The Road to Prosperity: Real-Time Approaches to Economic Improvement

Guest-ShakerAcross America, too many people believe that “no one will get out of their cars.” The newest data based on the 2012 American Community Survey, shows “it ain’t so,” even for small cities and their surrounding areas. The national trend in the US is a drop of almost 1 percent per year in passenger vehicle-miles-traveled or VMT, driven by the high price of transportation generally and more specifically related to the need to drive, a function of the increased distance between people and what they do. People have been driving about 1% per year less for a while now.

Take Doña Ana County, New Mexico, as an example of the road to prosperity. Beware, though, this is not your standard 500-word easy-read blog. Instead, it’s a thought piece that sets out to invoke some heavy lifting for you transportation types at home. If you’re not up for that, check back next Monday for a more conversational read.

In 2012, 81 percent of the Doña Ana County workforce reported driving alone to work—but 19 percent did not, opting instead for carpooling, working at home, walking, or taking public transportation. Clustering the data, 16 percent got to work by a form of publicly available access, and 3 percent by working at home. The story is pretty similar for much of the nation.

Shown here, GDP per household is still going up while how much those households drive has been dropping roughly for the last decade. (National data from FHWA on VMT; household counts from Census, GDP from the Bureau of Economic Analysis). I wouldn’t be too quick to attribute all this to “youth drivers license avoidance.” We have the other end of the demographic curve growing at least as fast along with reduced driving there too. And we have demand-response to high gas prices and to the awareness of high transportation costs generally. While I'm only able to make the following statement for Chicago, but it looks like (a) people are generally able to “dial back” their driving when they have more choice, most likely to happen in urban areas; (b) there’s also interesting cutting back going on in the “fattest” VMT areas, where perhaps people have a bit more slack to cut—e.g. areas where people are unnecessarily driving 25-30,000 miles cutting back to say 23,000, but not much deeper. Nationally, over the last decade, people are keeping their cars twice as long as they traditionally did to try and save money. This is a good strategy if you don’t overdrive, as older cars are increasingly susceptible to higher fuel and maintenance costs. The only way to get off this treadmill is to own fewer cars and drive less. This is limited by local inconvenience and regional inaccessibility, for which the solutions are better urban form and amenities and optional ways of getting around.

Shown here, GDP per household is still going up while how much those households drive has been dropping roughly for the last decade. (National data from FHWA on VMT; household counts from Census, GDP from the Bureau of Economic Analysis). I wouldn’t be too quick to attribute all this to “youth drivers license avoidance.” We have the other end of the demographic curve growing at least as fast along with reduced driving there too. And we have demand-response to high gas prices and to the awareness of high transportation costs generally. While I'm only able to make the following statement for Chicago, but it looks like (a) people are generally able to “dial back” their driving when they have more choice, most likely to happen in urban areas; (b) there’s also interesting cutting back going on in the “fattest” VMT areas, where perhaps people have a bit more slack to cut—e.g. areas where people are unnecessarily driving 25-30,000 miles cutting back to say 23,000, but not much deeper. Nationally, over the last decade, people are keeping their cars twice as long as they traditionally did to try and save money. This is a good strategy if you don’t overdrive, as older cars are increasingly susceptible to higher fuel and maintenance costs. The only way to get off this treadmill is to own fewer cars and drive less. This is limited by local inconvenience and regional inaccessibility, for which the solutions are better urban form and amenities and optional ways of getting around.

How Workers Got to Work in Dona Ana County in 2012—American Community Survey  DP03      The 19-20 percent who “didn’t drive alone” actually are using forms of “public transportation” but the categories are what get advocates in trouble—there are 245 regular riders on the Gold Line and 51 on the Silver Line of the NM DOT Park and Ride, and around 2700 regular Las Cruces Mass Transit aka Road Runner riders; 2996 total who ride scheduled, fixed-route mass transportation (not counting any who might be riding say Greyhound intercity motor coach to relatively nearby cities, likely a very small number). The same census, 2012 one-year average for the American Community Survey, shows 85,890 workers in DAC; I would trust the Census number for total workers but the two local reports, NM DOT and Las Cruces Mass Transit, for the number of workers riding. SO, 2,996/85,890 = 3.5%, versus what the ACS shows as 0.5%. The difference likely was taken off both the “carpooled” and “drove alone” categories. Might end up pushing the 19-20% who “didn’t drive alone” up by 1% or so.

