Post 35: The Siren Song of a 'Big Plan'

Daniel Burnham, one of the founding fathers of modern city planning, said in a 1910 speech: “Make no little plans; they have no magic to stir mens’ blood . . . “ [1]

Daniel Burnham

He was obviously on to something because there is no shortage of “Big Plans” proposed by developers, cities or various civic groups on an almost continuous basis.  Big Plans – with their slick renderings full of futuristic buildings and happy people – do indeed stir mens’ (and womens’) blood.  Not only are they visually attractive, they come wrapped around financial projections and employment promises that are so wonderful that it seems almost idiotic to not move forward with as much haste as possible.

What Daniel Burnham didn’t say (or perhaps didn’t anticipate) is that virtually every Big Plan comes with a big public price tag.  And that an uncomfortably high percentage of Big Plans either fail outright or at least deliver substantially smaller benefits than were initially promised.  Many cities have approved convention centers, arenas, ballparks, entertainment districts, or mega-malls only to be left holding the bag for the financial cost of construction bonds or maintenance expenses when project revenue streams fall short of projections.  What was supposed to be an economic boon turns into an economic boondoggle.  

I want to be clear that I am not entirely opposed to Big Plans.  The Brooklyn Bridge, for example, was thought by many to be a crazy undertaking but was crucial to the growth of New York City.  And some convention centers, ballparks and mega-malls do, in fact, generate more public revenue than the public subsidy that was required to get them built and big projects often do have positive benefits – both tangible and intangible – for the entire region.  Sometimes the path forward requires a leap rather than a series of tiny steps.

The problem is one of separating the wheat from the chaff.  How does a community know which projects to support and which to reject?  There are no easy answers, but my goal with this post is to put some structure around the problem to make the decision easier.  In particular, there are some red flags that I think should make communities think twice before moving forward.

But first, what do I mean by a ‘Big Plan’?  The term is relative, of course, but for the sake of this post I’m talking about development projects that share three characteristics:

• They are far bigger in size than the normal development proposal for the community.  So big, in fact, that civic boosters feel like they won the lottery.

• They require a substantial public investment.  Without fail, the cost of public incentives is justified by projections of public benefits (generally jobs and tax revenue) that far exceed the cost.

• The project is complex.  Big Plans invariably involve a lot of moving parts, each of which represent a potential point of failure.

The proponents of a Big Plan often call on decision makers to have a bold ‘vision’ for the future.  Many others have pointed out, however, that there is a thin line between a vision and an hallucination.

Is a Big Plan Needed?

As I mentioned earlier, sometimes cities need to take a big leap.  But before cities approve a Big Plan they should evaluate whether a series of small projects would accomplish the same goals.  In my opinion, 50 developers building 20 housing units each is generally going to be better than one developer building a 1,000-unit housing project.  Organizations such as the Incremental Development Alliance and Strong Towns have been extolling the virtues of small-scale, incremental development for years.  Incremental development yields greater variety in the end product, is more resistant to boom-or-bust cycles, and does a better job of spreading wealth across the community.

In 1959, Charles Lindblom wrote an influential article entitled “The Science of Muddling Through” that defended an incremental approach to public policy-making rather than an all-inclusive, theory-based, “rational” approach.  The same thinking can be applied to development projects.  A big development project is often so complex that its odds of success cannot be accurately calculated and the ripple effects cannot be accurately predicted.  Consequently, big projects entail big risks.  Incremental development entails much smaller, more understandable risks and is more adaptable to unforeseen circumstances.

All of the cities that chased Amazon’s HQ2 project a few years ago would have been far better off channeling that effort toward building and supporting a pool of local developers with projects that are less reliant on public subsidies.  Incremental development may not “stir mens’ blood” but also isn’t likely to bankrupt cities.

Still, big projects are going to be proposed and may sometimes be necessary.  So the remainder of this post is going to examine the red flags that cities need to be looking for.  Don’t fall for the siren song of a Big Plan without a clear-eyed analysis of the risks.

Beware of Land Flippers

To get a Big Plan built, developers typically need two types of approval.  The first is development approval under the city’s development regulations.  This might entail rezoning the property or getting a development plan approved.  The second type of approval is a financial incentives package.  This typically involves infrastructure improvements, a tax-increment financing plan, or tax abatement.  These two approvals are obviously connected, but they are distinct from each other and have different value to the developer.

