I keep thinking about the efficiency of the human body. Each model year comes equipped with space-saving design, lots of leg-room, built-in entertainment features, and is bio-fuel-compatible with generally limited emissions.
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I keep thinking about the efficiency of the human body. Each model year comes equipped with space-saving design, lots of leg-room, built-in entertainment features, and is bio-fuel-compatible with generally limited emissions. On foot, we are nimble, responsive, and shaped to maximize the utilization of space. A crowd of people is not a traffic jam, it’s a party!
We need a world class transportation system. Today we are committed to a 1950's approach to transportation which we fund with 1990's wishful thinking. We won't get the economic results we want from our transportation investments unless we start asking a different set of questions. The toughest among them, and perhaps most critical, will be deciding what parts of our current system are no longer worth maintaining.
It feels very good to be back writing again, with a clear head and a healthy wariness of hiking alongside slippery rock embankments (photo of actual place I fell - ouch). If you value what we do here at Strong Towns and want to help our board of directors sleep better at night, consider making a donation of support. We're a non-profit organization now thinking we may need to purchase some life insurance and recruit some backup writers, so if you can help us out, we'd really appreciate it.
I had an opportunity to meet Minnesota Transportation Commissioner Charles Zelle and he seems like a decent guy. Now that I have a face with the name, I find myself feeling sympathy for him quite often these days. Zelle has been given the unenviable (and impossible) task of explaining why everyone needs to pay more for a system that will continue to be in decline.
I do believe that the Minnesota Department of Transportation, as an organization, is beginning to come to grips with a new reality. In the distant rear view mirror are the glory days of this nation's highway departments; lots of federal dollars, miles of really fun, expansion projects and everything shiny and new. In the "objects may seem closer than they appear" portion of the mirror is some (desperation) federal stimulus projects and some other one-off mega expenditures, which in retrospect seem either delusional or, more generously, like a plan to let everyone down gently.
Out the front window is the hard truth that we have overbuilt and overpromised and, in doing so, raised expectations that the DOT can continue to be a sugar daddy for local governments, politicians and their pet projects. And on top of that, highway demand is slowing, causing panic among those who have thought through the financial impact of maintaining a bloated system with stagnating or even declining revenue.
Zelle seems not yet ready to deal with the overbuilt or even the overpromised, but is doing what he can to lower expectations.
"Every year, more and more of the funding that we have is dedicated to maintaining our roads -- replacing pavement, rebuilding bridges," said Zelle. "At the end of that 20 years, there's actually inadequate funding to even take care of the system we have."
Zelle was appointed commissioner at the end of last year after serving on Governor Mark Dayton's Transportation Finance Advisory Committee. That committee issued a report suggesting Minnesota would fall $21 billion short of what was needed over the next two decades just to maintain the current system. That's more than a billion a year, a 5.6% increase in the state's budget just for transportation, just to keep what we have.
And who really wants that? The public at large is certainly not keen with simply standing still. They want more lanes, more interchanges, more transit. To build what the Committee called an "economically competitive, world-class system" would cost $50 billion more than the revenue we have. That's $2.5 billion of additional revenue each year, almost a per year doubling of what was spent in total on transportation in the last biennium.
It's never going to happen.
This seems to be understood among the political class, which is why Commissioner Zelle and others are out slowly delivering the bad news. The committee's recommended funding sources -- which were rejected by the governor due to a lack of support -- did not even raise the revenue needed for the treading water standard, let alone the "world-class" standard. (Note that we have single party rule here in Minnesota so the governor's insight was not a reflection of partisan gridlock.)
Here's the rub: I want an economically competitive, world class system. Minnesota needs one. Every state needs one. Are we really going to be satisfied as a people with an approach that is simply slowing the decline?
To get a world class system, we have to ask a different question. Right now we are asking the funding question. Where is the money going to come from to continue doing everything we are doing essentially the way we are doing it now along with some other things that we'd really like? We need to switch that around and ask a different question.
Given the money we have, given the funds taxpayers are willing to pay, how do we design, build and maintain an economically competitive transportation system?
That's a much more relevant, and powerful, question than whether or not we can tap into a slush fund (sales tax) or create a new revenue stream to stick with the status quo. If we are to answer this new question honestly, however, it means culturally going someplace few are willing to go. We actually have to admit that we have overbuilt our current system.
Yes, that seems apocryphal in the current context. When we build a highway, it never goes away, does it? The only way we eliminate a highway is if we build a bigger highway right next to it. Other than that, the assumption built into our current approach is that we've never made a mistake in choosing to build a piece of transportation infrastructure. NEVER. Every lane is necessary. No shoulder too wide. No interchange was ever unjustified and simply built because a politician got the funding. We have no redundant bridges, no unnecessary signals, no accesses that could ever be closed. We can tweak our approach with better materials or fancier technology, but the fundamental assumptions are not up for debate.