How Workers Got to Work in Dona Ana County in 2012—American Community Survey DP03
The 19-20 percent who “didn’t drive alone” actually are using forms of “public transportation” but the categories are what get advocates in trouble—there are 245 regular riders on the Gold Line and 51 on the Silver Line of the NM DOT Park and Ride, and around 2700 regular Las Cruces Mass Transit aka Road Runner riders; 2996 total who ride scheduled, fixed-route mass transportation (not counting any who might be riding say Greyhound intercity motor coach to relatively nearby cities, likely a very small number). The same census, 2012 one-year average for the American Community Survey, shows 85,890 workers in DAC; I would trust the Census number for total workers but the two local reports, NM DOT and Las Cruces Mass Transit, for the number of workers riding. SO, 2,996/85,890 = 3.5%, versus what the ACS shows as 0.5%. The difference likely was taken off both the “carpooled” and “drove alone” categories. Might end up pushing the 19-20% who “didn’t drive alone” up by 1% or so.

As compelling as these data are, the situation comes into greater focus if we consider that just one trip out of five taken by US households is for the journey to work, while four out of five are for the trips to shop, to visit friends, receive critical services such as medical care, or for recreation. If these services are close to where people live, the choices we have on how to access them are better and more affordable, and vice versa.

While average household incomes in the Doña Ana County rose $736 per month (2000-2009), housing costs rose $11 and transportation costs $296. For households earning median income, that left $429 to pay for all other increases in the cost of living, such as food, medical care and for households with adjustable rate mortgages, the cost of mortgage rate resets. For households earning 80 percent of median, that available net increase dropped to just $282. To achieve local affordability, controlling transportation expenses is just as important as controlling housing expenses.

This is not impossible, for example, households in nearby metro El Paso drive, on average, 2,325 fewer miles annually. El Paso is just as sprawled out generally, but the greater extent of mass transit available and the somewhat better distribution of places to shop and of job centers works to the favor of that region’s families.

While the concept of housing affordability is usually defined as the ratio of housing expenses to income, these transportation costs are largely defined by “location efficiency,” which means both local convenience, and regional accessibility. Most people in Doña Ana County are paying as much or more for transportation as they are for shelter.

Economists call a situation where people have low savings levels due to either habit-forming or forced consumption a “poverty trap,” and with a 27% poverty rate, not providing people with more transportation choices for jobs access is no small part of this picture. While traditional approaches to poverty reduction and economic development focus on raising the number of workers who are college educated, this is an intergenerational goal.  By contrast, Viva Doña Ana! Is focused on providing quality of life improvements over the next few years.

Doña Ana County’s 74,000 households spend roughly $12,000 each on the cost of transportation, or $888 million every year. With current population growth rates, it will be $1 billion annually within a few years. New Mexico spends a pittance compared to this on helping families with alternatives that can lower the cost of living.

Too often, public transit expansion is considered expensive. The discussions are limited to either large fixed guide way systems, such as light rail and Bus Rapid Transit, involving matching federal monies with a five to fifteen year lead time. But innovative alternatives, such as carpooling, ridesharing, car sharing and express bus services can be much less, and with a little up-front work to assemble the right partnerships, can be provided in real-time.

Let’s start by looking at the current ridership and economics of mass transit as provided by the area’s two fixed route systems.

Bus Economics in Southern New Mexico

Twice as many people ride the Las Cruces Road Runner, 2700, as do the New Mexico DOT Park and Ride buses, 1250. Road Runner (aka Las Cruces Mass Transit) largely serves the city of Las Cruces, an area of 77 square miles, and a few adjacent areas, with 13 routes, 383 bus stops, service every 29 minutes at rush hours and every hour off-peak; 690,000 fixed route annual or 2653 daily riders (2012 from National Transit Date Base FTA).

Let’s look at the costs. The statewide Park and Ride program, represented here by the Silver Route with 2 daily round-trips serving Las Cruces / New Mexico State University / White Sands Missile Range for 51.3 average daily riders, and the Gold Route with 10 round-trips serving Las Cruces / Anthony / El Paso for 244.6 daily riders, costs the State an average of $10.58 per ride.