Some developers will try to make money by focusing on the first part of the approval process.  They will buy land that generally has not been considered for intensive development, prepare a Big Plan with fancy renderings and optimistic economic projections, and apply for development approval despite the objections of nearby residents who are shocked that anyone would propose such intense development in their previously quiet neighborhood.

If the developer is successful in obtaining the development approval from the city, the value of the land skyrockets to a level well above what they originally paid.  The project can then be shopped around with other developers who are more focused on actual construction because the biggest (and most contentious) hurdle in the development process has already been cleared.

The development team for this type of Big Plan tends to be politically connected but may be light on actual construction expertise.  The proposed plan will be very dense (because density equals value) and often unrealistically lavish.  Economic projections will be equally stellar with promises of top-tier tenants and high-paying jobs, but will be vague on details and lack firm commitments.  The developer may try to placate neighboring residents with perks such as parks or extensively landscaped buffers in order to win over city leaders who are undecided on how to proceed.

This type of Big Plan is essentially a bait-and-switch scam.  When a developer who actually wants to build something takes control of the project, they will inevitably ask for substantial changes to the plan.  The lavish building designs will be labeled “financially infeasible” and replaced by much more mundane designs.  The top-tier tenants will be replaced with local tenants or chain stores with jobs that are no more lucrative than elsewhere in the community.  In fact, the new development may simply poach businesses from other parts of town and add very little net economic activity.  

The problem is that once development approval has been granted, it is very hard for a city to legally take it away.  City leaders are faced with the choice of either allowing the plan to be substantially watered down or being taken to court by the developer.

Financial Planning on the Fly

The crazy complexity of a Big Plan is often revealed in the financing details.  Initially, a developer may have only a general sense of how a project will ultimately be financed when the project is submitted for approval.  That is because most investors won’t formally commit to a project until development approval has been granted.  Once that happens, leasing commitments can be obtained, designs (and costs) can be finalized, and investor details can be worked out.  This is where the second type of approval – the financial incentives package – comes into play.

Most developers proposing a Big Plan will ask for development incentives up front but the details will be vague or they will take an unrealistic “ask for the moon” type of approach.  In either case, negotiations won’t get serious until development approval has been granted.  The problem is that investors are generally a better judge of financial feasibility than cities are.  Investors will try to push as much of the financial risk onto the city as possible.  Once city leaders have been seduced by the fancy renderings and the promises of a golden stream of tax revenue, it is hard to say ‘no’ to requests for the city to provide more financial support or take more financial risk.

The second problem is that the complexity of the financial structure behind a Big Plan has many possible points of failure.  Unexpected occurrences or mistaken assumptions can cause tentative agreements to fall apart.  Once the financial plan starts to crumble, it can be hard to rebuild.  Cities need to insist that private capital be the first money at risk if things go south.  Public funds should either not be at risk at all until construction is underway or should be subject to “claw back” provisions if the project doesn’t move forward.

In my opinion, the most problematic form of public incentive is when cities agree to build infrastructure in support of the Big Plan before anything else is built.  It is almost impossible to recoup those costs if the project stalls.  Cities end up with dead-end water and sewer lines and roads that lead nowhere – the cost of which falls on the rest of the community because virtually no tax revenue is coming in.

Optimization is Not Always Optimal

In order to build public support, almost every Big Plan will be accompanied by a cost-benefit analysis that shows future revenue from the project far exceeding the value of the public incentives.  This analysis will be prepared by financial experts with impressive resumes and far more experience than any city staffer.  The developer will assure city officials that the development details have been optimized for their community and the economic characteristics of the region.  It will also be so complex that most people will skip over the details and go straight to the bottom line.

The problem is that every cost-benefit analysis is built on a series of assumptions and varying  those assumptions can produce very different results.  Keep in mind that the consultants preparing the analysis are getting paid by the developer and are getting paid regardless of whether the project succeeds or not.  They have virtually no “skin in the game” and often have no long term connection to the community.  This is not to say that every economic analysis is worthless, but there is generally a bias toward optimistic assumptions that make the project look as good as possible.  So what could go wrong?

