The Colorado Index

RTD Head Leaves With Lucrative Payout

Cal Marsella, Denver Regional Transportation District General Manager, will retire effective July 31.  The Denver Post editorial, lovingly titled "Marsella guided RTD down the right path", actually paints a fairer picture of the ups-and-downs of Cal Marsella's tenure at RTD.

On his watch, three popular light-rail lines opened on time and within budget [ by later revising the budgets upward to match reality ]. He helped secure nearly $1 billion in federal money to build rail lines and transit corridors. He pushed public-private partnerships that helped bring down transit costs, benefitting taxpayers. And he helped develop FasTracks, a plan supported by voters in 2004 to build rail lines throughout the metro area.

The Regional Transportation District also was named the Outstanding Public Transportation Agency in North America by the American Public Transportation Association in 2003 and 2008.

Yet, also on Marsella's watch, the costs for FasTracks ballooned from the $4.7 billion approved by voters to nearly $7 billion today. The agency now is faced with asking voters to approve another 0.4 percent sales-tax increase to finish all phases of the project by 2017.

Marsella, who announced Tuesday he'll leave RTD in July for a private- sector job, can't take credit for all of RTD's successes, nor can he blamed for rising construction costs and the price of steel that have hampered FasTracks. (However, the agency grossly miscalculated the costs of the projects and the amount of sales taxes coming in to pay for it.)

Randall O'Toole of the Antiplanner blog points out some of the spectacular contradictions of Cal Marsella's tenure at the Regional Transportation District.

In 1995, RTD paid Marsella $112,000 to run RTD, which was then mostly a bus system. He was picked for the job partly because he and the then-chair of RTD’s board of directors, Jon Caldara, agreed that rail transit was a waste of money.

Within a few years, he had changed his tune, overseeing construction of two new light-rail lines and pumping interest groups for their support for a 2004 measure to raise taxes to build six more.

“RTD always builds its rail lines on budget,” he told people. (In fact, it went nearly 30 percent over its original projected cost on its Southwest light-rail line, and nearly 60 percent over projections for the Southeast line.)

“Our studies found that rail transit is the most cost-effective way of reducing congestion,” he claimed. (In fact, all of RTD’s studies found that highways and bus-rapid transit were far more cost-effective; in most cases, they both cost less and did more to reduce congestion than rails.)

“Rail transit reduces air pollution,” he insisted. (Since Denver’s light-rail trains are mostly powered by coal-fired electric plants, they emit more greenhouse gases, nitrogen oxides, and other pollutants per passenger mile than a typical SUV.)

Perhaps Marsella did not become a choo-choo buff from conviction, but merely due to the political winds since trains have a certain cache compared to busses.  Cal Marsella then was the consummate government bureaucrat, overpromising a rail system with a purposely low-balled budget to eager cities and their residents.  However, now that RTD has to go back to the voters for additional tax revenue, it is time for Marsella to leave before the political fight begins.

But, do not worry about Cal Marsella's finances.  The Regional Transportation will pay him well.  The Denver Post news story reports:

Marsella's employment contract with RTD calls for him to get 2 1/2 years of pension credit for each year worked. As of Feb. 28, Marsella also had accrued 1,010 hours of unused vacation and 939 hours of sick leave, both of which he can "cash out" upon leaving RTD.

This is a sweetheart deal for the man responsible for RTD's fiscal mismanagement.   Enjoy your retirement, Mr. Marsella.  The taxpayers will be happy to see you go.

by Civil Sense

Minimal Eco Pass Hike To Force Future RTD Tax Hike

Denver's Regional Transportation District approved fare hikes to begin in January last night.  Unfortunately, the RTD Directors ignored their staff recommendations and refused to overhaul the Eco Pass program.

RTD directors Tuesday night approved an across-the-board fare increase for Jan. 1, but rejected a staff recommendation to boost minimum contract amounts paid by small employers in the Business Eco Pass program.

