… More than a decade later, the Port of Miami Tunnel is the marquee example of a public-private transportation infrastructure partnership. … But the tunnel’s success is deceptive, since the unique factors that converged in South Florida cannot be replicated everywhere. For every Port of Miami Tunnel, scores of ill-conceived projects dot the American landscape. The United States lags behind not only in basic maintenance of existing assets at the end of their life cycles but in building the next generation of roads, bridges, rail, tunnels, and aviation projects. With public funds scarce in a climate of tax-cutting and budgetary austerity, the risk is that the contactor/partner pays the up-front costs but sticks future generations of taxpayers and rate-payers with exorbitant charges. … But states and municipalities can learn to appreciate the differences between partnerships that put the public first and the rip-offs that erode public confidence in government and drain public coffers.
… The Trump administration’s version of an infrastructure initiative relies heavily on private financing, which may or may not materialize. … But the Trump framework is only an exaggeration of recent trends. At best, new fiscal pressures can lead public officials to get creative, seeking private partners who may bring superior engineering, financing, and legal expertise, and better attention to maintenance and operations. But private-sector involvement does not automatically mean a better outcome. Citizens and public officials often forget that the private sector’s prime motive is profit, not philanthropy. If a firm cannot clear a good return on an investment, either the deal will not materialize or the terms will be onerous to the public. Public debates can be marred by false expectations, and confusion or obfuscation of what distinguishes a good partnership from a rip-off. …
On Monday, a Kansas legislative committee on corrections got answers to questions they should have been asking all along. Rep. J. Russell Jennings, Chairman of the Committee on Corrections and Juvenile Justice Oversight, called the hearing after The Star detailed the nearly $2 billion Missouri and Kansas will pay to Corizon Health over a decade to provide health care to inmates. Despite the cost to taxpayers, legislative oversight has been lax, particularly in Missouri. That needs to change. The Tennessee-based company has been sued more than 280 times by inmates in Missouri and Kansas, which should be a red flag for lawmakers. … At Jennings’ request, the Kansas Department of Corrections detailed how a University of Kansas Medical Center team conducts monthly reviews of the care being provided to the state’s approximately 9,800 inmates at a cost of about $68 million a year. … The committee learned that Corizon was penalized more than $1.7 million in 2017 for infractions, including failing to meet staffing or compliance standards for mental health treatment. Corizon has been sued 48 times in Kansas since 2014. So far, there have been no adjudications, settlements or findings against the state, the University of Kansas Medical Center or Corizon. … Missouri has been even less responsive. A state grant once paid a nursing professor to oversee the contract. But then Corizon was allowed to begin paying the fee. So the person who was scrutinizing Corizon was paid by Corizon. ….
A committee tasked with picking a team of consultants to advise the city on whether to privatize St. Louis Lambert International Airport has met several times but has yet to choose advisers to lead the process. There were 11 submissions for consulting services, Deputy Mayor for Development Linda Martinez told the Post-Dispatch. Only three covered all services sought in the city’s request for proposals, she said, and the others only covered part of the services. The identity of the winning bidder won’t be revealed until a contract is agreed upon. … No vote was taken when the committee met Wednesday. Instead, much of the session was devoted to providing information to several city aldermen, amid growing concern from members of the board that the process, which was greenlighted by the Federal Aviation Administration in April, hasn’t been transparent. … Critics have questioned the need for privatizing Lambert, citing its recent growth, including a 10 percent spike in passengers in 2016, and a strong credit rating. … The effort to explore the benefits and risks of privatization has been a slow one. …
The director of St. Louis Lambert International Airport said Thursday she’s keeping an open mind about a proposal to privatize its management. Rhonda Hamm-Niebruegge also said she has reservations about the shift’s potential to steer more money from the airport to the city. Mayor Francis Slay traveled to Washington this week to ask for St. Louis’ inclusion in a Federal Aviation Administration pilot program to study leasing airport operations to a private business. St. Louis County Executive Steve Stenger and Lyda Krewson, the Democratic nominee for mayor, have said the idea deserves examination, and political mega-donor Rex Sinquefield has made a six-figure commitment to help pay for the application. The FAA could decide this month whether to include Lambert in the program, starting a decision-making process that could take at least a year. If the change were made, the city still would own the airport and land while a private company leases it. … The city draws about $6 million annually from the airport, and a public-private partnership could bring an “immediate” infusion of more funds, according to the city. … Congress is considering how infrastructure projects might fit into the FAA’s reauthorization legislation. …
At a Wednesday meeting, Kansas City council members discussed the feasibility of outsourcing the responsibilities of the city’s animal control division to the KC Pet Project. This summer, an internal audit highlighted a lack of oversight and organization within the Animal Health and Public Safety division. For example, if you called the agency about an animal cruelty case, there might not be any follow-up because the audit says the department doesn’t keep track of its investigations. City workers spoke out against the merger two council members say will help things run smoother. … A union representative with the American Federation of State, County and Municipal Employees (AFSCME) Local 500 said talks of outsourcing shouldn’t even be taking place. …