Overstating Growth Projections.  It is frequently assumed that the new residential units in a Big Plan will attract new residents to the city, that new retail space will attract new shopping options, and that new office buildings will attract new businesses to the area.  In most midwestern cities, growth does happen but it is a slow process.  Construction of the Big Plan leads initially to an oversupply of space which means that shops are filled with stores that moved out of other shopping centers and office buildings are filled with businesses that left other office buildings.  Promises to recruit new retailers or new employers from outside the region may be well intended but they are often overly optimistic and cannot be enforced by the city.  The result is that residents, retailers and businesses are mostly reshuffled from existing developments leading to high vacancy rates elsewhere in the community.

Confusing Gross Revenue with Net Revenue.  The economic analysis accompanying a Big Plan will often tout millions of dollars in retail sales or hundreds of millions in wages from the jobs that will be created.  Once the project is built and occupied, those projections might actually be correct, but they rarely reflect the fact that most of the money spent in the newly built development is a substitute for money that would have been spent elsewhere in the community.  It is not new economic activity, it is just redirected economic activity.  Total sales tax collections, for example, may not end up changing much at all.

People will Behave Differently.  Proponents of a Big Plan often claim that their project will “draw people back to downtown” or “attract tourists from surrounding states” or “double game-day attendance.”  It is, of course, almost impossible to prove or disprove these types of statements but they are frequently exaggerated.  People sometimes do change their behavior but most people are creatures of habit and while they might try something new, long term change is harder than people realize.  Entertainment districts and downtown ballparks seem particularly prone to these kinds of projections, and initial attendance numbers might seem promising but basing a 20-year revenue stream on such assumptions is very risky.

The National Economy will Continue to Grow.  This assumption is probably true but what is rarely reflected in the economic analysis of a Big Plan is that the national economy is cyclical.  This means that there will occasionally be economic downturns or even recessions.  What impact would such an event have on the revenue stream?  It is a rare analysis that even attempts to address that scenario but it can have a huge impact on the economic health of a community.  A recession can wreak havoc on a municipal budget, but having to take over bond payments or maintenance costs for a big development project at the same time could be disastrous.  Cities should try to avoid being on the hook in this type of situation because they almost inevitably will occur.

The bottom line is that life is stubbornly resistant to optimization.  The best laid plans often go astray because the future is filled with unforeseen events and people are prone to irrational actions.  The recent string of bank failures (and the growing list of struggling banks) is an example of this principle.  All of those institutions were led by very bright people with a carefully considered strategy that made lots of money until, suddenly, it didn’t.  Something as seemingly predictable as rising interest rates proved to be catastrophic.

Local Examples

A quick review of my local Kansas City region reveals examples of Big Plans that have succeeded, struggled and failed.  On the positive side, Kansas City just opened a new airport which was delivered on time and on budget.  And the city’s long-neglected riverfront has started to blossom with mixed use buildings and a new stadium for the women’s professional soccer team – refreshingly financed with largely private funds.

Kansas City’s Power and Light District has re-energized the downtown area and provides venues that support tourism, conventions and events at the T-Mobile arena.  Unfortunately, revenues from the district have not met projections and the city has been forced to kick in roughly $10 million per year to make up the difference. [2]

Mission Gateway Site

Finally, the suburban community of Mission has struggled for more than 15 years to get developers to finish the redevelopment of a 16-acre site known as Mission Gateway.  The project has been the subject of at least five plan revisions, numerous missed deadlines, a variety of mechanics liens for unpaid work, and most recently a New York bank has filed for foreclosure due to missed loan payments.  What should have been a focus of community pride is instead an eyesore that deteriorates by the day. [3]

I’m willing to bet that virtually every major metropolitan area could put together a similar list.  Again, this is a wheat versus chaff issue.  Cities need visionaries and risk takers, but they need not fall victim to projects where the odds of failure are greater than the odds of success.  In mythology, Sirens were creatures that lured sailors to destruction through the irresistible sweetness of their songs.  Cities need to learn to cut through that sweetness and see the risks involved before getting on board.

