A while back, I had predicted to a few friends that Scott Walker would raise the issue of rejecting Federal money for HSR between Milwaukee and Madison. The second part of my prediction was that, like on most issues, Scott Walker's reasoning was the part that would bother me.
Recently, this played out as I had predicted.
http://www.jsonline.com/news/milwaukee/84198582.html
http://www.jsonline.com/news/wisconsin/85788762.html
As I have stated before, I am highly skeptical about the value of rail projects. I think that public investment in transit is valuable, but I am also of the opinion that given the demographic and geographic qualities of SE WI, that BRT is a more advisable option. However, it is investment in infrastructure that brings out the value of the transit system. Within the city, traffic light controls, advance ticketing, curb bump outs, and "next arrival" clocks would vastly improve any transit system, regardless of the machine selected to move people around.
Therefore, I could see a basic point in not pursuing a large transit project that would have to be run by the state without properly considering it.
However, I am a supporter of diversifying transit options and think that public investment in all forms of transit should be considered differently. I also think that the state spends too much on road construction, and that these projects should be given the same scrutiny that other forms of public subsidy of transit are given.
And it is in that analysis of the proposal that I find Scott Walker lacking. The overriding question in any analysis of government spending should be whether the project provides a value to the State in relation to its cost. Current estimates for the ongoing operational costs are $7.5M for 2013 and rising to $15M by 2022. The question therefore, is will this project provide Wisconsin with more than $15M benefit per year over that time period. My response is that it should only be done in such a way that this ROI can be achieved.
But what about the $800B in government money that it will cost to build it you ask? Well, we can evaluate the merits of the Federal Government's decision to fund rail networks, but if Scott Walker is opposed to the Federal Government's decisions, then he should be running in the other November race against Feingold. Perhaps, Walker would rather face Mark Neumann in a primary, rather than Tommy "Train to Madison" Thompson.
The fact of the matter is that the Governor of Wisconsin has to be looking out for what is best for Wisconsin, rather than relying on national talking points. In order to evaluate what is best for Wisconsin, you therefore need to perform the analysis that I am proposing: can rail be implemented in such a way that Wisconsin benefits more than the costs of operating the rail. Since Wisconsin is not on the hook for the infrastructural costs, then the analysis need only extend to the ongoing operational costs of an estimated $7.5M, and rising to $15M over the first ten years. If the train route cannot be operated in a manner such as to provide this meager economic benefit to the state, then the project should rightly be tabled. However, it rather seems that the goal should be to design and implement it in a way such as to achieve far greater benefit than it will cost to operate.
How can this be done? Well, first advocates on both sides need to be more honest about what this line is and is not. No one is going to ride it from Brookfield to Madison or Milwaukee. Not even that many people are going to ride between Milwaukee and Madison. This is about connecting to Chicago. The line from Milwaukee to Chicago is already proven as a popular transportation option. It doesn't take long before the costs of tolls, parking, gas and driving time make up for the cost of the ticket. (If Wisconsin were to implement tolls on I-94 as well, then these fares could actually be allowed to increase with the market.) However, right now you need to get on the train in Milwaukee or at the Airport. Stations in Brookfield, Occonomowoc, Watertown, and Madison would open these communities up to the same connective advantages as those living between Milwaukee and Illinois. Kenosha County has been the 4th fastest growing county in Wisconsin due to its interconnections to Chicago and Northern Illinois. By extending this route West, Waukesha, Jefferson, and Dane counties can benefit from this connection as well.
The Madison - Milwaukee - Chicago region can effectively become a single job market for professional couples. Lots of people already commute between Milwaukee and Chicago or live in between due to spouses working in different cities. Even back in 2000 (comprehensive commuting data is surveyed every ten years with the census) over 31,000 people commuted across the state border every day for work between Milwaukee, Racine, and Kenosha Counties and Northern Illinois. The existing rail connection both supports and benefits from the interconnection between these two regions. In 2000, even without the assistance of a convenient train route, over 1400 people commuted between Northern Illinois and Waukesha County daily. Therefore, even ten years ago, there was already a base of commuters and connectivity between Waukesha County and Northern Illinois upon which to build upon now.
