Mass transit’s catch? Paying for it

Rapid transit sounds great in theory, especially to frustrated commuters–too bad there's nothing like a consensus on how to finance it here.

"Some people want light rail. Some people want buses. But nobody wants to make the connection of what it costs and who pays. We don't seem to be dealing with those basic questions," said Kenley, a Republican. "It's all just a blue sky discussion until you ask where the money's going to come from."

The price tag is daunting. For construction alone, it ranges from at least $546 million for suburban express bus service up to $1.4 billion for an "automated guideway" system similar to a monorail. And that's for only one corridor; plans for other parts of the region aren't even being considered yet.

Plenty of proposals to raise the cash are being bandied about: Some local officials hope the federal government will cover as much as 80 percent of the tab. Others envision financial assistance from the state–or at least the authorization to levy a new regional tax dedicated to mass transit.

But there's a long line of other cities ahead of Indianapolis at the national trough. For any chance to earn support from the Federal Transit Administration or the Indiana General Assembly, Indianapolis first will have to broker unanimous agreement from all the doughnut counties.

That could prove difficult, since only portions of Marion and Hamilton counties would see any immediate benefit from the transit system as proposed.

"The bottom line is, cities and metropolitan areas around the country have applied for [federal] funds. So the competition is intense," said Robert Puentes, a fellow with the Washington, D.C.-based Brookings Institution's Metropolitan Policy Program. "The demand for federal transit money far outstrips the supply for those who want to build mass-transit systems."

And although local officials are diligently studying the technical aspects of mass transit, they haven't done much to get decision-makers on board.

"This has not been brought up to me before [IBJ called] today," said state Rep. Cleo Duncan, R-Greensburg and chairwoman of the House Roads and Transportation Committee. "We need to talk about it first. We can't just go ahead and say, 'Here's some money,' without a plan or adequate knowledge of [whom] it's going to serve."

Meanwhile, the clock is ticking.

Mandatory studies for mass transit take time, and the approval process can drag on even longer. Traffic gets worse every day.

In order to build a mass-transit system before congestion becomes a crisis, some key local decisions must be made in the next six months. Maintaining the project's time line is critical, and the first domino is financing. If transit advocates don't approach the General Assembly in 2007, its budget-writing year, their next chance won't come until 2009.

Business leaders already are rallying behind the push. They're increasingly concerned about the productivity their employees lose to traffic jams. And they know future economic development depends on a transportation solution.

"[Mass transit is] really critical if we're not only going to maintain what Indianapolis has, but grow it into the shining city on the hill we all want to see," said Indianapolis Chamber of Commerce President Roland Dorson. "I don't know what the answer is [on funding], but I know we need to find the antidote for parochialism."

Lack of consensus

In 1982, Indianapolis drivers spent on average just four hours annually stuck in traffic, according to a Texas Transportation Institute study. Today, they squander a frustrating 38 hours a year.

Congestion might not be a problem for suburban towns like Shelbyville or Mooresville now, but Indianapolis Metropolitan Planning Organization projections indicate it will be eventually.

Hamilton County Commissioner Christine Altman wants to avoid the worst-case scenario: mile after mile of unchecked suburban sprawl connected only by car-choked roads and highways. So she's spearheading the Central Indiana Regional Transportation Authority, the primary organization attempting to steer mass transit.

"There are communities that have done nothing. The residents' day is planned around traffic," Altman said, pointing to notorious examples like Los Angeles. "When you just cannot get through the system, that's lost time from family and work. It's extremely expensive. So I see doing nothing as a terrible option."

As the U.S. interstate system marks its 50th anniversary, an increasing share of federal transportation money inevitably will go toward highway maintenance, said Paul Larrousse, director of the National Transit Institute at Rutgers University. So adding lanes is unrealistic.

"There's an overall conclusion in this country we cannot build our way out of congestion," Larrousse said. "If you look at cities worldwide that are successful, they have some degree of transit in their public infrastructure."

Even if only one in 10 drivers chooses to board the mass-transit system, Puentes said, it's a healthy start.

"Congestion is one of those things that is an insolvable problem," he said. "If you could cut 10 percent of your traffic, many metropolitan areas would jump at the chance."

Indianapolis isn't yet ready for the Olympics, but it is measuring the hurdles.

The city MPO has broken the region into seven transportation corridors, and planners are focusing on the heavily traveled northeast sector for the first phase of a mass-transit system. More than 62,000 commuters travel between Marion and Hamilton counties each day, according to the Indiana Business Research Center.

"You have to start somewhere, and you certainly want to begin where you have the best chance of succeeding to show the way for future growth of the system," said Indianapolis Mayor Bart Peterson, a Democrat. "The data shows that the best starting point is the northeast corridor."

