Albany rogue: Assemblymember William Colton

Photo: Brooklyn Paper

2008: Colton protects the families of his neighborhood from congestion pricing.

2010: Colton protests the elimination of the B64, claims that the MTA can be funded by "Eliminating Waste and Corruption." Can we start with him?

Public and private on the Goethals Bridge

Image: Port Authority
As I wrote before, our government plans to spend over $2.4 billion in road projects over the next several years: $500 million to rebuild the Brooklyn Bridge, $700 million to rebuild the Kosciuszko Bridge, $1 billion to rebuild the Goethals Bridge and $250 million to rebuild the BQE just south of the Brooklyn Bridge in Carroll Gardens. Of this, only the Goethals replacement will be paid for by tolls.

Or will it? Today, the Tri-State Transportation Campaign tweeted a link to an article in the Staten Island Advance that tells us that the Port Authority has issued a request for proposals (PDF) for a public-private partnership to reconstruct the bridge.

This $1 billion project is also going to add a "managed use" lane to the bridge in each direction, either a high-occupancy vehicle or bus-only lane. This would bring the total number of lanes from four to six, adding capacity for 1600 more vehicles per hour to cross onto Staten Island in each direction. Believe it or not, this is actually a huge victory by Tri-State and Staten Island groups over the previous proposals that called for eight or more unrestricted lanes. There are also plans to reserve space for a "future transit corridor" that could carry light rail or buses (probably not subways or commuter rail, with that kind of grade). Finally, the current hair-raising three-foot-wide bicycle/pedestrian path that is never open would be replaced with a ten-foot path separated from speeding traffic by a generous shoulder.

Apparently the Port Authority, no longer a cash cow, has spent too much money on the World Trade Center and the ARC Tunnel and doesn't have any to lay out for the bridge. They want a private investor to design and build the bridge, and then maintain it for the next thirty to forty years. The company would lend a bunch of money to the Port Authority, which the authority would presumably invest somewhere, and then pay back to the company in periodic installments to cover the cost of design and construction. It would also pay installments for maintenance over the 30-40 year term of the agreement.

The request is confusing, because it refers to a "Construction Lump Sum" and a "Maintenance Lump Sum," and I thought that a lump sum was the opposite of installments, but maybe it refers to the fact that the amounts are agreed on beforehand. In any case, let's run this through Melissa Thomasson's ideas about the benefits of the public and private sectors:

Markets are usually really good at controlling costs. When they work best, products come into existence, like cell phones or stockings. They start expensive, and then they get cheaper and better. But markets don't guarantee that everyone can afford the things they need. Government can be good at that, ensuring universal access. But when you're paying for everybody, it's hard to control costs.

In this case, there will be no market beyond the initial bidding process, so don't expect too much cost containment. There will also not be the advantage of flexibility that come with entrepreneurship, because the entire process will be subject to an agreement negotiated between the winning bidder and the Port Authority.

The main thing that the Port Authority would get from the deal is that it wouldn't have to issue bonds to pay the upfront costs. It would also shift the risk of cost overruns and unexpected maintenance expenses onto the company. In exchange, the company would get interest on the loan, which the authority would presumably pay for out of tolls.

Eliot Brown at the Observer has an analysis pointing to some potential problems. The private partner may want a lot of money to cover the risk and the costs of borrowing, and while they would have an incentive to build something that would last thirty to forty years, they would have very little incentive to build anything that would last longer.

What Brown doesn't mention is that shifting the risk is not always successful. If the investors feel that they're not making enough money on the deal, they can default, leaving the Port Authority responsible for cleaning up whatever mess they make.

Essentially, this is like a teenage boy who wants to buy a car but can't get a loan on his own credit. He asks his parents to cosign the loan. Instead of an obligation to visit them when he might not otherwise feel like it, the Port Authority is just paying extra interest.

Now about this extra interest. The Advance says, "Borough President James Molinaro said an investor could stand to make a decent profit on the arrangement, which he said he would support." Well, that's nice, but it means that more than a billion dollars of toll revenue will be spent on this, money that might otherwise be available to subsidize PATH trains or the bus terminals.

