Greetings, gentle readers!
I didn’t post last week, as I was busy thinking of what I wanted to write about this week. One thing that has been bothering me in recent weeks has been my own writing on previous posts. For example, back in April I wrote about the news of Anadarko Petroleum being made a buyout offer from Chevron, but when I wrote the post the story was not in fact over yet. It turned out that Chevron was beaten out in its bid for Anadarko by Occidental Petroleum, which thanks to a $10 billion assist from famed investor Warren Buffet, made an offer that beat the one made by the mighty Chevron. It wasn’t a big thing in the whole scheme of things, but I have taken pride in my writing and thinking, and I don’t like to leave things behind that didn’t entirely turn out to be true. I did write in my original post that the Chevron-Anadarko merger was not quite a done deal and that other offers were potentially still in the making. Yet I posted before the actual agreement between Anadarko and Occidental was a done deal, and I don’t like facts, even if they are after-the-fact type facts, like that dangling out there, as I believe this hurts my credibility as a writer and thinker.
In a similar vein, I also posted some weeks back about the slew of bond elections that were held in May of this year, well off the radar of when most people are paying close attention to what’s going on in politics. I predicted (and was willing to put up a $100 bet to anyone that would accept) that all of the bond issues would end up passing, based on my sneak-attack election theory. Much to my surprise, however, one of the bond referendums – the Conroe ISD bond referendum for $807 million – was in fact defeated.
Ergo, what’s the moral of the story? Pay attention to what I write because doing so just might win you some money!
On the November 2019 METRO bond referendum
The (highly likely) upcoming METRO referendum is starting to pick up notice here and there on some people’s radar. However, debate on this proposal seems to be suffering because all of the oxygen in the Houston political scene is being sucked up by the intensifying City of Houston mayoral election.
I was part of the coalition that fought the November 2003 METRO referendum. So what were the reasons that I fought the referendum, and what do I think of what has transpired over the past 16 years? The reasons I opposed the referendum back in 2003 were as follows:
- At the most basic level, Houston, like most American cities, is a low population density urbanized environment. Indeed Houston, with aggregate density of some 3,500 people per square mile, has a population density that is among the lowest of any major urban area on the entire planet. As some have noted, in order for mass transit to be effective and meaningful, you have to put the mass into mass transit! The higher the population density, the higher the likelihood that transit will perform better for more people. Indeed, for very high density population centers, those with densities of 50,000 or more per square mile, transit very nearly becomes a requirement for an urban area to function in an economically effective way. Houston however, doesn’t fit this criteria, and hence I thought that a program of rail-building would be a poor use of taxpayer monies.
- The transit industry, like others, faces incentives, constraints, and tradeoffs. One big constraint is that METRO has not, for quite some time, collected very much of its revenues from the fare box (less than 10%, to be exact). Since the agency is so heavily dependent on the local 1% sales tax for its revenues, it sets up a dynamic whereby there are only so many tax dollars to go around. Every dollar that is spent on operating buses is a dollar that is not available for other purposes. The same goes for spending tax monies on rail lines. A dollar spent on building and operating a rail line is not a dollar that is available for operating bus routes.
Hence, building rail lines might make the construction contractors happy. It might make the political classes happy, and it might make the rail fans happy. However, what rail construction won’t do is add overall system ridership, as tax monies spent building rail lines eat into monies that could and would have otherwise gone to operating a bus network. Indeed, many local transit agencies lost ridership after embarking on rail-construction programs. The most spectacular example of this was in Los Angeles, whose agency (the Los Angeles Metropolitan Transit Authority or LA-MTA) embarked on its modern-day rail-building program in the 1980s. As Wendell Cox notes, the LA-MTA, which had made spectacular gains in ridership in the 1970s and early 1980s with an all-bus program, subsequently lost some 25% of its ridership after embarking on its rail construction program. It wasn’t until some two decades later that the LA-MTA regained its ridership of the early 1980s, but in recent years the agency has once again experienced a substantial drop in patronage.
So what has been the fate of Houston’s METRO? Has METRO experienced this same dynamic of lost ridership after starting its rail-building program? The answer is – yes it has. Back in 2007 – 2008, I started keeping a spreadsheet of METRO’s ridership data, which I once published at my old blog. My original post from all those years ago can be seen here, and my old spreadsheet can still be found and be downloaded here.
