Tail Fattening in Practice

Some fun stuff:

A recent Strong Towns post tells us that (1) sales taxes are increasingly being used as DOT slush funds (due to excessive restrictions on local tax collection),

while (2) this table suggests there is a mighty overhang in retail in this country (made worse by the fact that such counts routinely undercount antifragile retail),

thereby (3) heading into the teeth of a likely large-scale retail downsizing,

which would (4) extirpate sales tax revenues in most locations--shrinking the size footprint of the transportation slush fund.

This is consistent with "tail fattening" (think Nassim Taleb)--especially the kind that, to reduce or mitigate risk now, kicks it down the road, compounding it when the interest's due.

The only real long-term solution is--as  I have said before and I will say again--conversion to a user fees-based system for access-managed roads, and massive reductions in maintained infrastructure for all general-access byways.

On Retail

Saw this at Zero Hedge.

Keep in mind the deep structural fragilities of the average four-anchor regional mall. There's the fragility resulting from the slow decline of the middle class, and this is what blogs like Zero Hedge focus on.

Then there's also a management fragility, a fragility that stems from the very design of the mall: To be healthy, it is dependent on the health of all four anchors. Mall dead zones are intensely correlated with closed (or "dead") anchors. Since the beginning of the '90s, there were basically five different entities that would anchor a mall:

• Sears
• J.C. Penney
• Federated (Macy's)
• May (Strawbridge's, Hecht's, Filene's, Kaufmann's, Marshall Field, etc.)
• Regional chains (Boscov's, Dillard's, Belk, Northern {Bon-Ton, Carson Pirie Scott, etc.})

Sector consolidation has been in full force since the '70s, when Macy's was semi-national and most regional malls had two regional chain options, with the loss of chains as large as Wanamaker's, Gimbels, Stern's, Hudson's, the Emporium, and Woodward & Lothrop, and as small as Hess Brothers, Lit Brothers, Bamberger's, Abraham & Straus, and countless other minor metro and secondary major metro chains.

The problem is that the four-anchor model matured just before this contraction: When malls such as Montgomery Mall, Neshaminy Mall, Oxford Valley Mall, Christiana Mall etc. were designed, REITs (mall developers) usually had a buffet of six or more potential anchors to court. A four-anchor mall was a nice tradeoff between mall developers and the anchors themselves, none of which would need to be in every mall to achieve market saturation. Failures such as Dixie Square in this environment were rare and more linked to demographic misprediction.

But the so-far culmination of the contraction in the 2005-6 Federated-May merger resulted in further anchor erosion, such that four-anchor malls could court only four anchors:

• Sears
• J.C. Penney
• Macy's
• Regionals

And since Federated (Macy's) and May duplicated each other in many, many malls, these malls were left with just three anchors. The growth of Target as a mall anchor has helped somewhat, but Target is independent in a sense that the older anchors just aren't. It isn't a coincidence that the inventory of dead malls began growing more quickly after 2006, as many malls with a merger-lost anchor saw themselves go obsolete, and lose more and more stores.

Either the collapse of Sears or J.C. Penney would catalyze the exponential growth of dead malls, a point Zero Hedge makes, largely because it would collapse the available anchor list for most malls from four to three (and keep in mind that hypermarkets e.g. Target generally make poor anchor candidates, as they're usually co-located in the same strip, just down the road), thereby creating large dead sections in most malls--and exacerbating dead sections of malls that still have dead sections left over from 2006. In fact, for the latter case, such a collapse spells a death knell, as, once a mall drops below a certain occupancy threshold, it generates inadequate rents to be self-sustaining.

A further issue is that more profitable malls currently cross-subsidize less profitable ones. This is why malls that obviously take massive hits on facilities maintenance, such as many of those featured on Dead Malls, can afford to stay open until Claire's, Gamestop, and Radio Shack are the only tenants left. Just the collapse of Sears or J.C. Penney harms the mall model overall, because the cross-subsidizer loses one of its major income centers (the wing it anchored), in turn reducing the internal cash flow to the subsidized dying/dead mall, forcing more dead malls to close etc.

Just the collapse of Sears or J.C. Penney makes the mall financially fragile.

The collapse of both wipes out whole wings, or halves, or--for malls still dealing with a 2006 anchor loss--more, of leased leasable space in 99% of all malls. Even the most financially robust malls see their balance sheets shrink to breakeven. Already dying malls are discharged. And for the typical challenged, already breakeven anchor mall, there is no white knight, no cross-subsidizer left. Only a truly slim subclass of malls--those with carriage trade anchors*--could possibly emerge from this for the better.