Tactically, this makes us Napolean entering Russia. Or the Wehrmacht doing the same in World War II. We will never give up an inch of ground, no matter the cost. To even consider doing so is simply not American. The idea of a strategic retreat is out of the question, even as our systems fall apart around us. No public official could seriously discuss contracting the system.
I've written so many times about reforming state DOT's (and eliminating the Federal DOT) that there is little more to say. Just this year, I've outlined principles for a next Generation DOT, recommended criteria for prioritizing spending with a limited budget and described in detail how DOT's can save tons of money while improving the economic health of small towns. Today I do have one additional idea to add to the mix.
We need the transportation equivalent of the Base Realignment and Closure Commission. For those of you too young to remember this, at the end of the Cold War, we knew we needed to cut back on the number of military bases we had but no politician could vote to close a base in their district. A commission was formed to recommend closures. Their decision -- which was based on a technical review -- was essentially final unless Congress acted to overturn it. This gave politicians who were losing a base an opportunity to rant against it but, ultimately, the hard decisions were made.
We need to do the same thing with transportation infrastructure. Let's have a commission that looks at the entire system, prioritizes transportation segments and comes up with a list of what we walk away from. If we did this along with adopting a new approach for transportation within cities (eliminate STROADs) that is distinct from our approach outside of cities (reduce accesses), we'd be making huge strides towards focusing on our priorities and being honest with ourselves about what we can actually do well.
We need a world class transportation system. Today we are committed to a 1950's approach to transportation which we fund with 1990's wishful thinking. We won't get the economic results we want from our transportation investments unless we start asking a different set of questions. The toughest among them, and perhaps most critical, will be deciding what parts of our current system are no longer worth maintaining.
It's hard out there today, largely because we made it so easy for ourselves for so many years. Let's start being honest with where we're at, get serious about a change in approach and start building a nation full of strong towns.
Welcome to all of you who are discovering Strong Towns this fall. In addition to the blog, podcast and TV channel here, join us on the Strong Towns Network for some additional discussion on this post and more.
And if you'd like more of my work, check out my book, Thoughts on Building Strong Towns (Volume 1). It is a primer on the Strong Towns movement and an essential read for those wanting to get up to speed quickly.
Election 2012 Note:
There is something great about experiencing an election with a group of strangers over a beer in a public place.
Unlike the last Presidential election, I stayed in this year. It was quite the juxtaposition to 2008 and 2010 (read: Sweeny’s Pub, plenty of ale and countless mini-corn dogs). Last night I enjoyed my girlfriend’s delicious Midwestern-style dinner of chicken and biscuits and a nice, relaxing night in – yet, it didn’t quite rival the excitement of experiencing election results with a large group of strangers over a pint. There is something excellent about being surrounded by people from both parties, cheering for different candidates, all in the same space.
We need to create built environments all over this country where these interactions can happen more often. It’s one reason that I stress our need for more quality “third” places. Twitter is a good place to communicate, but a great third place is tough to beat.
Now, I’m sorry for the rest of this post (read: possible grammatical errors and wayward thoughts). Like the rest of America, I was up late glued to the television and social media, and all I can say is: Well America – that was fun, but can we please get back to upbeat television ads about fast food, laundry detergent, beer and shiny electronics?
What’s the plan now? That’s a good question.
I’ve often contemplated what this election mean for America’s towns and cities? I’m not really sure. My guess is that is resembles something like what Bob Collins’ tweet was hinting.
In my mind, one of our political faults is that we ignore how we build places and don’t have anything that resembles a consensus on urban and rural infrastructure development. Our collective culture is still set in the idea that large infrastructure projects will help us grow our way out of debt [See "Debate Questions" on the blog and the related podcast].
The establishment, both liberal and conservative, view projects like the $750 million St. Croix Bridge and the $125 million 169/494 interchange as catalysts of growth – not agents of future debt and long-term maintenance obligations. It’s embedded in our economic culture and how we develop our landscapes.
A great example of lacking a consensus is my hometown: Mankato, Minnesota.
Mankato really wants a vibrant downtown. They’ve pulled out all the usual stops: promote mixed-used development, a historic building facades grant program, improve street, pedestrian and bike connections and reacquaint the town with its riverside. The plan is good, but the City has absolutely no idea how to make it happen.
All the money and time spent towards revitalization efforts is moot if Mankato doesn’t stop subsidizing large competing suburban infrastructure projects that add no real value to the community and quickly become financial liabilities. Public officials on all sides of the political spectrum want the best of both worlds: 1) more quick tax revenue windfalls from easy-to-build suburbanism, and 2) a vibrant downtown. This point is best illustrated by Mankato’s new expensive intersection and its relationship to “new mall building.”
This 1.2 mile blue line represents one of the biggest urban planning blunders in Mankato history. In fact, it probably represents upwards of a $1 billion in extra cost to the small City and its residents over its short 20 year existence. What is the blue line you ask? Well – it is the shortest route that connects Mankato’s Madison East Mall (built late 1960s) to the newer River Hills Mall (built early 1990s). This also ignores that they also built a mall downtown (destroying good urban fabric) in the 1980s.
