Sell GreenP? NO WAY!

Toronto Mayoralty Candidates Eye Asset Sales

National Post 2010.01.18. An article in Monday’s Post included a very short mention of the possibility of monetizing an operating contract for Toronto Parking Authority assets to raise money for a broke Toronto:

The city's wholly owned parking operations generate about $55-million in profit every year. The blue-ribbon panel provided estimates, still considered accurate, that say anywhere from $200-million to $500-million could be made if the operating contract was monetized over a period of time. There are also 150 parking lots, such as the City Hall garage or the Dundas Square garage, that could be sold.

Chicago did this a short while ago. Raised an obscene amount of money for that city. What happened? The new operator (no fool, he), raised prices, extended hours and generally found a way to shorten his ROI, all the while shoveling Dave Driver’s doubled dough into his shareholder’s pockets.

The Toronto parking asset is worth much more to us who live in the city if left in the city’s hands and re-priced to market value: prices made variable, raised to hit 15% vacancy, hours extended to 70% vacancy, and spread the good cheer to all the streets that are unpriced, underpriced, abused, tire-marked, and only occasionally enforced.

If the City currently generates $55M net as this article claims, then the City’s gross revenue would be on the order of 150-160M given that municipal parking operations (when they are as badly underpriced as they are in Toronto) consume between 60% and 70% of revenue. If pricing were doubled (Toronto needs this to control congestion), and the operator kept hours and enforcement the same, the operating profit would be more like $210M – a far cry from 55M. Suddenly the asset would be worth between 800M and $2B, using the same multipliers as reported, since the new revenue all go to Toronto’s bottom line.

Either way Mary Motorist pays 50% of current garage fees instead of 25% (still a steal), but my way the city (and its citizens) get the benefit. The Chicago method that the Post’s article contemplates means that some company’s shareholders get your dough instead.

And all this because City Council does not understand markets and arrives at work without courage.

Folks, it’s our city. Parking is about to get more expensive. Where should the money go? To our starving, pot-holed, Metropolis or to somebody's rich uncle?

Keep GreenP, and raise prices to market value.

RAC – The Congestion Challenge

In July 2009, UK’s RAC Foundation*, sponsored a study. It’s foreword, copied here in its entirely, deserves to be widely read. I will comment next week on a way out of the very real challenge it exposes -- and a challenge that may affect a country near you.

FOREWORD

In an age where the political emphasis is on reducing car use, it is perhaps worth reminding those who run the country of a stark reality; over three-quarters of drivers would find it difficult to adjust their lifestyles to being without a car.

That is just one of the findings of this joint RAC Foundation / Ipsos MORI report which provides a barometer of opinion about car use and congestion, at a time when environmental policy is aiming to deliver important climate change objectives during great economic uncertainty. It underlines the importance of taking the needs and views of road users into account when developing a strategy in this area. Policy must not be developed without regard for public opinion, or at least the need for public explanation.

And here are a few more things to bear in mind. Congestion, although still considered a serious problem by two in every five motorists, is not thought to be as big an issue as it was ten years ago. This is a marked shift in opinion, created not by reduced traffic volumes, but because motorists appear to have reluctantly accepted the phenomenon of congestion, and believe it will only get worse in the future, particularly on motorways.

Improvements to the situation are considered unlikely and supposedly radical solutions like road pricing carry decreasing support. Additional charges for travel into town centres and motorways, no matter what the caveat, are unpopular, even more so than at the beginning of the decade – witness the resounding defeat of the Manchester TIF scheme in the referendum of December 2008.

Unsurprisingly support is highest for the options that cost the ‘public purse’ rather than the individual, such as public transport improvements. However previous backing for these initiatives has not translated into a change in people’s travel behaviour. In fact, there was actually a greater willingness to swap from the car to another mode of transport ten years ago.

Managing motorways better, through hard shoulder running and the adjustment of motorway speed limits during periods of high congestion, was generally welcomed, and more than six out of ten people favoured the widening of existing motorways where there were congestion problems, a similar level of support to measures that increase the number and frequency of bus services.

But on the whole, drivers remain unconvinced by alternative modes of travel - so much so that over half would rather take the chance of being stuck in a traffic jam than get on public transport. Only three out of ten people think it is likely they will use public transport to make a journey they currently make by car over the next year. This appears to illustrate both a reluctance to change behaviour and also disappointment with the alternatives that currently exist. Despite Government rhetoric about improving public transport, fewer than three in ten people are optimistic about its future, with the majority believing performance will stay the same or get worse.

The resounding message is that the travelling public are extremely pessimistic, and resigned to a future without performance improvements across the various transport modes. Those who anticipate a worsening in traffic congestion over the coming years are no more inclined to support any form of road pricing, in fact they are more likely to oppose policies, which could improve the situation. A stalemate seems to have arisen.

A radically different – or rather, a radically better – future is hard for individuals to grasp and accept. And while there is apparent widespread support for improving public transport, it is clear that for many it will never be an alternative to the car. The challenge then is to make the vehicles people use smaller and greener.

In the short term more can be done to enhance the ‘performance’ of the road network such as providing motorists with reliable journey times. The Highways Agency’s Managed Motorways scheme has started to do this and politicians must ensure it has the money to see it through.