The net result would be a ripple contraction throughout the retail sector, as REITs merge to survive; inline stores contract locations and staff as they clear out of dying malls; and who-knows-what other consequences fall out of the vicious cycle.

Why does this matter? Aren't malls obsolete anyway?

To answer the second question first: Yes and no. Yes, the regional mall is an obsolete business model, but no, it's not online retail or lifestyle centers driving them out of business. For the former, I like to say that  Amazon is to us what the Sears catalog was to people living in the 1900s: that is, remarkably convenient, but not convenient enough to trump the bricks-and-mortar shopping experience. The numbers bear this out (Zero Hedge ibid.). And for the latter, lifestyle centers are just newer shinier malls, very occasionally with a prototype infrastructure of resiliency in them.

The thing that is really killing the mall is the return to relevancy of the very thing it displaced.

For the former question, this matters because--nearly all job growth in the last decade (or more) in any sector that doesn't require mastery of calculus has been in retail sales. And in most suburban markets, the highest job densities in this sector, after revitalizing Main Streets, are--in regional shopping malls. Just as the traditional setup cross-fertilized sales, so too did it jobs. Lifestyle centers replicate this to some extent, and hypermarket-driven power centers don't hold a candle. Of course, nearly all non-Main Street retail offers little more than servitor jobs, but even so...

The implication is clear. Concomitant collapse of Sears and J.C. Penney brings the mall to its knees. In doing so, it catalyzes the downsizing of almost every inline chain, as they scramble to locate or relocate to the remaining profitable malls. And in doing so, it catalyzes a major percentage cut in the retail jobs numbers. This, in turn, negatively affects mall patronization**, further weakening the remaining malls, further catalyzing consolidation, causing yet more cuts etc. in a vicious cycle. And of course, since retail jobs have been the only positive fudge for economists, a sector collapse would lead to significant wider economic implications.

The large-scale arc appears to be: The return of the (antifragile) entrepreneur, the Main Street retailer, and the failure of the (fragile) nationalized franchised chains. Bricks-and-mortar is resetting. But the path there will be ugly.
_____________
* I.e. Barney's, Bloomingdales, Lord & Taylor, Neiman Marcus, Nordstrom, Saks Fifth Avenue, and a handful of regionals or one-offs such as Von Maur.
** Among other things, such as further stressing a stressed welfare state.

Another Oil Price Shock Is Brewing

Photo: Philadelphia Inquirer

Fun news: another oil price shock is coming.

How can I tell? Simple. The price at the pump is already back above $4/gal. There was a debate last December (on The Oil Drum) about 2012 barrel price projections. But, as Voltaire noted, Les hommes discutent, la nature agit--we can quibble about our projections, but the ultimate arbiter is what actually comes up out of the ground and who gets it.

This is something the U.S. is losing. Oil production began to plateau in 2002; in 2005 China and India became major buyers Hoovering up all the world's excess crude. In 2005 the U.S. ceased to be the world's crude sink.

2005 was peak oil for America. It was the peak of availability, note, not of absolute production. That has not yet indisputably happened. But since 2005 India and (especially) China have been the buyers of choice, those who get first crack at oil, while the developed world has had to make due with decreasing local supplies. This has, unsurprisingly, led to slow but sure increases in U.S. gas prices.

In 2006-7 wanton speculation in the oil futures market (an early reaction to a local collapse of the housing market that actually began in 2006) led to a steep rise in the price of gas, leading to the first price shock, which in turn catalyzed the more general collapse, particularly in the housing market, we saw through 2007-8. With that collapse, the price of gas dropped to unsustainable lows, and has since been increasing in lockstep with the economy's inchworm improvements.

But the final straw that brought about this collapse was the fact that the price of gas became too high to bear. $4/gal seems to be the critical threshold, beyond which non-automotive transportation options, whatever their limitations, become mighty appealing. And we find ourselves back at this threshold early this year, before the spring or summer traveling seasons have even begun.

A key issue is the long-term ramifications of the Arab Spring and the Iranian oil sanctions, both of which have essentially taken Mideast oil supplies off the map. Continuing political tensions there will continue to effect oil prices.