At any rate, building a system that reaches everywhere at once would be impractical.

"It would just be chaotic to consider doing something county-wide," said City-County Councilor Joanne Sanders, a Democrat and member of the regional transportation authority's board. "The cost would be outrageous. And the disruption for traffic patterns and business … is something I don't think anyone in the community would want to go through."

However realistic the more focused approach may be, it limits regional support. Residents who don't travel the northeast corridor balk at the prospect of paying for a rapid-transit system they may never ride–much like some disagreed with a restaurant tax hike that is helping build a football stadium in downtown Indianapolis.

"The stadium was not a real popular thing down here. And unlike the stadium, which obviously created jobs … the transit system, all that does is help people get down to work," said Shelbyville Mayor Scott Furgeson. "I guess it would help some shoppers get to the northeast part of Indianapolis, but I don't know what it does for us."

IBJ interviewed key officials in all nine central Indiana counties and found that mass transit isn't on the radar screen in less-populated areas like Shelby or Morgan counties. Leaders in faster-growing areas, like Hendricks or Johnson counties, are generally more supportive.

Johnson County Commissioner Mitch Ripley acknowledged his area's growing congestion problems and the need to plan regionally for a mass-transit alternative. If rapid transit is successful in the northeast corridor, eventually it could be linked to a system that stretches across all of central Indiana.

Even so, he's not willing to approach residents for a tax hike.

"If all we have is to go to the taxpayers, we have a serious problem," Ripley said. That's why transit officials have proposed adding express bus service to serve suburbs even outside the northeast corridor. They have high hopes it might make a regional tax hike easier to swallow.

Hendricks County Council President Larry Hesson said a great deal of education will be necessary to sway area opinion. Residents must understand how mass transit could serve them, too.

"We're not a collection of small towns any longer," he said. "We are part of the metropolitan area."

Federal funding?

So what are the other options?

The Federal Transit Administration will provide $1.5 billion this year for mass-transit "new starts" nationwide. But Indianapolis won't see a dime. That money already has been earmarked for 16 projects in other cities.

Two dozen more are ahead of Indianapolis at various points in the FTA pipeline. Although a total of $3.5 billion in new-starts money is still up for grabs in 2007 and 2008, competition for it will be fierce.

"The metropolitan areas who have already gone through the early parts of the application process are far ahead," said Brookings Institution's Puentes. "Indianapolis would have to think carefully and make sure it has all its ducks in a row. Being politically connected is important."

In general, the bigger the project, the smaller the federal government's share of funding. Case in point: a $2.4 billion light rail link under construction in downtown Seattle. A combination of local bonds, sales and vehicle excise taxes will provide $1.9 billion of that tally–or nearly four-fifths of all its funding.

Federal new-starts funds also cover upgrades of existing transit systems, which get the lion's share of the money available. Consider Chicago, which has three projects totaling $1.2 billion in the works. FTA is covering 79 percent of those costs, a far larger share than it has pending for any other city.

"Basically, because of the competition, when you're going for these major investments, you do well to get a 50-percent share of federal transit funding," said Larrousse, the Rutgers transit expert.

Actually, local officials are considering opting out of the federal process entirely. They worry that its length will inevitably increase the cost of the project and push back the day riders could finally board the system.

If they do choose the federal route, they'll have to make their own case. FTA won't study or resolve the matter for Indianapolis.

"It's a local decision whether or not a transit system is built and what form it takes," said FTA Senior Public Affairs Specialist Paul Griffo. "FTA will become involved in moving the project along once a city decides what the citizens want to do."

State debate

Mass-transit supporters hope to have that answer in time for the General Assembly's Organization Day in December, when they'll begin to sell the idea.

Statehouse support is crucial. Whatever its ultimate proportion, the federal government requires locals to share the cost of mass transit. And unlike many other U.S. cities that issued referendums about how to pay, Indianapolis will need state approval to levy any new taxes.

Fare-box revenue from a mass-transit system likely would be used to sustain its operation, so that won't be available for construction costs. Whichever option the funding plan tapped–possibilities include a regional sales tax, a gasoline tax, a commuter tax, an income tax increase or a motor vehicle user fee–a majority of Indiana's 100 representatives and 50 senators would have to approve it.

Bottom line: Even if the feds covered half the bill, local taxpayers still would be on the hook for hundreds of millions of dollars.

At current interest rates, annual payments of $7.5 million are necessary to service every $100 million of municipal debt, said Jim Merten, vice chairman of City Securities Corp., Indiana's largest local investment bank.

So to pay half the cost of a $1.4 billion automated system, proponents would have to come up with $53 million annually for 25 years. Even the proposed express bus would cost $19 million a year. And with interest rates rising, those figures could quickly increase.

