Houston’s metropolitan area shares many characteristics with Southern California, so it’s always interesting to review assessments of Los Angeles’ urban boondoggles for guidance on how to avoid the same mistakes here.
In this L.A. Times op-ed, urban economics expert Joel Kotkin (previous posts here) explores the latest initiative to allow L.A.’s white elephant — the downtown convention center — to feed at the public trough. Despite the fact that the center has been a chronic money-pit despite a $500 million city expansion investment 17 years ago, the city is now proposing $300 million in loans, tax breaks and fee waivers for a $750-million, 54-story complex ó including a 876-room Marriott Marquis, a posh 124-room Ritz-Carlton and 216 luxury condos ó across from the Convention Center (sound familiar?). Despite the huge public outlay of public funds for the downtown convention center, Kotkin reports the following:

L.A. is still not on the list of the nation’s top 10 convention cities and has little prospect of competing successfully against Las Vegas, New York and Orlando, which have far more attractions. According to one trade publication, L.A. hosted fewer major conventions last year than Indianapolis and Rosemont, Ill. But there’s a bigger problem here.
The simple truth is that convention centers are rarely a good public investment. A definitive national study by the Brookings Institution, released last year, found that they frequently operate at a loss, including the recently expanded centers in Washington and St. Louis. In most cases, their much-ballyhooed effect on the local economy ó new private investment, more jobs and increased levels of tourism ó “has simply not occurred,” reported Heywood Sanders, the study’s author.

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Tory Gattis of the smart Houston Strategies blog has been doing his typically excellent job of covering developments on the proposed expansion of the Houston Metro light rail line. Neither an over-the-top advocate nor a grizzled pessimist about urban rail systems, Tory takes a refreshingly measured view that such systems should attempt to maximize usefulness while being a part of an integrated urban mobility plan that doesn’t place all urban mobility eggs in one transit-type’s basket.
The wisdom of Tory’s approach is reflected by what is currently playing out in Las Vegas, where Sin City’s new $650 million, 4.4 mile monorail project just experienced the worst monthly ridership in the system’s 18-month history (earlier post here). Although comparing Houston’s light rail system to the Las Vegas monorail is bit akin to comparing apples and oranges, it is noteworthy that the poor performance of the Vegas monorail has contributed mightily to the junk bond rating of the Las Vegas Monorail Co. bonds that were used to finance the system. Now, the Vegas transit authority finds itself unable to sell bonds at a realistic price in order to finance construction of logical expansions of the system, such as an extension to McCarron Airport.
Read the entire article because it is a wonderful reminder to us of how financial logic and constraints are abandoned in the face of such governmental boondoggles. For example, what do you think the Vegas transit authority did in the face of a system that is generating less than half of the amount necessary to pay operating expenses and debt service, lost $20 million last year, and is generating far fewer riders than projected?
The transit authority increased its base one-way fare from $3 to $5.
But wait, pointed out a spokesperson for the transit authority, that cool move generated an almost 24% increase in monthly revenues from a year ago even though 18% fewer riders used the system. Thus, even though the system needs over a 50% increase in monthly revenues to approach break even status, the transit authority’s spokesperson reasoned that an anecdotal month’s worth of higher revenue indicates that a drastic ridership increase won’t be needed to break even. According to the transit authority, all that is needed is a quadruple increase in the monorail’s marketing budget in order to attract more riders, presumably high-rollers who enjoy moving from casino to casino. Often.
So, how long do you think it will take for the Vegas monorail to be converted into Vegas’ newest rollercoaster attraction? ;^)

This article notes that the same amount of monthly rent that would get you a nice apartment in Houston would get you something nice in Manhattan, too — a parking space!:

Keeping a car at Time Warner Center across from Central Park runs about $550 to $600 a month. One- bedroom rentals are available for $500 to $600 in Greensboro, North Carolina; Austin, Texas; Cincinnati; and Oklahoma City, . . . Space is at a premium in Manhattan, home to about 1.56 million people, as outdoor lots and garages are converted into housing and new construction eats up what little land is available.
That opens a door for some building owners to tout their parking services. At 170 East End Avenue, architect Peter Marino designed parking spots as “couture homes for your car,” with each space planned and presented to the buyer in the building’s sales office, . . .
At One Beacon Court across East 59th Street from Bloomingdale’s, where available apartments sell for $5.9 million to $17 million, residents have access to valet parking at a nearby garage, with their cars delivered to the building’s entrance.
Rates are $600 a month, $700 for an oversized vehicle.

And I thought that $7 charge at the Civic Center Parking Garage for a couple of hours of parking last week was stiff! ;^) Hat tip to Craig Newmark for the link.

Tory Gattis asks the right questions regarding Houston’s latest proposed urban boondoggle, but it’s at least somewhat comforting to know that other cities are pondering even bigger boondoggles.
In Chicago, Mayor Richard Daley is floating a plan to build a new $1 billion dollar domed stadium to attract a second NFL team, the Super Bowl, the 2016 Olympic Games, the NCAA Final Four, and perhaps an unending string of monster truck shows to the Windy City. Brad Humphreys over at the Sports Economist comments on the absurdity of this proposal:

For those with short attention spans, Soldier Field, home of the NFL’s Chicago Bears, underwent a $365 million dollar publicly financed renovation in 2002. But someone forgot to enlarge Soldier Field and build a roof during the renovation. Its 61,500 seat capacity is second smallest in the NFL, and too small to host the opening and closing ceremonies at the Olympics.

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The Chronicles Nancy Sarnoff writes in this article about the Metropolitan Transit Authority‘s latest venture to do something other than what it is chartered to do, which is to provide a flexible and effective mass transit system for citizens of the Houston metropolitan area:

[Metro] has selected Houston-based Transwestern Commercial Services to build [a $105 million building above the transit center on Fannin near the Medical Center], which could include condominiums, a hotel, office and retail space in the Texas Medical Center.

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Houston’s light rail system is a depressing black hole that gobbles huge amounts of money, so we are reduced to feeling somewhat better about that waste by stories such as this one that portend an even bigger urban boondoggle:

A decade ago, local leaders [in the Raleigh-Durham Research Triangle area of North Carolina] started planning a regional rail system, hoping to avoid a future of clogged highways and frustrated commuters. . .
The Triangle Transit Authority wants to build the $759 million system. But TTA is struggling to answer rigorous questions from federal officials about predictions of how many people will ride.
No dirt has yet been turned, although TTA has spent nearly $43 million acquiring land and access to an existing railroad corridor.
The project’s cost has ballooned from a 1994 estimate of about $100 million to a new estimate of $759 million.

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