March 3, 2016

Red and Purple Line partnerships and political football

It's fitting that Joe Flacco signed the richest contract in pro football history on the same day the state of Maryland finalized the biggest contract in its government history - to build the light rail Purple Line. And while nobody is arguing that Flacco is anywhere near the best player or quarterback in the NFL, neither has anyone claimed the Purple Line, whose giant consortium won the $5.6 Billion competition, is more valuable than the Metro transit lines it links in the Washington metropolitan area.

It's all about what needs to be done, how to do it, and who can actually do the job.

The DC area Purple Line left the Baltimore Red Line in the dust, just as the Washington Redskins surpassed the previously mighty Baltimore Ravens last year on the strength of backup quarterback Kirk Cousins, when both teams' highly paid starters, fallen Flacco and fragile Robert Griffin, were left on the sidelines.

While $5.6 Billion is a staggering commitment, it's hard to ascertain just how much money it really is or how it was calculated. The purpose of the public-private partnership is to spread out the risk and acquire the expertise that the state is unable or unwilling to summon on its own. It's sort of like renting instead of owning. The landlord is just more prepared to deal with the property and its complexities which are inherent in a deal as encompassing as this.

But as complex as the Purple Line's 36-year design, finance, construction and operating contract necessarily had to be, it would have been a mere napkin note compared with how complex and convoluted a comparable Red Line public-private partnership would have been.

There's really only one solution: The Red Line must be downsized into a manageable project, to get it going again.

The most important part of the Red Line is economic development, not just transit, as shown in this alteration
 of the MTA Harlem Park station plan to get rid of the adjacent "Highway to Nowhere". (by Marc Szarkowski)

Taking the vertical game underground

The proposed Red Line's huge risk and complexity was mostly in its 3.4 mile Red Line tunnel under downtown Baltimore, which represented roughly half of the total $3 Billion capital cost and two-thirds of the heavy construction cost of the entire project.

But that was just the beginning. The "vertical game" (to stay with football parlance) refers to far more than just whether to try to go underground in a tunnel to get the Red Line through downtown, which Maryland Transportation Secretary Pete Rahn rightly called a "fatal flaw" in the project. After all, there are many subways in the world.

But then the Maryland Transit Administration decided it had to award the engineering contracts and begin final design for this tunnel before any kind of public-private partnership was established. The Red Line process had been plodding along for over a decade and the MTA felt the need to just keep plunging forward. They knew that engineering the tunnel would take far longer than any other part of the project, while its construction would have to begin first. If they didn't begin the tunnel's engineering as soon as possible, the entire project would suffer from insurmountable delays, And of course, time is money.

So while the Red Line's timetable was behind the Purple Line's in most respects, it was ahead of the Purple Line's in design. Even now, engineering on the Purple Line still hasn't begun.

This is actually a huge advantage for the Purple Line, enabling its public-private partnership to be defined and negotiated far more cleanly and flexibly. In contrast, Red Line engineering was literally stuck in a hole.

This explains much of the reasoning behind the MTA's now infamous "all or nothing" approach to the Red Line. The tunnel needed its own commitment and timeline as a prerequisite for anything else. So now all that expense is literally buried in the ground. "All or nothing" became nothing.

The only flexibility would have come if an entire piece of the project was jettisoned, when and if money needed to be saved. That probably would have meant chopping off the transit line's east or west ends, which were the segments that actually contributed to the line's ridership in a reasonably cost-effective way.

That is what Baltimore County Executive Kevin Kamenetz was rightly fearful of. He had been pressured by the state into making a financial commitment to the project with no genuine assurance that the portion of the project in his jurisdiction would actually get built.

It's like football fans who now worry about whether the Ravens can now actually afford to pay for a good defense and offensive line to support the rich Joe Flacco. But offensive lineman, even great ones like Marshall Yanda, cost a lot less than Flacco, so it makes a lot more sense to pay them their due than to cut them just to throw more money at Flacco.

The Red Line tunnel as designed would have been a mandatory and largely inflexible expense. Its only severable element would have been its pedestrian tunnel to connect the Inner Harbor Red Line Station to the Charles Center Metro Station. Red Line supporters claimed that this pedestrian tunnel was crucial, steadfastly defending it to the critics who mocked and criticized it. But should the thousands of projected daily Red Line transfer riders be forced to walk the length of more than TWO football fields to get from one line to the other? Even mighty Joe Flacco never had to do that.

But here's a hint: The extremely detailed 65% complete engineering drawings for the Red Line's tunnel showed only an outline of this pedestrian tunnel. That's expendability. Like a quarterback taking a sack to avoid a fumble.

