Parking-free apartment buildings aren't enough

In Portland some developers have recently started constructing apartment buildings without parking (a practice that is illegal in most cities), angering some neighbors who complain that the tenants still own cars, and that they just park them on the street instead of in privately owned spaces. And they're right. According to an article in the Oregonian:

[The city] found that 73 percent of 116 apartment households surveyed have cars, and two-thirds park on the street. Only 36 percent use a car for a daily commute, meaning the rest store their cars on the street for much of the week.

Frankly, this is pretty damning evidence that parking-free apartment units don't actually discourage car use. Not enough, and not by themselves, at least. Of course, only 73% of households owning a car is far below the average rate of car ownership in most cities, but it's still the majority of the tenants. What I found most significant here was the fact that only 36% use their cars for commuting--half of the households that own a car. The implication, of course, is that with the right incentives many of the people who don't commute with their vehicles could be encouraged to get rid of them. In the age of ZipCar and walkable cities, owning a car in this type of environment is more a matter of inertia than genuine need.

What might those incentives look like? One option might be for property managers to offer access to car-sharing, as is being done in a few places throughout the country. This might also be something cities themselves, or a non-profit of some kind, could administrate. For example, in exchange for donating your car you might get a five-year membership to a car sharing service with up to 20 hours of use a month. The value of getting people out of their cars is so high for cities--less congestion, pollution, and carnage, and considerably more money spent locally--that subsidizing some of the cost of car sharing might even be worthwhile.

Another obvious incentive is appropriately pricing our existing public parking spaces. In my old neighborhood of Capitol Hill, and many of the busier areas of the city, a parking permit is required to park on residential streets during the day, and costs $65 every two years. On commercial streets we're currently asking drivers to pay up to $4 per hour to park, but our residents aren't even paying $4 a month! And as far as I can tell there doesn't even seem to be a limit to how many you can purchase beyond, presumably, the number of cars you own. We set prices for commercial parking to ensure that those willing to pay can always find a space, but don't adhere to this philosophy when it comes to residential parking.

The same residents paying effectively nothing (usually actually nothing, for most neighborhoods), are demanding that developers--and hence the residents of those new developments--foot the bill of $10-20k (and upwards of $50k in some places) per parking space, usually underground. In other words, only existing residents get free parking, and everyone else has to pay the full cost. Even those who don't drive end up paying, in the form of taxes used to build and maintain the public roads being used for car storage. At a time when we recognize that reduced car use is good for cities and good for people, why are non-drivers subsidizing the cost of vehicle storage, and single-car households subsidizing multi-vehicle households?

A drastic increase in the cost of parking permits would raise considerable revenue, but I'd be perfectly content if it was dedicated to nothing but road maintenance. The real goal is a resolution of the Tragedy of the Commons, wherein un-priced public goods (in this case parking spaces) leads to vast overuse, harming everyone in the process. Revenue is simply beside the point. Even if a change in parking permit prices was offset by a slight decrease in, say, local sales taxes, making it completely revenue neutral, it would be a huge boon to the awful parking situation in the city, and to our economy.

The point of all this is that it would also discourage people in the densest, transit-oriented parts of the city from owning cars that they only use for occasional trips. For current residents who own a car and don't want that purchase's value completely destroyed by the increased cost of parking, the trade-in for a ZipCar-like subscription could help mitigate that loss. This, or another creative means of positively incentivizing a switch to a car-free or car-lite lifestyle, would be a valuable and perhaps necessary complement to increasing long-term parking costs. 

Even if all the new developments in the city provided enough parking for their residents, there's a critical point at which our roads simply can't handle any more traffic. We need to pair strategies for reduced parking in new apartment buildings with strategies to reduce car ownership and, especially, reduce the need for it. Doing just one or another won't be enough.

In Washington state, the gas tax is not a user fee

Over the 2011-2013 biennium Washington state is projected to collect about $2.5 billion in gas tax revenue, or roughly $1.25 billion per year. The state gas tax rate is 37.5 cents per gallon, which means we used 3.3 billion gallons of gasoline last year. For none of that gasoline were drivers required to pay sales tax, depriving the state of more than $800 million in revenue. Why don't we pay sales tax for gasoline in Washington?

The simplest answer is that sales tax has been replaced by the gas tax for this specific consumer good. The state began imposing a gas tax in 1921, starting at one cent per gallon. At the time gasoline cost about 26 cents per gallon. (This pdf has a list of all the Washington state gas tax levels since 1921, and this one has the average national gas price since 1919.) When the State Constitution's 18th amendment passed in 1944, the state gas tax was at 5 cents per gallon. The 18th amendment says the following (paraphrased by the Department of Transportation):

The 18th amendment to the Washington State Constitution dedicates motor fuel tax collections to “highway purposes". Revenue generated from the gas tax is distributed to counties, cities and state accounts. The state receives about half of the total revenues collected. These are the funds which support the WSDOT highway programs as well as the Washington State Ferry System, which is deemed a state highway system by constitution. Highway construction, maintenance, preservation, administration and debt service on highway construction bonds are all funded by these revenues. The other half of the fuel tax revenues are distributed directly to cities, counties and other agencies for roadway programs that are not part of the state highway system.

