Making a Federal Case for Ann Arbor Rail

As we related in the last post, Ann Arbor has been dreaming of trains for the last decade. We have paid for multiple studies, and detailed plans and reports have been produced. Our Mayor, Christopher Taylor, has named rail travel as a top priority. In a letter sent to many constituents early in January, he stated “Expanded rail service is vitally important to the future of Ann Arbor”. (Here are some further comments reported by the Ann Arbor News.) Now the City Council has just a couple of months before the next Budget is adopted.  How much of the City’s resources should continue to be devoted to this purpose?  After so many years with rail in the future, is it time to relegate these dreams to the past?

For Love of Trains

First of all, this question is not about whether we love trains.  Of course we love trains.  Most of us of any age or travel experience have happy memories to relate.  (I have a sentimental description of my own experiences in this post from 2011.)  Trains are part of the sensibility installed in us from childhood.  Here is a video of a favorite childhood song about trains.  Wouldn’t you like to climb aboard on this train, or at least join in?

Trains are a great mode of travel.  Sit and read (or work) or just look at the scenery. No worries.  Why wouldn’t we want to be able to travel to Detroit without worrying about freeway traffic and parking?  And as a commute, it can’t be beat, especially if that “last mile” problem can be solved.  (Transit from the station to work.)  If you have visited a city with a light rail system, you know how nice it is to travel around an urban area that way.  Just hop on, ride a few minutes, hop off.

For all these reasons, and for several others, the dream has survived since 2006 and has been enthusiastically adopted by many on our Council, and by many citizens.  The rail projects have all been studied and are ready to be implemented, more or less.  But is this possible?  Most of all, can we afford this vision under the present circumstances?

A Very Expensive Wish List

Because consultants have been hired to do studies of our rail wish list, we have some rather good numbers now for how much these projects will cost.  The costs for the Ann Arbor Train Station have been kept rather obscure through the Environmental Review process, as has much other information. A construction estimate was provided via a FOIA by Dave Askins (thanks to a direct response by Howard Lazarus, the City Administrator).  A couple of feasibility studies have been completed for the Connector. The North-South Commuter Rail (aka WALLY) Feasibility Study has recently concluded; here is the Financial Analysis.  The Ann Arbor-Detroit Commuter Rail was folded into the Regional Transit Authority and cost estimates were included in that plan (RMTP) .

From all of these studies, we can compile a total of the full cost of the rail wish list for Ann Arbor.  Note that these figures are not the amount that the City expects to pay.  The Connector, WALLY, and the Ann Arbor-Detroit Commuter Rail are all expected to be cooperative projects and other governmental entities are expected to contribute. (The Ann Arbor Station is an Ann Arbor project alone.)  But in every case, the expectation has been that the main burden of the cost will be borne by the Federal Government.  Often the statement has been made that 80% of the cost will be Federal, and the 20% local matching amount is partly offset in theory by the State of Michigan (MDOT).

Costs for these projects are of two types: Capital (original construction) and Operating (annual cost of operation and maintenance).  Capital costs are a one-time investment, but operating costs are perennial.

Capital costs for four rail projects

Annual operating costs for three rail projects. It is assumed that Amtrak would continue to operate the train station. These are gross costs; offsets for fares and fees not subtracted.

Making Decisions about the City Budget

Most City expenditures are based on fairly accurate estimates, either for existing contracts or from well-fleshed out plans.  Most budgeted items will be spent as described, with a fair certainty that the deliverable will be produced.  There is never quite enough money for all the things we would like to achieve as a community.

The City Administrator, Howard Lazarus, has been making presentations to the Council in advance of the budget.  Capital improvements are suggested for firehouses, streetlights, sidewalks, dams, and signals.  The slide also showed the following amounts ($millions) for FY 2018 and FY 2019. The last column to the right is “FY 2020+”.  Taken all together, the rail items constitute 43% of all capital improvements.  These are General fund expenditures in the City Budget for the next couple of years.

From the slide of 2018 capital improvement costs. Figures at bottom include more items than shown here.

If Council is going to continue to use Ann Arbor city funds (taxes) to pursue these rail projects, it is making a calculated gamble.  We are continuing to put chips on the table in hopes that there will be a big payoff.  And the expectation has been that the deep pockets at the table belong to the Federal government.  That is no longer true.

The Shifting Sands of Federal Funding

With the Trump presidency, predictions are impossible.  One can, however, hear solid hints of what he is thinking.  There are other players in Federal funding, especially many different factions and interests among members of Congress.  Here are a few high points about Federal transportation funding, which has usually been very contentious.