What would happen if the Port Authority couldn't find a bidder? According to the Advance, "If no one comes forward to fund the project, the Port Authority will maintain the existing bridge, and Islanders will be stuck with its deteriorating roadway, dangerously narrow lanes and heavy traffic for the foreseeable future, until the economy rebounds or an alternate funding source is found."

The existing Goethals bridge is a pretty scary and dysfunctional thing, and the proposed new one would be safer for all and friendlier to pedestrians and cyclists, and have the promise of a new transit corridor some day. However, it would add up to 1600 more vehicles per hour to the roads of Staten Island and Brooklyn. And it would take a billion dollars out of the Port Authority budget, and it still runs the risk of a bankrupt partner dumping a financial mess in the authority's lap.

This bridge replacement should probably be done at some point. It's not quite as horrible as the Tappan Zee bait-and-switch, or the Kosciuszko that has no transit component. But this is not the time. The Port Authority should wait until it can raise the funds through public means, either by its own bonds or with federal money. It has already spread itself too thin, and we can ill afford to see it collapse and take our PATH trains and bus terminals with it.

What transit needs from government

Jarrett has a helpful comment on my last post about the difficulties of cross-subsidy. Okay, so maybe you're all not quite on board with privately operated transit, but I hope I've shown that public transit can never reach its full potential of drawing people out of their cars, at least as long as government is also subsidizing driving. As I've said numerous times, private transit cannot bring us to our goals without significant government involvement. I want to summarize the ways.

1. Enforcement. We need minimum standards of safety and responsibility. Transit providers need to be adequately licensed and insured, and to follow employment and traffic safety laws.


2. Coverage. Some routes and schedules are necessary to provide access for all, or to complete a network so that other routes become useful, but are uncompetitive with private cars on even a basic two-lane paved road. If we want access for all, it has to be done by the government.


3. Speed boosts. Buses have an inherent time disadvantage against private cars in stopping for multiple passengers. Government can compensate for that disadvantage by providing quickways that allow buses to get to the front of the line, recognizing their greater value.


4. Loading, terminal and depot coordination. One thing that private buses do badly is loading. Bus operators have killed each other over access to passengers at the curb. Many of the recent complaints against buses in Lower Manhattan concern the loading of passengers and the storage of buses by private operators. Government needs the authority to regulate this properly to ensure a level playing field that promotes transit and avoids backlash.


5. Fare coordination. Incompatible fare systems allow operators to compete at the expense of passengers. Government can provide a single payment system that allows for transfers, TransitChek and other advantages.


6. Route and schedule planning. Is this necessary beyond coverage requirements? I haven't made up my mind.

Am I missing anything?

The difficulty with cross-subsidy

Recently I've been pointing to privately owned and operated bus service as a way to keep transit running. I'm not exactly happy about this, but I want to get where I'm going without too much waiting or crowding. Beyond that, I want to keep increasing the competitiveness of transit in order to get people out of their cars and fight pollution and carnage, waste and inequity.

I don't want to give you the impression that private buses will necessarily be better than government buses, or that government has no role in transit. On the contrary, we've seen that unregulated transit tends to be restricted to places where it is profitable, undermining our goal of access for all. It is often dangerous, conflicting with our goal of increasing safety, and frequently uncomfortable. Private buses may also be more polluting, and spend a lot of time idling. All these problems decrease the competitive advantage of transit, conflicting with most of our goals.

Some government involvement is definitely needed for transit to serve our goals. In this post I'm going to talk about what government can do to promote coverage. As Jarrett Walker writes (PDF), "Coverage goals are met by the availability of service, regardless of its patronage." Expanding coverage helps provide access for all and improve our proximate goal of competitiveness.