This means that all gas tax money must be spent on roads, although there is some flex to whether this applies to certain transit programs. At the very least, all of the money must be used for transportation purposes, and certainly the vast majority of transportation dollars are spent on  roadways. In this biennium, for example, the WSDOT's budget is $7 billion, four billion of which is devoted "highway improvements," with another $750 million for "highway preservation." (Less than 10% goes to rail and transit.) Over this two year period, the gas tax barely covers half the cost of highway construction and repair. Worse, this is true despite the fact that we fall further behind on road maintenance every year.

Many drivers feel they "pay their own way" for the infrastructure they use in the form of various taxes, fees, and tolls, but can this really be true when they're exempted from paying normal taxes on the purchase of gasoline? After all, if I buy a new couch at a furniture store, the tax I pay is not earmarked to help me pay for a place to store it. Sales tax paid for a new ink cartridge in my printer isn't earmarked to compensate me for said printer. Perhaps most tellingly, when I buy a bicycle the sales tax on it isn't dedicated to new bike lanes, cycle tracks, pothole repair, or anything else meant to help me get around safely and efficiently. And it probably shouldn't, because it would be extremely limiting to government's ability to decide where the greatest need is, and where the tax proceeds of my purchase should be spent.

As long as gas is exempt from sales tax, drivers can't claim that the gas tax is a "user fee" anymore than the tax I pay on a Subway sandwich is a "user fee." Compare to a true user fee, the tolled road: roads and bridges tend to be free to drive on, but a toll has been added in order to help pay for construction and/or maintenance of the road. A gas tax, on the other hand is not an additional charge placed on top of the cost of driving. Instead, it's a bait-and-switch in which money is effectively taken from the general fund (via lost sales tax revenue) and moved into the motor vehicle fund every time someone purchases gas. This is particularly true now, when, at current gas prices, sales tax or fuel taxes would produce almost exactly the same amount of revenue for the state.

Worse, calling it a "gas tax" gives some drivers the fantasy that they're paying their own way without assistance, when in fact the cost of building and maintaining our road infrastructure falls on everyone. Even if the gas tax actually was a user fee, it wouldn't come close to funding our highway program--even with the addition of vehicle- and driver-related fees--and would need to take money from the general fund (as it does now). And this is fine! Infrastructure is important and should be funded adequately, but when we give certain groups of people the impression that they're the "producers" and everyone else are the "moochers," we end up making infrastructure decisions that aren't in the interest of the cities, the state, or our future, and having unproductive fights about how bicyclists, pedestrians, and transit users are "stealing" money from drivers. 

Likewise, although I don't own a car I still make use of the roads. I take the bus, ride my bicycle, walk, and occasionally get rides from friends or family for more distant events. I'm glad the roads are there (many of them, at least), and happy to pay for my share of them. But with driving on the decline and driverless cars likely to reduce congestion in the future, building more roads is a strategy that favors current drivers at the expense of current non-drivers and the future generations that are forced to maintain or demolish their excess capacity. This isn't intended as a demonization of drivers, it's simply a recognition that they don't warrant any special status, including a sales tax exemption for the product that makes their vehicles run.

A better system would be to stop exempting drivers from sales taxes and devote 100% of gas tax revenues and user fees to maintenance and existing bond repayment. This would have a few key benefits:

1. State revenue would increase by about $1 billion per year, and could be spent on education, health services, public safety, or whatever's needed, including transportation;
2. We'd be performing some minimum level of road maintenance that is clearly not being met currently, and tends not to be considered in the total cost of road construction;
3. We'd be less likely to continue accumulating infrastructure that isn't going to be useful in the future;
4. The remaining transportation budget could be spent rationally, since none of it was coming exclusively from drivers or devoted exclusively to them; and
5. Consumption of gasoline would be discouraged further.

Then, of course, there are downstream benefits of this, like better transit service, less pollution and congestion, healthier people, and all the other things that come with less auto-oriented places and more spending on social services. 

Now, reinstating the sales tax is probably something that couldn't happen without a repeal of the 18th amendment which, unfortunately, seems very unlikely. But it doesn't mean we should just accept this destructive and misleading status quo, either. Even without removing gasoline's sales tax exemption we could dedicate all gas tax revenue to maintenance, for example. We could still raise the fuel tax, which historically has been closer to 20% of the cost of gasoline, rather than the current ~10%. And most importantly we can make it clear that everyone helps pay for transportation infrastructure, and all of our voices matter in the decision-making process--including those who are going to have to live with (and pay for) the consequences in years to come. Compared to everyone else, those who drive the most don't contribute more to the state's budget--they just contribute in a different form--and they shouldn't receive any special subsidies or elevated stature because of it.

We need a better system for delivery of commuter tax benefits

Most people are familiar with the concept of purchasing their health insurance through their employer with pre-tax income, but fewer are aware that the same option is available for the costs of commuting (transit or parking). Part of the reason for this is that it's up to employers whether they want to offer the benefit, and not all of them do, and it's a newer program than the one for health care premiums. But given that pre-tax benefits of this type lower taxes for both employee and employer, why don't all employers offer it? If there are legitimate reasons to be hesitant to participate, we in Seattle and we as a nation should be doing everything in our power to address those concerns and encourage maximum use of the commuter benefit for transit users.