  • The gold standard is outright grants.  In other words, Federal taxes distributed directly to states and localities for use in transportation projects.  This is what we would like for all our projects.  There has been a move in recent years toward encouraging localities to apply for loans instead. The TIFIA program is an example.
  • Pennies were falling from heaven in 2009, with the Obama stimulus program, better known as the American Recovery and Reinvestment Act (ARRA).  This was especially friendly to transit programs and included the high speed rail program (HSIPR)  program that has paid for our preliminary rail station study.  It was not renewed with the new Republican Congress in 2010. All ARRA grants expire at the end of the current fiscal year (September 2017).
  • The main source for transportation grants has been the Federal gas tax, or Highway Trust Fund.  The tax rate has not increased since 1993.  This fund was originally to pay for the Interstate system.  A mass transit fund was added to it in 1982.  The Transportation Act, which is the law that governs how the money is spent, has expired a number of times and been renewed and rewritten.   This is always a big food fight in Congress.  The way the money is allocated changes in each revision.  There are always legislators who would like to get rid of the mass transit and alternative transportation provisions so more money can be spent on roads and bridges.
  • Through some miracle (and our Senator Debbie Stabenow deserves a lot of credit), the Transportation Act actually got revised and renewed in the last Congress.  The name always changes.  The last bill was MAP-21; this one is  the FAST act.
  • An important feature of the Transportation Bill is that items funded by the Highway Trust Fund are not dependent on the Federal Budget because they are not part of the General Fund.  This has kept funding of mass transit programs, for example, very stable.
  • The FAST Act included rail travel for the first time.  BUT it did not attach Highway Trust Fund monies to it.  RAIL IS DEPENDENT ON ALLOCATIONS IN THE FEDERAL BUDGET (the General Fund).
  • Congress has been keeping the Federal Government running by a series of continuing resolutions.  It has not actually passed a budget for a long time.  The current Continuing Resolution expires on April 28, 2017.
  • Meanwhile, President Trump and Congress are trying to conclude negotiations on a variety of bills and spending priorities.  Here is the Budget Blueprint recently published by the White House.

Important Cuts and Immediate Significance

The two most important points affecting grants to local governments for rail in the White House blueprint are the cancellation of TIGER grants and the loss of New Start funding for new projects.  TIGER has been a source of discretionary grants – very competitive (only 1 in 20 grant applications funded) but very essential to localities.  That is the source that Ann Arbor hoped to tap for the new train station.  New Starts have been the method of choice to start a new rail system “fixed guideway program” (which includes Bus Rapid Transit); this would have been the likely source of cash for the Connector or possibly one of the commuter rail systems.   Without these, there is literally no Federal grant program that could realistically pay for our rail programs.

Even if Congress does not follow this blueprint, it must still appropriate funds for any grant program.  With the Continuing Resolution due by April 28 and tax cuts looming on the horizon, this seems unlikely.

The Trillion-Dollar Question

What about the infrastructure program that President Trump has mentioned?  It would not be grants, but rather tax incentives for private investment.  The likely mechanism would be “P3” (Public-Private Partnerships) programs where the locality borrows money from private investors.   A preliminary list of likely projects has been released, but has no force in law.  Many such programs will require a source of revenue, such as fares, tolls, or fees.

ADDENDUM: The Administration’s likely approach is being telegraphed by Elaine Chao, the Transportation Secretary.  In this speech she says,

“Investors say there is ample capital available, waiting to invest in infrastructure projects. So the problem is not money. It’s the delays caused by government permitting processes that hold up projects for years, even decades, making them risky investments. That’s why a critical part of the President’s infrastructure plan will include common-sense regulatory, administrative, organizational and policy changes that will encourage investment and speed project delivery.”

This is a clear call for privatized projects.  What is not clear is what “impediments” are going to be cleared.  Agreement by local governments? Safety regulations? Environmental hazards?  Best not to picture this too fully.

The Gamble

Since it is so unlikely that there will be Federal grants to pay for the wish list of rail projects, what should the City Council do?  One alternative would be to sit tight and wait for developments.  But will they spend substantial funds in the next year on these projects, with all the other priorities? To do so seems to be a triumph of hope over prudence, indeed.  Perhaps there is a good lottery running somewhere.

 

 

Explore posts in the same categories: civic finance, Transportation

8 Comments on “Making a Federal Case for Ann Arbor Rail”

  1. Jeff Hayner Says:

    A one-billion dollar gamble, played by the mayor and council, using the public’s chips. No thanks.

  2. Marge Says:

    Thank you for assembling this information. This whole train thing seems like an irresponsible obsession. A good bus system could achieve good connectivity results at a much lower cost and with flexibility to adjust to changing population centers and needs over time. Too bad voters didn’t go for it last fall…but give us another chance.

