What if HQ2 comes to Reston?

At last week’s DC Economic Club luncheon, Jeff Bezos stated that Amazon will announce the location of its second corporate headquarters—“HQ2”—by the end of the year.  The Washington metropolitan area figures prominently in Amazon’s consideration with nine sites identified as finalists.  One of the possible locations indicates it is likely to be located at the Center for Innovative Technology (CIT) near Dulles airport in the bulls-eye of the US internet.    

Regrettably, Fairfax County leaders are not planning realistically or inclusively to provide the infrastructure needed to support the promise of 50,000 new jobs dangled by Jeff Bezos resulting in an estimated 130,000 person population gain, according to the Metropolitan Washington Council of Governments (MWCOG).  Moreover, MWCOG expects Amazon’s arrival in the DC area to generate an additional population growth of 260,000 people region-wide in households with employees directly supporting Amazon. 

Reston and the CIT are at the epicenter of Fairfax’s development planning to support Bezos’ expected move.  They are along Metro’s Silver Line and bordered by generally low-intensity commercial development that is already being profitably redeveloped into a high-density residential-centric mixed-use urban environment. 

The county’s comprehensive plan for our masterpiece Bob Simon “planned” community—modified without meaningful resident knowledge, much less input, in recent years—is to triple Reston’s roughly 60,000 population and add about 40,000 jobs over four decades.  This is the kind of growth that Amazon will require.  This includes well over 90,000 new residents and the new jobs in its three Silver Line Metro stations and adding more than 20,000 residents to its redeveloped suburban village centers, changing them from neighborhood shopping sites into high-density mixed-use mini-urban centers.   Routinely awarded "bonus" density and development waivers are likely to drive that population growth up at least another ten percent.

Using FCPS' forecast methodology, that potential 180,000 or so population means more than 5,000 new students added to the 20,000 kids already in Reston’s overcrowded schools according to Fairfax schools.  More broadly, MWCOG estimates total added students from all Amazon-related employment at 87,000--a much higher per household student ratio than Fairfax County anticipates (0.2 vs. 0.087 students per household).  The county’s plan:  Add one elementary school and shift some boundaries.  Using the county’s forecasting methods, Reston’s citizen groups calculate that three new elementary schools and one each middle and high school will be required.   MWCOG's forecast would require a doubling of that number.

Open spaces—parks, athletic fields, woods, and lakes—are a cornerstone of Reston’s history and its planning principles.  More than 1,350 of Reston's total 10,000 acres is HOA open space while the county provides only about 110 acres of parkland in Reston.   Yet the county’s Reston plan calls for only about 12 new ballfields requiring less than 50 acres, about one-quarter the acreage mandated by its own urban parkland acreage standards.  There would be virtually no other public open spaces of consequence, maybe some small linear and pocket parks, playgrounds, and—yes—sidewalks. 

The county’s transportation plan for Reston is equally ludicrous.  In general, it hypothesizes without meaningful evidence, using a flawed methodology, and relying on unreliable self-monitoring that traffic will magically diminish as new bicycle and pedestrian facilities and high-density housing are added.   Its few substantial road improvement proposals—critically needed crossovers of the Dulles Corridor—are literally decades away and unfunded, and moving farther into the future despite a special added tax on Reston station area properties.  Finally, the Reston plan explicitly proposes no additions to public transit—none!

Nonetheless, the County is in no financial position to carry out even these insufficient plans as the delays and omissions in its transportation planning highlight.  It has insufficient reserves to buy land for schools, parks, or any other public facility, much less build them.  Moreover, it almost certainly has made generous secret tax concessions to Amazon to attract it here.  It could use its “AAA” bonding power, but the investment would be in the billions of dollars over time, put its bond rating at risk, and require substantial additional property taxes on all county residents while limiting the availability of bonds for other county needs.   And there is little land available in Reston for almost any of the needed infrastructure investments at any price. 