The proper analysis of the expansion of rail between cities across Wisconsin should be made upon the basis of the return on investment. Since Wisconsin is not paying for the start-up costs for the Milwaukee to Madison line, to make this project economically valuable to Wisconsin, it need only produce a greater economic benefit than it costs in subsidies. If constructed and operated properly, I am certain that that level of benefit can be achieved, primarily by expanded connections between SE Wisconsin (including Madison) with Norther Illinois, resulting in opening greater economic opportunities to the citizens of SE Wisconsin.
Sunday, March 28, 2010
Wednesday, March 24, 2010
Reason Saves Cleveland, Can it Save Milwaukee? (Part 2)
In this second part of this post, I will look at the three final suggestions for Saving Cleveland.
4) Take Care of Business
5) Bottom-up Redevelopment
6) Bring the People Back
4)Take Care of Business
Any city can improve by making it easier for companies to locate and grow in their location. Issues like the sick leave ordinance help to paint a picture that Milwaukee is not business friendly and therefore companies should look elsewhere.
Another often overlooked source of regulation that harms or has harmed business in Milwaukee is the Clean Air Act. This page is one example showing all of the sources of regulation under the Clean Air Act, as implemented by the EPA and the WDNR. The Clean Air Act (originally enacted in 1970 and amended in 1990) served to push older industrial cities over the edge by preventing them from renewing their industries over concerns about clean air. Now the EPA controls much of this enforcement, but WDNR does not need to extend the regulations beyond those of the EPA. By reducing the costs and regulations of the Clean Air Act in Milwaukee, the industrial jobs that so many politicians want to bring back to the area will have one less barrier to entry.
5)Encourage Bottom-Up Redevelopment
By relaxing zoning standards and focusing on incremental city development, Milwaukee can more successfully leverage the tax dollars that it spends on development. Like Cleveland, Milwaukee has 42 different zoning districts. Therefore, by reducing the different types of zoning, allowing a greater mix of housing density and residential and commercial properties, it will be easier for neighborhoods to organically develop to fill in the empty lots based upon need. Creative reuses of buildings such as the development of a duplex into a combination of office and living space or neighborhood stores become available options with relaxed zoning.
Looking to the East Side, we can find both positive and negative examples of such zoning. Starting with the positive, a less restrictive zoning allowed for the Park at 1824 to be built without the need for a zoning variance. This development, would likely have been opposed by neighbors for the increased density that it brought to the neighborhood, but since it was within the existing zoning, the development faced far less regulation and proceeded quickly.
On the other hand, we can look to the recently apartment building recently proposed by Mercy Lakefront Housing, Inc. Despite the fact that the apartment building would occupy a current city owned surface parking lot (returning it to the tax base, see #2 above), it would provide public parking services on the nights and weekend, nearly replacing all of the spots provided by the old surface lot. Additionally, the apartment would be mostly directed to working wage employees. North Avenue is quickly becoming one of the most dense residential, retail, employment, and entertainment nodes in the city. This is exactly the type of development that can contribute to the development of this neighborhood, while providing affordable housing within walking distance to work for CNA, janitor, food service, clerical, and retail employees that keep North Ave buzzing. However, this proposal is outside of the current zoning and therefore requires a variance before going forward. This allows NIMBY interests to oppose the development.
With less restrictive zoning, Milwaukee too, would see improved development of its neighborhoods into distinguishable areas, rather than every development meeting the required predetermined massing and use laid out by the City.
6)Bring the People Back
As I noted at the start of this series, it appears as though Milwaukee may have begun to turn the corner with regards to bringing people back to the city. I found it interesting that Reason used the example of Ray's Indoor Bike Park in Cleveland as an example of Cleveland entrepreneurship, since it was recently announced that Ray Petra was looking to open a location in the Milwaukee area as well.
One quality of Milwaukee is the parks system, including the Milwaukee River, which only continues to improve as a recreation destination for the people of the city. Now I think that increased amenities in the parks will only add to their use, and value to the city (can we please get some additional food, rental, retail, recreation development on the lakefront as well as along our bike paths?) However, the combination of the inland parks and the lakefront parks, is something that I feel can attract people to living in the city.
Another quality of Milwaukee that I have grown to appreciate as I have grown up, is the diverse availability of housing that can be found within the city limits. Just to compare the current residences of friends of mine, everything from condos and apartment flats to old houses in established neighborhoods, to new single family subdivision construction can be found within the city. And for those that do not want to live in the City of Milwaukee, there is a wide selection of old, historic inner-ring suburbs to new suburban developments, all within a reasonable commute from employment in the city. With such a diverse housing stock available to newcommers, anyone can come to Milwaukee and find the type of residence in which they want to start their new life.