In the early 1990s, instead of expanding the existing mall and using existing infrastructure in the (still) vacant land surrounding the Madison East Mall, the decision was made to sprawl out the town an extra 1.2 miles. The question I wish would have been asked in the 1990s is: how much financially better off would the town be if it didn’t build the additional roadways, exit ramps, water and sewerage pipes and electric lines?
All of this needs to be maintained into perpetuity. Not to mention that every driving trip for the majority of Mankato’s population burns 2.4 miles more in gas. And for what? In return for the newer mall where city residents get virtually the same stores in a different location? Needless to say, the town is still recovering from this decision, the old Madison East Mall is a ghost town and the buildings that once abutted the commercial hub have gone through 25 years without reinvestment.
My favorite example is the Burger King at the entrance of the old mall. It’s now abandoned. The Burger King closed after access to the fast food restaurant was decreased as a result of a $25 million intersection “improvement” project that was designed to accommodate more traffic towards a newly built intersection ($4 million) and away from an old (and “congested”) intersection adjacent to the River Hills Mall. I’m not mourning the loss of a fast food chain, but merely shaking my head in disappointment and begrudging acceptance at the desolate environment that will continue to ensue once the building starts to fall into disrepair along Mankato’s busiest road.
This cost $25 million. It effectively saves drivers upwards of 1 minute in time and prevents people from having to turn left. This is in addition to another $4 million to build yet another intersection (just slightly down the road) at local Highway 14. All of these expenditures are necessary because of the Mankato’s chosen development pattern. Unfortunately, all of this cost a lot of money and doesn’t pay for itself. Imagine what could be done if Mankato decided to spend the $29 million spent on sprawl-inducing intersections and instead used that money to improve its already existing public infrastructure downtown or neighborhoods?
To give you an idea of the total costs of public infrastructure: The total land and construction of Mankato’s new elementary school costs $8 million less than its two new intersections. At the end of the day, Mankato has money to spend on infrastructure. The town just isn’t spending it in the right places.
This is the problem we have and this is where I agree with Bob Collins’ Tweet: What’s the plan now? For development of infrastructure and our built environment, it looks to be more of the same. If politicians were looking for a stronger economy, they should look to build Strong Towns.
I'm in Kansas City, MO, today at the International Association of Assessing Officers where my friend Joe Minicozzi and I are scheduled to give a presentation tomorrow. I had an open day yesterday and, after getting a little caught up on sleep, I spent a large portion of the day out and about. I walked the streets and I biked the streets in an effort to get to know downtown KC a little bit better.
I wish I could report I am impressed because I really want to like it here.
While there are many things that really depress me about America's cities, particularly those in the Midwest, there is one thing that stands out above the rest: our misunderstanding of what a street is. If you were from Kansas City, you would be excused for believing that streets are corridors for moving automobiles quickly from one parking lot to another. You would be excused because that is all you see.
Except for the fact that there are virtually no cars. That is another component of this entire mess: there is really no traffic to speak of. We're fighting a beast that does not exist. Let me elaborate.
Like many cities, the streets of downtown Kansas City are unnecessarily wide. In addition, parking along the streets is mostly prohibited, ostensibly so there are ample driving lanes for all of the traffic. In many places, the streets have been configured in what is known as a "one-way coupling" where traffic flows in one direction on every other street. This, too, is to provide for a fast flow of high volumes of traffic.
After devoting all of this effort and valuable real estate to moving automobiles quickly, Kansas City then does what every city does: they install traffic signals everywhere. Cars are forced to stop every block or two and wait while the signal cycles from red to green.
Here's what is most odd about all of this: there's virtually no traffic.
I was out around lunch time and then again during rush hour. In the latter, Joe and I are biking down the street and, in the couple of miles we went, we were passed by no more than three cars. There was just nobody out there. On the way back to the hotel, we were just walking down the middle of the street laughing about how there was literally nobody here in a car.
This is a city of nearly half a million people. The city has spent billions on getting them in their cars. Where are they?
Joe Minicozzi recklessly dodging the traffic on our walk back to the hotel in Kansas City.I quite frankly don't know the answer to this question, but I understand the ramifications. By adopting the approach that they have, Kansas City and other cities like it have:
- Created a public realm where someone (pedestrian or driver) does not have to worry about the volume of cars but their excessive speed due to the needlessly wide lanes.
- Forced themselves and their business community to pay for expensive off-street parking by needlessly restricting on-street parking.
- Given up the value of all of the development space that is currently devoted to parking cars, all while the streets are vacant.
- Needlessly spent tens of millions of dollars or more on traffic signals.
- Needlessly delayed millions of motorists who sit at signals while no cars approach from any direction.
- Limit the overall desirability of the downtown by making the public realm, and the corresponding adjacent land use pattern, auto dominated.
- Built a system of transport that is inefficient and unsafe.