Notes

1. “A Chicago tale:  Why we’re happy to erase the asterisk from Daniel Burnham’s “Make no little plans’;” Chicago Tribune Editorial Board; March 2019; https://www.chicagotribune.com/opinion/editorials/ct-edit-daniel-burnham-quote-20190305-story.html

2. Thomas Friestad; “Kansas City has paid over $160M to cover Power & Light’s debt;” Kansas City Business Journal; February 2023; https://fox4kc.com/business/kansas-city-has-paid-over-160m-to-cover-power-lights-debt/

3. Kyle Palmer; “After decades of false starts, the Mission Gateway project is now facing foreclosure;” Shawnee Mission Post; April 2023; https://www.kcur.org/housing-development-section/2023-04-25/after-decades-of-false-starts-the-mission-gateway-project-is-now-facing-foreclosure

Robotaxi Revolution Delayed

It is hard to think of a technology that has been more over-hyped than autonomously driven vehicles.  Predictions from just a few years ago made it seem like self-driving cars would be commonplace by now, the ranks of Uber and Lyft drivers would be plummeting, and cities would be forever changed.   After all, it was just 2019 when Elon Musk proclaimed at the Tesla Autonomy Day event that:  

“By the middle of next year, we’ll have over a million Tesla cars on the road with full self-driving hardware, feature complete, at a reliability level that we would consider that no one needs to pay attention.”

And:

“From our standpoint, if you fast forward a year, maybe a year and three months, but definitely next year for sure, we’ll have over a million robotaxis on the road.” [1]

Of course, Elon Musk is a showman with a history of over-promising and under-delivering, but others have been almost as outlandish – such as the 2016 prediction by Lyft president John Zimmer that the majority of trips by the ride-sharing company would happen in autonomous vehicles within 5 years.  Or Business Insider predicting in 2016 that 10 million self-driving cars would be on the road within 5 years. [2]  Even allowing some leeway for the hyperbole that normally accompanies a bold prediction, these statements were wildly over-optimistic.

Waymo Robotaxi

What has gone wrong?  It turns out that while the basics of driving a car are relatively straightforward, the nuances of driving safely in an urban environment are much more difficult than autonomous vehicle engineers anticipated.  Is the person standing by the curb getting ready to step into the crosswalk or just waiting for someone to pick them up?  Is the car that is slowing down and drifting slightly getting ready to turn or is the driver just distracted by their phone?  Human drivers are amazingly good (but not perfect) at figuring out the intentions of other humans.  Computers, not so much.  Progress is being made, but it is time to reset our expectations about what is going to happen in the next several years.

To be fair, many new cars have implemented elements of self-driving technology but none are so feature complete that “no one needs to pay attention.”  With one exception, there are only a handful of cars available for sale to the public where the driver can take their hands off the wheel and let the car drive itself.  And even then, there are (1) severe limits on where self driving can be used, (2) the driver must always remain focused on the road, and (3) must always be ready to assume control over the vehicle. 

The exception is the Mercedes-Benz EQS and S-class models that can self drive up to 40 miles per hour without the driver staying focused on the road.  Although the driver can play games on their phone or answer emails, they must still be able to retake control if so directed by the car.  This is a milestone of sorts, but still well short of what people have predicted.

In February of 2022, I posted an article that gave a broad overview of the autonomous vehicle industry.  I stand by what I wrote at that time, except that I may have been slightly too optimistic about the pace of progress.  Perhaps in five years I will look back at that article and hang my head in shame, but I think there is a decent chance that I won’t be too embarrassed.  In this post, I’m going to give an update on the state of the autonomous vehicle industry with a particular focus on self-driving taxi services (or “robotaxis”) that have the potential to change urban transportation dramatically.  

Amazon Zoox Robotaxi

Taxi cabs, of course, have been around for decades but it was just 2009 when Uber was founded (then called UberCab) and it has only been in the last 10 years or so that Uber (and others) have become commonplace in their current form.  The convenience of being able to move from point A to point B by simply using a smartphone app which matches available drivers to your desired trip has been more revolutionary for city life than most people realize.  In 2022, Uber alone provided over 7 billion rides to a base of 130 million active users which generated gross bookings of $115 billion. [3]

If that transportation innovation could be reduced in cost from the current $1 - $2 per mile average to perhaps 50 cents per mile, the impact would skyrocket. A robotaxi ride would suddenly be an affordable option for many more types of people in many more types of situations.  That is the potential of robotaxis – by eliminating the driver the cost of travel (at least in theory) drops substantially.  This would lead, in turn, to changes in the transportation choices that people make.  Inexpensive robotaxi rides would likely reduce trips in privately owned cars, and might also impact the use of public transit.