But this is key--unlike with the last price shock, there is no clear evidence that speculation was driving an unsustainable bubble. In fact, it seems the opposite is true. The price of oil is up because (a) production is as flat as it has been for a decade (this is in accordance with realizations of Hubbert peak theory) and (b) China and India have fast become "thirsty" countries. In fact, I posit the supply of oil in China and India will be inversely proportional with the supply in the developed world (the U.S., Canada, Western Europe, Japan, and Australia). In the long run, these two demand blocs will just about evenly split the balance of the world's oil demand, but this is not going to happen without severe economic adjustments in the West.

But--$4/gal is the critical mass beyond which Americans will begin en masse to seek alternative transportation options; we can expect $4.50 or even $5/gal gas over the summer. And, to repeat: this will be the second oil price shock.

Particularly late last year, when the oil price inexplicably dropped (Libyan reserves coming back online?) oblivious or in-denial Americans began to revert to their gas-guzzling ways. This came while at the same time the younger generation, when they could afford it, showed a clear preference for urban living.

The economic reaction to this shock is very much up in the air. America is stronger right now; Europe is knee-deep in the Euro crisis (another debt crisis). But the dominant economic structure right now is deleveraging--each debt crisis is catalyzing another one, and will continue to, until debt burdens are enormously shrunk, if not outright eliminated.

It is very likely the U.S. will have a reaction to this shock the same way the Europeans had the first one--no need to panic, this is just like 2007, only this time we don't need to choose between our house and our car (we made that choice five years ago). To them, though, this could be the one missing brick that brings down the tottering structure that is the Eurozone--or, obversely--be the foundation block that cements a unified Europe...

Costing the City Branch Line

Long ago, I suggested the possibility of a long-term subway line running from 8th/Oregon (Pennsport) to Ridge/Henry (Andorra), the first phase of which would run between 8th/Market and Girard via the City Branch cut and part of the Ridge Avenue Spur. It looks like this.

A very old map. For one thing, my station naming principles have changed since.

The next obvious question is, how much does it cost? Actually, answering this question is substantially more advantageous than other potential heavy rail lines (or even Phase Is of lines), as the routing proposed runs along a former (abandoned?) freight right-of-way in heavily redeveloped (or redeveloping) areas where industrial uses are obsolescent: Franklin Town* and Callowhill. People live--not work--in these areas today.

This routing has four key components:
-The Philadelphia Branch from Girard to Noble. This follows the last mile or so of what was once the B&O's Philadelphia mainline, and is parallel to the single-track CSX main on what is at least a four-track (possibly six-track) right-of-way. It also includes a 1/3-mile section in the Fairmount tunnel, between Noble and Park portals.
-The City Branch, along the former course of Noble St. between Broad and the Noble portal, just west of 22nd. Like the ex-B&O ROW, this is a very wide route that is in disuse due to the postindustrial evaporation of its customer base. East of Broad, the City Branch continues on an elevated structure to connect into the 9th St. Branch and the approach to the former Reading Terminal. This elevated structure network (extant from Vine to Fairmount, and from 9th to 13th) is now known as the Reading Viaduct.
-A new tunnel from Broad, along Noble, to an at-grade (no flyunder) junction with the Ridge Avenue spur between 10th and 11th Sts. This tunnel would include a new Callowhill station between 11th and 12th Sts. and a short stretch of 4% grade in order to clear under 13th and between Broad and the existing subway tunnel and portal onto the City Branch's former elevation.
-The Ridge Spur from Noble south to 8th and Market.

Acquisition of the existing parts of this right-of-way is the initial hurdle: CSX is infamously recalcitrant when it comes to giving away parts of its right-of-way. However, there is little economic justification for holding onto this stretch, as the Fairmount Tunnel has been single-tracked to maximize clearance**, particularly due to the ancient (and constraining) south portal, just under the proposed Paine Park site, the duplication with the double-stack clearing ex-PRR High Line trestle across the river, and the single-track bottleneck of a concrete-lined cut by Wayne Jct.; the lack of any active customer in the immediate area; and finally the slow speed limit of this stretch caused not by engineering so much as the sheer congestion encountered in an urban area--particularly the approaches to the Schuylkill Banks. However, as the Banks themselves have proven, CSX is willing to let go of obsolescent stretches of its right-of-way***, and a good deal of the right-of-way width between Fairmount Tunnel and Fairmount Jct. is nothing if not obsolescent.