I'm willing to bet that downtown Kansas City has a rate (incident per capita, incident per vehicle-miles-traveled) of fatal car car accidents and a rate of insurance claims for auto accidents higher than New York City. I'll bet it is far, far higher. Anyone who has access to such data, please prove me right or wrong.
And let me talk about efficiency, which seems to be the metric we want to use to judge success. Who is this system efficient for? If it is the driver, then we need to do something about the traffic lights. If it is the taxpayer, then we should do something about the hierarchical road network because, as is obvious from watching the traffic patterns today, the capacity that has been paid for is not being used efficiently. It is largely being wasted.
Here are the immediate things I would do tomorrow if I were put in charge of renovating Kansas City's downtown:
- Remove all one-way couplings. Every street will have two way traffic.
- Allow parking on every street.
- Where streets are too wide for two travel lanes and two parking lanes, stripe for bike lanes and/or buffers. The lane widths must be narrowed.
- Change all signalized intersections into a shared space area. As a temporary transition, shut off the traffic lights and paint the intersections to alert everyone that this is shared space.
- Deploy aggressive traffic calming devices where the highways and major arterial STROADs empty into the downtown.
- Sit back and watch the downtown prosper.
Now there are many more things that would need to be done -- a regulatory framework and tax system that supported vertical expansion and good urbanism would be paramount -- but these steps would remove the major obstacles this downtown faces.
Oh, and did I mention that this would be far less expensive than the current approach. Like vastly cheaper. I believe that makes this approach more financially viable than what the local engineer and public works departments likely have planned in their fantasy wish list of projects to theoretically be funded by someone else. Let's see a credible, locally-funded alternative from them.
And remember, it is not like there are that many cars today that would even notice.
We humans are eager to believe, in the face of overwhelming evidence to the contrary, that large changes in the trajectory of human progress are infrequent. There is comfort in pretending that we are far more in control of things than we really are. We don't understand, or perhaps respect, the mystery and complexity of the world we operate in.
If you are in Pennsylvania and would like to have the Strong Towns message brought to your community, we have an ongoing fundraiser to help us visit your state and hold 8 to 10 Curbside Chats. Please consider supporting this effort and pass it along to those you know in PA. We'd love to bring this message back to the Keystone State and change the conversation on growth statewide.
Last week I blogged about transportation projections and how it really is silly that we rely so heavily on a system that we know gives us bad advice. In The Projections Fallacy, I pointed out that we don't need better projections but a model of growth and development that is robust to modeling error. This seemed fairly self evident to me; if something is not working, find something else that you think will.
I was not prepared for the number of people that had a difficult time wrapping their mind around this. There were three main counterarguments put forth to my premise. First, there were some that agreed that our models were bad, but they argued that what was needed is a better model. I'm going to address that belief today. The other two -- that bad models are better than no models and that, flawed as it may be, I have no better solution -- I will address later this week.
Earlier this month I read When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein. Long-Term Capital Management (LTCM) was a famous hedge fund that experienced unprecedented success before going bust in spectacular fashion in 1997, necessitating a federally-organized bailout. The story should humble anyone who does high stakes projections or modeling for a living.
The idea behind LTCM was an equation known as Black Scholes. It is a model for pricing options that, through use of statistics and normal distributions, allowed hedge funds to make "low risk" bets on the movement of markets, offsetting those bets with a "hedge" to limit the amount of loss. In theory, it is an amazingly powerful model, brilliant enough to earn a Nobel Prize in Economics. In practice, it failed spectacularly and almost brought down the entire global financial system.
It is not that the model was wrong -- much of what they were doing had been back tested and, given infinitely deep pockets, infinite time and markets that operated within their modeled range, they may have been able to weather the storm -- but more that they were incomplete. They assumed rational market behavior; that others working in an efficient market would not leave money on the table, opt for the lower performing (but safer) bet, voluntarily take a loss, default on debt obligations and a myriad of other things that happened in succession. Their models said this confluence of events should happen only once in the history of four universes. Obviously, that was not quite accurate. Their downfall came from market responses that could not be modeled.
In comparison to the modeling used by the quants on Wall Street, traffic modeling is so simplistic as to be almost laughable. I've seen more just straight linear projections than anything else, essentially taking a ruler and drawing a trend line out from past data. This is done digitally using a spreadsheet to give it a veneer of complexity. It is anything but.
More advanced models actually examine the behavior of traffic given certain changes to the system. If one road is opened up or widened, cars will opt for that route, reducing traffic in a different area. These models are more complex with many more variables. Like any model, the greater the number of variables the increase in the likelihood of modeling error and the greater likelihood of an outlier event.
So the idea of building a better model is being tried and there are many people -- in the financial world and in the traffic modeling world -- that believe it is possible. If you back test the data far enough, fine tune your variables, try to take into account all the intangibles you can think of, you can get a model that is reasonably close.
Until it isn't.