Las Cruces Transit Access Shed

Las Cruces Transit Access Shed

The Las Cruces Road Runner grew from 763,415 rides in 2012 to 816,662 rides in 2013, with $3.73 per ride in operating expense. Per passenger, the cost to the State to subsidize Park and Ride service is almost 3 times higher. For a daily rider, the State is paying $2,645 per rider per year (assuming five-day/week commuting 50 weeks per year) while the State operating subsidy to the Road Runner is zero. The Park and Ride cost data is posted by NM DOT transit division, while the financials for the Road Runner are part of FTA’s National Transit Data Base.

It costs Road Runner $75.44 per operating hour to offer fixed-route scheduled service. We examined route lengths from places like La Union, Vado, Sunland Park, and Mesila to Las Cruces, downtown El Paso, Ft. Bliss, White Sands, and Truth or Consequences, anywhere from 25-75 miles. We also looked at shorter distance routes to Santa Teresa Logistics Park, which includes the currently-under-construction Union Pacific intermodal freight yard. To make the calculation easy, let’s assume we could offer express bus service from a limited number of gathering points, similar to what the current Park and Ride offers, with one difference: the buses being used by the State are intercity motor coaches, VERY expensive to buy and operate compared to standard buses.

Let’s say the average route for an express run from a gathering point to an employment center is one hour, so a round trip per-route would be 2 hours. That gives us $150 per route, times the number of round trips per day, call it 4 = $600 per route per day times 5 days per week = $3,000 times 52 weeks per year = $156,000 per route per year.  Add more round-trips and the cost go up proportionately; but on this basis, operating an additional seven routes is a $1 million dollar proposition.

Let’s say a standard bus holds 60 people sitting, so $156,000/year divided by (60 x 4 trips/day x 260 days/year) = is a little under $3 per ride. I’m a bit off a bit since the current Road Runner financials show operating costs at $3.73 per ride, but on the other hand if this is marketed and priced right there’s no reason to not expect a very high load factor, better than either Road Runner or the current Park and Ride. At these longer distances full economy will be much better than for the regular stop-and-go routes in Las Cruces itself.

If the employer is willing to pay this operating cost, then they can deduct that as an eligible employer benefit under the IRS Employer Transit Benefit provision, which treats this as pre-tax. Alternatively, if either the worker or the employer is willing to pay the operating cost as a fare, and we can convince employers to buy additional buses, then those are tax-deductible contributions. One could imagine creating a network of major employers to make this a cool valley-wide voluntary workforce and affordability initiative.

The Other 80 Percent…

Our experience with the car sharing is that one-fifth of household travel is for journey to work and four-fifths is for shopping, services, visiting, recreation, church. The average distance on getting to work is typically much longer than for the non-work trips. People join car sharing mostly to have an on-demand way to handle the four-fifths without having to drive. When they start thinking about paying for it, they become more comfortable with transit where it’s available for journey to work, and carpooling otherwise.

We did start experimenting with offering shared cars for getting small numbers of people to work, but the results were inconclusive. Full disclosure—our organization, CNT, ran I-Go Car Sharing, a not-for-profit service, for ten years and sold it to Enterprise Holdings May 2012. By the time we sold I-Go a few months ago, it was paying its way on both capital and operating expenses, and serving 15,000 active members.

As better planning and reinvestment results in more walkable communities, the demand for these shorter trips will drop. And as services such as car sharing are introduced the cost of these trips will drop too. Car-sharing can be started in under a year, and so qualifies for our “real time” screen.

The road to prosperity potential

  • Complementing current Park and Ride and employer vanpools with dedicated fixed-route express service offered either by an expanded Road Runner service or a new provider
  • Introducing car-sharing and maybe even new kinds of delivery services into the south end of the County AND into Las Cruces
  • Creating a mechanism for cost-sharing with employers and the State
  • Creating a Transportation Management Association, something recognized under federal law, a non-profit that both government, communities and businesses govern, that arranges for real-time augmentation of transportation services (there are 128 of them) as of this August 2012 directory. These are self-organized, can be approved either by a State’s DOT or a metro area’s MPO, which makes them eligible to receive federal funds. They provide a good way to share State and local public funds with a rich variety of private dollars and fares. There are currently no such organizations in either Doña Ana County or for that matter, statewide.