Moreover, as analysis of numerous research studies has pointed out, the cost of adding infrastructure to support residential development consistently exceeds the new tax revenue generated.  The result, of course, will be a sharp diminution in Restonians’ quality of life with similar, but lesser, lifestyle erosion county-wide.   

And, when it suits Jeff Bezos, Amazon will move on to “HQ3”—just as Exxon returned to Texas a four years ago—leaving behind the wreckage of the once-uplifting planned community of Reston.

Now they tell us: BRT is more cost-effective than rail for TOD!

Looks like we could have saved $5 billion or more (as many of us already suspected) by building a bus rapid transit (BRT) system down the Dulles Corridor, not to mention outrageous Dulles Toll Road rate increases to come.

The Institute for Transportation & Development Policy (ITDP) has just issued a major study that, among other things, highlights that there is little or no advantage to spending big bucks on rail if your goal is to stimulate economic development in transit-oriented development (TOD) areas.

Here's what Atlantic Cities has to say about the report:

Today, the Institute for Transportation and Development Policy released a report showing that bus-rapid transit can play a huge role in stimulating economic development — often leveraging more investment than rail projects do. Previous research already suggested as much, but the impact documented in the ITDP report is still eye-catching. . .

So what's the lesson here? Well, the basic takeaway is that cities seeking TOD investments should build that desire around a strong plan for government intervention first and foremost, then identify a corridor with great potential as a secondary act. The type or quality of the transit system itself need only be a third consideration; indeed, ITDP concludes that light rail, BRT, and streetcars "all led to similar TOD investment outcomes under similar conditions."

In other words, if your goal is economic development, then focusing on transit is besides the point.

But as usual the broader lesson is more complicated. The idea that TOD doesn't always require the T can be encouraging, since it frees up cities to invest in urban corridors for their own sake. But it's also concerning, because even if transit quality doesn't matter for TOD purposes, it certainly matters for mobility. Cities that see transit systems as a mere pretext for economic development are bound for some sort of disappointment, no matter the monetary gain.

There is no doubt that the Dulles Corridor has experienced HEAVY government intervention with the two new Comprehensive Plans for Tysons and the Corridor.  Moreover, the area has major potential.

Apparently, however, spending billions more to put in commuter rail will have little impact on the economic success of Tysons or the Reston as TOD areas.  BRT would probably have worked as well (as is outlined in the current Dulles Corridor Comprehensive Plan).  But of course, our Loudoun and Fairfax county governments picked the less cost-effective approach!

Click here to download the full ITDP report (161 pp).  

LTE: Reader Questions Logic of Rail to Loudoun, Ashburn Patch, April 26, 2012

Infrastructure costs, unknown commitments and uncertain expectations are the the focus of his concerns.

As expected, proponents of the Dulles Rail project are relying on the most optimistic projections to support the need to add rail to our transit options, while opponents point to the enormous cost and the selective burden faced by Dulles Toll Road commuters to cover the financing. Beyond the political theater, it would be fair to say that there is enough uncertainty to apply the highest level of scrutiny to the proceedings.

Having examined some of the documents on the Loudoun County website, most notably the Dulles Rail traffic and revenue projections, and the updated Fiscal Impact Analysis, I must echo the findings by Terry Maynard of Reston Citizens Association Board of Directors/RCA Reston 2020 Committee, who in a recent letter to the Loudoun County Board of Supervisors and Gov. Bob McDonnell, states that “The key point is that Metrorail to Loudoun will bring major infrastructure investment and financing costs with it that will outweigh—probably by far—the economic benefits that may accrue to the county over the next several decades.” . . .

Please click here for the rest of this letter by Robert M. Jones, North Fork, Blue Ridge District, Loudoun County.  He discusses a number of other issues that affect the costs and impact of extending rail to Loudoun County. 

