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Voters and Congress Decide the Fate of Public Transportation

By John Addison (10/31/08). A record number of Americans are saving thousands per year by using public transportation from one day per week to living car free. In 2007, a 50-year record was set of 10.3 billion transit trips per year, saving over 4 billion gallons of car gasoline use. 2008 will set a new record that may approach 11 billion trips as more commuters leave their cars parked to brave standing-room-only train and bus rides.

Public transportation and corporate commute programs have helped America finally reduce its dependency on oil, with vehicle miles traveled reduced for the first time. Now, our financial crisis is putting this in jeopardy.

Although public transportation is rescuing Americans, will Americans rescue public transportation? Record ridership, shrinking tax revenues, frozen funds, and fuel prices are overwhelming transit budgets. Where more routes and buses are needed, cutbacks are instead being made.

This Tuesday votes in 33 states will make decisions about the fate of transit funding. In California, decided will be the fate of High Speed Rail.

The American Public Transportation Association (APTA) called on Congress on October 29 to pass economic stimulus legislation that includes funding public transportation projects to create new jobs. APTA has identified 559 public transit “ready-to-go” projects, worth $8 billion, from Chicago to Atlanta, and from NY to LA.

Testifying before the House Committee on Transportation and Infrastructure, APTA Chair Dr. Beverly Scott, who is also general manager and CEO of the Metropolitan Atlanta Rapid Transit Authority (MARTA), testified, “We simply must get our economy back on track, and the most important way to do that is to create new jobs, and give our citizens the tools they need to find jobs and keep working.”

Dr. Scott continued, “Not only do transit systems need assistance for capital projects, transit providers also need help to maintain their current services. Transit systems across the United States are being forced to choose between raising passenger fares or cutting service to make up for shortfalls in local funding and the increased cost of diesel fuel this past summer. The burden is so great that 35 percent of public transportation providers who responded to another recent APTA survey have been forced to cut or plan to cut the level of passenger service they provide in spite of the growing demand. Transit needs to be part of the solution to – not the victim of – the current economic crisis. This could not happen at a worse time. Public transportation ridership has grown dramatically this year, and we need to continue that growth.”

Even the collapse of AIG is having a devastating effect on transit. Dr. Scott as testified, “From the early 1990s to 2003, the Federal Transit Administration urged transit systems to enter into innovative financing deals known as Sale-in/Lease Out and Lease-In/Lease Out (SILO/LILO) transactions. These transactions helped transit systems finance large, capital intensive projects by selling their assets to investors and leasing them back. The transit agencies received up-front one time payments in consideration for future tax benefits for the investors, until these transactions were prohibited in 2003. To secure these transactions, sale proceeds in the form of Treasury securities were placed into an account that AIG and a small number of other insurers guaranteed. Under the terms of the contracts, transit agencies are responsible for replacing the guarantors of the secured assets if they fail to maintain a certain bond rating- often ‘AAA’ status. Unfortunately, because AIG and the other insurers have lost their ‘AAA’ rating, and there are no available financial institutions to replace them, the equity investors are able to find the transactions in default. Under this scenario, through no fault of their own, transit agencies could be forced to pay hundreds of millions of dollars in fees to make the investors whole. The banks have the opportunity to gain 100 percent of the tax benefits that have been disallowed, which would in turn devastate transit agencies, which will be required to pay more than $2 billion to the banks immediately.” Congressional Testimony

Will we keep America moving, our will be go back to being stuck in our cars in gridlock, burning billions of dollars of extra gasoline from countries that are glad to take our money?

John Addison publishes the Clean Fleet Report.

Keeping America Moving

By John Addison (10/11/08). A record number of Americans are saving thousands per year by using public transportation from one day per week to living car free. In 2007, a 50-year record of 10.3 billion trips per year, saving over 4 billion gallons of car gasoline use. 2008 will set a new record that may approach 11 billion trips as more commuters leave their cars parked to brave standing-room-only train and bus rides.

Fifteen thousand who run global transportation systems convened in San Diego from October 6 to 8 to examine a range of strategic issues and to review 800 exhibitors at the American Public Transportation Association (APTA) Expo.

As transportation managers accommodate record numbers of passengers, they face challenges. Most transportation funding is spent on highways, not on public transportation. Fare revenue is only a fraction of budgets. Loss of property and sales tax funding is forcing operators to cut budgets. Diesel fuel prices have increased 166 percent in four years.