The blame game

Like pro football, running a transit system is really all about management, and there's where the $3 Billion Red Line was truly unworkable.

The Baltimore Ravens actually originated with the State of Maryland. The state wooed the Browns away from Cleveland (that's nasty!) and built them a new stadium, which the state still owns. But the state has nothing to do with anything else about the Ravens, even how much Joe Flacco is paid.

That's the way it's going to be with the Purple Line too. The $5.6 Billion private partner will fully design, finance, build and operate the line. The buck stops there.

That kind of direct accountability would not have been possible with the Red Line. Besides the cloudy design decisions discussed above, there is the question of actually operating the line after it is completed.

The vehicles would be owned and maintained by the private consortium. But the state MTA would actually run the trains, just as with their other heavy and light rail lines and buses. This is a recipe for perpetual finger-pointing. Whenever a service problem arose, the state would blame the contractor and the contractor would blame the state. The state would try to get the contractor to fix any faults with the vehicles, and the contractor would blame MTA train operators for abusing the vehicles they're responsible for maintaining.

Trains running late could be an even bigger issue in the blame game, and poor "bottom line" ridership would be the ultimate unresolvable issue.

Yes, contract language would attempt to clarify these kinds of things, but that just opens doors for lawyers. The example the MTA has cited is that there would be contract criteria for cleanliness of the vehicles, and if they flunk the "white glove" test, the contractor would forfeit some of the state's money. But gum under the seats is far from being the most serious problem with operating a transit line. Gumming up the motors is a far greater threat.

Horizontal vs. vertical monopoly

This is all part of the question confronted by economists of horizontal vs. vertical monopolies. All transit lines exhibit monopoly characteristics, which means that a free supply/demand market is not possible to regulate or resolve them.

The DC-suburban Purple Line will be a vertical monopoly. All stages of the "supply chain" which delivers transit service will be clearly controlled by the consortium.

Vertical monopolies are strong in that management and production are controlled holistically. The operator follows orders, merely doing what it's mission says it will do. Any influence from politicians, workers, riders, etc. can be processed by the entire system. Of course, pure vertical monopolies are rare. (It would be like the National Football League owning college football.)

On the other hand, Baltimore's mass transit system is a horizontal monopoly, which means it is vulnerable to impacts on all flanks from all forces and institutions. The transit operators union has its say. The various jurisdictions have their say. The state legislature has its say, etc.

A horizontal monopoly is always in a state of flux. The latest is a proposed "scoring system" by the Maryland legislature to determine which transportation projects get built. President Obama already implemented something of that sort when he had the Federal Transit Administration incorporate community impact factors into its selection criteria for transit project funding.

Then there is the effect of separate local transit systems. The DC metropolitan area is far ahead of Baltimore in this, but Baltimore is catching up. The city now has its Charm City Circulator system which affects the MTA tremendously, although they haven't admitted it. The Uber-style cyber-taxi system is becoming a huge factor in transit and perhaps Zipcar renting will as well.

Bottom line: Downsize the Red Line

The hype called the Red Line a "game changer". But the truth is that the game is always changing faster than we realize until after the fact. A single poorly designed rail transit line is but one cog in the wheel of change.

The biggest question in any public-private partnership is: What happens if it fails? In the vertical monopoly Purple Line, it's the relatively simple matter of finding a way to adjust the game to achieve the desired results. That customarily means shoveling more money at the problem, but at least it's do-able.

The Baltimore MTA has been shoveling money at its problems for decades, with a spectacular lack of success. All kinds of solutions have been proposed, as if some knight in shining armour such as moving to an all-powerful regional authority could fix the problems. But it just doesn't work that way.

The goals are nebulous enough as it is. What Baltimore really wants is to make transit a potent economic development tool. How do we measure that?

There is really only one feasible direction we can go. The Red Line must be downsized and refocused into the smallest feasible project which is capable of moving the city and region toward its goals, while accommodating future expandability to continue expanding those goals.

At the very least, that means building a Red Line which emphasizes linkage with the rest of the transit system and with community development. That means getting rid of the 3.4 mile downtown tunnel.

It means a clearer and more straightforward public-private partnership. It probably means getting rid of the local government funding shares, which was so unpopular it devolved into smoke and mirrors. Local money should be directed instead to related station-area community projects.

This certainly means the Red Line won't be built immediately (we already knew that) so the preparation of the line's corridor for the future can and should proceed first. That could mean getting rid of the "Highway to Nowhere" and creating a viable corridor development plan which includes the re-use of the massive Metro West former Social Security complex.

A multi-billion dollar public-private transit partnership is complex, but redeveloping a city is far more important and rewarding.


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