The Independence and South Platte emergency medical services union will get some of what it has asked for in its long-running contract dispute with American Medical Response. But the bulk of the fight still lies ahead. Members of the EMS Workers United-Local 1812, which represents emergency medical technicians, paramedics and dispatchers, have been circulating petitions to require Colorado-based AMR to regularly report employee turnover data to Independence officials. They planned to present the petitions to the Independence City Council at its meeting Monday. … Warth said the turnover data will be presented monthly at meetings of the emergency services committee, which includes representatives of the Independence police, fire, AMR and Centerpoint Medical Center. The committee meets every second Thursday. Robert Mills, a member of the EMS Workers United-Local 1812 bargaining team, said he was at the May meeting Thursday morning and no mention was made of the new data-sharing agreement. …
Members of the EMS Workers United-American Federation of State, County and Municipal Employees (AFSCME) Local 1812, which has been in contract negotiations with AMR for a year, say their turnover rate is too high due in part to fatigue and burnout from too many extra-long shifts – potentially putting patients at risk. They want the city’s health department and Emergency Services Committee that advises Health Director Andrew Warlen to have access to employee satisfaction and turnover data on a regular basis. Such a transfer of information is not uncommon in other municipalities contracted with AMR, they say. Furthermore, they believe Warlen is within his authority in the city code to request it. On March 23 the union filed an unfair labor practice charge with the National Labor Relations Board to obtain employee satisfaction information for themselves from the ambulance company. …
The union that represents emergency service technicians with the American Medical Response (AMR) are in a dispute with the city of Independence and the company. EMS Workers United-AFSCME said the city isn’t asking tough questions and the company isn’t being transparent, that they say that could put lives in danger. … According to her union, the employee turnover rate last year was 23 percent twice the national average. … In Independence, the city’s health director monitors response times monthly. Union members want him to do more that. “That’s currently the only metric that the city is measuring, then we’re not getting a full picture of our emergency care here,” Robert Mills, an EMT at AMR, said. … But the union points to ordinance SEC. 19.04.004. A.1 in the city’s code that allows the health director to request more reports in additional to response times.
Missouri’s cities and counties could lose state funding if they force nonunion contractors to pay workers union wages for public projects, under a measure now headed to Gov. Eric Greitens’ desk. Current law allows both union and nonunion contractors to bid on public construction projects. But under a project labor agreement, local governments can require nonunion contractors to pay union wages, something Missouri Republicans call an unfair practice that discourages competition. The legislation also would ban local governments from giving preferential treatment to union contractors. Governments that violate those provisions would lose state funding and tax credits for two years. Greitens, a Republican, has listed the elimination of the agreements, or PLAs, among his labor reform priorities, which he says will persuade more businesses to set up shop in Missouri. …
Legislation that would expand charter schools in Missouri has passed one side of the General Assembly. By a narrow 82-to-76 margin, the Missouri House approved HB-634 — sponsored by Republican Rebecca Roeber of Lee’s Summit — which would allow charter schools to be established throughout the state. Currently, charter schools — which are publicly-funded and tuition-free schools that operate independently of the public school system — are only allowed in the Kansas City and St. Louis areas. … Many Republicans in the House backed the bill because it increases choices for education, while opponents hold that the state cannot hold the schools accountable. … Governor Eric Greitens has already signaled support for the proposal. The bill now heads to the Senate for consideration, where a similar proposal is already in committee.
Bringing Bridj to Kansas City seemed like a no-brainer to transit officials. For just $1.50, anyone could use an app to summon a ride downtown in van that would follow a route calculated on the fly by an algorithm. No one within the service area was ever more than a 10 minute walk from a stop, and as an added incentive, your first 10 rides were free. It flopped. Just 1,480 people rode on a Bridj van, a laughably small figure in a city of 2 million people. The city launched the program with the Boston mobility startup in March 2016, and in the past six months just one-third of riders took more than 10 rides. The one-year, $1.3 million project ended Friday. You might call it a failure. Government officials and transit researchers call it a success…..
Urban technology company Bridj is teaming up with the Kansas City Area Transportation Authority (KCATA) to launch Ride KC: Bridj. It is a one-year pilot program that will use a network of locally built Ford Transit vans (photo below on left). The program will provide a new way to access areas of Kansas City that are rich in jobs and housing. The project is scheduled to launch in early March. … Ride KC: Bridj will be powered by billions of data points, Bridj’s platform determines where riders want to go and how to get them there most efficiently. Using the Bridj mobile app, riders can request on-demand shuttle service that they can access via pop-up shuttle stations. The pilot aims to extend the current capabilities of Kansas City’s mass transit system.