First some background: the commuter tax benefit, found in section 132(f) of the  Internal Revenue Code, began in 1993 and offered deductions of up to $60 a month for transit use and $155 a month for parking costs. In recent times the value of the transit/vanpool benefit has been approximately half the value of the parking benefit (a policy failure worthy of its own post), but during 2010 and 2011 they came to parity when they were both set at $230. Unfortunately, in 2012 the value of the transit benefit was allowed to fall back to $125 whereas the parking benefit was increased to $240. Even so, someone making $35k a year using their full $125 transit benefit every month ends up saving almost $30 a month in taxes, and more than $300 a year. Those earning more than $35k a year save even more. And on the employer side there's a little over $110 per year tax savings.

Commuter tax benefits since 2007. From Wikipedia.

Just for reference, I calculated the employee number by summing the 15% for federal income tax (at that income level), 6.2% for Social Security tax, and 1.45% for Medicare, then multiplying that percentage by the $125/month. For employers, the savings are just the payroll taxes, since they don't pay federal income tax.

Employees--both those who already use transit and those who would like to--can't participate in this program if their employer doesn't offer it. But what employer wouldn't want to save up to $110 a year per employee? I think the "per employee" part is the answer: like any other program, government-operated or otherwise, there will be paperwork and accounting to accompany it, and it's possible that for small employers the costs would outweigh the potential savings. This is an unfortunate loss for the employees, but it's understandable why the employer wouldn't want to lose their own money for the greater good of his or her employees.

This is also why participation in this program is much more common among large employers, like mine at the University of Washington, for example. (This pdf is an impact survey that has tons of information on the program in various cities, including that fact.) If you have to administer the same program whether you've got ten employees or ten thousand, economies of scale make it much more efficient--you could have an employee whose sole job was to administer this program, and even if only 1,000 workers took advantage of the program you'd be saving over $100,000 a year, far more than you'd need to pay your new administrator, and all of those participating employees would be saving even more for themselves.

Small businesses can't take advantage of these economies of scale, so I think we should build that economy for them by outsourcing the administration and accounting to government or a non-profit organization. State and local governments would benefit tremendously from the savings, leaving their citizens with more spending money to contribute to the local economy, so the costs of creating such a system would be far outweighed by the benefits. And the benefits aren't just financial: by increasing participation in the commuter benefit program we'd be adding ridership to our transit system at no cost, decreasing pollution and congestion, and ultimately encouraging more people to live in denser, more efficient transit-oriented developments.

I've never owned a business, so I don't know the details of how employee payrolls are managed and how the various pre-tax deductions available are tracked and accounted for by employers. That said, we needn't look any further than health care for a similar example of what I'm suggesting, and how it might work. As a result of Obamacare we'll soon have health care exchanges, run by state governments (or the federal government for states that choose not to participate), which will allow people to purchase health care independent of their employers. There are various merits to this system, but since this isn't a health care blog I'll only mention the one that I think is relevant to this discussion; namely, the shift away from employers being responsible for their employees' health care plans. In the long term there's no rational reason to have an employer-based system because it takes choice away from the employee, and as we see with the commuter benefit it can also lead to some arbitrarily missing out on savings--a worker shouldn't be punished for working at a small business whose owner doesn't feel up to the task of setting up and overseeing a commuter benefit plan, and frankly there's no particular reason that the employer should bear this responsibility in the first place.

Perhaps states could set up a similar exchange in which all of a state's transit agencies are represented, and residents can purchase their passes through it according to their location. The state can track the purchases and award the tax savings in real time, then go to the federal government to get reimbursed. Or, at the very least, those who aren't offered the benefit at work can claim a separate deduction (on top of their standard or itemized deductions) on their tax returns every year. This isn't ideal because it forces individuals to save the records of all their transit spending and once-a-year tax refund windfalls don't lend themselves well to responsible financial planning, but it'd be an improvement over the status quo.

This post was originally inspired by a post at Mobilizing the Region about a law that was recently passed in California requiring businesses with at least 50 employees to take part in this program (or offer their own transit benefits), and this is certainly an option too, but not an ideal one. For one, it's not easily replicable. But besides that, many, many people work at businesses with less than 50 people. Ignoring them just because it might take a little more effort isn't fair to them, and it fails to take full advantage of the opportunity to get more people out of their cars. 

What we have right now is a system that favors large employers and their employees over small businesses and their workers, and just as with health care, an exchange or similar institution might be a solution to the problem. Certainly, what we're doing now just isn't working.

How federal taxes work, and sometimes don't

I'm aware that this has nothing to do with transportation whatsoever, but I'd like to talk about taxes in the United States. I could make a point about how we fund our government plays a major role in how we pay for infrastructure, which is true; in reality I just think this is very important and I only have one blog, so this is where it's going.

