What Chicago can't do

Chicago, striving to become a “green” city, has just made it very difficult to deliver green transportation options. By selling off -- I mean “leasing” – every single one of its 36,000 parking meters for some fast cash, Chicago can no longer do what other forward-thinking cities have done.

While it might be buried in the fine print of hundreds of pages of the lease contact, it would appear that for the next 75 years, the city cannot remove metered parking to:

• Create dedicated bus lanes (see New York City plans), or trolley lines (Charlotte NC).
• Allocate spaces for car sharing vehicles (see Washington DC and Boston) or bicycle parking (see Portland, Oregon, New York City plans, Paris)
• Create bike lanes (Paris, Portland, New York)
• Make pedestrian-only retail districts

Here is what the deal means for parkers (My comments are in italics):

• Quadrupling of meter costs in two-thirds of the city's meters over the next five years, from 25 cents/hour to $2/hour by 2013.

• Meter rates in the downtown Loop will rise from $3/hour to $6.50/hour over that same time period. Parking meters are generally underpriced across the country so I agree that these likely should be raised.

• Future rate increases (in years 5 through 75) will need to be approved by the city. It would seem that the city alderman needed to hide behind this lease, in order to get these first price increases done. What is the likelihood that they will be able to approve price increases in those later years when they aren’t shielded by the big bolus of cash upfront? nor get a piece of the increased revenue stream?

Here is how the city intends to spend the $1.16b it will receive in cash for the deal:

• $325m to balance the budget over the next 4 years ($50m 2009; $100m 2010)
• $324m for budget “stabilization” for budget gaps. These two added together mean that $649m of the money will be spent almost immediately, leaving the remaining 70 years of this lease without any benefit to the residents of Chicago.

• $400m will be put into a long-term account generating $20m in revenues annually, to “cover” the usual amount of revenues generated by the parking meters. Do we really believe that $20m/year will equal the expected annual revenue from parking meters 15 years from now? How about 30, 45, or 75 years from now?

• $100m in human infrastructure. Not clear what this is. Note that none of the money raised from this parking sale went toward improving transportation infrastructure in the city.

There are several things that really bother me about these deals:

1. Can’t we produce politicians or a public that can accept rises in parking rates without having to hide behind a privatization deal? In both cases there is an increase in fees, but in the privatization deals we lose flexibility over the asset and the management fee that goes to the private sector company, a much worse deal for citizens.

2. Assuming the city is desperate for an upfront lump of cash, isn’t it common for banks to loan money on the back of a guaranteed future revenue stream that is collateralized by an asset? Why the 75 year leases? It just doesn’t seem right to mortgage future generations for our quick fix today – politically easier yes, but not right.

3. And most egregious, is the loss of network control and flexibility over the asset. This parking deal has effectively locked up street use for the entire city of Chicago for the next 75 years! Forget about closing some streets to traffic (as has been done in cities the world over). Forget about changing the use of specific streets and traffic flows (just this last year New York city has changed city streets to accommodate bicycles, pedestrians, chairs and tables, dedicated bus lanes; in Washington DC they have changed some parking spaces into shared car parking; in Portland, Oregon, bicycle parking is substituted for some previously metered spaces). All of these options will be closed for the city of Chicago. And closed for 75 years.

Sources:
http://www.bondbuyer.com/article.html?id=200812021PTMA2E7
http://ohmygov.com/blogs/general_news/archive/2008/12/24/chicago-sells-right-to-city-parking-meters-for-1-2-billion.aspx

Some quotes:

"I wish we had other options at our disposal to help balance this budget without entering this 75-year concession agreement with one of our most valuable public assets, but we're in the situation we're in, with not many options" Alderman Brendan Reilly told the Tribune.

Alderman Richard Mell described the deal as being a "once-in-a-lifetime shot to grab this pool of money.

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Advice for Cities & Towns on Green Transport

I sometimes get asked for the quick hits that a local government can undertake that is within their jurisdiction. Here is what I send them:

1. Parking maximums for buildings (all kinds) rather than parking minimums. If the developer is ready to build without parking, their ear is closest to the market, let them do so. This will reduce the cost of housing by as much as 25%, increasing affordable housing within the city. Every parking space built is a magnet for a car, which will then be driving on city streets, increasing our congestion problems. Yes, I know all about residents desire to protect the existing free on-street parking for themselves. See number 2 below.