Procurement of (portions of) the existing railroad easement, wherever not already in the public realm, is thus the first major expense this project encounters. Mercifully, however, it is short: one mile along an obsolescent section of an active right-of-way, and two-thirds of one along an inactive one. $30 million for acquisition costs seems like a reasonable estimate.

Since the meat of the project is basically the linking two separate railroad rights-of-way together, the greatest cost would be expected to be in the actual interlinking itself, especially one that (a) is underground and (b) requires engineering with finesse. While tunnel construction should be (for the most part) cheaply done via cut-and-cover, due in part to the lack of major commercial or residential uses along the vast majority of the 3.5-block-long section, it would also have to be built under 13th, into the Branch between Broad's street grade and its subway grade, and with a gallery area for the Callowhill subway stop between 11th and 12th^, would be done for close to the minimum possible cost of a true subway under U.S. labor conditions--but it is still a subway, and may well breach the water table when it passes under 13th, and thus will be expensive. $50 million sounds like a reasonable cost estimate^^.

The final major expense is what could be best called "installation of railroad technology", namely, the rails and ties, equipment, third rail, platforms, platform access, and turnstiles. Since I'm attempting to utilize the most cost-effective possible alignment, most further savings (howsoever incremental on an individual basis) can be made in this arena. For instance, the cars currently in use on the Broad-Ridge Spur would be re-assigned for this line. No new equipment = $40 million cost savings. Platforms would be 100 feet long, or just about the length of two BSL subway cars (why would they need to be longer?) and built out of wood, wherever feasible (Broad, Franklin Town Park, Rodin Museum, Lemon Hill, Girard), offering a cost savings of a few million. Instead of needing to install an expensive new ventilation system in the Fairmount tunnel in order to deal with the diesel fumes, the CSX section would be simply walled off from the rapid transit section, and the two tunnel sections would alternate between the existing ventilation shafts (which were originally engineered for the significantly greater emissions of steam traction). Few barriers are as effective as physical barriers, anyway. Cost savings: Quite a lot.

While an elevator (or two) would have to be installed at Callowhill, Fairmount, and Art Museum each--due to these stations' being underground--at all of the other stations, a pedestrian ramp (also made of wood) would be able to satisfy ADA requirements.

So there are essentially three elements that spending actually has to be done on to finish this project: (1) extending the track down our fresh new ROW, along with the third rail needed to power our equipment, (2) building a cinder block wall down the middle of Fairmount Tunnel to divide diesel and metro ventilation districts (and the masons would be used to build the Fairmount and Art Museum station platforms too)--the tunnel being shallow enough that approximately 1/2 of the current ventilation shafts should allow acceptable air exchange--and (3) installing wood platforms at all of the other stations. Where the ROW parallels the CSX line, a chain-link fence is also a must-install, but that should frankly be about the same as what an exurban homeowner would expect to spend at the Home Depot to completely fence a two-acre lot in. Perimeters rake up mileage real quick. I recall that laying track costs about a million per mile, so we'll cost this at about $10 million and give the masons and carpenters $4.5 million each to play with.

The final cost is a contingency fund, a hedge or allotment set aside to deal with unexpected expenses. This is usually about 10% of the project's total projected cost, which at this point would be $9 million ((50+30+10)/10); since we are already costing out with a tight cost ceiling, we'll give this contingency fund an extra mil, and make the total cost projection $100 million even.

$100 million is borderline for Small Starts (unusual for heavy rail projects; Small Starts as a grant mechanism favors light rail and commuter rail), and since we're aiming for about 10,000 daily riders (~1,111 riders/station)--not too bad considering that the combined population of the Census tracts immediately abutting this proposed line is 27,344, and thus fully in line with relative ridership on heavy rail lines in similarly dense areas in New York, Boston, Chicago, and Washington, D.C. At these (optimistic) projections, the cost per mile is $33 million, and per passenger, $10,000. Even if half the proposed ridership is actually attained, the cost per rider would be $20,000, still extremely low by heavy rail standards and well in line with light rail standards.