The case for doing this

Where the Jobs are in Metro Las Cruces

Where the Jobs are in Metro Las Cruces

  • Beating spatial mismatch—Half the households in Doña Ana County live in the City of Las Cruces, an area of 77 square miles, while the other half are spread in corridors county-wide, an area of 3,814 square miles. Most of the jobs are in the City of Las Cruces or in two corridors stretching to White Sands or toward El Paso. Absent better transit options, it’s hard for most workers to get to work unless they drive.
  • Income is low and transportation costs for driving are high—the typical family there has two cars per HH and is driving anywhere from 19,000 to 22,000 miles per year. If they needed to drive daily say from La Union out to Alamagordo, 90 miles each way, over 45,000 miles per year just for the work commute. Even up to Las Cruces, 18,000 miles per year just for one worker’s commute. Tiring just to think about it. This taxes scarce income by 10-15% which could be drastically reduced by the provision of mass transportation, which in turn converts expenditures on gasoline and vehicle maintenance into savings and eventually taxable investment
  • Reducing poverty in real time—A recent Harvard and University of California study shows that the chance of low income children in the Valley becoming upper income wage-earning adults is only one out of ten. The example given for the phenomenon is the high cost and excessive time it takes adult wage earners to commute and the effects of this on families and communities.
  • A good use of State and private resources—Because high transportation costs preclude households savings, it ends up costing the State mightily to subsidize social services, a cost that could be avoided by ensuring transportation choice.
  • The cost isn’t prohibitive—seven daily routes for a million dollars, with the cost for each additional round trip at just $600 per round trip, or $10 per rider per day for jobs access.
  • Supports Viva Doña Ana goals—By deciding to focus on the benefits of offering the service, it becomes apparent that adding local services to minimize the non-work travel too, new retail and services will be supportable, increasing employment, further reducing driving, and increasing the taxable base of activity.
  • Getting ready to access emerging job centers—With the completion of the UP intermodal yard and Santa Teresa Logistics Park, economic activity and the demand for transportation will only increase. But what’s learned from this experiment will help inform the State and local communities on how to use common sense planning to boost economic returns.
  • Thinking ahead—New Mexico spends just $12.60 per capita per year for transit subsidy currently, less than Nevada ($17.33); Utah ($17.46); Arizona next door ($20); Montana ($21.14); Idaho ($25.15) or California ($30.84). Apparently none of the subsidy, according to the FTA, benefits riders of the Road Runner service currently.
  • For a better ROI—Most of the communities served by the resulting transit in these other places are able to count on sufficient service to support higher levels of mixed use real estate development, plugging leaks in municipal and state economies, and creating thousands of unquestionably needed jobs. These transit-served areas are becoming preferred locations for new business activity too.
  • Great opportunities for affordable public-private partnerships—Major employers have Human Resources staff who can be mobilized to help make all this happen—there’s a great opportunity for a high-profile public private partnership waiting to happen.

So given all these considerations, it’s not an expense. It’s an investment that will produce near term and permanent returns.  How large of a return on investment?

Every 1 percent of “drove-alone” workers who shift to public transportation and reduce car dependence, which we calculate as the effect of reducing household car ownership by 1 vehicle and driving 5,000 miles less per year. That’s a net savings of $421/month or $5,055/year. This would save (0.01 x 88,849 workers = 888.5) x $5,055 = $4.49 million per year if 1% of workers ride. Or if 10% shift to public transportation, then it’s worth $44.9 million per year to these workers.

A similar effect could be derived from introduction of car-sharing and increased car-pooling.

A simplified description of what re-spending of a million dollars per year is worth—

  • 20 direct and 20 indirect jobs
  • $63,800 in gross receipts sales tax
  • Increased property tax receipts (more local retail activity means more commercial property from which people are buying within the County/State and/or more taxable value from existing businesses) plus any other benefits if this results in “infill” or vacancy reduction
  • $4.49 million in transportation cost savings for the riders themselves, if 1% of workers ride the bus, and $44.9 million if 10% of workers ride.

Alternatively, since we’re trying to help low-moderate income households, the State and employers could work the cost-shares so that some fixed percentage of what’s saved gets directly deposited into a savings account, matched by contributions from the State, County, employers, and/or foundations to accelerate wealth.

See the Think New Mexico Family Opportunities Act, passed 2006. These IDA programs are popular and enjoy bipartisan support across the country, with the purposes of the accounts being to save money for a down payment, self-employment business startup costs, education, medical purposes, etc.

