ROI, A Look at Transportation

Earlier this week we reviewed Newt Gingrich's vision for future infrastructure investments, including the principles of Efficient, Productive and Flexible. Following that entry, I was made aware of an organization called Transportation for America, a coalition advocating "renewal of our national transportation program for the 21st century". I want to connect one of many common threads in this speech and the coalition's positions and then provide a real-world example of getting a return on our transportation investment.

The Transportation for America web page contains a platform for the group. The executive summary is a good read if you are looking for many ideas pulled together into one cohesive vision. The fourth plank on their platform addresses land use planning.

4. Reward and Support Smart Local Land Use Planning

The most efficient trip is the shortest - or the one you don't have to take at all. More than 60 percent of the growth in driving is due not to population or economic growth, but to spread-out development.

Our nation can no longer afford the endless cycle of building roads, allowing them to become overwhelmed by poorly planned development, and widening or building again. The federal transportation program can encourage coordinated planning between transportation facilities and land use, ending the de facto subsidization of unsustainable development through these initiatives.

So they are acknowledging the obvious connection between transportation and land use. As Newt says, our infrastructure needs to be efficient. Transportation for America states the obvious - the most efficient trip is short or the trip not taken. A spread-out development pattern creates 60% of the increase in driving. Nowhere is this spread out development pattern more evident than in the modern incarnation of the small town. Not efficient. Definitely not flexible, as almost every small town trip is, by necessity, an auto trip.

Later in the platform, Transportation for America points out that the current federal highway funding system rewards states where people drive more. They suggest some new ways to think about funding transportation, including taxing per mile driven instead of per gallon, as well as the following:

Establish a National Infrastructure and Transportation Bank funded by capturing some of the economic value created by the placement of infrastructure investments.

What they are saying here is that we need to see a return on our investments and, further, we need to capture some of that return to pay for the actual investment. In Monday's entry evaluating Gingrich's approach, we made the same conclusion:

We need to make better use of our massive infrastructure investments. We need to see significant returns on the money we spend.

Here's the catch: for almost all development taking place in our small towns today, there is a low or negative long-term return on the investment. You build a mile of road in an urban area and you connect hundreds or thousands of people and millions of dollars of private investment. Do the same thing in a small town and you connect dozens, with much, much less private investment.

So somehow we have to rethink the development model in small towns. We have to start looking at the amount of money we are putting into infrastructure and the direct long-term return we are going to get for each specific investment. For public infrastructure, this evaluation has to go beyond one generation to include replacement.

Retrofitting our small towns in this way is going to take a more creative approach, which means less zoning and more planning.

For example, what if instead of looking at the main highway through town as a central conduit for traffic, which we managed for optimum traffic flow, we instead looked at this stretch of road as our main infrastructure investment that we need to manage for economic return? If we did, instead of optimizing for traffic, we would optimize for growth and investment. While we would still have cars passing through, the street would necessarily become more complex, with the parking, landscaping and pedestrian areas required to spur the dense commercial development we need. Growth might be slower (might not, especially in the long run), but it would be financially sustainable.

While the idea of turning the main highway into a complex street is more than controversial in most small towns (fighting words in many places), I'm going to close with a reference sent to me by a citizen-planner interested in this concept. It is a big-city example - Seoul, Korea - but understand that their traffic and development problems were on a much more vast scale than any small town. If they can do it, so can we.

And consider this ROI:

In exchange for the $360 million price tag of the Cheonggye River Restoration Project, Seoul’s government anticipates $12 billion in new investment. A redevelopment map shows several miles of new waterfront development opportunity on both sides of the river. At one end they anticipate the linear expansion of the financial district and at the other the creation of an entire new town on the site of some of the city’s worst post-Korean War housing developments.