A secondary benefit is that by eliminating the driver, there is now more room in the vehicle for passengers.  In fact, nearly all of the major players in the robotaxi industry are planning on producing or buying vehicles specifically designed for this function.  There won’t be a driver, of course, but there also won’t be a steering wheel or gas pedal.  Purpose-built vehicles will not only have more passenger space, they will be less expensive than modifying a traditional car, be easier for users to enter and exit, and be cheaper to operate.  Leading the way in the US is Amazon with their Zoox vehicle (currently entering testing), Google/Waymo with their ZEEKR platform, and GM/Cruise with their Origin vehicle.  

Personal Experience

I was in Phoenix recently for a short vacation and it gave me the opportunity to ride in a robotaxi driven without any human assistance.  Waymo (a subsidiary of Google parent Alphabet) has been testing self-driving vehicles on public streets in the Phoenix metro area since 2017 and has been offering rides to the general public as a full-fledged rideshare service since 2020.  In January of this year, Waymo reached the milestone of one million rider-only miles.  I couldn’t wait to give it a try!

Like any rideshare service, the first step is to download an app onto your phone and create an account.  The Waymo One app is easily installed and works more or less like any rideshare app.  The robotaxi service is limited to two different parts of the Phoenix area, including the downtown district and Sky Harbor airport.  I landed relatively early in the morning and decided to take Waymo from the airport to a restaurant (about 8 miles away) in order to get some breakfast.  I admit to being a little nervous as I started the app and requested a ride, but my experience ended up being awesome and I wouldn’t hesitate to do it again.

My ride did, however, give me some insights into the realities of autonomous vehicles and some of the issues that robotaxi companies are facing as they try to become as ubiquitous as Uber or Lyft.  At the time of my ride, there was no inclement weather and traffic was modest by big-city standards.  If it had been raining or if traffic had been heavy, my experience might have been different and Waymo might have included an “autonomous specialist” to provide a human backup to the “Waymo Driver” computer system.  

The trick to bringing an autonomous vehicle to market is not being able to drive in good weather and light traffic, it is being able to handle tough conditions and unforeseen circumstances – what the industry refers to as “edge cases.”  Every time an edge case is encountered, the system “learns” something new, but human intervention is occasionally needed.  In Waymo’s case, that is becoming increasingly rare but I suspect that there are still a lot of edge cases that haven’t fully been addressed, particularly in areas where bad weather is more common.

Overall Impressions.  My ride in the Waymo vehicle was almost entirely uneventful (I will get to the exception in a moment).  It is a lot like driving with someone who is extremely conscientious about following every single traffic law and best practice – in short, a bit boring.  Undoubtedly, that is exactly the experience that Waymo wants users to have because boring also means safe and reliable.  Although boring, it was never irritating.  The car accelerated briskly, turned without hesitation, and stopped normally.  It merged into traffic without any problems and never felt indecisive or unsure of how to react to other cars on the road.  

It was a ride with the precision one would expect from a computer – it drove precisely the speed limit, it stayed precisely in the middle of its lane, it never tail-gated other vehicles, and it stopped precisely a car length behind the car in front.  The Waymo Driver showed none of the human foibles that most of us have picked up over years of driving.  For example, when turning left onto a multi-lane street, the vehicle always turned precisely into the inside lane – no lazy “banana” shaped turns for Waymo!

Pick Up and Drop Off.  Anyone who has hailed a cab in a big city knows that while cabbies try their best to find a safe spot to pick up or drop off passengers, if necessary they will stop in the middle of traffic and endure the honks of irritated vehicles behind them.  Uber and Lyft drivers seem a little more careful about the pick up/drop off process but will still make judgment calls that occasionally bend the law for the convenience of the passenger.  Not Waymo.