Let's go back to 1925 and apply this build-a-better model logic. Pretend we worked for a local trolley company. We needed to project how much to invest in new growth (overlooking for a minute that this is not how the trolley systems were built -- build-it-and-they-will-come is a modern phenomenon). We look back over the past 50 years and see a country that has been urbanizing through the Second Industrial Revolution, one that is in the midst of a great boom that appears to have no end, one where the demand for the trolley system projects as strong.
We can pull in any variable or intangible that we could reasonably identify at the time and we would not have been able to predict the Great Depression, the Second World War, suburbanization, the advent of buses, the rise of the automobile, the Interstate Highway Act and the forces that would relegate the trolley industry to a local novelty. And that is just in fifty years.
We're making investments today that we expect to be around at least that long, with projections of the future that extend out decades. I don't care how good the model is, no model will accurately predict the future. Nobody can tell you with any type of certainty what will happen with gas prices, technology innovations, consumer preferences, war and disease and any other myriad of game-changing variables that humanity has faced throughout history. And we're in a period of history where change is accelerating, something that modelers are totally blind to.
Now, none of this would matter if the bets we were making were small. You can bet a small amount of money on the probability of things happening in the distant future and it really doesn't matter if you are wrong. Unfortunately, we're not making little bets. We're making massive bets, not only in terms of the money we spend today but in the cumulative repercussions of the approach over time. That's why we do modeling; this is all really important because there is a lot at stake.
So if we can't build a better model -- and we know that to be a self-evident truth -- why do we do it? That is a psychological question that I'm not fully qualified to answer. My suspicion is that we humans are eager to believe, in the face of overwhelming evidence to the contrary, that large changes -- positive or negative -- in the trajectory of human progress are infrequent. There is comfort in pretending that we are far more in control of things than we really are. We don't understand, or perhaps respect, the mystery and complexity of the world we operate in.
Our models simply don't work and we can't build a better model. We need to face those facts, embrace them fully and do something positive with that knowledge.
Later this week I will address the two other contrarian responses I received, specifically, that bad models are better than no models at all and, if I'm so smart, what would I do differently in a world without models. Check back with the Strong Towns Blog for that.
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How can a country that is so wealthy be in such enormous debt? How can a country that can build such marvelous transportation systems not find the money to sustain them? How can a people that enjoyed decades of unrivaled economic hegemony -- staggering levels of growth beyond anything seen in human history -- be facing such economic turmoil after a couple years of, not even decline, but just slowing growth? The answer to these questions reveal some uncomfortable truths about who we are, how we got here and what options we have for our future prosperity.
I wanted to provide a brief message for our podcast listeners who have now gone three weeks without an update. I'm so sorry. Like our politicians and engineers with our highway systems, I have had the best of intentions. I've brought along recording equipment on our recent trips to California and Memphis but never had the time to put something quality together. There are two answers to this problem. First, I'm going to make some time this week and next week, with CNU, I will have a ton of content. Keep your ears open for that. Second, we need some help around here, and that can only happen with your assistance. We have an amazingly small budget when compared to everything we do. If you are in a position to support our high return operation, we would value your contribution and put it to good work. Thank you for your support.
I'm struck by how strongly our culture associates growth and prosperity with highway construction and expansion. Tom Friedman, a respected left-of-center columnist with the New York Times, had an entire chapter in his most recent book, That Used to Be Us: How America fell behind in the world it invented and how we can come back, devoted to the concept that "our winning equation" is, in part, to invest in infrastructure and then watch prosperity flourish, just like it did in the 1950's and 1960's.
Of course, this ignores that fact that our investments during the first generation of America's Suburban Experiment (1950-1975) were higher return investments that generated a lot of positive cash flow. I like to point out that, when we built the 35W bridge here in Minnesota for the first time, it connected far flung areas of the Minneapolis/St. Paul metropolitan region in a way that had not been done before. Following that investment, new commercial real estate was developed, new residential housing went in and the resulting influx of tax receipts made us feel wealthy. When the bridge fell down and had to be rebuilt, we didn't experience all that new growth, just the costs of construction and delay. Maintenance has an entirely different set of financial metrics than new construction.
Which is why our transportation spending is set up to favor new construction. It is just so much more fun. Maintenance is simply a pain, a local concern. That highway fix it project means nothing but congestion and delays and, when it's all done, all you have is a little smoother ride. By contrast, new construction is so much better. Not only do the politicians get a ribbon cutting scene, but we can all (once again) "solve" congestion while getting a new WalMart, Taco Bell and Quiki Mart in the process. New growth just feels so much better.
How else can you explain what I experienced last week in Memphis? Here is a city with enormous infrastructure maintenance problems having spent untold sums running highways all over the region. Their local transportation board is proposing the region spend $10 billion more, almost all of it adding new capacity on the far flung (new growth) extremes of the network. Maintenance? That's someone else's problem.
How else can you explain a state (Minnesota) that would prefer to spend more on one bridge to aid exurban commuters from the neighboring state than on maintaining all of the state's 1,149 bridges that are currently rated as structurally deficient? We culturally believe in the power of new growth to solve our problems, that investments in highway capacity and combating congestion pay dividends to us as a society.