2. Make residential parking permit rates much higher, and consider monthly fees rather than annual ones. This will make more parking available for those residents that need to park, by getting off the road cars that are rarely used (this is why we need this to happen monthly, so there is incentive to get rid of your car quickly when you no longer use it often.) In northern climates, it is easy to see the enormous number of vehicles that are little used by walking down a street one week after a snowfall and seeing the number of cars that haven't moved in a week.

3. Charge residents for curb cuts just like on-street parking. Their individual curb cut is removing a space available for others on the street. Curb cuts shouldn't be free for residents or businesses.

4. Give a rebate to residents who don't own cars -- they cost the city less money! less demand for ploughing, road maintenance, police and traffic enforcement, reduced emissions, etc.

5. Do bicycle traffic education for every middle school student (and in driver's ed).

6. Offer $200 rebate to kids on their 16th birthday, good only toward a bike purchase (and registration with the local police).

7. Improve bike and pedestrian connections everywhere. Start with routes to school, around the public library, and convenience/food stores.

8. Paint bicycle lanes on as many oversized roads as you can simply by giving the minimum width to cars (usually 10 ft) and allocate remaining space to bikes. Stop your lines short of the intersections and just do the straight-aways. This lets you get 80% of the job done quickly and cheaply, without fiddling with the complex part.

9. Require that businesses that offer parking to employees to "register their commutes" so that there is a database for potential commute ridematching. You can't require agreeing to share a ride, but you can require registration.

10. Consider building municipal parking lots, and make parking in those lots cheaper for residents than on-street parking permits. [This makes parking less convenient, and people will be more likely to leave their house to bike, walk, or T for short errands rather than hop in their car.]

11. Remove on-street parking for every space created in municipal lots. Do better things with those spaces -- bus priority lanes, bike lanes, wider sidewalks.

12. Consider making play streets in some neighborhoods, by closing them to through traffic with wooden barriers (that are signed with relevant times) during afterschool hours. In New York City I saw this in practice with neighbors opening and closing the street.

13. Consider closing scenic roadways on Sundays when there is reduced traffic (and alternate routes) and making them accessible only to people and non-motorized vehicles.

Thirteen is purportedly an unlucky number. Please add your low cost ideas to the comments.

Robin

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Leveling the Playing Field for the American Auto Industry

The failure of the American auto industry has lots of root causes, but the difference in cost structures and buying incentives between US and foreign auto makers surely has a lot to do with the industry’s lack of competitiveness.

Lack of universal health care here means that every car manufactured in this country is saddled with $2100 of health costs that aren’t included in European or Japanese cars.

Comparatively low gas prices mean that American consumers have not had the same fuel efficiency incentives buyers in every other country have had. Sure, Toyota was clever about designing and building the Prius. And fully 35% of Prius sales to date have been in Japan alone, a dramatically smaller market than the US. So just how prescient was Toyota? They were designing and building cars that suited their own domestic market.

Human rights and labor requirements are held to much higher (and more costly) standards by US car manufacturers than by their foreign counterparts, so I’ve been told.

As Congress contemplates a bailout for the auto industry, we should consider correcting the underlying causes. Addressing these would mean the industry has a much higher likelihood for competitive success in the long-term. If we really want a thriving car industry in the country, we need to reduce the burden of health care costs for this industry (and all industries), require the same human rights and labor standards for all cars being sold in this country, and raise the cost of gas in this country so that it more closely mirrors those experienced by European and Japanese consumers, and is more aligned toward our goals of energy independence and CO2 reduction.

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Apps for Democracy

Go see Apps for Democracy. It’s what I’m talking about!

1. The DC City government built a platform for engagement. They put up DC's Data Catalog online and invited internal agencies and external free agents – we sometimes call them “people” – to create mashups for $20k in prize money.

2. The city is trying to tap into the excess mental capacity and time of skilled, clever, and innovative people everywhere who want to challenge themselves.

3. Too soon to know what the unintended benefits are, but they are certainly reaping some intended benefits:

• Neighborhood crime
• Historic tour of DC
• Parking garages
• Hospital info

Oh, it has to be incredibly stupid form to put a link in the first few words of a blog. So if you are totally intrigued, now is the time to go check it out again here, a link at the end.