Regional Transportation District officials told the directors the minimum price for a small company acquiring Eco Passes for up to 10 employees should be equal to the cost of two annual transit passes instead of one, as is the case now.

With the program priced at the equivalent of one pass, if more than one employee at a small firm uses transit passes, RTD gets no additional revenue for that service, general manager Cal Marsella told board members.

Raising the minimum at least to the equivalent of two annual passes would help correct that inequity, he said.

But after hearing a flood of speakers blast RTD for proposing to tamper with contract minimums — especially without having precise ridership data — the board voted 10 to 4 to limit a Business Eco Pass price increase to 19 percent along with a $5 surcharge on trips to Denver International Airport — the skyRide.

Even Regional Transportation District General Manager Cal Marsella realizes that the Eco Passes are underpriced.  However, since paying customers only account for 20 percent of operating revenue, the taxpayers are on the hook for the rest.  Since farebox revenues fell this year with more riders, RTD obviously hopes that the across the board fare increases will increase revenues.

RTD needs to further study the composition of its customers and their payment methods.  However, as riders take advantage of these hugely discounted passes while fuel prices increase, RTD will have no choice but to ask taxpayers for more money.  Before any tax increase request, RTD needs to present all of its ridership and revenue data to the public and explain why its fares do not cover its costs.  Unfortunately, the RTD board preferred to turn a blind eye to its flawed, discounted Eco Pass program and is now on the road to begging for increased taxpayer subsidies in the future.

by Civil Sense

Denver Councilmen Defend Flawed RTD Eco Pass Program

Over the past several months, I have written critically aboutDenver's Regional Transportation District financial woes.  Back in August, RTD proposed raising fares while cutting a minuscule portion of the fiscally flawed Eco Pass program.  Two Denver City Councilmen, Chris Nevitt and Doug Linkhart, wrote  an op-ed in the Denver Post decrying the proposed cuts to the RTD Eco Pass program.

To slash the EcoPass program is to move in precisely the wrong direction: reducing availability of transit just when increasing numbers of metro residents are relying on it; undermining business confidence in the transit alternative just when our urban road system is becoming critically congested; and destroying public goodwill toward RTD just when public patience and support are most needed.

Finally, the financial justification for the attack on EcoPass is not supported by available evidence. The EcoPass program allows businesses to purchase all-access transit passes for their employees. This provides employees a convenient and cost-effective alternative to driving, thereby taking cars off the road, reducing traffic for the rest of us, and reducing pollution for all of us. In addition, the availability of the EcoPass creates positive incentives for businesses to locate near transit, thereby multiplying the future value and benefits of our public investments in a first-class transit system.

Denver Councilmen Chris Nevitt and Doug Linkhart are dishonest in their portrayal of the situation.  RTD lines are being cut due to low ridership, not due to Eco Pass.  Overall, demand is high for transit, perhaps due to the lower than market-rate fares. However, transit still only accounts for 2-4 percent of commuting traffic in Denver (which only makes a small dent in traffic).  Systemwide, ridership was up 8 percent in May, but farebox collections were down 3.3 percent.  Overall, fares only account for 20 percent of operating revenue.  This is not a recipe for fiscal success; it is a recipe for disaster.

The suggestion of Chris Nevitt and Doug Linkhart that this pass "creates positive incentives for businesses to locate near transit," is an interesting argument.  Why do these council members want to take funding from the Regional Transportation District to give to private enterprises as corporate welfare?   Both the taxpayers and RTD get the short end of the stick on that argument.

Councilmen Chris Nevitt and Doug Linkhart actually do get one item correct in the article, though.

The cuts to the EcoPass program are focused directly on small business participation, yet there is little empirical evidence that small business is a disproportionate source of red ink.

In fact, what data does exist suggests the opposite: that very small businesses (25 or fewer employees) provide over 50 percent more revenue-per-employee than the average EcoPass- participating business.