Unfortunately, we base this belief on the illusion of wealth that was created in the early years of the Suburban Experiment, where the first life cycle of horizontal expansion had produced growth for our economy and that pesky overhang of maintenance was still a decade or more away. We should know better by now, but there are few in a position to change the system that don't benefit, at least in the short term, from it being perpetuated.
The emperor has no clothes, indeed, but we're still in the phase where we jeer and deride the one pointing it out. That will change soon.
What will speed up that change is an understanding of the fact that our transportation investments are not creating wealth, they are destroying it. Now I'm not talking about just the investments where the old Target store at the old interchange is induced to move into the new Target store at the new interchange four miles up the road. I mean almost all of our highway spending. It costs more to build and maintain than it generates in returns and, therefore, will only continue so long as we have the capacity and the desire to delude ourselves.
Let me provide an example. Pretend you were a local elected official and I came to you and said that I had a project that would reduce congestion, allow us to improve traffic safety, create local economic development opportunities and return 2,194% of the cost of the project to the local economy? Sounds good.
What if I then said that the federal government would pick up 90% of the cost, making the local share just $716,000? This is now a no-brainer, right?
Today let's just look at the federal contribution. I did a Google search for a Diverging Diamond enhancement project with a cost benefit analysis and came up with this one from Kentucky Colorado. Yes, I have an obsession with the delusion that is the diverging diamond interchange, but the selection of Kentucky Colorado was just random. The report for the project contains an appendix that has a cost benefit analysis as follows:
You can see that by the time you get to 2030, for the diverging diamond without the added enhancements, the cost is $7.2 million but the benefit is nearly 22 times that at $157 million. That is an AWESOME rate of return. Graphically, it would be presented to public officials like this, which makes it easy to understand why it could be supported.
At this point, we're not going to delve too deeply into what this benefit is. That will come later. Let's give it the most optimistic spin. Nobody is suggesting that this is money that will pour back into the government. What is being suggested here is that transportation investments like these will reduce congestion, increase mobility, create jobs and that will all grow the economy. So the $157.1 figure could be thought of as the increase in Gross Domestic Product (GDP).
Still sound good? Consider that the federal government -- through all means of taxation, including income tax, tariffs, business taxes, estate taxes and even including the gas tax -- currently captures 15.8% of the economy. Put another way, for each dollar of GDP, about sixteen cents finds its way to the federal government. That means that our whopping $157.1 million in GDP growth only returns $24.2 million to the federal coffers. Graphically, it would look like this.
Okay, this still feels like a good project, doesn't it? The Federal government spends 90% of $7.2 million and, over the subsequent 15 years, brings in $24.2 million. We should just do this over and over again because we're just getting richer, right?
Not so fast. It is not like the $24.2 million is going to be spent on transportation, or even that $7.2 million of that is going to be spent on transportation. The Federal government does many things, has tremendous obligations and spends the vast majority of its funds on things that our society deems more worthy of our investment than transportation. In fact, in 2011, the Federal Highway Administration's budget was 41.1 billion, just 1.07% of the Federal budget. If we are only going to spend 1.07% of what we bring in on transportation, that means this project yields just $259,000 in funds that actually pays for transportation investments.
If the problem here is not obvious to you at this point, let me elaborate. We spend money on transportation. We feel wealthy and experience this enormous "return" (more on that in a second). Only a fraction of that wealth is actually cycled back into the system, however, and an even smaller fraction of that will actually be captured to pay for the project. The amount recouped is ultimately nowhere near the amount invested.
The most obvious "solution" to this problem is to devote more of our Federal budget to transportation projects. That would be the solution of the American Society of Civil Engineers and their adherents in the Infrastructure Cult. Okay, let's not bother calculating the time value of money (the fact that the costs are today but the benefits are spread out over many future years), but just evaluate what it would take in terms of an increase in our budget to go from $0.26 million returned to break even at $7.2 million. That increase -- 27 times the current budget -- would make the Federal Highway Administration's budget $1.1 trillion, bigger than the national security budget ($895 billion), Social Security ($730 billion), Medicare ($491 billion) or Medicaid ($297 billion). That's not going to happen.
So what if we just raised taxes and the federal government captured more of the wealth generated by this improvement? The calculations reveal that the Federal government would need to increase its take of GDP from 15.4% to 19.8% of the economy, a tax increase of $640 billion with all that extra money devoted just to roads. Only the true socialists and/or the true believers in the power of the Suburban Experiment will think that is a good idea.
Now let me drop the bomb I've been alluding too: Those "benefits" that we kind of think of as prosperity, wealth or GDP; they really aren't. There are derived from a set of narrow correlations between time saved and prosperity that we witnessed in the early 1950's when we built those initial highways. We connected these far flung places -- places only served by railroads or poorly constructed roadways prior -- and we saw all kinds of economic gains. We then used that knowledge to build equations to justify expansion of the system. Nobody ever questions those equations today (why would they) and nobody stops to consider the diminishing returns of the system.