Let me just start with an anecdote. About seven years ago I was an employee at Comcast as a cable technician and, during my first few weeks, I was trained by a few different people who'd worked there quite a while. One of them was telling me about how much money you could make as a contractor, relating to me that he'd made just under $75,000 in a prior year, which led to a brief discussion about how he was worried about hitting that $75k threshold and being taxed at a higher rate. Knowing what I did about taxes at that time (i.e., nothing), I took it at face value that if you earned more you would be taxed at a higher rate, and assumed that applied to every cent you earned. So if you paid a higher tax rate above $75k than you did below it, you would actually keep more of your money if you earned $74,999 than if you earned $75,001.  It seems kind of unfair, but in a simplistic way it makes perfect sense.

It's also perfectly wrong. Even professional writers have been shown to be ignorant of this fact. In fact, we have something called a marginal tax rate for federal income tax in this country, and it's structured such that you only pay a higher tax rate on money earned after a given threshold has been reached. For example, if we had only two tax rates, 10% for earnings under $50k, and 25% for everything above that, it would look like this:

$35k earnings: full amount taxed at 10% = $3,500

$50k earnings: full amount taxed at 10% = $5,000

$51k earnings: $50k taxed at 10% ($5,000) + $1k taxed at 25% ($250) = $5,250

$100k earnings: $50k taxed at 10% ($5,000) + $50k taxed at 25% ($12,500) = $17,500

Play around with the numbers all you like, the takeaway point is that the more you earn in this system, the more money you take home. Always. There are diminishing returns on the amount of money you keep as you earn more, but it's impossible to be taxed more than someone with higher earnings than your own. The corollary here is that, ignoring the many exemptions that exist, as well as non-wage income, your average tax rate is always lower than someone who earns more than you. So the people making $35k and $50k pay a tax rate of 10%, the person making $51k pays a tax rate of 10.3% (5,250 divided by 51,000), and the person making $100k pays an averaged rate of 17.5%. This is exactly how our system works, with a greater number of brackets (2012 rates pictured below) so that the tax rate increase from one threshold to the next isn't quite so dramatic.

Federal income tax brackets. From Wikipedia.

One thing I think it's important to keep in mind when someone says they're paying a certain tax rate is that they're often referring to the highest marginal tax bracket that they pay. So if I earn $150k per year I might say that I'm paying a tax rate of 28%, but that's not actually the case. Instead, my tax rate is calculated as follows:

10% of $8,700 = $870

15% of $26,650 (35,350 minus 8,700) = $3,997.50

25% of $50,300 (85,650 minus 35,350) = $12,575

28% of $64,350 (150,000 minus 85,650) = $18,018

Total tax paid = $35,460.50

Actual tax rate = 23.6%

A 28% tax rate on $150k would come out to $42,000, so while it's not a massive discrepancy between the highest marginal tax rate and actual tax rate, that difference equates to more than $6,500 that they get to hold onto. To get just a little bit political here, this is why I don't find the "it'll hurt small business owners" argument against increasing the rates of the upper brackets convincing: for one, about 2% of business owners who file their taxes as individuals earn over $250k a year; that point aside, only the income beyond that $250k threshold (or other arbitrary amount) would be subject to the increased rates. And since high earners still get the benefit of all those sub-$250k tax cuts, they still get a bigger tax cut than anyone else. Passing up hundreds of billions of dollars in revenue just for the sake of this tiny group of business owners--people who are just as free to use that extra money on a fancy rug as on expanding their business or hiring new employees--seems very foolish to me when we're supposedly so concerned about our nation's debt and the insolvency of our entitlement programs.

Moving on: federal income taxes aren't the only taxes we pay, of course. There are property taxes which everyone pays (including renters, since this cost is generally passed on by the owner), as well as sales taxes, capital gains taxes, gas taxes, and income taxes for many states (on top of federal income taxes). And we have payroll taxes, the other tax that shows up on your actual paycheck. On the employee side, we pay 6.2% of our income for Social Security, and another 1.45% for Medicare. Social Security taxes are only collected on the first $110,000 of taxable income as of 2012, so earnings beyond that are only subject to federal income tax and the 1.45% Medicare tax.

Keeping the Social Security tax exemption for income over $110,000 in mind, let's calculate the total tax rate for three different incomes. I'll just give you the total amount of taxes paid (summing income tax, SS tax, and Medicare tax) and the actual total tax rate:

$110k income = $32,675.50 taxes = 29.71% tax rate

$150k income = $44,455.5 taxes = 29.64% tax rate

$300k income = $94,698 taxes = 31.57% tax rate

Uh oh, we broke it. Why is $150k-person paying a lower rate than $110k person? The answer is that the person earning $200k is paying exactly the same dollar amount in Social Security taxes, but since their income is higher their effective payroll tax rate is much lower than the rate of the person earning $110k. Once we get up to $300k we see that we're back in "higher earnings = higher tax rate" territory, although it might be reasonable to ask why the person earning almost three times as much as the $110k guy is paying a rate that isn't even 2% higher. For comparison, the jump from roughly $35k to $85k in earnings is commensurate with an effective tax rate increase of almost 7 percentage points:

$35,350 income = $7,571.78 taxes = 21.42% tax rate

$85,650 income = $23,994.73 taxes = 28.01% tax rate

Someone increasing their income from $35k to $85k is experiencing a much more significant and positive change in their quality of life and financial circumstances, and yet it seems that we're penalizing them more for this improvement than we are for someone jumping from $110k to $300k. Of course the point of taxes is not to punish people for earning money, and rather to fund government services of various kinds, but we should also be honest about the fact that taxes discourage the activity that they're tied to. This is more obvious with things like cigarette and gas taxes, but it also has some small impact on how much time people devote to work versus leisure. Why we are applying that discouraging tax rate increase more forcefully on those raising themselves from middle-class to upper-middle-class than we are from people moving from upper-middle-class to upper-class is something of a mystery to me. Weren't we supposed to be champions of the middle class?