    • varmentrout Says:

      I think you are referring to the SE Michigan RTA which lost on the ballot last fall? One of the peculiarities of that proposal was that instead of having an express bus or BRT line from Ann Arbor to Detroit Metro and beyond, they stuck in the commuter rail. Commuters from Ann Arbor would have to take the train, get off, and then get on the BRT or a SMART bus to access the metro system. It didn’t make much sense to me.

      There was a news story that said the RTA board was planning to wait until 2020 to try another millage ballot measure. Meanwhile Michael Ford was fired. They are obviously regrouping, it will be good to stay tuned.

      I agree with your point about a bus system. I’m grateful that we have AAATA and a network, though it could use improvement. I’d like to see them protect their core business (buses) and not get pulled into these other projects.

      • krieg45 Says:

        Just a word about the Ann Arbor to Detroit rail vs. BRT proposal: rail would be much faster than BRT – about an hour vs. 2 or 2.5 hours by BRT, which serves a different purpose. And rail is inviting, since many of Obama’s “pennies” that you mentioned in the main post went to purchasing the rail line between Kalamazoo and Dearborn for the State, and improving it in several ways.

  3. krieg45 Says:

    Thanks once again, Vivienne, for pulling the facts and figures together. I’ve posted a blog entry on WashtenawTOD with my candid opinion of the Wally study, which could be summarized by this extract: “…as I see it, neither of the proposals [full-service or shuttle] as offered in the study deliver enough value for enough voters to come anywhere near passing, no matter how the voting districts are drawn. There are several limitations to the proposals that lead me to that conclusion.” Naturally, I hope you’ll read the full “What’s Next for Wally” blog (http://washtenawtod.blogspot.com/2017/03/whats-next-for-wally.html), but in short, the answer is that without a network of connecting buses and of parallel buses, it doesn’t provide the necessary supporting network.

    That said, service by train is by no means an irresponsible obsession. Many US cities are finding it worthwhile to start them up: Orlando, Salt Lake, Denver, Minneapolis, Dallas, and Miami, to name a few. Beyond a certain number of passengers per trip (I estimate somewhere around 70-80) train operating costs per passenger are lower. The equipment lasts 2-3 times as long as buses. They also avoid the congestion issues which will continue to plague access to Ann Arbor. People commuting by public transportation (whether bus or train) will relieve Ann Arbor of the need to use land and funding to provide space for their cars to “sleep” while they are working.

    Despite what some critics have claimed, rail commuting systems make relatively compact suburban development possible, and they are the only way urban density can be increased beyond a certain point. Example: U of M’s East Medical Campus was built several miles from the main center exclusively to provide room for parking. The same facilities could have been built on Maiden Lane instead of the parking structure. The clinics at East Campus are used by many low-income patients who don’t have access to their own cars, causing a very real environmental justice issue.

    Bottom line: our generation is leaving a very big infrastructure bill for the next generation. It’s too easy for us to say “No, thank you!” to infrastructure costs. The Flint crisis is a classic example of what happens when we say “No, thank you!” to taxes for infrastructure problems, and pass them along to the next generations, and Flint is just the tip of the iceberg. I sit here as I type, watching my 12-year-old grandson sitting close by, laughing over a game on his computer. How long before his innocence is ended, and he must shoulder the burden we left for him?

    • varmentrout Says:

      Actually, Larry, the Flint debacle has very different origins from a failure to anticipate infrastructure problems. It happened because of planning for a new water system in Genessee County.

      Most of your comment falls into my “of course we love trains” point. But the point of this blog post is that the Federal grant money that everyone has been counting on will not be there. I’m hoping that the Ann Arbor City Council will not spend more of our limited funds on chasing projects with no future.

      I’ll have to read your post on WALLY.

    • Jeff Hayner Says:

      I say “No, Thank You” because the foamers keep asking me to buy something I simply cannot afford. Let’s not lose sight of the fact that we are talking about simply a train station – it has little to do with the train itself. I can wait for a train in a dusty field by the side of the tracks. The UMHC can have a Euro-style modest platform added on their dime. I don’t need a $60 million luxury concourse with catering by The Lunch Room. (coming soon to the Farmer’s Market Event’s Barn) For what we have squandered already on this we could have made substantial improvements to the existing station. This HAS NOT been money well spent.

  4. Kent W Burkhart Says:

    Characteristically well done and brave… I view your “logic” as sound: I think you are being very brave here going against predominate intellectual fashion… or is it a new religion?. .


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