There is a grain of truth to that statement.  According to the pricing schedule, Eco Pass for a small business with 1-24 employees costs between $68 and $344 per year (depending on business location) for local, express, and regional bus routes.  Therefore, these passes cost between 8 percent and 40 percent of the $840 per year local pass.  This pays more of the costs than the Eco Pass for businesses with greater than 2000 employees whose Eco Passes cost between 4.5 percent and 33 percent of the local pass.  Therefore, eliminating small businesses from the program is not the answer.

The Eco Pass program needs to be reformed, and fares increased to cover more of the operations and maintenance costs of RTD.  Truly need-based fare subsidation would help much more than the Eco Pass program.  Unfortunately, politicians such as Councilmen Chris Nevitt and Doug Linkhart prefer to increase taxes and changing the scope of the Regional Transportation District's purpose from running bus and train lines into developing transit-oriented business sites and subsidizing businesses.

by Civil Sense

What Should RTD's FasTracks Plan Become?

Denver's Regional Transportation District light-rail expansion plans are notoriously over budget. RTD's choices are basically to eliminate some lines (the northwest rail corridor that will duplicate bus rapid transit service on US 36 to Boulder comes to mind), to keep all the proposed lines and stretch out the completion date (not much different than the first option as citizens can revisit the merits of constructing the delayed lines), or raising taxes.  According to this Rocky Mountain News editorial, however, cities within the Regional Transportation District are stubbornly refusing to support any cost-cutting measures so RTD can return to budget without a tax increase.

Metro area cities seem determined to force a vote to raise taxes again for FasTracks. There is simply no other explanation for their recent behavior.(snip)

Not that everyone puts it quite so bluntly - or even admits that the choices are limited. A Thornton planner actually suggested, for example, that each transit line except the one to the airport be cut back by 40 percent. It's the Solomon solution applied to transit, except that he apparently wasn't bluffing.

Why don't they want FasTracks trimmed? Because dropping a corridor wouldn't be "equitable" so long as those communities pay RTD taxes, too. They do pay taxes, of course, but they are still served by buses. Don't the majority of people in southeast and southwest Denver who never take light rail pay the tax as well? Should they feel aggrieved? Are all government services - from state parks to colleges - equally distributed throughout all cities and neighborhoods? Of course not.

Then why is it so difficult for metro leaders to agree to adjust the project to fit budgetary reality - unless, of course, their true purpose is to force a vote on taxes?

As I wrote previously, the metro area mayors recently demanded no cuts in any line or timetable for service.  Due to their political capital invested in the FasTracks program, these city politicians and planners are an inflexible barrier to fiscal sanity.  Beginning all of the lines and only building what RTD can afford is ludicrous and irresponsible.  A half-completed rail line costs a lot of money to construct and operate.  Since transit is most popular between large, dense population centers, a half-completed line will never come close to recouping anything but a miniscule fraction of operation costs due to low or nonexistent ridership.

Randall O'Toole of the Antiplanner Blog, Cato Institute, and Independence Institute believes that RTD should choose a fourth option: cancel FasTracks altogether.

Without the tax increase voters approved in 2004, RTD can improve bus service in every FasTracks corridor, operating buses as fast and as frequently as the proposed FasTracks rail lines.

RTD's own analyses of FasTracks corridors showed that bus rapid transit using a combination of high-occupancy lanes and existing roads would cost less and do more to relieve congestion than rail.

So why did RTD pick rail, the high-cost, low-benefit solution?

One answer is that rail lines create lots of profits for the companies that supported the FasTracks campaign. For example, Siemens donated more than $100,000 to the FasTracks campaign and was rewarded by RTD with a $187 million no-bid contract for light-rail cars.

The other support for FasTracks comes from those who want to socially engineer Colorado lifestyles. They use light rail as an excuse to build tax-subsidized high-density housing projects on properties taken from their owners by eminent domain near planned rail stations. Yet few Americans aspire to live in such dense housing, and such compact development makes little sense in a state that is 97 percent rural open space.