In fact, the pick up/drop off process was distinctly different from most cab or Uber rides.  To begin with, I was directed to take the Phoenix Sky Train from the terminal to the 44th and Washington Station which is a much quieter location than the area outside the terminal normally used by Uber and Lyft.  This was not a difficult thing for me to do and my Waymo car (a modified Jaguar I-Pace) was patiently waiting for me when I arrived, but it did add five minutes to the process.  My guess is that the traffic chaos outside the main terminal is an “edge case” that Waymo still has difficulty with.  What was more surprising was that Waymo would not drop me off directly at the restaurant, but found a quiet street a block away where it could pull safely out of traffic.  The restaurant had a small parking lot but it was an odd layout that the Waymo Driver apparently did not feel comfortable negotiating.

This pick up and drop off process (sometimes referred to as the “PuDo” issue) is something that cities will need to plan for in the future.  I’m sure robotaxis will get better, but for safety reasons they are never likely to block traffic or double-park the way a human driver might.  This means that cities may need to create loading zones on almost every block face, particularly in congested areas, in order to accommodate robotaxi traffic.

Edge Cases.  My ride was not without a couple of quirks that probably would have qualified as edge cases at some point in the development of the self-driving software.  First, we encountered a traffic backup due to some road construction.  My Waymo vehicle detoured around the problem by cutting through a mixed commercial and residential area rather than stay stuck in traffic.  It drove more slowly since it was on side streets, but I’m sure we saved time.  We also passed a man walking his bike in the street on the wrong side of the road.  The Waymo Driver stayed several feet clear and passed safely without incident.

Finally, there were a couple of instances in which I detected a slight “twitch” by the Waymo vehicle in response to other cars on the road.  For example, an on-coming car suddenly turned left into a driveway when I think most drivers would have waited for us to pass.  It wasn’t really a big deal but it was unexpected enough that I probably would have lifted my foot from the gas pedal and been at least ready to brake.  The Waymo vehicle not only stopped accelerating but actually did start to break until it realized what the car was doing.  My guess is that this is an example of the difference in reaction time between computers and humans.  The computer was able to react so quickly that it felt unnatural to me, but the slight twitch that I felt was actually the system being safer than a human driver.

The Route.  My 8-mile trip ended up taking about 25 minutes and the route consisted almost entirely of thoroughfares with a 35 mile-per-hour speed limit.  The odd thing about the route is that it didn’t include any part of I-10, an interstate highway that cuts through downtown Phoenix and that I think would have saved me about 10 minutes of travel time.  Perhaps I-10 was congested at the time, or maybe the Waymo vehicles stay off of highways as a matter of standard practice.  I don’t know and I wasn’t able to find any information that would answer that question one way or the other.

It did make me wonder, however, whether cities would be smart to work with robotaxi firms to develop preferred streets that robotaxis would take whenever possible.  For starters, cities could make sure that the preferred routes had lane markings in good condition and safe places for the pick up and drop off activities.  But it might also be an opportunity to start implementing the next generation of the “internet of things'' technology.  Specifically, the ability for pieces of roadway infrastructure to communicate directly with cars.  A traffic signal, for example, might broadcast its timing sequence so that cars could slow down when a signal is about to turn red, or road sensors might broadcast the optimum speed of travel to minimize traffic congestion.  This technology would not need to be limited to robotaxi companies, of course, but they might be in a financial position to be the first to take advantage of it and they might be willing to partner with cities to develop and test the systems needed to make it work.

The One Exception.  Earlier I wrote that my trip was almost entirely uneventful.  The exception had nothing to do with my Waymo vehicle being unsafe or inconvenient in any way.  Instead, it had to do with the interaction between human drivers and the computerized Waymo Driver.  As I mentioned, the Waymo vehicle obeys all traffic rules including the speed limit.  This means that on the thoroughfares we used the Waymo vehicle was going slower than just about everyone else.  As in most cities, drivers routinely go five to ten miles per hour above the speed limit especially when traffic is relatively light and the weather is good.  There were two instances when other vehicles honked at us, presumably because they thought we were going too slow.  This is a bit odd, of course, because honking has absolutely no impact on how the Waymo Driver behaves and you would think that Phoenix drivers would know that by now.  The Waymo vehicles are decked out with so many sensors that they are almost impossible to mistake for a regular, human-driven car.