4) Take Care of Business
5) Bottom-up Redevelopment
6) Bring the People Back
4)Take Care of Business
Any city can improve by making it easier for companies to locate and grow in their location. Issues like the sick leave ordinance help to paint a picture that Milwaukee is not business friendly and therefore companies should look elsewhere.
Another often overlooked source of regulation that harms or has harmed business in Milwaukee is the Clean Air Act. This page is one example showing all of the sources of regulation under the Clean Air Act, as implemented by the EPA and the WDNR. The Clean Air Act (originally enacted in 1970 and amended in 1990) served to push older industrial cities over the edge by preventing them from renewing their industries over concerns about clean air. Now the EPA controls much of this enforcement, but WDNR does not need to extend the regulations beyond those of the EPA. By reducing the costs and regulations of the Clean Air Act in Milwaukee, the industrial jobs that so many politicians want to bring back to the area will have one less barrier to entry.
5)Encourage Bottom-Up Redevelopment
By relaxing zoning standards and focusing on incremental city development, Milwaukee can more successfully leverage the tax dollars that it spends on development. Like Cleveland, Milwaukee has 42 different zoning districts. Therefore, by reducing the different types of zoning, allowing a greater mix of housing density and residential and commercial properties, it will be easier for neighborhoods to organically develop to fill in the empty lots based upon need. Creative reuses of buildings such as the development of a duplex into a combination of office and living space or neighborhood stores become available options with relaxed zoning.
Looking to the East Side, we can find both positive and negative examples of such zoning. Starting with the positive, a less restrictive zoning allowed for the Park at 1824 to be built without the need for a zoning variance. This development, would likely have been opposed by neighbors for the increased density that it brought to the neighborhood, but since it was within the existing zoning, the development faced far less regulation and proceeded quickly.
On the other hand, we can look to the recently apartment building recently proposed by Mercy Lakefront Housing, Inc. Despite the fact that the apartment building would occupy a current city owned surface parking lot (returning it to the tax base, see #2 above), it would provide public parking services on the nights and weekend, nearly replacing all of the spots provided by the old surface lot. Additionally, the apartment would be mostly directed to working wage employees. North Avenue is quickly becoming one of the most dense residential, retail, employment, and entertainment nodes in the city. This is exactly the type of development that can contribute to the development of this neighborhood, while providing affordable housing within walking distance to work for CNA, janitor, food service, clerical, and retail employees that keep North Ave buzzing. However, this proposal is outside of the current zoning and therefore requires a variance before going forward. This allows NIMBY interests to oppose the development.
With less restrictive zoning, Milwaukee too, would see improved development of its neighborhoods into distinguishable areas, rather than every development meeting the required predetermined massing and use laid out by the City.
6)Bring the People Back
As I noted at the start of this series, it appears as though Milwaukee may have begun to turn the corner with regards to bringing people back to the city. I found it interesting that Reason used the example of Ray's Indoor Bike Park in Cleveland as an example of Cleveland entrepreneurship, since it was recently announced that Ray Petra was looking to open a location in the Milwaukee area as well.
One quality of Milwaukee is the parks system, including the Milwaukee River, which only continues to improve as a recreation destination for the people of the city. Now I think that increased amenities in the parks will only add to their use, and value to the city (can we please get some additional food, rental, retail, recreation development on the lakefront as well as along our bike paths?) However, the combination of the inland parks and the lakefront parks, is something that I feel can attract people to living in the city.
Another quality of Milwaukee that I have grown to appreciate as I have grown up, is the diverse availability of housing that can be found within the city limits. Just to compare the current residences of friends of mine, everything from condos and apartment flats to old houses in established neighborhoods, to new single family subdivision construction can be found within the city. And for those that do not want to live in the City of Milwaukee, there is a wide selection of old, historic inner-ring suburbs to new suburban developments, all within a reasonable commute from employment in the city. With such a diverse housing stock available to newcommers, anyone can come to Milwaukee and find the type of residence in which they want to start their new life.
Tuesday, March 23, 2010
Reason Saves Cleveland, Can it Save Milwaukee? (Part 1)
This past week Reason.com (the online wing of the Reason Foundation) ran a six-part video series on solutions to improve Cleveland.