Sometime in the near future I hope to dwell on non-financial justifications for this line's existence and programs that SEPTA can run in concert with lineside destinations to increase usage.
_________
* Fun fact: The Baldwin Locomotive Works, the biggest American steam locomotive builder, was once located in Franklin Town, running between Callowhill and Spring Garden and Broad and ca. 20th. This helps explain the paucity of historical rowhomes in the area.
** Like the Howard Street Tunnel in Baltimore.
*** To my knowledge, the B&O easement originally extended to the river. Part of the Banks is, for example, built over 24th St. Sta.'s coach yard.
^ With the expectation of, if not a wholesale plan for, redevelopment of what is currently a transformer array in the station's immediate area--an array that is supposedly being replaced by a new one along the former Viaduct; such station-side development tends to greatly improve ridership.
^^ Based on the assumption that a mile of subway costs $100 million (a number I've heard thrown around for the Navy Yard extension) and considering that the actual tunnel length will be just shy of half a mile, with a bit extra thrown in for a cost cushion; an electrical substation, for example, may need to be built out by Girard somewhere.

What Does It Cost?

I spent some time the past couple of weeks researching fares for commuter rails in the U.S. What I was after was a way to compare these fares, so I decided to use the rather arbitrary benchmark of a one-way 20-mile (as the bird flies) peak-hour trip as the basis of my fare comparison.

Of course, it's impossible to expect a regional rail network to have a station exactly 20 miles away from the CBD--although some come darn close. In one extreme example, I had to use a station 25 miles away as there were none closer to the 20-mile mark, despite a town along the railroad being approximately 20 miles from the city center and in another, the line wasn't 20 miles long. Finally I excluded rail lines operating non-FRA-compliant equipment, as part of what I'm getting at is how much a fare costs for equipment that mixes--or, more accurately, can mix (at a regulatory level)--with freight rail in this country.

Agency	Trip	Fare (One-way station peak)
LIRR (New York)	NY Penn-Hempstead	$10.00
MNRR (New York)	NY GC-White Plains	$10.50
NJT (New Jersey)	NY Penn-Woodbridge (NJ)	$10.00
MBTA (Boston)	Boston South-Framingham	$6.25
SEPTA (Philadelphia)	30th Street-Lansdale	$6.25
MARC (Maryland)	D.C. Union-Gaithersburg	$5.00
VRE (D.C.)	D.C. Union-Woodbridge (VA)	$7.85
Metra (Chicago)	Ogilvie-Glen Ellyn	$4.50
South Shore Line (Chicago)	Millennium-Hammond	$4.75
Northstar (Minneapolis)	Target Field-Elk River*	$5.50
Music City Star (Nashville)	Riverfront-Martha	$5.00
Tri-Rail (Miami)	Central-Hollywood Airport	$3.75
Trinity Railway Express (Dallas)	Union Station-Hurst/Bell	$5.00
Rail Runner (Albuquerque)	Albuquerque-Los Lunas	$2.00
FrontRunner (Salt Lake City)	Central-Layton	$3.75
Sounder (Seattle)	King Street-Mutilkeo	$4.00
WES (Portland)	Beaverton-Wilsonville**	$2.35
Caltrain (San Francisco)	4th & King-Redwood City	$4.75
ACE (San José)	Diridon-Pleasanton	$7.75
Metrolink (Los Angeles)	L.A. Union-Sylmar	$7.25
Coaster (San Diego)	S.D. Union-Solana Beach	$4.00

* Closest station to 20 miles is 25 miles (or greater).

** Line extends for less than 15 miles. Assume at least one zone increase were line lengthened.

Observations about this table:

1. The cheapest fares in the country are in the Southeast and Desert Southwest, with Albuquerque's Rail Runner being, by far, the cheapest fare of all. (I was shocked by how cheap it said it was on their website.)
2. The most expensive fares in the country are in the Northeast and in California. The three most expensive fares, overall, were all concentrated in the New York Area, while the next two most expensive were in L.A. and Northern Virginia.
3. It's more expensive to commute to downtown D.C. from Virginia than Maryland. Additionally, it's substantially cheaper to commute to San José from the Peninsula than from Altamont Pass.
4. Of the five largest cities in this country with commuter rail (New York, Los Angeles, Chicago, Philadelphia, and San Diego), the cheapest fare is San Diego's (at $4.00).
5. Three of the ten largest cities in the U.S. by population have no commuter rail whatsoever (Houston, Phoenix, and San Antonio).
6. Two of the ten densest metropolitan areas in the U.S. have no commuter rail whatsoever (Pittsburgh and Louisville). *Pittsburgh is especially surprising, given how much rail infrastructure exists in and around the city.

This list, of course, brings up further questions. According to Metrolink's website, AAA calculates the cost of driving at $0.541/mile, which means that every commuter rail network in the country offers a cheaper fare than the $10.82 it would cost to drive the 20 miles...even the Metro-North to White Plains, the most expensive fare on the table. So why is ridership depressed despite the cost savings?