One incident stands out because it escalated to an unusual degree and because it illustrates that the combination of computer-driven and human-driven cars might not be all sweetness and light.  We were on a four-lane thoroughfare in the inside lane driving exactly 35 miles per hour.  A pickup truck came up behind us and gave a lengthy honk.  The Waymo Driver, of course, did nothing but I was a bit unnerved.  At the next stoplight, the driver of the truck pulled up next to us in the left turn lane and rolled down his window.  Looking straight at me (I was in the front passenger seat), he yelled:  “Hey d**kh**d, stay out of the left lane!”  I responded by holding up my hands and saying:  “I’m not driving.”  That should have been obvious, of course, because to see me he had to look across the empty driver's seat, but it didn’t seem to lessen his anger and when the signal turned green he roared off.

I’m guessing this isn’t all that unusual.  After all, similar things happen on a regular basis to human drivers who drive at or below the speed limit.  Road rage is a serious issue and I suspect that robotaxis – and eventually other computer-driven vehicles – will only make the situation worse.  Some drivers may go beyond honking and drive in an erratic manner knowing that the robotaxi’s computer will react quickly enough that they are unlikely to get in an accident.  This seems like a recipe for disaster and I’m not sure exactly what can be done about it.  Fortunately, robotaxis are decked out with cameras and other sensors so incidents of this type can be documented.  Perhaps cities can use that documentation to issue traffic citations.

The Bottom Line  

The key to public acceptance is going to be safety and robotaxis are off to a good start in that respect, although there have been some notable gaffes.  A group of five Cruise robotaxis all stopped working at the same place last summer for example, blocking traffic in San Francisco for several hours.  Just recently, another Cruise robotaxi drove at low speed into the back of a San Francisco bus.  While these incidents (and others) sometimes seem inexplicably stupid, don’t forget that human drivers do inexplicably stupid things all the time.  From the partial data that has been published so far, robotaxis seem to be involved in a relatively low number of accidents per mile driven, and those accidents tend to be relatively minor in most cases.  The standard, in my opinion, is not that robotaxis should be perfect but that they should be as safe or safer than human cabbies and Uber drivers.

Waymo has been the most transparent about their driving record, perhaps because they seem to be doing the best job.  Here are some of their recently published statistics for their autonomous robotaxi service:

1. In January 2023, Waymo passed 1 million rider-only miles (on top of millions of additional miles with a Waymo specialist in the car as a precaution).

2. There have been no injuries reported.

3. There have been 18 minor contact incidents and only two incidents which met the reporting criteria for the National Highway Transportation Safety Administration’s Crash Investigation Sampling System.

4. Fifty-five percent of all incidents were the result of a human-driven car colliding with a stationary Waymo vehicle.

5. There were no intersection-related incidents and no incidents involving pedestrians. [4]

It is important to point out, however, that these statistics are shaped by the fact that Waymo has been very cautious about the situations in which its vehicles are allowed to operate.  It avoids many difficult situations, most hazardous weather environments, and does not drive outside of well-mapped areas where the potential hazards are understood.  Still, the results are pretty impressive and seem to warrant expansion of robotaxi service to more locations.

Do not, however, expect robotaxis to be showing up in your city any time soon unless you live in California, Arizona, Nevada or Texas.  Those are the only states that have been receptive to robotaxi pilot programs to date and even there expansion is piecemeal.  In most states, the regulatory and legal framework for self-driving vehicles is virtually nonexistent.  In addition, robotaxi service is likely to spread first into warm weather states that do not routinely experience snow and ice storms.  Bad weather testing is taking place but those areas are likely to be low on the priority list for expansion.  Finally, when expansion does take place to new cities, expect it to be limited to just part of the metro area and to be priced similar to Uber or Lyft.  For the next several years, robotaxi service will still be in a highly monitored and carefully restricted test mode which means that cost reductions will not show up and the ability to drive to any and every address will not exist. 