You've probably figured out by now that I don't have any particular point I'm trying to make here. Hopefully you learned a little something about how the United States tax system works, and maybe have a slightly different perspective than you did before (or maybe a radically different one!). It's important that we do more than complain about the things we don't particularly like (i.e., taxes) and instead make an effort to better understand them and make educated decisions about how they should be changed. Maybe lower taxes are a good idea, but "lower taxes" doesn't tell us anything about who's paying less, how much less they're paying, or whether some people might be paying more to afford it. Additionally, how our institutions are organized is important. People will always argue about appropriate tax rates, but few would disagree that things aren't working properly when someone earning $150k a year pays a lower tax rate than another person earning $110k without even taking advantage of any of the numerous loopholes found in our tax system (which would take much more than this one post to discuss). Conversely, the advantages of a marginal tax rate system are self-evident: in actual dollars, people shouldn't pay more taxes than someone earning more than them.

If this post left any questions unanswered for you please let me know in the comment section. Chances are that I won't know the answer off-hand, but in the spirit of Better Institutions I'll be happy to learn the answer for myself and pass it along.

What would Seattle look like if Metro fares weren't subsidized?

There are a lot of people out there who consider it a waste to use taxpayer money subsidizing transit fares in urban areas. Obviously I'm not one of them, and my response to those people is usually to note that if all those people drove instead traffic would be (even more) unbearable, pollution and oil dependence would increase, public health and safety would suffer, and more space dedicated to parking in apartment units would increase rents as well.

This usually leads to an argument about how if I want to save the world then it shouldn't be on the car drivers' dollar, to which I respond that the majority of Metro's operating budget comes from sales tax*, which everyone pays (and the lower your income the larger the proportion of your income paid as sales tax), followed by transit fares, then federal and state grants for the capital budget. The total spent on transit by King County Metro is about $1 billion per year. Certainly some money comes directly from those who drive, for example the 2-year $20 vehicle license fee in effect right now that the King County Council approved to mitigate a 17% cut in Metro service last year. There are other things too, higher up in the state budget. But most people who use the bus also own at least one car. So round and round we go, point-counterpoint.

Where your sales tax money is being spent (source: kingcounty.gov)

Lately I've been asking the question: what do you propose we do instead? These people seem extremely averse to spending money on mass transit, but especially in light of our growing population and a lack of room for any more roads, I don't hear many alternatives being offered. I'm all for directing more money toward maintenance rather than endlessly expanding our infrastructure (and therefore our maintenance liabilities), but it's obvious that simply maintaining what we've got is a recipe for a steadily worsening transportation system as the population increases. I've yet to get a straight answer from anyone on what they'd actually prefer to see (as opposed to "no more trains!" and "no more war on cars!"), so feel free to let me know in the comments what your vision is for the transportation system if you don't support subsidizing mass transit.

As a thought experiment about public transportation subsidies, here's what I think it would look like if we started demanding that everyone pay the full, unsubsidized cost of their fares:

First off, Metro fares are currently about $2.50 (up a dollar since 2008) in Seattle. We've got a roughly 28% farebox recovery rate, meaning that we recoup 28% of our operating expenses in the form of user fees. If we wanted to increase that to 100% we'd have to charge about $9 per ride and that's making the inane assumption that increasing fares more than threefold will not reduce ridership. So, to get to and from work we're looking at $18, and assuming five work days a week we've got about $360 a month spent just on the work/school commute. Add another ten trips during the month for various errands and we're up to $450.

Many bus riders could afford this, but would they choose to? Given that the vast majority of mass transit users own cars anyway, the question now becomes whether gas + parking (car payment, licensing fees, and insurance already being paid for) adds up to $450 per month, and the answer is almost certainly "no." So everyone who owns a car starts using it for almost all of their trips, even if they used to prefer using the bus or train to get around most of the time.

For those who don't own cars, the decision is a bit more difficult. They have to decide whether the cost of a car payment, licensing fees, insurance, gas, and parking are a better deal than $450 a month in fares. Personally, I owned a 1995 Camry for five years that cost me $5,000 to purchase and about $2,000 in maintenance over it's lifetime, which adds up to about $120 per month for 60 months. Add $50 for liability insurance (if you're over 24 and have a clean driving record, at least), $50 or so for various fees, and $100 for gas (optimistically). We'll ignore parking for now, but I'll get to that later. That adds up to $320 per month, far under the cost of a month of busing and much more convenient, too. So many people who don't currently own cars also start driving them to get around everywhere.

