Tuesday, December 7, 2010

How To Write a Biased Rail Transit Financial Study

That’s how long-time Honolulu rail supporter Hannah Miyamoto has titled her commentary on the study by the Infrastructure Management Group (IMG) that former Governor Linda Lingle commissioned. Honolulu Mayor Peter Carlisle has called the study a waste of taxpayer money, and his administration has its own detailed analysis of the IMG report.

Miyamoto earned a degree in civil engineering, specializing in transportation engineering, from the University of Minnesota, and she’s now studying sociology as a graduate student at the University of Hawaii. Miyamoto says she applied her economic analysis knowledge in studying the IMG report to produce this commentary. We’ve appreciated her insights on rail transit over the years and requested a copy of her analysis of IMG’s study, as well as permission to use it. It originally was posted in Civil Beat’s subscriber-only pages and Miyamoto's Facebook page; CB says it is fact-checking the IMG study on its own.

Here’s Miyamoto’s description of How To Write a Biased Rail Transit Financial Study:

1. DO BE UNDULY PESSIMISTIC. Make economic forecasts without considering all the economic forecasts made by others before you. For example, the "Downside" forecast in the IMG Report portrays a local economy that is as depressed as it has been since 2007. Even their "Best-Case" scenario is considerably more pessimistic than the one currently being used to manage state government.
2. DO BE IGNORANT ABOUT THE ECONOMY YOU STUDY. The IMG Group report blithely presumes that the Hawaii economy expands in direct relation to the state population, and criticizes the project financial plan's GET projections for this. We know that the Hawai'i population is more responsive to the state economy than the other way around. The state tourist economy responds to the global economy as much as the U.S. economy. The state's military economy is set by Congress, not the U.S. economy.
3. DON'T KNOW ANYTHING ABOUT THE LOCAL GEOGRAPHY. The IMG Group report assumes that the state's island location will complicate transportation of materials, creating the potential for cost overruns. We know that Honolulu has modern port facilities and that construction materials are readily available for any building project.
4. DON'T STUDY THE PROJECT YOU ANALYZE VERY CLOSELY. The IMG Group report adds $29 million to O&M costs for "dead-heading" trains, or running trains empty at the start of their run. However, the rail yard will be next to the rail line, and trains will only have to travel a neglible distance before serving passengers. Furthermore, the trains will probably run automatically, with only roving monitors passing through occupied trains.
5. DON'T EXPECT PROJECT MANAGERS WILL RESPOND TO CHANGED CIRCUMSTANCES. The "Base" and "Downside" cases presume that construction will not begin until 2012 or 2013. However, contracts have already been awarded to build the line from East Kapolei to Pearl Highlands (Phase 1), and Pearl Highlands to Aloha Stadium (Phase 2). If construction begins on both Phases in spring 2011, and is finished at the originally planned rate, the project will be ahead of schedule by nine months when the track is opened to the stadium.
6. DO BE INTERNALLY CONTRADICTORY. For example, the IMG Group report presumes that if the state economy does not recover over the next 10 years, construction prices will still rise at a faster-than-predicted rate. The Report concludes that O&M costs are under-estimated, while also criticizing the ridership projections for being too optimistic, even though O&M rises and falls in response to utilization of equipment. The Report, after claiming that the ridership projections are too high, argues that the rail line will demand more city subsidy because too many people will use it.
7. DON'T GIVE EVIDENCE FOR YOUR CLAIMS. The IMG Group report insists that the rails will demand rehabilitation and replacement less than 12 years after their installation. I was unable to find an instance of such a requirement arising less than 25 years after the rails were installed, and yet the project financial plan includes a rail rehab and replacement program starting only 12 years after the first phase opens. The IMG Group team mysteriously includes findings like this in its secret "model", without providing any factual basis for its conclusions.
8. DO BE EVEN MORE INTERNALLY CONTRADICTORY. Furthermore, if the rails wear out faster than expected, then ridership must also be greater than predicted. Basically, the IMG Report considers any "problem" that any transit operator would be likely to have, such as higher-than-predicted ridership, as a disaster.

Miyamoto might have added: DO ASK AN ANTI-RAIL ACTIVIST TO HELP PREPARE THE STUDY. Tom Rubin's involvement on the IMG team has attracted considerable attention already. It’s presumably for these and other reasons that Mayor Carlisle said IMG’s study had a pre-determined outcome. If you want to comment on Miyamoto’s analysis, please do so by posting it below.

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