At the most basic level, we can simply divide up the routes into those that have enough profit potential to attract a private operator, and those that don't. The government can operate the unprofitable routes, and license private operators to serve the profitable ones. This is essentially how it works in Rockland County, where the for-profit Rockland Coaches (currently owned by the Scottish conglomerate Stagecoach, doing business as Red and Tan Lines or Coachusa) operates the profitable commuter routes to Manhattan, earning a $9 million profit in 2007 but accepting $4 million in state aid in 2008. The government agency Transport of Rockland operates the unprofitable local routes, receiving more than $13 million in subsidies in 2007 and $16 million in 2008.

That leads us to a question, though: why not just let the government run the profitable routes, and cross-subsidize the unprofitable routes? What if Rockland County took over Red and Tan and merged it with Transport of Rockland? It would have been able to use the $9 million profit from last year to offset the $13 million deficit from the local routes, requiring only $4 million in subsidies. This is essentially what the MTA does with its bus routes: the $1.9 million operating surplus from the M23 is used to cover the $1.6 million operating deficit on the M104 and the $350,000 deficit on the M72.

The problem is that the surplus from profitable routes are not usually as high when they're operated by government agencies. Cost is lower for private operators, in part due to labor issues. They can also charge market prices (like $8.85 for a one-way bus trip from the Port Authority to Nyack), which is very difficult for a public agency to do. It's also a lot harder for a government operator to abandon a route, so the government agencies are much more timid when it comes to expanding routes, knowing that they might be stuck with them for years to come. There is less incentive for them to add extra buses to supplement an existing schedule.

Put this all together, and the government may not actually earn much from profitable transit routes. It may cost just as much to subsidize the unprofitable routes, and the profitable routes may even require subsidies. Because of this, it is often better to simply subsidize the unprofitable routes and leave the profitable ones to private operators.

Skimming the cream off the poached siphons

Some anti-van activists, like Roe Daraio and the Queens Crapper argue that private jitneys "have long poached fares" from the MTA and thus cutting into their revenue.

In his 1985 article about private commuter vans and public express buses, Jay Walder wrote:

the express buses are not only losing money as a whole, but also on a route-by-route basis. Hence, rather than harming the express service, or "skimming the cream" off its routes, the private vans are actually helping to reduce the city's transit deficit.

I wish I could just leave it at that. No poaching, no skimming. Jay Walder said so! Sadly, his argument doesn't apply here. In his study, the vans could save the MTA money because the MTA would eliminate unprofitable routes and leave the field to the jitneys.

In practice, the MTA has continued to run all the unprofitable lines that Walder identified twenty years ago. The amount they have spent to run these buses every year has increased (from $13 million to $20 million), and they have added more routes (for a total cost of $38 million).

I found it interesting that Walder was so surprised to find the Staten Island express buses losing money. Today it is almost an article of faith among transit advocates that no route earns enough at the farebox to cover its operating expenses, let alone capital costs. This is actually not true across the board: there are routes within the MTA, and entire independent companies, that make an operating profit. Some even make an overall profit. But the vast majority of bus agencies are heavily subsidized, a fact that many advocates use to counter accusations that a particular route or agency is "losing money."

In 1985, though, Walder wrote, "Contrary to general perception, NYCTA express buses are operating at a loss, with a deficit estimated at $4.7 million per year, or 85 cents per passenger." Clearly, not only were the NYC Transit express buses expected to earn enough profit to cross-subsidize the local service, but everyone else thought that that was actually happening.

The fact that these losses weren't openly acknowledged or widely discussed when found, well, I don't know what to think. But leaving the field to the private jitneys was only feasible if Walder's other recommendations were followed. That probably has something to do with it.

But what does Jay Walder think?

Your Cap'n can be an arrogant sumbitch, but I'm not so arrogant that I believe I'm the first one to think of everything. And with jitneys, I'm not. It turns out that in 1983 New York's commuter vans were the subject of a study at Harvard's Kennedy School of Government by a 24-year-old master's student named Jay Walder.

Walder focused specifically on express van service on Staten Island. He summarized his findings in an article that was published two years later, when he was already working for the MTA Capital Program. He came to five conclusions, as follows:

1. "The vans are not siphoning off revenue from the NYCTA express bus system."

2. "Commuter vans do not have to sacrifice public safety."