Who's left after that? Basically the very poor, the young, and the very old. In other words, the transit system falls apart due to lack of a constituency and we don't actually have mass transit anymore. Everyone drives everywhere, and those who can't due to age, ability, or income are left to fend for themselves. Even if we limited transit subsidies to just these people, they don't make up a large enough share of the population to constitute a real transit system and many of them already struggle with $2.50 fares, so instead we'd end up with a bunch of incredibly inefficient routes serving a relatively small pool of people. In our quest to end transit subsidies we end up with a system with a farebox recovery rate that is probably closer to 5-10%, subsidized to an even greater degree than before. If efficiency was the goal here we've failed miserably.

And what about all the people already driving as their primary means of transportation? Needless to say, traffic and parking get much worse, particularly downtown where a large proportion of transit trips begin and end. Less of their money is going toward transit projects though, and more toward roads. This does almost nothing to improve traffic in Seattle since there's no room for more roads, but maybe existing roads are kept in a better state of repair. Maybe not though, since all of those cars take a toll on the road, and since congestion has increased everyone is spending more of their time on the pavement. Pollution worsens; people walk around less and sit in traffic more, both of which are bad for physical and mental health; and although the full 1.8 cents of sales tax** that is devoted to transit is no longer needed, those savings are almost certainly eaten away--and then some--by the extra gas wasted sitting in the worsened traffic.

More of this. Right on.

To make matters worse for drivers, with more people now reliant on cars parking in central Seattle will become scarce. This means two things: first, metered street parking rates increase drastically in order to maintain their target of one open space per block; second, as paid parking lots and garages begin to fill up and supply is saturated, demand drives prices for private parking up too. Likewise for parking rates in apartments, driving up effective rents. New apartments and condos built in the city will start including more underground parking (an extremely expensive form of parking infrastructure), adding tens of thousands of dollars to the cost of each unit. This general phenomenon would likely recapitulate itself in every neighborhood center, driving up parking rates not just in downtown, Capitol Hill, and South Lake Union, but Fremont, Ballard, the University District, Wallingford, Queen Anne, Columbia City, Eastlake, etc.

This would be a terrible outcome for drivers, particularly those who preferred to take the bus but can no longer afford it, but it's bad for the economy too. There are already people who avoid traveling to Seattle because of the traffic and lack of cheap parking. (Personally, I hated Seattle before moving here because my only experiences involved driving around in it.) If the buses disappear you can count on that sentiment getting far stronger, and a lot of business that comes in from outside the city will quickly evaporate. That means less business for just about every type of service- or retail-based company in the city, and reduced tax revenue as a result. So all that money we're saving by not sending the entire 1.8 cents of sales tax toward transit? It's at least partially offset by the loss of sales tax revenue from non-Seattleites who now avoid Seattle when they can. That's to say nothing of Seattleites themselves, who are now spending more on gas (or in the case of former busers, transportation in general) and have less money to spend on food, drinks, entertainment, rent, electronics, bicycles, clothing, etc. Once again, this means less revenue for the city, and all those sales tax savings are chipped away even further.

Have I made myself clear? Subsidized public transportation is not a luxury in a large urbanized city: it's a necessity. I made a point of glossing over the moral implications of removing these subsidies not because it's unimportant--it's vitally important--but because the economic argument is sufficient unto itself. By dedicating 19% of our sales tax toward public transportation we ensure that Seattle is able to function as the cultural and economic center of our region. Non-automotive options for getting into, out of, and around the city are essential if we're to retain that position, and our investment in those options more than pays for itself by keeping more spending local, restraining housing costs, and allowing us to remain a viable destination for those who come to our city by car, either by choice or of necessity.

*Fun fact: One-quarter of the sales tax collected for Metro goes toward capital expenses. If the entire 1.8 cent sales tax was directed toward operating expenses, user fees + sales tax revenue would exceed the operating budget.

**The 1.8% sales tax dedicated to transit pays for both King County Metro and Sound Transit.

Increased apartment housing in Seattle likely to stabilize rent prices

It's a common refrain among urbanist types who are savvy to land use issues that increasing the amount of housing in a region can lower rents, or at least slow their rise. The reasoning is straightforward: if you have more demand than supply, prices will increase; if you increase supply to meet or exceed demand, landlords will be forced to compete with one another for renters and prices will decline.

This sounds really great. When you combine it with all the other great things densely-built, transit-oriented development can bring (more walking, bicycling, and transit use; more efficient use of energy and infrastructure; greater diversity of shops, restaurants, and entertainment; more spontaneous interactions with other members of the community; etc.), it sounds even better. But is it true? Do rents really decline just because more units of housing get built? I wanted proof.

After reading this article at the Seattle Times on the boom in apartment building in the Puget Sound region and the effects it may have on rents, I felt like I was on the right track. Unfortunately, the most conclusive statement contained in the article in support of this idea was the following:

[T]he regional apartment-vacancy rate has stopped dropping, both Dupre + Scott and Apartment Insights say, and it should start inching up next year as a bumper crop of new apartment projects comes to market.

That means “rents will basically have to flatten out,” said Mike Scott of Dupre + Scott.