So there is not actually any money here, just a few seconds of saved time here and there that economists and engineers equate with money when they are trying to justify a project. Do you take home more money, generate more wealth for the economy or spend more of your income when you can arrive at work 45 seconds more quickly? Not me either. These equations are a joke. (If you want to learn more, read our 2010 series on Costs and Benefits.)
So when I say we are going broke, that this system provides the illusion of wealth in the near term but ultimately destroys wealth, that the decay you see around you in our transportation system is not due to a lack of investment but to the lack of financial viability of the system, you can get a sense of how far gone we are. We are literally operating in a totally different paradigm from reality.
When someone like James Howard Kunstler says we need to rebuild our passenger rail system, that the highway era is a transitional phase that is going to come crashing down on us, we all smile and nod to his face and then giggle behind his back because "that guy is a little crazy". Like I said earlier, the emperor has no clothes, but we're still in the phase where we ridicule the guy pointing it out. We need to get past that. Quickly.
Yes, this is just one project, but I picked this project because it is a low cost, high return endeavor. That is the argument that the engineering profession is making and one of the reasons people got so mad at me when I did my earlier posts on the diverging diamond; the diverging diamond makes better use of existing infrastructure and pays a high return, especially when compared to things like adding another lane or building another interchange. Even so, the math on it is ridiculous. Imagine what the math on a project like the infamous St. Croix bridge would be.
In a follow up post I'm going to look at the original construction of our passenger rail system and show how important capturing value to pay for capital costs is to making transportation systems work as well as how such a system naturally resists excessively ridiculous spending, or at least creates systems that break early enough to avoid catastrophe. In the process, I'll explain why funding the highway system with gas tax dollars was flawed but also why continuing to fund it with deficit spending is perilous. I'll also, if needed, address any engineers (or those sympathetic to them) that want to argue that we shouldn't look at the revenue for a single project because it's the system, dude, that generates the prosperity. Yeah, how's that working out?
The time to shift our focus to building Strong Towns is now.
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The concept of building shared space within the public realm is a radical one here in the United States, where automobiles are not only given priority, but completely dominate most public spaces. With the financial insolvency inherent in our current approach becoming more and more apparent each day, there is a need to study alternatives. The shared space model -- while a dramatic departure from the status quo -- can help us build Strong Towns while making our urban neighborhoods safer in the process.
Strong Towns is proud to support a new transportation-focused blog here in Minnesota called Streets.MN. The site is a collaboration among a number of local transportation enthusiasts. Content is updated frequently and can be access on the Streets.MN site as well as on Facebook and Twitter. Today's Strong Towns post is being run concurrently on the Streets.MN site. I intend to be a regular contributor in support of the effort.
This year at Strong Towns we have focused on a comparison between the financial productivity of the traditional neighborhood pattern and the post-WW II development pattern of the Suburban Experiment. Our case study has been a three block area in my hometown of Brainerd, MN, where the city has provided a 26-year Tax Increment Financing (TIF) package to a fast food restaurant that, despite being brand new and built in full conformance with the local suburban codes, has a total value 41% less than an adjacent block of the same size that has retained -- in a much deteriorated state -- the traditional development pattern.
The traditional development pattern is more financially productive and more resilient. So how do we, at this point in the process, embrace the historic DNA of our urban centers and start to reverse the decline? The next posts in this series will seek to answer that question starting today with perhaps the most difficult change we need to make; the orientation of our highways as they pass through urban neighborhoods.
The single piece of public infrastructure doing the most damage to the value of the neighborhood we are studying is the state highway. Its design is sucking the value out of the entire place. Like most highways, the design through this urban neighborhood is indistinguishable from the design used on the open road outside of town. This helps the engineers at the DOT to theoretically meet their mandate -- move as many cars as possible as quickly as possible -- but does little to create a platform for creating, let alone retaining, real financial value.
The STROAD design -- a street/road hybrid -- is the futon of transportation alternatives. Where a futon is a piece of furniture that serves both as an uncomfortable couch and an uncomfortable bed, a STROAD moves cars at speeds too slow to get around efficiently but too fast to support productive private sector investment. The result is an expensive highway and a declining tax base.
When a highway enters an urban area, it needs to adopt an urban geometry. That means narrower lanes, slower speeds and more awareness of the need to share space. The concept of "sharing space" is so foreign to Americans that it is worth deeper explanation. We're not talking about having a place for everything -- aka, Complete Streets -- or even having everything in its place -- aka, Complete Roads -- but that the concept of "priority" needs to be abolished in favor of an approach where all space is shared amongst transportation options.
Priority is what keeps you waiting at a traffic signal. It is what makes pedestrians run across the street when the light is about to change, even when they are in the crosswalk. Priority is what keeps drivers from being prosecuted when they run into a cyclist. It is one of the physical mechanisms that foments the mental reaction of road rage.