We’ve been experimenting with a form of counseling in which participants, instead of being given “50 simple things to reduce the cost of living,” are given just 4—weatherization, car-sharing and mass transit, alternative food supply and better ways to purchase phone/IT services. This “Equity Express” usually raises the typical 1% savings rate to 5%, which for households earning $30,000 (2012 median in DA county is now $37k) or less means reducing the time to save for a down payment from 5 years to 1 year.

Regional potential

The current transit system doesn’t do what it needs to for jobs access.

Regional Transit Access Shed

Regional Transit Access Shed

  • You can get to 36,000 jobs within 30 minutes only from downtown Las Cruces; versus 86,000 people in the workforce, so they’re traveling somewhere else by car
  • There are 42,000 jobs within the City of Las Cruces itself, mostly accessible by Road Runner; the City is 77 square miles
  • There are 63,500 jobs within DAC; so another 21,500 jobs not within the city of Las Cruces, very few of which are accessible by the current Park and Ride
  • So there are (86,000-63,500 =) 22,500 more workers than jobs in DAC who need to travel somewhere else; again with limited help from the current Park and Ride schedule
  • Including Otero County (Alamagordo) picks up another 14,000 jobs but also there are another 25,000 workers there commuting somewhere, somehow to work
  • So DAC, until growth catches up, is dependent on commuting, mostly to border activities and to the greater El Paso area
  • The prospects for growth generally are good, and well documented by the Mesilla Valley Economic Development group; but the major job growth is away from Las Cruces itself and not really proximate to most of the population
  • Viva Dona Ana! and other efforts are grappling with this and setting priorities accordingly.

Put another way, if employers and governments can sensibly cost share with riders those corridors can support a much higher demand for express bus service. And between downtown Las Cruces and downtown El Paso, a potential may exist to support commuter rail.

It’s time for an “expressway to prosperity!” Wanna ride?

–Scott Bernstein

Scott is President and CEO of The Center for Neighborhood Technology (CNT). The CNT is the national non-profit that has pioneered ways to quantify the advantages of linking transportation, land use and housing strategies with economic development and community affordability. It is the leading national provider of web-based analytic and data access tools for local area planning intended to meet the triple bottom line of improved quality of life, improved economic quality of place, and environmental resilience. CNT is a winner of the 2009 MacArthur Foundation Award for Creative and Effective Institutions, and Planetizen lists Scott Bernstein as number 27 in its poll identifying the Top 100 Urban Thinkers of the past century.

References

Association for Commuter Transportation, https://www.actweb.org/eweb/startpage.aspx

Housing + Transportation Affordability Index, Center for Neighborhood Technology, http://htaindex.org

Las Cruces Area Mass Transit (Road Runner), United States Department of Transportation, Federal Transit Administration, 2012, at http://www.ntdprogram.gov/ntdprogram/pubs/profiles/2012/agency_profiles/6049.pdf

Locational Affordability Portal, United States Department of Housing and Urban Development and Department of Transportation, 2013, at http://www.locationaffordability.info/

National Directory of Transportation Management Associations, Community Transportation Association of America, December 2012 at http://web1.ctaa.org/webmodules/webarticles/articlefiles/16_TMADirectory.pdf

New Mexico Department of Transportation, Rail and Transit Division Fact Sheet, sections on Park and Ride and Rural Transit, updated December 2013, http://www.dot.state.nm.us/content/dam/nmdot/Transit_Rail/TransitandRailDivision2014FactSheetPacket120613.pdf

NM Borderplex Regional Profile, Mesilla Valley Economic Development Alliance, http://www.mveda.com/docs/Regional-Profile.pdf

Partnership for Mobility Management, http://web1.ctaa.org/webmodules/webarticles/anmviewer.asp?a=1790

Reconnecting Ft. Wayne Using Transportation Management Associations, Center for Neighborhood Technology 2007 at http://www.cnt.org/media/CNT_ReconnectingFWTransportationManagement.pdf

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  1. [...] Scott Bernstein of the CNT comes to Placemakers with a nice longread on how counties similar to Doña Ana County in New Mexico can reduce transportation costs and boost transportation services. [...]

  2. [...] Across America, too many people believe that “no one will get out of their cars.” The newest data based on the 2012 American Community Survey, shows “it ain’t so,” even for small cities and their s…  [...]

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