Secondly--and this applies more for the cheaper fares--what is the farebox recovery ratio? With commuter rail (or any sort of mass transit, really), a farebox recovery ratio of 50% or better is preferable; some systems have it 75% or better; NJ Transit usually operates at a profit. Granted, networks that use a proof-of-payment system have lower labor costs, but the majority of commuter rail systems in this country use F59PHIs or MPI MPXpresses and gallery cars, and there's considerable cost disparity between these systems. It is impossible to believe that Rail Runner, for example, realizes a farebox recovery ratio better than 50%, based on this cost figure.

Paying for Infrastructure: At the National Level

So, since the Democrats dawdled their way out of a supermajority that could have easily allowed them to pass a good urban-oriented national transportation bill, the now Republican-controlled House has (finally!) produced a new national transportation bill*. This bill controls Federal expenditure on transportation for the amount of time it takes until the bill expires; historically it's been treated as a sort of Five-Year Plan for the Interstates.

While others have done a better job pointing out the bill's many obvious shortcomings, I'd like to focus on how we need to reorient and refocus our transportation bill. Since Mica's orientation paradigm is entirely reactionary--stripping out all of the most important features the bill has and retaining precisely what needs to be stripped out--understanding this new orientation is absolutely necessary, especially in terms of a public transportation policy shifting along with the changing transportation demands of the public.

What is happening is the beginning of a generational modal shift away from cars to walking, bikes, and mass transit. This shift is currently happening as a choice, as recent college graduates, more aware than ever of problems with the status quo, deliberately eschew the freedoms offered by the automobile (the ability to go anywhere, anytime) in favor of the freedoms offered by other modes (the ability to do your work, or snooze, or read while commuting). Hence, since the popular zeitgeist is a refutation of autocentrism, it should be expected public policy is shaped by it.

Mica's policy is reactionary in that it follows a caricature of 1950s transportation policy--namely, the stereotype of the era as being highway-centric--and thus seems like an attempt to force perception to bend to the will of policy, rather than the other way around. Instead, passage of this bill would just further pen up demand for alternative, walkable, urban, urbane places and lifestyles. It would grossly subsidize status quo exurban construction, even as demand for those types of places collapsed in the wake of the Great Recession--and not subsidize enough to artificially create any demand, either. In other words, it would be a boondoggle on a truly colossal scale, a scale at the same level as the 1950s' urban renewal. And unlike the 1950s, we don't have the liquidity to invest poorly anymore. We need to force a high ROI out of any investment we make...in making this claim, the conservatives are ideologically correct, regardless of how when it plays out in practice, conservatives seem attracted, like mosquitoes, to projects with the lowest public ROI (but the highest subsidies, visible or otherwise, for corporatist interests).

This logic of forcing the highest ROI out of transportation leads to me calling for a tripod scheme of Federal-level transportation investment. This scheme calls for:

• Leveraging current public transportation assets to provide new liquidity into the system;
• Leveraging new liquidity to (a) maintain public assets and (b) provide a national-level network in what is currently the most undercapitalized section of the transportation sector; and
• Providing planning and implementation monies to ensure transportation security at the national, state, and metropolitan levels.

Translated into plain(er) language, this means:

• Leasing and/or selling limited-access divided highways, particularly the Interstates;
• Investing capital gained in aforesaid process into endowing an infrastructure bank (focused on road maintenance and new rail infrastructure); and
• Ensuring that monies disbursed from aforesaid infrastructure bank are equitably divided between (a) national-level freight and passenger rail, (b) state-level freight and passenger rail, and (c) mass transit for interconnecting cities and urbanizing suburbs.

This is the broad framework the bill needs to operate in. Notice how diametrically different this framework is from the current framework, which focuses on highways and strips away all other funding--blindingly stupid when highways currently have the lowest ROI of any public infrastructure investment. Since we are overcapitalized on highway investment, with a handful of exceptions, and undercapitalized on rail investment, with almost no exception, eliminating excess capital from the highway network and plowing it into rail--as the only network able to operate with the same efficiency as highways--makes eminent sense.