Great news! Not exactly a scientific proof, but I'll take it. Near the end of the article, however:

Even so, 73 percent of landlords responding to that company’s survey said they plan to increase rents over the next six months.

Okay, not so good news. Most of the 35,000 units planned for the next 5 years haven't opened yet though, so maybe landlords are just getting what they can while the gettin's good. Soon enough, the thinking goes, the balance of power is going to tip back toward the renters, and prices will moderate. And a good thing too, since in-city rents for 20+ unit apartments in Seattle have increased by almost 7.5% in the last year (most of that, 6%, in the last 6 months). Has this actually happened? Thankfully, the Times article led me to the answer.

In an article Dupre + Scott Apartment Advisors have produced to accompany the aforementioned survey, they clearly describe some of the trends in the region and break it down into sub-regions with some nice charts. I really encourage you to read the whole thing--it's not too long. But first, and most importantly, I'd like to show you the following two charts from the article:

What I hope you'll appreciate when looking at these charts is their opposing nature. When vacancies are low, rents go up; when vacancies are high, rents go down. That's right, they actually went down! Next time someone tells you it's not possible, and asks you how building new, usually more expensive housing will lower rents, just point them here. It works. And just to be clear, I believe these prices are in nominal terms, not inflation-adjusted, which would explain why prices tend to increase by higher percentages than they decrease. If you provide enough housing to affect vacancies (i.e., enough to meet or exceed demand), prices will go down.

Now I'd like to point out one more chart:

Note how many apartment units were opened in 1999-2002, and then take a look at the vacancy rate for 2001-2005 in the earlier chart. We built a lot of units in that time period, and it seems that this had a significant impact on the market vacancy rate. If you know of something else that accounted for this difference please let me know in comments, but for now I'm going to stick with the sensible conclusion that the supply increased beyond demand and we ended up with a bit of an apartment glut. Prices went down and all was right with the world (for renters, at least). Now look at how many units are planned for 2012-2015. Many more! I suspect that demand for urban living has increased since the early 2000s, but nonetheless this bodes very well for apartment prices in the coming years. And just to drive the point home, note that it took a year or two after the apartments started coming online for prices to start declining. That shouldn't be surprising since the first to open probably only served to soak up the existing unsatisfied demand for living in the regions--it took an excess of supply to actually start bringing prices down.

One more thing to look forward to, renters: besides the large addition of apartments we're experiencing, the real estate market is also improving. That means many people who were forced into renting, or delayed buying a house until they were certain the real estate market had hit rock bottom, are going to start exiting the rental market. So look for this to remove some of your competition as well, driving prices down even further.

So three cheers for providing more housing in Seattle! It's efficient, it's in demand, and it helps keep housing affordable. What's not to like!?

Why would we want to privatize the one profitable Amtrak service?

There's been a lot of news about the GOP's most recent attacks on Amtrak, and my post is largely motivated by this post at Streetsblog, titled "Reminder: Amtrak Subsidies Pale in Comparison to Highway Subsidies". This is an important point and one that most people are probably unaware of, but the quote that really got me in this article was the following:

Amtrak’s subsidies by and large support the long-distance routes, which Congress mandates as a public service. It can’t very well require Amtrak to run these money-losing (but important) long-distance routes and then cut the money to run them – yet that’s what Mica proposes to do. Outsourcing wouldn’t work because no private company would want to take on routes that are proven to lose money. Maybe that’s why Mica’s privatization plan centers on the lucrative Northeast Corridor – the one place Amtrak does make money.

Read the link in that quote too, it's a good one. What interested me about this was why House Transportation Committee Chair John Mica would want to privatize the one Amtrak operation that is running profitably. If the issue is that Amtrak is being run irresponsibly and costing taxpayers a lot of money, shouldn't we want the private sector to take over the lines that are actually losing money? But, as noted above, these subsidies are required because the long-distance routes were formed by mandate of Congress, not because they were expected to be profitable. I'm happy to have a debate about whether these long-distances lines should be operating at all, but that's not what's happening. Instead we're forcing Amtrak to operate unpopular lines and then blaming their inability to turn a profit on incompetence. It's a despicable practice, especially from someone who knows better like Mica.

I was interested in actually finding out where Amtrak is making and losing it's money and I found this FY2012 budget from their site. If you skip to the very last page you can see everything broken down by individual route, and also grouped into three categories: NEC Spine, State Supported Routes, and Long Distance Routes. I've included an image of part of that page below.

As we can clearly see the NEC Spine earns a profit of approximately $230 million a year with 11.2 million riders, almost all of which is thanks to the $50-per-ticket profit on their Acela line, the only high speed rail line in the country. I can understand why Mica wouldn't want to draw attention to that though, given the GOP's visceral opposition to high speed rail and their assertion that it can't be profitable. Looking at State Supported Routes we see a loss of about $160 million a year with 15.4 million riders, although there are a few bright spots (e.g., Washington-Lynchburg, New York-Newport News) where we see decent profits. Then we get to the Dread Long Distance Routes. 4.7 million riders, operating loss of $530 million, a whopping $111.47 loss per rider. Ouch. The best line here loses $60.72 per rider, and the worst, Sunset Limited, loses an astronomical $373.34. So if we take the NEC Spine away from Amtrak and leave it all the losers, how is the taxpayer better off? Without the NEC, we'd have paid out $690 million instead of $466 million.