But Altman said legislators shouldn't focus on mass transit as a new expense. Rather, they should view it in context of the vast sums already spent on infrastructure for cars and trucks. In 2006 alone, the Indiana Department of Transportation's budget for highway construction and maintenance is $862 million.

"It'll need to be subsidized no matter what, just like roads are subsidized," she said. "Everybody looks at transit as an expensive cost, but if we start comparing the dollars we put into our road grid, it almost pales."

It's nearly impossible to tell how well central Indiana's mass-transit proposal will be received in the Statehouse. Right now, legislators are barely aware of the discussion.

Like her counterpart Duncan in the House, Senate Commerce and Transportation Committee Chairwoman Sue Landske, R-Cedar Lake, was unaware of Indianapolis' mass-transit plans.

"We haven't even talked about this, so I have no idea what funds might be available," she said. "It would be an excellent idea if [mass-transit advocates] would meet with some of the key people now. It's not too early. It would be in their interest to bring them up to date."

If legislators do take up the debate, they'll probably have 150 opinions. And like suburban officials around Indianapolis, their support will vary depending on how much the capital city's congestion affects their constituents.

Sen. Glenn Howard, D-Indianapolis and the Senate Transportation Committee's ranking minority member, wants to see suburbanites carry the financial load. To underwrite a majority of a mass-transit system's expense, Howard said, residents from the doughnut counties should pay a commuter tax.

"They just drive in, take all the jobs and drive out. They're not paying one dime to work in Marion County," he said. "Every day, when 9 a.m. comes, we pay the sewer bill for them when they go to the rest room. Then at the end of the day, they wave at us and say, 'See you tomorrow.' It's just take, take, take."

Rep. Terry Goodin, D-Crothersville and ranking minority member on the House Transportation Committee, said discussion about building Indianapolis a rapid-transit system will soon digress to include the transportation needs of other parts of the state.

"It's not going to be a piece of cake, walk up to the candy store and get that red sucker. That's not how it works," Goodin said. "Northwest Indiana folks are going to say, 'Why is this so important for just Indianapolis?'"

INDOT is involved in the rapid-transit discussion, but it says financing the system is a local matter. Gov. Mitch Daniels, a Republican, said he hasn't yet taken a hard look at the mass-transit issue. But all $3.8 billion of the money raised through his lease of the Indiana Toll Road has been earmarked for investments in roads and bridges through the Major Moves initiative.

As with the federal government, the key to Statehouse support will be showing a broad local consensus. Transit advocates say that's what they're doing by focusing on the technical analysis first. Goodin said they'll also have to prove extensive buy-in from voters.

"Everyone has to be on board at the local level," he said. "If there's dissension shown, there's going to be a lot of questions about whether this is a small minority trying to push it down the majority's throats."

"But this is a budget year," Goodin added. "This is going to be the year to ask."

Pollution push

To increase regional support, mass-transit advocates often point to air-quality concerns. They assume streets and highways clogged with idling cars must be choking the air with noxious fumes.

The region's pollution could affect economic development even more directly, given federal air-quality standards that limit the total emissions of factories and vehicles. More exhaust from cars could constrict future industrial activity.

"We're right on the bubble for ozone non-attainment," said Mark Fisher, business advocacy manager for the Indianapolis Chamber of Commerce. "Whatever we can do to reduce those emissions I think would be helpful."

But the city's own planners say pollution isn't driving the push for mass transit. Indianapolis MPO Assistant Manager Philip Roth said area emissions are expected to decline in the decades to come–whether or not a local rapid-transit system is built–thanks to improvements in automotive technology.

What's more, the majority of riders on a new mass-transit system likely would still produce pollution. They'll start and end their journey each day by driving to a mass parking lot. Since most auto emissions are produced in the first 60 seconds after ignition, Roth said, the impact won't change.

"We're viewing the benefits of [mass] transit as a transportation benefit, rather than an emissions benefit," Roth said.

Supporters may be on firmer ground when they make their case about quality of life and its result on economic development. Peterson said college graduates increasingly gravitate to cities with great amenities. To attract them, Indianapolis must consider their demands.

"Mass transit is one of those key offerings that can attract today's talented workers," the mayor said. "And with rising gas prices, more and more people are going to be looking to locate in cities that offer transit alternatives."

"Time is money to businesses," Peterson added. "The easier we can make it to move customers and employees from point A to point B, the more attractive the city and region will be for business growth and investment."

Such arguments may sound persuasive to advocates of a mass-transit system. But to build consensus, they also will have to win over Hoosiers who haven't even begun to ponder the idea.

"We need, step one, to stop preaching to the choir to people who already believe in transit and start talking to the public," said Altman, the Hamilton County commissioner. "When you view it as a necessity, you look for a reasonable price tag for that necessity."