The links to each of the parts are here:
1) Decline of a Once-Great City
2) Fix the Schools
3) Privatize it
4) Take Care of Business
5) Bottom-up Redevelopment
6) Bring the People Back
Now these are admittedly short and paint with a broad brush due to the format, but each video raises questions that I feel can also be applied to the challenge of improving Milwaukee.
I'd like to take each of the points raised by Reason and see how it applies, or can be applied to Milwaukee. In this first part, I will look at the suggestions of the first three videos.
1) Decline of a once-great city
On their face, Milwaukee and Cleveland look pretty similar. Both are Midwestern industrial towns on the shores of a Great Lake. However, I think that Milwaukee decline can be distinguished from Cleveland decline in terms of population. First, while the City of Milwaukee has experienced population decline since the 1960's when it topped out at 750,000 down to its present population of just over 600,000; Cleveland once had over 900,000 people and now is home to an estimated 433,000. On the other hand, Cleveland's MSA is about 1/3 larger at 2 Million compared to Milwaukee's 1.5 Million. So while Cleveland itself is smaller, it is supported by a much larger metro area as compared to Milwaukee's metro area.
Another consideration is that Milwaukee city and metro have been modestly growing in the last decade. This is another advantage over Cleveland which has declined in population both in the city and the metro over the last decade. Therefore, whereas Milwaukee may have reached bottom, and turned a corner in the 2000's in some respects, Cleveland still has a ways to go.
The comparison to Pittsburgh can be made here, where Pittsburgh reversed its population decline in the 1990's and now is generally considered to be a post-industrial city that is making it competing in a global economy. So too, can we hope that the next decade sees Milwaukee's development in this way.
2)Fix the Schools
Anyone reading this will know of some of the struggles of Milwaukee Public Schools. However, once again, I think that Milwaukee may be ahead of Cleveland in this area as well. Milwaukee's voucher program is about to enter its 20th year in operation. Last year over 21,000 students (over 1/4 of the number of students in MPS (82,000 without voucher students)) took advantage of this program to take charge of their education.
Some significant changes to the voucher system have been/will be implemented over the next few years. Already, schools must be accredited. This accreditation process led to a net loss of 14 voucher schools in the program, even while the program added over 800 students from last year. While the accreditation process does create a barrier for new schools to enter the market, problems with fraud lead me to believe that this basic form of accreditation strikes a balance between allowing new schools to enter and preventing fraud.
The next big change happens next year, when all voucher schools must give their students the same WKCE test as are required by the public schools in the state, and to report these scores to the DPI. I think that this is an important tool as it will allow for an apples-to-apples comparison between schools and student performance. This way, the comparison will be explicit and schools and parents can make a more informed decision about where and how students are instructed.
Public Policy Forum recently issued a study on the voucher system if you would like more information.
3) Privatize It
Privatization, when done correctly, can improve market conditions and reduce government expenses. Government should only be involved in those business to which it wants to provide a subsidy. One example is that of parking. When the city own and operates parking lots, it either provides that parking at below-market rates, making it difficult for private parking operators to compete to also provide parking, or it does so at a profit. In either of these examples, it seems that the consequences do not justify government involvement in parking.
Subsidized public parking by artificially lowering the price of parking downtown, the city provides cheaper parking at some specified locations, while harming the entire parking market and beyond. Subsidized public parking creates a disincentive for private operators to get into the market. This has the effect of reducing the overall supply of parking. Furthermore, since parking cannot be profitable downtown, more subsidies must be offered to build the parking for any new developments downtown. Buildings such as Manpower, Pabst City, and the Moderne all required city investment, in all or in part to provide for their parking needs that couldn't be provided for by a parking market.
Additionally, the subsidization of parking artificially makes it cheaper to drive downtown than to take transit service. Ironically, if the city were spend less on parking, they could charge more for transit while still increasing ridership.
Alternatively, the city makes a profit on the parking services that it provides. If this is the case, the parking profit goes to the city coffers, but at the cost of reducing the tax base (a parking structure valuable enough to make a profit would provide a considerable amount of property and service tax revenue to the city) and unnecessary numbers of government employees (who are paid more than their private sector counterparts) in order to achieve such profits.
Therefore, Milwaukee should seriously consider privatizing all of the parking in the city. If there is demand for parking in locations, then it will be enough to spur the development of additional private structures.
