to be higher in metropolitan areas where housing development is relatively restricted, and lower where developers find it relatively easy to get clearance to build. (Their report is international in scope but I will limit my comments to their analysis of US conditions.) Continue reading Housing costs and land use regulation

Grant funding and transit efficiency

A couple of years back I attended a conference where somebody– I think it was a couple of Chicago payrollers– reported on the bus rapid transit system of Curitiba, Brazil.  It’s considered by many (and I have no information to the contrary) to be a cost-effective implementation of pretty good transit service (better than we have, anyhow) at modest cost. They actually got to compare notes with the former Mayor who is considered most responsible for the design of the system.  He was quoted as saying, “I’m glad we don’t have as much money as you have in Chicago, because surely we would waste it.”

What reminded me of this most recently is this release from Sen. Durbin’s office, anouncing or reannouncing the awarding of various grants. In particular:

Illinois Department of Transportation (Chicago Metro): $341,694 in TIGGER II funding to install automatic shut-down and start-up systems in an estimated 27 locomotives in the Metra fleet, which operates in the Chicago metro area. Metra estimates that by shutting down instead of idling the locomotives, the automatic systems could save an estimated 800,000 gallons of diesel fuel and reduce CO2 emissions by an estimated 80,000 tons per year.

If the information is to be believed, an investment of $341,694 “could save” 800,000 gallons of diesel per year.  Now, I don’t know how reliable that estimate is, but let’s assume it’s way too high, really only 200,000 gallons will be saved.  And what does Metra pay for diesel, surely not less than $2.50/gallon.  On these very conservative assumptions, it would take less than 9 months’ fuel savings to pay for the devices.  (And that’s not even considering the savings from not having to go thru the grant process.)  And if they lacked the cash, they certainly could have borrowed it, paid extortionate interest, and still come out ahead in a year.

So why didn’t Metra do that?  Are they stupid? Or corrupt? Of course I have no way to know, but I think there’s another reason.  I can imagine how the decision was made:

Technical staffer:  We can buy shutoff devices, pay for them with fuel savings in less than a year.  May I place the order?

Manager: Would this qualify for TIGGER funds?

TS: Huh?

M: It’s a grant program.  I don’t remember where the acronym comes from, but it’s federal money we can spend on things that save energy and reduce emissions. This sounds like it would qualify.  The Board prefers that we use federal money instead of Metra’s “own” money.

TS: I suppose it would qualify.  What do I do now?

M: Go talk to the Metra Department of Getting Grants.  They’ll take care of it, you’ll just have to get them some pictures, brochures, maybe some other paper.  Shouldn’t take you more than a week or two.

TS: Well, OK.  Will I get a bonus for this?

I have no idea who will get a bonus, but I know who is spending more and waiting longer than necessary for a cost-effective investment.

Missing from Chicago’s Transportation Platform

Eight area advocacy organizations have issued “Chicago’s Sustainable Transportation Platform,”  recommending public policies for a better transportation system. Since I’m a paying member of at least two of the eight, and on the mailing list of a well-funded third, I had hoped that maybe a few sensible things would be included.  You can decide for yourself which of the ideas are sensible (“Design streets that are safe and convenient for all users.”).  Pretty much all of them could be construed as “Create additional jobs and funding opportunities for us and our friends,” but that’s true of most public policy discussions.

I’m mainly concerned about what’s missing, for instance:

  • Obtain transit funding from those who benefit from transit service– the owners of land and other privileges in areas served by transit.
  • Reduce the number of free and subsidized parking spaces provided at public and nonprofit facilities, including libraries, police stations, educational and medical institutions.  Use the resulting revenue to reduce taxes on productive activity.
  • Improve transit governance by requiring the majority of governing boards of CTA, Pace, Metra, and RTA to be regular transit users, and no board member who takes fewer than five transit trips in a month can receive pay for that month.

Other ideas?

Speculators pay > $250,000 for Chicago taxi medallions

Chicago Dispatcher reports that the City of Chicago has auctioned another 50 taxi medallions.  Ten of these were reserved for working cabbies and went for $150,599 to $180,101. Of the remaining 40, half were bought by Paul Widmarck for $259,999 each, and the other half by Leonid Sorkin for prices ranging from $252,800 to $254,700.   I assume that the total proceeds, something under $12 million, will be used to help plug the City’s current budget deficit.  I suppose that’s better than giving medallions away, but a policy of collecting annually the rental value of a medallion would provide a continuing income stream to the City and prevent speculation.

The ten owner-operator medallions “are designated, and must remain, Owner/Operator Medallions.”  It will be interesting to see how this is enforced over the years.

The speculative prices over $250,000 compare to past sales which, to my knowledge, have never exceeded $200,000.  Shortly before the sale, Chicago Dispatcher provided a graph of medallion price trends.  Certainly looks like a speculative bubble to me.  But you probably should ignore me.  Had I had been prescient enough to know what would happen to medallion prices, I would have bought a couple dozen (on credit) five years ago.

Real estate can help pay for transit

Haven’t posted much lately; busy with other things, including trying to clear off my desk.  In the process of which I found some notes of interest

How do you fund transit in the “most liveable city in the world?” Vancouver uses the real estate tax to cover about 35% of its operating shortfall (net of fares).  Fuel tax covers an almost equal amount (See this pdf). One can imagine how well Chicago’s transit system could run if funded this way, assuming also that it was competently planned and managed.

Unfortunately, Vancouver fails to fund capital costs in this way, relying instead on what Canadians call “senior governments,” meaning provincial and federal funds.  Probably that has something to do with the continuing real estate bubble in the area.

I also found notes I took at a conference in July concerning Japanese high speed rail services.  Japan is said to be the only country with privately-owned high speed passenger rail.  How is it funded? Hint: JR-East, one of the big operators of high speed trains, gets 32% of its gross revenue (see this pdf) from real estate it owns, and intends to grow this to 40 by collecting more of the value that good transport gives to real estate.