The concept of priority is the opposite of shared space. With priority, traffic devices, controls and regulations are used to designate who has domination of the public realm at any particular time. Generally, automobile through traffic is given the priority. When a car is forced to stop at a signal, pedestrians and traffic moving in a perpendicular direction can be given priority while the through traffic waits. Bikes are sometimes given priority in designated lanes. Sometimes cyclists ride within the traffic stream and theoretically have the same priority as an automobile, although too frequently that right is not recognized by the driver.
The connection to road rage is simple; when the system gives you priority, the public realm belongs to you. This gives drivers a feeling of entitlement and of domination -- they waited their turn and now the road is theirs. Add the relative anonymity of being in an automobile to the equation, and it is not difficult to see why we have road rage problems in the United States. In a priority system such as ours, anyone that fails to properly signal their turn, drives a little too slow or cuts into traffic is taking away the right of the driver with priority to access and fully utilize the public realm.
And priority is dangerous too. When we give a driver priority, we tell them that it is okay to go. The system of priority is supposed to make the public realm safe for the driver who has been given control over it. While we talk about defensive driving, we are conditioned to expect normal, routine conditions. In a system of priority, we are not automatically looking out for the accident-causing exception to the rule.
Most Americans that read what is going to come next in this post will find it bizarre. That is not because it is crazy but because we are so conditioned to believe that a system that gives priority for using the public realm is both efficient and fair. It is neither.
In an urban area -- and don't confuse what I am going to write here with a suburban road situation -- in an urban area, remove the traffic signals, the excessive (and generally ignored) signage, the stops signs, the hard elevated curb that separates pedestrians space from automobile space and the crosswalks. Reconfigure the public realm to give it an intuitive sense of complexity. What happens? Chaos? We may be inclined to believe so, but no.
What happens is shared space. I'll give you an American example where this works so you can picture the mechanism. Say you are attending a concert or a sporting event where the overflow parking is in a field or some type of area where the stalls and driving lanes are not well defined. When the event is over, people (some of whom may be under the influence of adult beverages) are walking around this undefined space at the same time that cars (sometimes driven by those also under the influence of adult beverages) are trying to navigate the same space. Despite the chaos, nobody is run over and people don't die in this environment. Why? Because it is a shared space.
In a shared space, drivers expect pedestrians and look out for them. Pedestrians expect cars to be there and do likewise. Instead of the aggressive stop and go of a priority system, you have flow. Everything flows naturally and the public realm is shared amongst all traffic options. Cars, bikes, pedestrians, people with baby strollers, people in wheelchairs, etc... They all are equally accommodated.
Counterintuitive as it may sound to the American used to the priority system, share space works because the perception of risk makes people more alert, more accommodating and more cautious.
A shared space approach may mean that cars will need to be driven at 10 or 15 mph, but before you think that the result is tremendous delay, understand that they are not stopping at lights or other places where priority would make someone wait. The continuous flow combined with the ability to intelligently access the entire neighborhood grid system (as opposed to the hierarchical system that funnels all traffic to collectors and then to arterials) not only increases the total capacity of the system but provide drivers with multiple, viable options for each trip.
Getting back to our three block case study, once we slow the cars and convert the STROAD to a street, we will provide for a more complex environment that will favor the traditional development pattern. People will be able to park on the street without worrying about getting their door sheared off. People will be able to walk without a car traveling 45+ mph mere feet away. Bikers from the surrounding neighborhoods can return. Some shade trees can be provided in the recaptured area to add even more value.
Now here's the punch line to this entire concept: to do everything I've described here and convert this STROAD to a productive, shared-space environment would cost a fraction of what our current priority-based system costs to build and maintain.
Back in 2004, this quote appeared in an article in Wired magazine appropriately called Roads Gone Wild:
The old ways of traffic engineering - build it bigger, wider, faster - aren't going to disappear overnight. But one look at West Palm Beach suggests an evolution is under way. When the city of 82,000 went ahead with its plan to convert several wide thoroughfares into narrow two-way streets, traffic slowed so much that people felt it was safe to walk there. The increase in pedestrian traffic attracted new shops and apartment buildings. Property values along Clematis Street, one of the town's main drags, have more than doubled since it was reconfigured. "In West Palm, people were just fed up with the way things were, and sometimes, that's what it takes," says Lockwood, the town's former transportation manager. "What we really need is a complete paradigm shift in traffic engineering and city planning to break away from the conventional ideas that have got us in this mess."
An urban street that costs less to build and maintain, attracts more private sector investment, creates a greater, more resilient tax base than the standard approach, and is safer too. Those are the type of advantages that come from building a Strong Town.
Strong Towns - We're a lot like James Howard Kunstler except you can share us with your mom. Check out our podcast on iTunes and, while you're there, give us a rating. If you listen to our podcast, have already given us a rating and would like to do us another favor, go to our donations page and become a supporter of the podcast. If you've done that, then sync up, put in your ear buds, tune in and zone out to our latest podcast; an interview with Duncan Crary of the Kunstlercast.