3. "The vans were found to have a negative impact on traffic patterns... This problem may be alleviated to some extent by increased use of contra-flow express lanes on connecting highways."

4. "The city could best respond to the commuter vans in a cooperative atmosphere."

5. "The city should reexamine its role in providing express bus service."

Some of these points are no longer valid after twenty-five years, and others were based on inaccurate assumptions and never were quite valid. But the general thrust, expressed most clearly in conclusion 4 - privately owned mass transit is not a threat to be defended against at all cost - is still valid, and it's nice to see that Walder is the kind of person who's open to such ideas. When he worked at Transport for London, he dealt with the privatized system there, so he probably knows as much about private mass transit as anyone who might wind up running the MTA. It'll be interesting to see what he manages to accomplish. I sure hope he doesn't wind up getting thrown to the wolves like Lee Sander.

We could have more private buses

Jitneys have two advantages over public buses: they're cheaper and more flexible. Privately run buses that don't use the jitney model (i.e. that run on a fixed schedule or don't pay their drivers per passenger) may not be quite as cheap or flexible, but they're more so than public transit. They may be the only way to expand transit if the Legislature refuses to provide adequate funding.

Even in this economic downturn there is significant demand for transit in the New York area, and whether due to labor costs, government inflexibility or lack of funding it is clear that the public transit agencies are incapable of meeting that demand.

We know that private buses can meet some of that demand. Full-service bus companies with fixed schedules are making profits right across the river in New Jersey. Private jitneys (aka dollar vans) are making profits in Jersey, in Brooklyn and even here in Queens.

Private buses can help fight global warming, make our streets safer, make our energy supplies last, and give people access to homes, jobs and stores that they couldn't get to with a car. So why aren't they already running on your favorite bus route, and what can we do to change that?

Well, it turns out that it's really hard to start a new bus route in the city, much harder than, say, a restaurant. There are intercity buses like Greyhound, tour buses like Grey Line, and school buses, but they all have restricted stops. The "private" companies that were absorbed into the MTA a few years back were all legacy companies that had been established in the era of trolleys, and were operating buses owned by the City of New York under franchise agreements with the Department of Transportation. Under a similar arrangement, two Staten Island express bus routes are operated by Atlantic Express under contract to the New York City Economic Development Corporation.

As I read the law (and I am not a lawyer), the Transportation Commissioner has to personally approve every city bus company, every bus route, and every bus stop. They don't do it that often. There is only one bus line in the city that operates legally with private funds. That is the Williamsburg-Boro Park express bus that connects two Brooklyn neighborhoods with large Hasidic Jewish populations. Unfortunately, the company that runs it doesn't seem to be doing well, and the city is looking for another company to take it over. But it's notable that this one route was established by a community with a reputation for political clout; the Chinese and the Jamaicans have had no comparable success.

In the absence of full approval, most jitney companies are operating illegally. As far as I can tell, very few operators are just some guy who happens to own a van. Most are chartered as commuter vans. The legal way that commuter vans are supposed to operate is this: a company that owns a properly registered van applies to operate as a commuter van in a particular "zone." If the application is approved by the TLC, the company is authorized to pick up passengers - but only by "prearrangement," that is, when requested by the customer by phone, or by a standing agreement, in advance. The vans are not allowed to duplicate an existing bus route used by the MTA. If they followed all these restrictions, only a handful of companies would be able to make a profit.

It could be worse: from 1994 to 1999, the City Council had the right to veto commuter van applications - and did so 98% of the time. That part of the law was found unconstitutional.

In practice, commuter vans operate outside their designated zones and pick up passengers on the street. Since they do not have designated stops outside these zones, and they are not allowed to duplicate public bus routes, they often simply stop wherever they are hailed. This arrangement seems to satisfy most of the customers and yield profits for the van operators, but it can block car traffic, which seems to be the main complaint of Comet.

Unfortunately, the current system also seems to make it difficult to expand to new markets. That's what will help us towards our goals. For that, the laws will have to be changed. That will require a coalition that would either include the TWU or be powerful enough to overcome it, and at least some TWU members have negative opinions of jitneys.