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Time for Cooperative Capitalism

Crisis describes our times. The perilous state of the American and global economies, environments, and personal finances have me convinced that we’ve got to start working and thinking more cooperatively.

Last June I began to give public voice to these ideas and approach that has been taking shape in my mind for a long time -- Ann Arbor (June 11 ppt) and at the Personal Democracy Forum in NY (June 24).

For many years I’ve been attracted to the beautiful efficiency and widespread benefits of shared resources (cars, rides, networks). And over the last few years, I’ve been espousing the need for business and government to think more expansively about the web 2.0 phenomenon – where end users create content and value by building on a common platform (eBay, wikipedia, flickr, Facebook being some famous examples). We need to envision collaborative financing (lending circles), collaborative infrastructure (mesh networks), and collaborative consumption (car-sharing). It is time to push this idea and approach as far as it can go. A way to think about this approach is “cooperative capitalism.”

Here is the formula:
1. Identify excess capacity.
2. Build a platform for others to share/engage with this excess capacity.
3. Appreciate unanticipated benefits

My favorite example at a city level is Bogota’s Ciclovia:

1. The Penalosa brothers (Mayor Enrique and Gil, Head of Parks & Recreation) noted that on Sundays traffic throughout the city was very light.

2. Every Sunday from 9am to 2pm, more than 72 miles of roads are closed to car traffic and open to pedestrians and bicyclists. Tens of thousands of residents get out and use the ‘new trails and paths’ every week. Cost to the city for this highly prized and transforming resource? Just the cost putting up and taking down the barriers.

3. Unanticipated benefits include a healthier population, a stronger community, and increased bicycle use every day of the week.

My favorite opportunity at a city & national level (see my TED talk for a big vision explanation):

1. The wireless devices being used for open road tolling (and in the future for congestion pricing and road pricing) cost about $28, are single purposed, closed, and in active use for about 30 seconds a month. That is a lot of excess wireless capacity!

2. Create an open source mesh (ad hoc peer to peer) communications platform that would turn the device in the cars into nodes (routing and repeating data bits). The software could also be used in all wireless devices (laptops, cellphones, pdas, traffic lights, smart utility meters, etc.), creating a mobile internet (collaborative infrastructure). Each person will have paid for his/her own device (collaborative infrastructure financing).

3. While spending what was required to do the task of open road tolling or congestion pricing and buying in a manner that used an open standard, and an open device, we have now made this investment leverageable for any number of innovative uses, created a robust and resilient nationwide network for local data transmission, and laid the foundation for the next economic engine for the US and world economies. I have a lot to say on this topic, best not here. Email me if you want to see the white paper.

We can glean from the above example some generalization principles that the US government should apply to the relevant procurements: require open standards, open APIs, give preference to responders that leverage existing infrastructure, investments, organizations – in other words – value and encourage cooperation among companies rather than reward closed proprietary systems that shut out such opportunities.

Examples at the corporate level would include Zipcar of course, which enables all the idle capacity of cars to be put to good use through its technology platform that makes sharing cars fast, easy, convenient, and cost-effective. Last year I visited Siemens New York office where the bulk of floor space has been turned over to cubicles that are not owned by any one person, but rather used as needed by its nomadic workforce that shows up in New York only periodically – dramatically reducing the amount of office space needed if each one of its employees had their own office. The unexpected benefits of open platforms abound -- users can innovate, or point the way for innovation (see Innocentive.com for a new way of thinking).

And at an individual and household level, what can we lend and what can we borrow? What can we buy used, and what can we make sure we put back into the marketplace? Think of eBay as collaborative consumption.

This way of thinking isn’t bad for the economy. Remember that our starting point is that everyone is going to spend as much as they have to spend. We – families, companies, governments -- all have so much we want to accomplish with such limited financial resources that the most logical, rational, profitable, and self-interested thing to do is to spend it as efficiently as we can: maximizing the benefit of each dollar spent, while minimizing the resource consumption. Since we know we are going to spend every cent, let’s get the most possible value out of that spending.

Think of our times. Cooperative capitalism is not just an interesting approach, it is an imperative.