Delusion and Deception in Large Infrastructure Projects, Bent Flyvbjerg, et al, California Management Review, Winter 2009

This research report written by Dr. Bent Flyvbjerg, one of the world's leading experts in infrastructure planning, with Massimo Garbuio and Dan Lovallo provides an important overview of the many factors that cause infrastructure plans, especially those for transportation, tend to arrive later and be more costly than anticipated.  The article notes (emphasis added):

There are some phenomena that have no cultural bounds such as maternal love and a healthy fear of large predators. We can add to this list the fact that, across the globe, large infrastructure projects almost invariably arrive late, over-budget, and fail to perform up to expectations. Cost overruns and benefit shortfalls of 50 percent are common; cost overruns above 100 percent are not uncommon. For example, in one study of major projects in 20 countries, nine out of ten projects had cost overruns.4 Similarly, a study of 44 urban rail projects—in North America, Europe, and developing nations, including London’s Tube and the metros in Washington, D.C., and Mexico City—found that the average construction cost overrun in constant prices was 45 percent; for a quarter of the projects, cost overruns were at least 60 percent. In addition, passenger ridership was, on average, 50 percent lower than forecast. Furthermore, for a quarter of the projects, ridership was at least 70 percent lower than estimated.  An appropriate slogan seems to be “over budget, over time, over and over again.”

 The causes are straightforward:

The underlying reasons for all forecasting errors can usefully be grouped into three categories: delusions or honest mistakes; deceptions or strategic manipulation of information or processes; or bad luck.  Bad luck or the unfortunate resolution of one of the major project uncertainties is the attribution typically given by management for a poor outcome. . . .

. . . Both delusion and deception see the high failure rates for ventures as a consequence of flawed decision making. According to the first explanation— delusion—the flaw consists in executives falling victim to what psychologists
call the planning fallacy.  In its grip, managers make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate costs and time. They involuntarily spin scenarios of success and overlook the potential for mistakes and miscalculations. As a result, managers pursue initiatives that are unlikely to come in on budget or on time, or to ever deliver the expected returns.

According to the second explanation—deception—decision making is flawed by strategic misrepresentation or the presence of what economists refer to as principal-agent problems. Whereas the first explanation is psychological, the second is due to the different preferences and incentives of the actors in the system.  In this situation, politicians, planners, or project champions deliberately and strategically overestimate benefits and underestimate costs in order to increase the likelihood that their projects, and not their competition’s, gain approval and funding. These actors purposely spin scenarios of success and gloss over the potential for failure. This results in managers promoting ventures that are unlikely to come in on budget or on time, or to deliver the promised benefits.

This figure from the report highlights the importance of delusion and deception in large infrastructure projects, especially rail projects. 

 
The authors detail various specific causes falling within these three categories and move on to some recommendations about how to limit delusion and deception in large infrastructure projects from both inside and outside perspectives.  Within the latter category, the authors highlight the importance of reference class forecasting.   In brief, this process involves comparing the current proposal with the experience of a group of completed projects of similar size, complexity, etc.  Typically, such a review shows not only the weaknesses in cost and schedule forecasting, but the many specific sources of error that can lead to budget and schedule overruns.  The article notes that the American Planning Association has recommended this procedure for large infrastructure projects. 

Why is this important?

Underestimating the costs and overestimating the benefits of a given project results in an artificially high benefit-cost ratio, which in turn leads to two problems. First, the project may be started despite the fact that it is not economically viable. Second, a project may be started instead of another project that would have yielded higher returns had the actual costs and benefits of both projects been known.

To read the full article, click here.

Dulles Corridor Metrorail Project: A Cost-Benefit Analysis, Lauren Donnelly, Policy Perspectives,

This 2009 private cost-benefit analysis of the Dulles Metrorail project provides some insight into the issues surrounding the utility of the new Metrorail line.  Because it was conducted several years ago, it does not include the latest higher projected costs for the line.  There are also some other assumptions that suspect, but it is good to know that someone has taken the time to carry out such an analysis.  Bottom line:  It will take at least five decades for the benefits of the line to outweigh costs. 

Dulles Corridor Metrorail Project:  A Cost-Benefit Analysis,  Lauren Donnelly, Policy Perspectives