The links to each of the parts are here:
1) Decline of a Once-Great City
2) Fix the Schools
3) Privatize it
4) Take Care of Business
5) Bottom-up Redevelopment
6) Bring the People Back
Now these are admittedly short and paint with a broad brush due to the format, but each video raises questions that I feel can also be applied to the challenge of improving Milwaukee.
I'd like to take each of the points raised by Reason and see how it applies, or can be applied to Milwaukee. In this first part, I will look at the suggestions of the first three videos.
1) Decline of a once-great city
On their face, Milwaukee and Cleveland look pretty similar. Both are Midwestern industrial towns on the shores of a Great Lake. However, I think that Milwaukee decline can be distinguished from Cleveland decline in terms of population. First, while the City of Milwaukee has experienced population decline since the 1960's when it topped out at 750,000 down to its present population of just over 600,000; Cleveland once had over 900,000 people and now is home to an estimated 433,000. On the other hand, Cleveland's MSA is about 1/3 larger at 2 Million compared to Milwaukee's 1.5 Million. So while Cleveland itself is smaller, it is supported by a much larger metro area as compared to Milwaukee's metro area.
Another consideration is that Milwaukee city and metro have been modestly growing in the last decade. This is another advantage over Cleveland which has declined in population both in the city and the metro over the last decade. Therefore, whereas Milwaukee may have reached bottom, and turned a corner in the 2000's in some respects, Cleveland still has a ways to go.
The comparison to Pittsburgh can be made here, where Pittsburgh reversed its population decline in the 1990's and now is generally considered to be a post-industrial city that is making it competing in a global economy. So too, can we hope that the next decade sees Milwaukee's development in this way.
2)Fix the Schools
Anyone reading this will know of some of the struggles of Milwaukee Public Schools. However, once again, I think that Milwaukee may be ahead of Cleveland in this area as well. Milwaukee's voucher program is about to enter its 20th year in operation. Last year over 21,000 students (over 1/4 of the number of students in MPS (82,000 without voucher students)) took advantage of this program to take charge of their education.
Some significant changes to the voucher system have been/will be implemented over the next few years. Already, schools must be accredited. This accreditation process led to a net loss of 14 voucher schools in the program, even while the program added over 800 students from last year. While the accreditation process does create a barrier for new schools to enter the market, problems with fraud lead me to believe that this basic form of accreditation strikes a balance between allowing new schools to enter and preventing fraud.
The next big change happens next year, when all voucher schools must give their students the same WKCE test as are required by the public schools in the state, and to report these scores to the DPI. I think that this is an important tool as it will allow for an apples-to-apples comparison between schools and student performance. This way, the comparison will be explicit and schools and parents can make a more informed decision about where and how students are instructed.
Public Policy Forum recently issued a study on the voucher system if you would like more information.
3) Privatize It
Privatization, when done correctly, can improve market conditions and reduce government expenses. Government should only be involved in those business to which it wants to provide a subsidy. One example is that of parking. When the city own and operates parking lots, it either provides that parking at below-market rates, making it difficult for private parking operators to compete to also provide parking, or it does so at a profit. In either of these examples, it seems that the consequences do not justify government involvement in parking.
Subsidized public parking by artificially lowering the price of parking downtown, the city provides cheaper parking at some specified locations, while harming the entire parking market and beyond. Subsidized public parking creates a disincentive for private operators to get into the market. This has the effect of reducing the overall supply of parking. Furthermore, since parking cannot be profitable downtown, more subsidies must be offered to build the parking for any new developments downtown. Buildings such as Manpower, Pabst City, and the Moderne all required city investment, in all or in part to provide for their parking needs that couldn't be provided for by a parking market.
Additionally, the subsidization of parking artificially makes it cheaper to drive downtown than to take transit service. Ironically, if the city were spend less on parking, they could charge more for transit while still increasing ridership.
Alternatively, the city makes a profit on the parking services that it provides. If this is the case, the parking profit goes to the city coffers, but at the cost of reducing the tax base (a parking structure valuable enough to make a profit would provide a considerable amount of property and service tax revenue to the city) and unnecessary numbers of government employees (who are paid more than their private sector counterparts) in order to achieve such profits.
Therefore, Milwaukee should seriously consider privatizing all of the parking in the city. If there is demand for parking in locations, then it will be enough to spur the development of additional private structures.
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