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Blog posts are supposed to be short and to the point – that is satisfied by the above. For a little more background on why the current financial crises leads me to move from thinking that these are just interesting ideas, to a much stronger concept of “imperative,” read on.

We are living in a world of very precarious revenue sources at all levels of the economy – household, corporate, and governmental. Americans are at their lowest savings rate since the 1930s. In August, the GAO estimated the 2008 Federal deficit to be $410b, 3% of the GDP. The addition of the $700 billion bailout has the potential to double this to 6%. On October 1, our national debt passed $10 trillion dollars (that’s a 1 followed by an unlucky 13 zeroes).

And yet, despite our incredibly tight – and shrinking – budgets, we face spending imperatives of unparalleled proportions. In the US, the explosive highway and infrastructure building of the 1940s-1970s, are now meeting the end of their 30-50 year anticipated life spans. We have much rebuilding to do, just to stay even, and we have much new building needed to accommodate our growing population and 21st century transportation and communication needs.

We have an energy and climate crisis, that demand we rethink, retool, and build anew our power plants, our factories, our office, our stores, our homes, and our travel patterns. We have a broken healthcare system that without a fix will swallow the budgets of business and government, and then, despite those expenditures, leave many uninsured.

And of course, we Americans live in a world of 6.3 billion people, rising rapidly to 9 billion. And we all know this world cannot sustain the current use patterns many ‘enjoy’ if applied to everyone.

A friend of mine, Juan Enriquez, just gave his 20 minute analysis and prescription last week at PopTech, on the need for the next administration to start a program of austerity. He gives a compelling argument and has some nice visuals. And last week, Bruce Nussbaum blogged for Businessweek an opinion piece called “Zipcar Capitalism, a new economic model?,” an approach the author says he will bring with him to the World Economic Forum this week in Dubai. Both of these argument are running down the same path I am.

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Openness is Environmental; who’d a thunk it?

So here is the gist of the argument:

Open architecture, open standards, open protocols, and open networks enable the multi-purposing of devices, and encourage and facilitate organic improvement in device and application functionality requires. E-waste is reduced when devices serve multiple purposes, and when useful life can be extended through on-going adaptation and upgrades with software or addition of hardware components.

Closed proprietary systems, on the other hand, do the exact opposite. They are made for discrete purposes, with planned obsolescence, and innovation is limited to insider willingness and insider imagination.

To see some exquisite artistic renderings of consumption, including electronic consumption, check out Chris Jordan's work, from which the photo above is an unworthy clip. There is an important tool -- an Executive Order -- the US government can use, that would have an enormous impact on reducing electronic waste.

According to an EPA study of solid waste: "The production of electric and electronic devices is a very resource-intensive activity. The environmental burden due to the production of electrical and electronic products ("ecological baggage") exceeds by far the one due to the production of other household materials. When these devices become obsolete and are discarded without recycling they leave behind lead, cadmium, mercury and other hazardous wastes.

In USA In 2005, we generated 2.6 million tons of e-waste in the US, or 1.4% of total discards. Of this amount, only 12.5% of the consumer electronic products in the municipal waste stream were "recovered," This compares to the overall recovery rate of all categories of municipal waste was 32.1% in 2005.” (1)

Even while "68 percent of consumers stockpile used or unwanted computer equipment in their homes." E-waste shows a higher growth rate than any other category of municipal waste in the EPA's report.

Of course, I have to tie this in to my favorite subject: transportation! Long-term policy goals for the US department of transportation include IT for safety, mobility, and convenience applications. These applications will rely on electronic hardware for wireless communications connecting the 240 million vehicles on the road today with network access points across America.

Given the scale and scope of the US transportation system, pervasive throughout America, touching every American family, electronic devices that leverage open architectures, open standards, open protocols, and open networks -- enabling the multipurposing of electronic and wireless investments – can dramatically reduce the amount of e-waste and would be the environmentally preferred solution for safety, mobility, and convenience applications that are intended for large fleets (over five thousand units).

The Presidential Executive Order -- “Strengthening Federal Environmental, Energy, and Transportation Management,” signed by President Bush on January 24, 2007, instructs Federal agencies to “conduct their environmental, transportation, and energy-related activities under the law in support of their respective missions in an environmentally, economically and fiscally sound, integrated, continuously improving, efficient, and sustainable manner.”