This proposal would provide for, in general terms:

1. Decreased overall road spending. Road spending focus on repair. Sale or leasing of limited-access highways (primarily Interstates) to private transportation providers to provide capital for funding most of the rest of the bill, primarily through national- and state-level infrastructure banks.
2. Massively increased rail spending. Freight rail mainline electrification mandate; passenger rail mandate to provide daily service to all cities of 50,000 people or more; high-speed rail mandate to provide high-speed service to all metropolitan areas of 500,000 people or more, with 600 overland miles or less to the nearest similarly-sized metropolitan area. Reform of FRA and FTA to meet European and Japanese standards. Elimination of Buy America on small orders. Tax breaks for domestic railroad equipment manufacture and for shipping by rail.
3. Massively increased mass transportation spending. Mandates to provide transit access to 80% of all addresses in metropolitan areas and potential capacity enough to move half of the metropolitan area's population; mandate to provide a comprehensive implementation plan to that effect by the end of the decade. Increase of Small Starts and New Starts funding; enaction of America Fast Forward proposals.
4. Provision for planning of port and maritime facilities on a national scale. Ensurance that all large metropolitan areas (500,000+) with maritime access has national-level port. Planning and implementation of Maritime Interstates, following the coastlines, Great Lakes, and major navigable rivers.
5. Monies to maintain airports. Effort to reduce short- and medium-haul flights to increase long-haul capacity. Make airports profitable, and do not publicly fund profitable ones. Privatize airports in the same manner as the Interstates.
6. Pedestrians, bicyclists, and streets (as opposed to roads). Maintain a complete streets/shared space policy. Provide sidewalk access on all streets that are not to be shared space. Provide separate bicycle access parallel to arterial traffic roads, usually via a complete street. Finally, create national-, state-, and metropolitan-level "bicycle highway" multi-use trails, to be funded in cooperation between transportation and parks departments.
7. The infrastructure bank. Privatization of limited-access highways (primarily Interstates) and airports offers an excellent opportunity to fund an infrastructure bank. Land value of these holdings is in the many hundreds of billions, and transportation value in the trillions. Getting fair value for these holdings consequently offers enough liquidity to fund new public infrastructure projects for a decade or more. By providing infrastructure banks at the Federal and state levels, this liquidity is managed, and with a strong vetting infrastructure, poured into projects offering the biggest bang for the buck.


No transportation bill option currently on the table offers the value, stability, liquidity, and security of an infrastructure bank system financed via the privatization of currently-public infrastructure.
 
If you want to read the more specific proposals:

Roads: Leasing or sale of Interstate or Interstate-grade highways (privatization) will enable user fees to be bought to bear on an overutilized socialist commons; as a mature technology, the time is ripe to undertake this endeavor.

Public road maintenance will be funded through the infrastructure bank.

Roads will be maintained according to how much access they offer; rural (primarily access) roads will be funded at an appropriate level, as will urban roads.

Since funding transportation also entails eliminating overcapacity, funds will also be disbursed for the elimination of excessive roadway capacity implemented two or three generations ago (i.e. removal of urban freeways) in favor of the higher ROI generated via land development.

Preferentially fund roadway projects which (a) do not increase capacity (that is: repairs first) and (b) have strong state and local financial support. No project with less than 25% state financial support and 10% local financial support should be Federally funded (in essence, this caps Federal funding at 65%).

Rail: Current funding for Amtrak would stay intact. Future funding for Amtrak improvements would be folded into the infrastructure bank.

High-speed network proposals and funding would be folded into the infrastructure bank.

A new mandate for electrification of all freight mainlines by 2040. National standard would be 25kV 50 Hz catenary able to handle double-stack container trains. Funding for this mandate would be accomplished through infrastructure bank disbursals to freight line owners.

Special committee for the total rewriting of FRA and FTA regulation to make them internationally-compliant. Repeal of Buy America for smaller orders (sub-100 units) balanced with a rail manufacture-and-utilization tax break to better balance transportation modal shares and promote a domestic rail manufacturing industry.

Mandate daily passenger rail to all cities with a population greater than 50,000 and high-speed rail between all metropolitan areas with a population greater than 500,000, 600 overland miles or less from the nearest equivalent population center, both by 2050. Passenger rail is an Amtrak mandate, funded through the infrastructure bank, while HSR would likely utilize PPPs. Note also that the HSR mandate just applies to linking individual cities into a network. Note also that 600 miles is just a tad longer than optimal corridor viability, but connects nearly every middle-to-large city in the U.S. to one another via multiple transportation modes. Assume that HSR will utilize new rights-of-way while slower-speed trains will utilize existing rights-of-way outside of urban centers.

Mass Transit: Match Federal and state funding for all mass transit systems, nationwide.