Randall O'Toole has a point.  The high-density transit-oriented-development works well in LoDo and the Denver tech center, but it less desirable outside of these areas.  Even the Gates Rubber factory redevelopment near Broadway and I-25 has not begun, and the light rail to there has been open for over two years.  RTD oversold the desirability of this high-density development in the marketplace. 

The citizens of the Denver metro area and RTD need to revisit the feasibility studies for light rail and determine whether or not bus rapid transit/high occupancy vehicle/toll lanes are the better option.  An honest reassessment of the FasTracks project is in order.  Unfortunately, the political will to revisit this plan is sorely lacking with metro area government employees.

by Civil Sense

Denver Post Concerned About RTD

The Denver Post nearly always paints the Regional Transportation District in the rosiest way possible.  Today's Denver Post editorial includes the usual FasTracks Cheerleading, but it also contains some very interesting (and sometimes harsh) statements about RTD.

Billed as a $4.7 billion construction project when voters approved it in 2004, the estimated cost of the expanded rapid-transit system has jumped to $7.9 billion, according RTD's latest analysis.

It's not a matter of bad management or cost overruns. A worldwide surge in the cost of concrete, steel, copper and other essential materials has sent costs soaring. Meanwhile, a slowdown in the local economy has cut into the sales tax receipts RTD needs to pay for the projects.

This is not the truth.  The Regional Transportation District FasTracks budget contains cost overruns. Whether or not the construction and materials cost increases were predictable is irrelevant.  The management decisions are also questionable, such as bullying property owners with eminent domain and buying overpriced land out of district in Weld County.

We'd say forget about a tax increase, which voters probably would crush in the current economic climate.

Did the Denver Post just find a tax increase they did not like?  The Post provides many, many, many examples of tax increase advocacy.  It seems as if the Denver Post is slightly peeved at RTD.  However, the Post gets over it quickly and returns to advocacy of greater government spending on RTD (which still requires taxpayer funding through existing or future taxes).

There is one possible exception to that rule. Shoppers within the RTD area already pay a 0.1 percent sales tax to pay off the bonds on Invesco Field, which will expire Jan. 1, 2012. If voters agreed to extend that existing tax to help pay for FasTracks, it would add about $40 million a year. But it's unlikely that the state legislature would authorize such a vote until 2011, so such money can't be plugged into RTD's current plans.

Otherwise, we hope the next president, be he John McCain or Barack Obama, will press for a sizable increase in federal aid to transit. But that would probably require a jump in federal fuel taxes, and Congress isn't eager to do that with pump prices hovering around $4 a gallon.

Finally, we hope Gov. Bill Ritter's blue-ribbon panel on transportation includes increased funding for transit in the recommendations it sends to the 2009 legislature. But since voters would have to approve any overall transportation tax increase, such funds can't be plugged into RTD's current plans either.

The Post still advocates building FasTracks, but stretching out the timeframe.  Three lines are approved and have some federal funding: the Gold line to Arvada, the West line to Golden, and the East line to DIA.  The other lines would be targets for postponement.

RTD could help their case if they would consider dropping the Denver to Boulder heavy commuter rail line all together.  As the US 36 program will provide bus rapid transit in dedicated traffic lanes and could sell excess capacity to cars, it is a measure of redundancy to construct infrastructure for heavy diesel commuter rail as well. 

However, RTD is in a political pickle.  To get support for the FasTracks tax initiative, RTD promised the moon to every metro government in exchange for unified government support.  That's why the metro-area mayors are unified in support for FasTracks: every one of them (or their predecessors) spent significant political capital on the tax increase campaign.  Any mayor who does not get his gold-plated light rail will squawk loudly.  Thus politics, not common sense, is what prevents RTD from revisiting its  rail plans in an attempt to fit its budget.

by Civil Sense