If anything, this sounds like a great reason to invest more in the NEC corridor. It's the only transportation mode that's making any money, after all. Not only would it improve the quality of service there, getting people between D.C., New York, Philadelphia, and Boston faster and more comfortably, it'd also attract more riders away from money-losing aviation (government subsidy of $4.28 per ticket), intercity buses ($0.10), and cars (unknown, but certainly subsidized). That sounds like a pretty smart move for anyone who cares about saving taxpayers money, and it has the added benefit of being more environmentally friendly and reducing road and air congestion.

As it stands, Mica seems more interested in privatizing profits and socializing losses than actually improving Amtrak operations.

With bike share coming, can single-stop buses become viable?

As an infrequent--but aspiring--bicycle commuter living at the top of a hill (Capitol Hill) and working at the bottom of one (University of Washington), I've long dreamed of a way to bike to work without having to deal with the difficult, sweaty ride back home. Call me lazy if you like, or try to convince me that if I just got used to it I wouldn't mind so much, but the fact is that if I could ride my bike to work without having to deal with the hassle of taking it back on the bus I'd be much more likely to ride regularly. And I sincerely doubt that I'm alone.

About a year ago I was thinking of possible solutions to this and came up with the idea for a "Bike Bus" (honk honk), a vehicle operated either privately or publicly that could carry both people and their bikes from low points in the city to the high ones (e.g., UW to 15th & John at Capitol Hill and 65th and Roosevelt in Ravenna, or Pioneer Square to Queen Anne and First Hill), allowing them to easily ride on a flat or level path to their destinations once they got off the bus. This Bike Bus would have the added benefit of being much faster than the regular bus: it would only stop at the low point for pickup and the high point for drop-off, with two, one, or even zero stops in between. We could ride our bikes to work or school, get home without being drenched in sweat, and get a faster trip home than usual to boot! There'd also probably be quite a few bus riders who found this convenient, like a super-express version of their normal bus commute. Win-win-win-win!

This idea had some flaws. Operating privately would be incredibly difficult without some kind of agreement with Metro, for one, due to so many people (myself included) expecting their ORCA card to cover all transportation expenses. I already pay a monthly fee for the pass, why would I want to pay extra money just for this little convenience? There's also the logistical issue of how you actually carry so many bikes from one place to another. Do you get something like what's currently found on the front of buses, but bigger and pulled behind on wheels instead? A trailer with places to secure it inside? Find a way to get all the bikes inside the bus? None of these sound like very good ideas to me.  In fact, Jarrett Walker at Human Transit just wrote an article about the geometric impossibility of fitting more than a few bikes on a bus, among other things.

But the biggest problem by far is frequency. The locations where a Bike Bus would be useful already have 10-minute or less headways during peak hours, and the people who use those intermediate stops on the regular bus wouldn't be too happy to increase their headways to squeeze in some Bike Buses. After all, the bikers can still use any bus they want, but people who live somewhere in between are still stuck with the regular bus. And without a frequency approaching that of existing service (it could presumably be a little less frequent since the trip itself is faster), this simply won't be appealing to anyone. I couldn't come up with a workable solution to this problem, and combined with the other issues I just decided to drop the idea altogether. Oh well.

Enter bikeshare. Suddenly we don't need to worry about carrying everyone's bikes from point A to point B because there are already plenty stored at both. Since Puget Sound Bike Share is a non-profit we can hope that they'll be coordinating with KC Metro, and I'd be ecstatic if they integrated ORCA cards into the payment system. I know some of the guys at Seattle Transit Blog are big proponents of more and better distribution of ORCA cards, and bike share stations seem like a perfect place to dispense them from.

Frequency is still the big problem, but with bike share I think we get one step closer to closing the gap on this. Specifically, one complication with bike share is that inputs and outputs at specific docking stations are never exactly the same, so the operator has to employ people to truck bikes from overburdened stations to those with openings. Why not do double duty and pick up some people while you're at it? The vehicle could be a large-ish shuttle with a trailer behind for storing bikes, and once the driver has picked up the bikes they need from the area they could pick up passengers from a designated area and whisk them off to their destination. On the way back down the hill the driver can drop off the bikes where they're needed, then repeat. Frankly I have no idea how many employees a bike share operator would need to perform this function in a system of 2,200 bikes (the amount planned after all phases have been implemented), but it'd probably be several at least, and with a subsidy by KC Metro that could be increased since the passenger side of their activities would certainly cut into their bike relocation time.

I realize this is kind of an off-the-wall idea and far from completely worked out, but I think it's a good starting point for thinking about how we can a) encourage more people to use transit and get around on their own two feet (or wheels) more; and b) how we can make the best use of bike share when it comes. Much has already been said about how our infrastructure needs to improve for bike share to be safe and successful, but maybe we should also consider what we can do on the operational side to promote synergy between our transit system and bike share. I encourage any ideas related to the "Bike Bus" concept as well as any unrelated thoughts about how we might improve transit operation once bike share hits the street.