A recent study by the Massachusetts Institute of Technology’s Computer Science and Artificial Intelligence Laboratory (CSAIL) came to the headline-grabbing conclusion that up to 95 percent of New York City taxi rides could be met through only 2,000 on-demand 10-person shuttles. The study demonstrates what companies like Uber and Lyft are striving toward, but also what many public transit agencies are struggling to address: that future transportation systems will seamlessly and dynamically match riders with the best transit modes and routes. … Existing fixed route-based transit systems are just that: fixed. There are plenty of advantages to these systems, not the least of which is operational simplicity. But our nation’s backbone of transit agencies – often overburdened and underfunded – should be asking themselves “what service options do riders want?” as opposed to “what service options are the easiest for us to deliver?” The answer is personal public transit. This concept of on-demand mobility isn’t all that new, however. … Another issue is the cost and operation of paratransit. … Transit agencies from Boston to Washington have recently started to look to partners like Uber and Lyft to help provide a ride-hailing option to relieve fiscal and infrastructure pressures. A 2016 Brookings report estimates transit agencies could save $1.1 billion to $2.2 billion per year using ride-hailing companies for paratransit, based on an average $13 to $18 per ride. However, the secret here is that versus transit these savings do not scale up very well; ride-hailing services are really not designed to handle simultaneous, multiple trips efficiently, therefore even a bus with six passengers on it has less of a cost impact than six separately ordered Uber vehicles. … Forward-thinking city planners in Gainesville, Fla., and Helsinki are reevaluating the traditional transit equation and instead choosing to co-opt ridesharing and even autonomous vehicle technology to fill current service gaps in less densely populated areas. … Solving the inefficiency riddle will ultimately require transit agencies, technology companies and other innovators to seamlessly work together to maximize social benefits because public transit benefits every American—even if you don’t ride.
Five Central Florida cities that cut deals with Uber hoping to boost SunRail ridership have released records revealing how much money they will pay the ride-sharing service, which the company had hoped to keep a “trade secret.” Cities began receiving invoices this week that tabulated costs through Jan. 17, which just surpasses the halfway point of the yearlong program. To that date, the highest total came from Altamonte Springs, which has paid for $14,863.59 in Uber rides. Sanford received a bill showing it owed $7,869.99. Additionally, Lake Mary owes $723.38 and Longwood owes $681.17, and Maitland owes $324.65 records show. In July, the cities began the one-year pilot with Uber to cover 25 percent of Uber fares on rides that start or finish at a SunRail station, and also start or finish within a city’s limits. Cities also cover 20 percent of rides on trips that start and finish within the borders of participating cities. …
In Centennial, Colorado and Altamonte Springs, Florida, residents and visitors can now get a free ride to the nearest train station. The ride is paid for by the local public transit agency, but it’s not a public bus that makes the trip. Rather, it’s a car driven by someone working for ride-sharing companies Lyft and Uber. There are potential public benefits – the hope of increased ridership, better service for hard-to-serve areas and cost and equipment efficiencies. Competition could push sometimes slow-moving transit agencies to innovate and improve. There are also risks. Ride-sharing companies have devastated the private taxi market, effectively undercutting the entire industry in some cities. Mobility rights advocates and transit employees fear the same thing could happen to public transit, remaking, under private ownership, the way millions of Americans get around every day. … A likely outcome of ride-share and authority interaction is more of what is already taking shape in Colorado, Florida and many other locales – small-scale, replicable cooperation. Centennial and Altamonte Springs are attempting to address what is know in the transportation sector as the “first mile/last mile” problem. The idea is that many potential transit riders don’t use the service because it’s too far from either the beginning or end of a given trip. Offering ride-sharing as a way to connect from the doorway to the transit stop may help overcome this issue. … The biggest question about these new relationships is how well they meet riders’ needs over time. Disability rights advocates have already warned that substituting ride-share services for existing agency-run paratransit programs – on-demand rides for users with disabilities – may be a violation of the Americans with Disabilities Act. Public agencies and most private transportation companies are bound to provide these services to all users, but it’s not yet clear whether newer ride-sharing companies must also – or how contracting with a government agency might require it. … Continue reading →