Buses designed to stay on the road for 12 years are being kept in operation longer. When new buses are ordered, reduced fuel cost is a priority. 63 percent of buses ordered in 2007 were alt-powered using hybrid technology, natural gas as a fuel, or both. City light-rail is typically powered by electricity. Public transportation is increasingly using renewable energy (RE) by installing more solar power and contracting for RE with public utilities.

The shift to fewer car miles on highways and alt-powered transportation is helping the nation need less oil. U.S. use of oil refined products in transportation is estimated to be reduced 5 percent this year. Should rail and public transit resolve their budget crises, oil use will drop further.

Member organizations were encouraged to overcome all obstacles in accommodating record riders by Dr. Beverly Scott, APTA’s new Chair and also CEO of MARTA in Atlanta. When federal funding of public transportation expires in 2009, APTA will ask the new Congress for a $123 billion 6-year funding package.

Pushed to the wall, several major transit systems are making politically unpopular fare increases. Some are cutting routes, frequencies, and making layoffs.

In his speech, Jim Simpson, Federal Transportation Administration (FTA) Administrator encouraged executives to consider public-private partnerships (PPP). At the Expo, I visited with Veolia (NYSE: VE), the world leader in transportation service contracts and management. Veolia has 120 contracts to run transportation in 30 countries for annual revenues of about $8 billion.

A good example of an effective PPP since 1993 is Veolia’s partnership with the Regional Transportation Commission (RTC) of Southern Nevada. I have personally been impressed in using their bus rapid transit while attending Las Vegas conferences. During the life of this partnership, ridership has increased from 15 to 60 million per year. At the APTA Expo, on of Las Vegas’ new 62-foot rapid transit vehicles was on display, looking more like a bullet train than a bus. The vehicles are designed by Wright with ISE doing the hybrid-electric drive systems using Siemens components. Fifty of the new vehicles will be delivered to Las Vegas.

For transportation operators that cannot make capital expenditures, PPP can provide a way for private corporations to buy needed equipment, then utilize the rail and buses as part of service contracts. Unfortunately, the expansion of public-private partnerships (PPP) envisioned by the FTA goes in the face of some of its obsolete legislated rules for funding.

In the long-term public transportation will serve a growing number of Americans because of increasing oil prices, plus increased preference for urban living by the young, by families, and by retiring boomers. As transit stops being a neglected child compared to highway funding, it will meet the financial challenge of expanding routes and increasing frequency by adding rail, adding buses and employing more drivers and maintenance professionals. Significant growth will reduce or oil dependency, make people more productive, and unclog the streets and freeways. Even those who never use transit will benefit from lower gasoline prices, less time in gridlock and breathing cleaner air.

Significant growth will be supported by high speed rail linking suburbs and linking transportation systems. Jim Simpson, (FTA) Administrator, regularly takes the 3 hour Amtrak Acela regularly from New York to Washington, D.C. Often he cannot get a seat as record demand soars ahead of investment in more rolling stock. Amtrak carried a record 28.7 million people in fiscal year 2008. The company has posted six years of ridership and revenue growth, recently benefiting from high gas and airline prices. The number of trips over the past year increased 11% and revenue 14%.

On November 4, voters in 33 states will be making decisions about approving transportation funding. In California, voting on Proposition 1A will decide if the nation has a second high-speed rail system that could cover 800 miles and carry forecasted ranges of 32 to 68 million annual rides by 2020. It will cost far less than the alternative of expanding highways and airports. Should voters give the system the green light, the $10 billion of California taxpayer funded bond will need to be matched with $10 billion federal and $10 billion of public-private partnership money. The system will be electric, using no petroleum.

A study by the American Automobile Association (AAA) shows that the average cost of owning and operating a passenger vehicle is 54.1 cents per mile. The IRS allows you to deduct 58.5 cents per mile for business. This is over $8,000 per year per vehicle, based on 15,000 miles of driving. Depreciation is part of that cost. Anyone who has bought a car for $20,000 and later sold it for $5,000 understands depreciation. Fuel, maintenance, tolls, parking, insurance, and tickets add up. Most households have two vehicles, costing them over $16,000 per year.

More Americans will save thousands by using public transportation. For some it will be one day per week, for others it will be the primary way that they travel. City and regional systems are offering trip-planners, dynamic maps, and realtime GPS information to those using the Internet, text messaging, and smart phone technology. I have frequently used Google Transit to plan trips that have several transit legs. Enjoy the savings of time and money from public transportation.

John Addison publishes the Clean Fleet Report with over 100 articles and reports about vehicles and transportation. Disclosure: the author is a modest long-term stockholder in Veolia. All his stock holdings are getting more modest every day. John now uses transit more frequently than his car.