NJ Turnpike – “Savior of the Industry”

A recent meeting about the New Jersey Turnpike’s widening projects and related work was called  “Savior of the Industry.”  That’s a good indication of how bad things are in the construction industry – and how important infrastructure investment is for helping the ailing economy!

The Turnpike Authority is spending $350 million on this program over the next few years, and it has no doubt been a life-saver for many of the construction and engineering firms in the state.  Admittedly these projects have been controversial, and some people would have chosen other projects to spend $350 million on.  But the point is that this infrastructure investment has been a huge tonic to New Jersey’s economy, while buying its citizens a massive piece of infrastructure at bargain prices. 

The shame is that this kind of investment in major transportation infrastructure is not happening all over America.

The Turnpike meeting, by the way, was sponsored by the NewJersey Alliance for Action.  If you’re not familiar with the Alliance, they are a non-profit, nonpartisan coalition of business, labor, professional, academic, and government leaders that advocates investment in infrastructure in the state.  There are similar groups in other states, but I’m not aware of any that has the prestige and credibility that NJAFA brings to the public forum.  

Yes, You Should Read the U.S. Treasury Report on Infrastructure

State DOT policy folks and anyone interested in transportation finance should read the Treasury report “A New Economic Analysisof Infrastructure Investment,” published in late March. 

I haven’t posted anything on this report before now, as I’ve been trying to decide how to respond to some of the shortcomings in it.  Shortcomings aside, however, this is a valuable piece and should be taken seriously.  I mention state policy people in particular because although the report is intended to influence the congressional debate, I doubt that it will penetrate the dense fog on Capitol Hill.  Those toiling on transportation finance and revenue problems in the states, however, may find it a useful tool.

Why useful?  All too often the discussion of the economic impact of transportation investment is superficial at best, usually dominated by a figure for the number of jobs created by a project or program (based on a mutiplier that someone came up with at some time in the past).  The Treasury report, on the other hand, draws our attention to the real and substantive contribution that investing in transportation makes to economic growth. 

Some of the key points:

·      Transportation investments have long-term economic benefits in addition to short-term job creation.

·      Investment is very timely now, as there are major underutilized resources.

·      We are underinvesting in transportation compared to the need, the investment levels of other countries, and the expectations of our citizens.

·      These investments have a lot of side benefits, including promoting public health.

There has been surprisingly little work done on these issues, and state DOTs haven’t done much to pursue research at the state level either.  (When I was at NJDOT I commissioned Rutgers Professor Joe Seneca to do just this, which has yielded some excellent results: short version here, long version here.)

My main quibble with the Treasury report is that it manages to ignore the obvious point that a revenue plan is needed to support this highly desirable investment in transportation infrastructure.  I believe that a strong argument could be made that a significant gas tax increase, if phased in properly, could (1) finance an infrastructure-led economic recovery, (2) buy a huge amount of infrastructure for the price, (3) have minimal economic drag, and (4) promote long-term budgetary stability.  That argument – or any argument related to revenue – is not to be found in the Treasury paper.

Instead, we see another argument for a national infrastructure bank.  Now, I am generally OK with the idea of an NIB.  What I don’t like is the notion than an NIB will take the place of the revenue we really need.  And as Ihave pointed out before, there is usually an unspoken assumption in these discussions that private investments are adding new revenue to the mix, when in fact they are loans that are going to be repaid – with interest – by the tollpaying public.

I also continue to be somewhat perplexed at how the argument for an NIB gets mixed up with the argument that we need better project choices.  I have been a strong supporter of the TIGER program, which has used discretionary funding to stimulate innovative projects.  But NIB projects would seem likely to be scored by the predicted return on investment from tolls, not how well they contribute to innovative solutions.  And TIGER and NIB together would surely never account for more than a small fraction of the total transportation program.  More important for the total program is a focus on performance objectives.

Richard Florida at NJ Planning Conference

I never fail to learn something from Richard Florida, so it was terrific hearing his presentation as keynote speaker at PlanSmartNJ’s planning conference in Trenton this week.  As a “Jersey boy,” Florida was able to connect with his audience on multiple levels.

Much of the presentation would be familiar to those of you have read his books and follow him online.  He spent some time explaining his thesis that the current economic slump will be usher in a “great reset,” realigning us toward the “creative economy,” with all the social changes that involves.  This thesis resonates well in New Jersey, which has shown a dramatic change from a blue-collar manufacturing economy to a white-collar knowledge-based economy.

Some of Florida’s points that I thought most noteworthy:

·      Don’t think about quality of life, think about “quality of place,” which includes all the natural and built stuff on the ground.  Invest in parks and schools!

·      Corporations don’t grow the economy – cities do.

·      Don’t be concerned just about the business climate, be concerned about the people climate.

·      The most open-minded, diverse, tolerant communities are also the most prosperous.

Incidentally, central New Jersey, where we were (Trenton, Princeton, Ewing), scores very well on all of Florida’s metrics.

I won’t summarize the whole conference, but it’s worth listing a few nuggets that give hope for a better smart growth future:

·      New Jersey has a new state plan under development, which, while very different from the last one, is still very focused on smart growth opportunities.

·      New Jersey continues to be strong in health care and biotech, and these industries gravitate toward places with strong knowledge bases, good quality of life, and great connectivity (including transit).

·      Urban manufacturing is an underappreciated asset and continues to grow in certain niche segments, with small, decentralized, more sophisticated enterprises.

·      Goods movement trends in the region show signs of increasing “onshoring” of manufacturing and increasing emphasis on rail.

·      The transit sector continues to move forward despite the economy, with new light rail lines and extensions in planning and new transit-oriented developments.

Plenty of food for thought!  Thanks to PlanSmartNJ for a great meeting.

US PIRG Report Highlights Demographic and Cultural Changes Behind Drop in VMT

US PIRG has issued a new report summarizing recent data which suggests that the recent flattening of growth in vehicle miles traveled may be a long-term trend.   The implication of the data is that social, cultural, and technological changes – and not just the economic slump – have led to less driving, especially among the Millennial generation.  The 18 – 34s not only drive less, they use transit more, walk and bike more, rely on social media more, and are drawn to urban centers, where alternatives to driving are more plentiful. 

You have probably seen some of this data reported elsewhere, but US PIRG has pulled it together in a clear, well-documented, and persuasive narrative.  (As the report notes, you can also see this change on the ground by visiting places like the Orange Line neighborhoods of Arlington, VA.)

A critical question is the extent to which VMT will rebound when the economy rebounds.  The authors of this report suggest there is good reason to believe that attitudinal and behavioral changes observed in the Millennials will persist, causing long-term changes in the demand for transportation services.

Transportation policy folks need to carefully read the final section of the report – “Implications for Transportation Policy” – which asks us to think about whether we are planning, designing, and building transportation infrastructure to meet the needs of an era which is already passing.  What might we need to do more of?  More (and better!) transit, better land use planning, and a transportation revenue system reflecting a new reality.

Well done to the US PIRG and Frontier Group team!

Durham Keeps Getting It Right

I just saw the promo video for the newest building in the American Tobacco District in Durham, North Carolina, and I’m glad to see that Durham continues to get urban development right in terms of scale, sensibility, and economic value.

If you aren’t familiar with it, the American Tobacco District is a nice mix of adaptive reuse (old tobacco buildings), high-quality activity centers (the Durham Bulls ballpark and a new performing arts center), attractive new buildings, and a beautiful walkable setting.  Not surprisingly, the area is a magnet for cutting-edge knowledge-based businesses in a region where they are already prolific.

Durham is one of my favorite cities and just seems to keep getting better, one building and one block at a time.