Missouri and St. Louis tried mightily to keep the NFL Rams from decamping for Los Angeles, offering $400 million in state and city money for a new stadium. To justify the public expense, officials argued that the team, which moved from Los Angeles to St. Louis two decades ago, was an economic engine for the region. They offered to put up the money even though the Rams’ billionaire owner, Stan Kroenke, could afford to build a new stadium on his own. … Two other NFL teams, the San Diego Chargers and the Oakland Raiders, also are eyeing a move to the nation’s second largest city. But Nevada is hoping to grab the Raiders for itself, by dangling a $1.4 billion stadium that would be paid for, at least in part, by the taxpayers. Meanwhile in Atlanta, construction is underway on a new $950 million stadium for the NFL Falcons, to be financed partly through bonds secured by extending a tax on hotel and motel rooms. Amid all the jockeying, a decadeslong debate rages on: Does it make economic sense for cities and states to use public money to build sports facilities? …
… But many economists maintain that states and cities that help pay for new stadiums and arenas rarely get their money’s worth. Teams tout new jobs created by the arenas but construction jobs are temporary, and ushers and concession workers work far less than 40 hours a week. Furthermore, when local and state governments agree to pony up money for stadiums, taxpayers are on the hook for years — sometimes even after the team leaves town. St. Louis, for example, is still paying $6 million a year on debt from building the Edward Jones Dome, the old home of the Rams that opened in 1995, despite the team’s move to California. The debt is financed by a hotel tax and taxes on “game day” revenues like concessions and parking. …
…The first place to start is with the financing. A few years ago, a Harvard urban planning professor named Judith Grant Long put out a book called “Public/Private Partnerships for Major League Sports Facilities” that shed some light onto what these deals really cost taxpayers and the subsequent spillover effect into other areas. … The average public/private partnership has the cities forking over 78 percent of the costs, and the teams themselves just 22 percent. Additionally, she added, taxpayers spent about $10 billion more than originally estimated on the construction of all 121 stadiums that were in use during 2010. Ownership groups (made up of billionaires) tell city officials that they can’t afford the hundreds of millions of dollars required to erect these modern coliseums. They talk about the boon it will bring to the surrounding area, the increase in tourism, and the creation of jobs, while in the same breath, threatening to leave for another city if they don’t oblige. …
Hamilton County, which took on stadiums for both the Cincinnati Bengals and Cincinnati Reds in the mid-1990s, has been crippled with debt ever since. In 2013 alone, annual stadium expenses totaled $43 million. Since these two stadiums were built, a public hospital was sold, mass transit investments were put off, and the tiny amount of private development along the Ohio River, which was a big selling point to get an increase in sales tax approved, has still required additional public subsidies. …
To afford the $720 million required to build Indianapolis’ Lucas Oil Stadium, the city raised hotel, restaurant and rental car tax rates. Five months after it opened in 2008, a first-year deficit of $25 million was projected to jump to $45 million a year later. In June 2013, the city of Detroit, amid a financial crisis and filing for bankruptcy, stayed the course with its $444 million hockey arena for the Red Wings. A $450 million bond with a 30-year term fit the average arrangement mentioned in Long’s book, leaving taxpayers responsible for $283 million of it. …
After a week off, John Oliver and his award-worthy HBO program Last Week Tonight are back, and this time, they’re targeting one of America’s favorite pastimes: pro sports….. “The vast majority of stadiums are made using public money,” said Oliver, citing a report from 2012 stating there’s been “$12 billion spent on the 51 new facilities opened between 2000 and 2010.” “Which begs the question: Why?” he asked…… But the theory that building a new stadium boosts a city’s economy is, according to an economic study cited by Oliver, a total myth. “A major review of almost 20 years of studies shows economists could find no substantial evidence that stadiums had increased jobs, incomes, or tax revenues,” he said….Recently, Hamilton County, Ohio, spent more than $50 million on stadium debt service and other costs in 2014 for the Cincinnati Bengals and Reds, even though the county has had to sell a public hospital, cut 1,700 jobs, and delay payments for schools because of budget gaps.
Stadiums
Source: Last Week Tonight with John Oliver, July 12, 2015
Cities spend massive amounts of public money on privately-owned stadiums. Cities issue tax-exempt municipal bonds that — wait, don’t fall asleep!
This volume takes readers inside the high-stakes game of public-private partnerships for major league sports facilities, explaining why some cities made better deals than others, assessing the best practices and common pitfalls in deal structuring and facility leases, as well as highlighting important differences across markets, leagues, facility types, public actors, subsidy delivery mechanisms, and urban development aspirations. It concludes with speculations about the next round of facility replacement amidst rapid changes in broadcast technology, shrinking domestic audiences, and the globalization of sport.
From the abstract:
This paper reviews the empirical literature assessing the effects of subsidies for professional sports franchises and facilities. The evidence reveals a great deal of consistency among economists doing research in this area. That evidence is that sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation, those arguments most frequently used by subsidy advocates. The paper also relates survey evidence showing that economists in general oppose sports subsidies. In addition to reviewing the empirical literature, we describe the economic intuition that probably underlies the strong consensus among economists against sports subsidies.