Longer term, any more radical changes to the way drivers use the road system – possibly through the introduction of national road pricing – have to be implemented with public support. Convincing sceptical motorists of the merit of such fundamental shifts in policy will not be easy. But that is no reason not to do it.

[signed]

Professor Stephen Glaister
Director
Royal Automobile Club Foundation

~~~

The RAC Foundation, a registered UK charity, was originally set up in 1991 fundamentally as a research arm of RAC. Following the de-merger and sale of RAC in 1999, the Foundation took on a new and wider role to include researching and promoting issues of safety, mobility, economics and the environment. The Foundation explores the economic, mobility, safety and environmental issues relating to roads and the use of motor vehicles, and campaigns to secure a fair deal for responsible road users. Independent and authoritative research for the public benefit and informed debate are central to the RAC Foundation’s standing. (from the RAC Foundation site.)

Forget green, your time is more valuable

A Manhattan congestion pricing activist, Charles Komanoff, has achieved the unthinkable. He wrote a very competent argument 10.01.06 “With Congestion Pricing, Saving Time Trumps Reducing Pollution” and most of the numerous responses both pro and con were reasonably intelligent. That alone is one proud achievement in the CP debate.

Komanoff argues that the current value of time lost to congestion far outweighs the cost of incremental emissions caused. Scandal.

I do not like to surrender any argument for CP: productivity, time, emissions, funding, livability, health, national security (oil wars), etc. Right now a non-trivial portion of the developed world might profess to be more concerned about the environment than personal time budgets – at least many more than are willing to follow the arguments in and after his blog. Even though I largely accept Komanoff’s analysis, I don’t want to abandon those people who are pro CP for green reasons.

However, Komanoff’s argument – even if it were NOT backed up with data – is far-sighted. The reason that I have until about a year ago left emissions OUT of my arguments is that I am an optimist about technology, but not about people. However much of the CP fight trades on emissions will be eroded as green cars arrive. “What, me worry, I have an electric car!” Zoom. Zoom.

Electrification will prove Komanoff prescient.

Future car

Parallel developments in automotive telematics will lower costs of, and enable the move to, TDP/VMT road-pricing.

In the Financial Post, 09.12.31, Nicolas Van Praet writes about a number of things we can expect to raise the IQ of our wheels in the future.

For these new carbrains he predicts expanded capabilities for entertainment, information, and some very smart navigation and safety features. Some them could integrate navigation and safety very tightly, indeed:

Carmakers … are spending a lot of time and money thinking about how to incorporate next-generation mobile communications technology …. They're also trying to figure out how to respond to a demographic change of immense consequences. Sometime over the next decade, the world's population aged 65 and older will outnumber children under five for the first time... The number of seniors is growing at an average of 870,000 each month. Many of those older people are in better health than ever before. And many will want to continue driving. They will need help to do that, "in a sense, to keep them safe from each other …envision you're driving down a piece of road that you … [are] unfamiliar with. The GPS system knows exactly where you are … and it knows that it's night, that you're heading toward a mountain road hairpin turn, and that you're going too fast. You know none of this. But the car suddenly starts to slow down, literally takes complete control of the vehicle away from you."

Many of these carsmarts are already available as individual components and there are experimental systems that are designed to decide if you are going too fast for a particular context, and there are even prototype attempts to decide if a vehicle approaching an intersection is likely to be hit by another approaching the same intersection. So with all this automotive telematics engineering in progress at the same time that the market is churning out 65-year olds at the rate of 870,000 month, one can safely predict that demand will coalesce a new market for bundled telematics as we can barely imagine. A single sleek device, targeted after market at first and maybe factory installed as it matures, that will offer as many features in 2011 or 2012 as the laptop did in 2002 or the smartphone in 2008.

But consider another change that is approaching in the same timeframe – pay-as-you-go systems for parking, insurance, and road-use payments. These also need to be tightly coupled to positioning technology, although perhaps one that is more reliable than today’s navigation-grade GPS.

Cramming information (internet node), safety, entertainment, navigation, trip optimization, traveler services, and payment systems into a single system (actually, as apps on a single positioning and communication platform) is not only possible, but desirable. Desirable because dashboard or windscreen real estate is hugely valuable. Desirable because bundling will save motorists a ton of dough compared to purchasing six or ten different systems (my dash is already cluttered with my satellite radio, a GPS and a smartphone – the later two having multiple apps already).

So what will come first? (A) a sophisticated, factory installed, positioning-navigation-safety-management system? (B) a sophisticated aftermarket, self-installed, positioning-payment-management system? Or (C) a couple of generations of after-market systems that attempt some of each until we get it right for factory installation?

Considering that this is a complex integration problem, that we are not yet able to clearly understand the entire requirement, that there will be well over a billion cars on the road shortly, and that only market experience can fully anneal a competent set of system designs (the first cell phones were losers, no?), the correct answer is likely (C).

One of the things that (C) does for governments impatient to move away from the unsustainable fuel tax, is to give them a telematics platform that has some desirable – soon indispensable – features to host, sugar-coat and even help pay for road-pricing payment services.

This means that the upcoming demand for automotive-telematics-based information, safety, entertainment, navigation, trip optimization and traveler information is likely to be a critically important factor to fund the platform for the upcoming shift from pay-by-fuel-tax to pay-by-road-use.