Encouraging open architecture, open standards, open protocols, and open networks is important for this country’s future, one that includes limited resources – elemental as well as monetary ones. We need to get the most out of every device, every investment, and every dollar. Openness helps us accomplish that.

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All-you-can-eat vs pay-as-you-consume

Sounds like some frightening cannibal menu, but I’m really talking about pricing models. The wrong plan can have enormous unintended consequences. Take restaurants, for example. Given America’s rising obesity epidemic, all-you-can-eat buffets encourage us to over consume – an undesirable urge. So what does this have to do with cars you ask?

Economists will say that all-you-can-eat is the right way to price when you have lots of excess capacity and the cost to provide that extra unit of consumption very low. This is why cellphone providers offer monthly bundles of minutes. They know that people prefer having a stable monthly bill they can predict. They also know that people typically choose a higher rate plan than suffer the occasional penalty of going over. And then, people use their minutes right up to cut-off point.

The bottom line is that all-you-can-eat encourages more consumption than pay-as-you-go. Depending on the network I’m talking about, I have different opinions, which could make me sound like a hypocrite. When I’m talking about the internet, which I think everyone should have access to and use as much as they like, I usually favor all-you-can-eat pricing: please, consume as much information as you can! Produce as much content as you are inspired to produce! All for one monthly price!

But then, when I talk about cars, I say the exact opposite. We should pay-as-we-consume. We want people to know and experience the real cost of driving for every mile (and place) that they drive, so that they can make rational decisions about whether they should walk, bike, take transit, drive now, or bundle the errand with another trip. There is a reason for my flip flop (I’m in a political state-of-mind these days). There are enormous externalities associated with driving, that because they are don’t have a cost associated with them, make driving that extra mile appear free when it really isn’t. Take congested roads for an example, the cost of adding each additional vehicle is very high to every other person out there on the road. But there is a whole list of other underfunded costs as well: parking supply and demand, highway maintenance, traffic accidents (death and injury), the effects of car-dedicated pavement on land use, water quality, and the ability of other modes and people to share that same space. Can you believe I didn’t even say the CO word? I’m trying to make the point that even if no carbon dioxide were emitted from the engine, driving that extra mile has lots of other serious costs associated with it.

Over the last thirty years, the transportation profession has learned that if you build it, they will come – meaning you can never build your way out of congestion, because the more free roads and parking you offer, the more miles people drive and the more places they drive to instead of taking an alternative mode. In the last four years, the US government has been encouraging states to start making drivers more aware of the actual and marginal costs. In San Francisco, they have just launched an experiment with dynamic parking rates in a large area of the city. The tighter the on-street parking supply gets, the more it costs to park. [Conversely, you are always guaranteed to find a parking space in that section of town, you’ll just pay a lot for it at peak times.] Progressive insurance has just started offering pay-by-the-mile insurance: the more you drive the more you pay; the less you drive the less you pay. It makes sense.

I was reading about a keynote address Shai Agassi gave at a conference put on by Discovery Institute’s Cascadia Center for Regional Development. Shai has a compelling story to tell about how he is going to supply electric cars and refueling centers to entire countries (Israel and Denmark have signed up) to reduce CO2 emissions. Electric cars have an important role to play in reducing the 18% of the world’s emissions that come from our cars. Shai is doing some admirable work raising capital, building a business model, engaging partners, and accelerating the adoption of electric vehicles. People everywhere, who have been fretting about how to reconcile our car dependence and energy and environmental needs are loving Shai’s story. This from an article that covered the September 5 conference:

‘But what roused the audience to a level of enthusiasm comparable to the political conventions was the keynote address of Shai Agassi.

But Shai’s program has one element I’d like to see changed. His current plan is to offer drivers a cellphone-like plan. You get the car and x miles per month for a one fixed monthly price. And here is where I’d like governments and transportation planner and business people to take note: This pricing model for the electric cars runs counter to all the other steps transportation planners and city governments are taking. It undermines efforts underway to turn the fixed costs of car ownership into variable ones.

Cars aren’t bad, and electric cars are much better. But, all-you-can-eat buffets shouldn’t be on the menu.

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