With the firing up of this new METRO referendum, I’ve started an update of METRO’s ridership data. It is a project that won’t be easy, since over 10 years have passed since I’ve updated the original spreadsheet. The project will involve inputting some 15,000 pieces of data to bring it completely up to date. However, I will say that my task will be somewhat easier than it was all those years ago, because METRO has been kind enough to publicly publish the agency’s ridership reports since 2011. METRO’s ridership reports can be found here.
This past weekend, I went through overall ridership data for the years 2015, 2016, 2017, and 2018. I mainly concentrated on 40,000-foot altitude ridership numbers overall, rather than focusing on specifics of bus routes and train stations, which I will add in and compile later. However, I can tell you that METRO’s peak ridership years were in 2000-2001, before the start of METRO’s construction program, and around 2007-2008, when METRO had one rail line in operation, and Houston was going through an oil boom. Ridership in those years were around 101-102 million in annual boardings. Since 2008, ridership has sagged as METRO proceeded with the construction of the North Corridor rail extension, the Harrisburg rail line, and the Southeast corridor line. The system-wide ridership numbers for 2015: 82,865,083. The 2016 ridership amounted to 84,662,738 boardings. The 2017 boardings were 84,994,074, and finally the 2018 boardings were 85,777,120. Overall, METRO’s system-wide boardings for the past four years are down 15-19% from the start of the 20th century.
Furthermore, METRO, in building the Main Street rail line, picked what was by far the lowest hanging fruit in terms of achieving ridership. The Main Street corridor between downtown Houston and the Texas Medical Center used to be served by 4-5 bus routes, which had some 25,000-30,000 boardings per day. The Main Street rail line captured that ridership, and attained some more by taking over transit service the TMC used to provide to employees on its own. Further ridership gains were made by eliminating bus routes and having them end their lines where they crossed the rail line.
However, the experience that METRO has had since then shows that the Main Street line was, in fact, the lowest hanging fruit. METRO has completed three new rail lines since the Main Street line. I wrote about these lines four years ago, but I can post an update here. The eight train stations along the North Corridor (north of downtown Houston) drew 7,549 boardings in April 2019. The Harrisburg (Green Line) drew 4,761 boardings, while the Southeast corridor (Purple Line) drew 6,525 boardings. It cost over $800 million to build the North Corridor line, $600 million to build the Harrisburg rail line, and another $800 million to build the Southeast rail line. METRO spent over $400 million to attain ridership of 40,000 boardings per day along the Main Street rail line, but spent another $2.2 billion on its next three rail extensions only to attain 20,000 boardings a day afterwards from those three new rail lines.
The METRO Next referendum, with plans that are yet not finalized, has envisioned extending the Southeast rail line to Hobby Airport. The agency has also proposed extending a rail line down Washington Avenue. Given that Houston now has 16 years of experience with rail, it is highly likely that any rail line that is built to Hobby Airport will not draw more than a few thousand patrons per day since Hobby Airport serves 13 million passengers per year, or some 35,000-40,000 passengers per day. If 10% of those passengers are coming from or going to downtown Houston, that amounts to 3,500-4,000 patrons per day. Likewise, since METRO already has a bus route down Washington Avenue, the #85 Washington Avenue route, which runs for a distance of 20+ miles all the way up to the area around Greenspoint Mall, it behooves a potential METRO referendum voter to know that this bus route achieves 6,500 boardings per day for the entire route. It is highly likely that rail-line extensions built along both Washington Avenue and to Hobby Airport will likely suffer the same high cost and dismal ridership fates as the Southeast corridor and Harrisburg lines. Houstonians would be far better served, and would save over $1 billion of tax money, if METRO were to simply run buses and shuttles along Washington Avenue and to Hobby Airport.
So what about the METRO Next referendum?
Given this analysis, any METRO proposal at this point that includes building any new rail lines or extensions earns an automatic no vote. I simply can’t see any new rail lines or extensions anywhere in METRO’s tax jurisdiction that are going to achieve near the ridership and cost levels that the original Main Street rail line accomplished. I have yet to take a closer look at the rest of the METRO Next proposal, but bear in mind that METRO is making political demands for over $7 billion in spending, with over $3 billion in new bonding authority. Before Houston-area voters fall all over themselves to vote to hand $7 billion over to METRO, there really needs to be an accounting of what has really happened over the past two decades, and a realistic accounting of what would be the best way forward. And unfortunately, I’ve been around long enough to know that Houstonians are not going to get that from either METRO, the Houston Chronicle, anyone in the Houston-area media, or from anyone who has been in a position of power in Houston for the past 20 years.