Establish and fund planning-and-implementation programs for mass transit systems to eliminate gaps and optimize service, nationwide. Different local mandates will of course create different conditions, but when oil is expensive the need for greater mass transit service will be more pressing. All metros of 500,000+ must be capable of reaching 80% and moving 50% of their population via mass transit by 2060.

Plans to reach this mandate must be complete by 2020.

Implement funding strategies as suggested in America Fast Forward (L.A. 30/10).

Tie reception of all federal urban development monies (for 500,000+ cities) to the successful planning and implementation of mass transit. Mass transit is the key competitive advantage of the 21st century; cities which understand this are those best poised for long-term growth. Cities which choose not to implement mass transit are thus those least able to maximize returns on Federal investment.

Increase New Starts and Small Starts funding by at least 100%. Fund projects with maximal people-movement potential first, maximal non-people-movement-based environmental impact potential second, and maximal developmental potential third. Vet and penalize projects with inefficient expenditures (for example, overdesigned stations relative to service levels, overpriced equipment, new equipment when used equipment can suffice) and projects with low returns on investment viz. station-side development (reward TODs and penalize the overuse of park-and-rides). Preferentially fund projects with strong state and local financial support.

Provide Federal matching monies to rail agencies which sell, lease, or develop upon excessive park-and-ride capacity.

Preferentially fund projects with strong state and local financial support. No project should be funded with less than 25% state and 10% local financial support. (That, in essence, implies a 65% Federal spending cap.)

Maritime: Establish a ports policy at a national level. Port capacity should be greatest where port needs are greatest. Plan and implement a policy of national-level alpha, beta, and gamma ports, and fund repairs and improvements at those ports in kind.

Plan and implement a network of maritime Interstates following major waterways. Interstate maritime traffic is relatively underrepresented in the United States, and much more freight can, and should, be moved along the coasts and Gulf, on the Great Lakes, and down the major navigable river systems (Mississippi, Columbia, Hudson, etc.) than current levels. Traffic along these maritime routes would run between ports of four classifications: alpha, beta, gamma, and delta (non-nationally-important ports, particularly along the rivers). Most of the physical infrastructure for this network is already built-out; repair and expand were needed, and promote maritime freight operations with a minor tax break.

Ensure that all large metropolitan areas (500,000+) with maritime access (along a coast or navigable river) have access to a national-level port.

Airports: Maintain funding for airport repair.

Work to shift short- and medium-length trips from the air network into other modes in order to free up greater long-haul capacity without physical airport expansion.

Work to make airport facilities independently profitable for sale or lease (à la the Interstates).

Pedestrians/Bicyclists/Streets: Fund and improve pedestrian links.

Mandate that all non-local road projects have pedestrian infrastructure. This would be absorbed into larger-scale road funding.

Plan and implement national-, state-, and metropolitan-level bike highways (multi-use trails). Funding for this network would come from a combination of DOT and Parks Department monies.

Prioritize funding for complete streets and shared spaces projects.

Infrastructure Bank: The financing centerpiece of this policy is the establishment of a Federal-level and state-level infrastructure bank. This bank will be initially funded by the sale or lease of limited-access divided highways, Interstates and otherwise, as well as the sale or lease of airports. Money from this sale (land value of these properties is likely in excess of $500 billion, and transportation value greater still) will be divided 60-40 between Federal-level and state-level infrastructure banks.

The infrastructure bank will assess, vet, and disburse for projects which maximizes ROI in the following areas: (1) maximal transportation access, across all modes; (2) increased land values and human-scale development patterns nearest transportation access nodes; (3) has high degree of patronization (for rail projects, for example, 100 persons per mile or above); and (4) is economically efficient (a commuter rail example: it uses existing equipment wherever possible, has station engineering in line with ridership projections, places stations in established centers preferentially or else has a land-use plan in place to develop a town center around the station, uses park-and-rides only sparingly, and in places where park-and-ride patronage will be highest, etc.) Highest-impact projects are those with relatively minimized costs, calculated in metrics appropriate to mode, and maximized returns on cost, in terms of the triple bottom line. The national infrastructure bank will contribute between 50% and 65% to public projects, and the state infrastructure bank between 25% and 35%. Remainders--usually in the 10% to 15% range--are to be contributed via local and/or private matching funds.

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* Yes, I'm deliberately shying away from calling it a "highway bill" for reasons explained further along in the post.