Transcript Observations on a Long Range, Multi

Transportation & Economic Development
One Practitioner's Perspective
Presentation to Maine DOT
Frank Mahady
[email protected]
Principal
FXM Associates
www.fxm.biz
Began working with Maine DOT 28 years ago; some
projects in Maine…
















Statewide port strategy & forest products terminal
Sears Island Port Project
Waldo County Economic Development Strategy
Sanford Housing and Economic Development Strategy
Statewide Tourism Strategy
Route 196 Bypass
Lisbon Falls Bypass
Augusta Bridge
Auburn-Lewiston Air Freight
Lewiston Convention Center
Bath Conference Center
Route 295 Interchange/Waterfront Connector Road (Portland)
Gorham Bypass
Gray Bypass
Auburn-Lewiston Airport Intermodal Terminal
Portland Waterfront: real estate value capture; effects of ferry, excursion,
freight uses
Some observations, with a long-range planning
perspective on:



Planning Process
Analytic Approach
Economic Sectors
Observations on a Long Range, Multimodal Planning Process: Lessons of the Boston
Transportation Planning Review(1970)





3 million population; over 100 communities in study area
Broadly inclusive: reached out to community and business constituencies
Tested regional and community development themes
Tested regional and community alternatives
Explicit decisions made by Governor









No Inner Belt
No I-95 North Relocated
No Southwest Expressway
No South End Connector
No Route 2 Extension
Yes to Transit Extensions
Yes to Third Harbor Tunnel
Yes to Depressed Artery
30-plus-year build horizon -- $15 billion roads; $19 billion transit capital
expenditures made
Present BOLD themes and alternatives: i.e. those that can
accomplish discrete objectives
Let consensus on projects and alternatives develop over time
Observations on Analytic Approach:
Operating Definitions
Provide Operating Definitions for Key Variables: something you
can measure that people can understand
Access -- physical connections





Roads: landlocked areas; paved v. unpaved
Water: piers and terminals
Air: airports; runway lengths
Rail: connections; capacity
Accessibility -- time and reliability




Travel times for freight
Travel times for people
Predictability/predictable variations

Mobility -- choices for freight, commuting, personal travel

Safety -- quantifiable social/economic benefits of accident
reductions
Observations on Analytic Approach: Measuring Effects
on Business Output, Jobs, Income, and Taxes of Congestion/Travel
Time Savings for Goods Moved by Truck

Estimate Hourly Costs to Producers






Determine commodities moved and markets served
(OD for imports and exports)
Link commodity values and volumes to producing
industries
Estimate hourly production costs by industry (value
added – not value of shipments)
Estimate inventory cost as % of production cost
Estimate rate that shipments do not arrive on time
Determine average carrier rates per hour
Hourly Producer Costs = SUM (all industries)
([PrdC/hr * Fail%] * InvtC%) +TransC/hr
Copyright @ FXM Associates
Observations on Analytic Approach: Measuring Effects
on Business Output, Jobs, Income, and Taxes of Congestion/Travel
Time Savings for Goods Moved by Truck

Estimate Annual Hours of Congestion Costs/Travel Time
Savings



Derive aggregate annual changes in truck hours from traffic model
Apply proportionately to industries
Estimate Total Direct, Indirect, and Induced Effects of
Expanded Market Potential (productivity gains)
Input change in net demand by industry to IO model (adjusts for
local v. other firms by Regional Production Coefficient)

Change in Demand = Hourly Costs * Hours Saved

Run model for total direct, indirect, and induced effects by
industry and sector
NOTE ON LAND USE IMPLICATIONS: Changes in jobs by major sector can

be used to estimate potential demand for new industrial, commercial, office,
residential space (sq. ft. per employee; housing units) if output is assumed to
expand (versus retained)
“Try like the dickens to explain yourself…then duck”
Observations on Analytic Approach:
Measuring Other Economic Effects of Accessibility
Changes

Household spending for shopping, attractions, lodging
Threshold time savings to induce additional trips

Different effects by household type and characteristics

Different effects by trip purpose
CAUTION: Note redistributive versus net new effects


Labor Costs and Productivity



Change in geographic labor market
Change in labor cost
Institutions


Change in geographic customer market
Change in frequency of visitations
Practicioners need better empirical data and case
studies – will academia help?
Observations on Industries and Sectors
Lessons for Maine?

Ford Stamping Plant, Lackawanna, NY



$354 mil investment in plant re-tooling
Lost full shift (1,500 jobs) for 0.5% incremental delivery
cost (about 5 minute average time per shipment) to
assembly plant compared to competitor
About 10 minute per truck average travel time saving from
proposed Lackawanna Connector -- $30-50 mil, serving
several other major producers – project rejected
Small changes in travel times can matter – will /should
businesses pay more directly?
NOTE: Businesses need to be talked to, one-on-one in
confidence and the economic analyst needs to present
their perspective…they do not participate representatively
in the public process
Observations on Industries and Sectors
Lessons for Maine?

Big Box/Chain Retailers Effects on Regional and State
Economies





Greater sales per employee (fewer jobs)
Lower wages per employee (lower induced effects)
Fewer purchases from local business (lower indirect effects)
Displace smaller retailers with aggressive pricing and vastly
superior advertising clout (lower aggregate property taxes)
Masked social welfare costs (higher state taxes)
Overwhelming evidence that sacrificing commercially
developable land and state roadway capacity to
accommodate chain retailers is a bad idea for the local,
regional and state economy over the long term – can it be
avoided?
EXAMPLE: “Potential Direct, Indirect, and Induced Effects of Chain Retailers on
the Economy of Cape Cod in 2014”; FXM Associates, Smart Planning &
Growth Coalition, August 2005 www.gotcommunity.org
Observations on Industries and Sectors
Lessons for Maine?

Tourism: A Delicate Balancing Act






Employment opportunities, but with limited upside
potential
Increased property tax revenues , but service costs also go
up
Potential for local business development, but over time
bigger and more productive firms dominate
Significant long-term opportunity cost for year-round
business development as hotels, resorts, retailers develop
prime sites
Over time, year-round residents face higher housing costs
and restricted access to recreational opportunities
The Case of Nantucket – the once “Far Away Land” out of
reach of its children
Summary

Planning Process





Community, regional, state perspectives
Develop and test BOLD themes
Engage key political actors
Allow time for consensus on projects and alternatives
Analytic Approach




Clear operating definitions
Use empirical data specific to state, region, community
Measure direct, indirect and induced effects of accessibility
changes using market driven approach
Distinguish redistributive v. net new effects
Summary

Industries and Sectors


Small changes in travel times can be significant to
industries and have significant direct, indirect and induced
economic effects – can business be more engaged?
Home grown and smaller retailers good, big box retailers
bad for regional and state economies over the longer term
– can a proactive economic development strategy stem the
tide?

Tourism has a threshold (economic and land use) that
when crossed causes irreversible losses to traditional
communities – can communities be convinced to plan for
the long haul and develop land use controls?