Despite the cautious approach that robotaxi firms are taking to expansion, it is working and it is expanding.  And contrary to the claims of Elon Musk, robotaxi firms are miles ahead (excuse the pun) of traditional automakers.  So while the robotaxi revolution might be delayed, it is most certainly not dead.  It may be expanding at a glacial pace for now, but at some point that will change and cities need to be preparing for that eventuality.

I expect slow expansion in warm weather states to be the norm for the next 2 to 4 years.  By that time, robotaxi firms will be rolling out purpose-built vehicles, safety concerns will be largely forgotten, and substantial progress will have been made on the pick up/drop off issue.  At that point, other states will start enacting the necessary regulatory changes and robotaxis will start appearing in many more cities.  The human support network that robotaxis need, however, means that they will not appear everywhere and will not cover the entire metro area even where they do operate.  Profitability concerns will limit robotaxi service to areas where demand is high enough to ensure high utilization rates and efficient support services.  The fear that some have expressed that empty robotaxis will be roaming around cities causing congestion is misplaced because empty vehicles will not be economically sustainable.

By 2030, robotaxis will be a useful transportation option for many people and will be considered a normal part of urban life.  Continued innovation in the interface between the computer “driver” and human passengers (e.g. facial recognition or mobile video calls) will produce new types of service that don’t exist today.  For example, parents might schedule a robotaxi to pick up their kids from school, including a quick video chat with Mom about “how was your day.”  People who are elderly or disabled will have more mobility than ever, and tourists might ask their robotaxi for sight-seeing advice.  In short, the combination of a self-driving vehicle and an AI powered computer presence will do more than your Uber driver ever could.

Notes: 

1.  Aaron Gordon; “All the Big Claims Elon Musk Made About Tesla’s Autonomous Driving Plans”; Jalopnik; April 2019; https://jalopnik.com/all-the-big-claims-elon-musk-made-about-teslas-autonomo-1834238028

2. Adam Ismail; “Let’s All Laugh At These Bad Autonomous Car Predictions From Just A Few Years Ago”; Jalopnik; April 2021; https://jalopnik.com/let-s-all-laugh-at-these-bad-autonomous-car-predictions-1846690460

3. Harry Campbell; “Uber Statistics 2023: Drivers, Riders, Revenue & More”; The Rideshare Guy; March 2023; https://therideshareguy.com/uber-statistics/

4. “First Million Rider-Only Miles:  How the Waymo Driver is Improving Road Safety”; The Waymo Blog; February 2023; https://blog.waymo.com/2023/02/first-million-rider-only-miles-how.html

Post 33: Rethinking Transit - Part 2

 In the first part of this series, I tried to make two major points.  First, transit systems are struggling, partly from the COVID pandemic and the ongoing ripple effects, but also at a more fundamental level.  Second, transit systems are essential to successful urban areas.  

This second point may need some clarification.  My use of the phrase “successful urban areas” is meant to describe places that have a positive impact on the broad cross-section of our society.  Success based not just on size, or economic growth, or number of high-rise buildings, but on the range of people that can live safe, healthy, and reasonably prosperous lives regardless of whether they are old, young, rich, poor, physically fit or physically limited.  My underlying assumption is that a city isn’t really successful – and our society isn’t really successful – unless we encourage and facilitate participation by virtually the entire population.

The problem is that we have shaped our cities around the assumption that nearly everyone can drive or has someone who can drive for them.  While that may be true for the vast majority, there are a substantial number of people who are unable to drive, can’t afford to drive, or just don’t like to drive.  In a car-centric world, those people are left scrambling to find options or to participate less than they would like.

The “unable to drive” category includes over 25 million Americans with travel limiting disabilities.  Of that group, more than 13 million are in the 18 to 65 age range commonly associated with the workforce.  And yet only 20 percent of them have either full- or part-time work compared with roughly 75 percent of people in that age range generally. [1]  Over 54 million Americans are over the age of 65 and approximately 11 million of them no longer drive – and arguably several million more shouldn’t be driving.  According to a recent survey, those unable to drive report limited transportation options, which prevent them from doing all they would like to do and leave them feeling frustrated, isolated and trapped. [2]

Driving used to be a luxury that only a few could afford.  Now it has become a necessity and the vast majority of households have figured out a way to have at least one car.  That doesn’t mean, however, that driving is cheap.  The average household spends nearly $11,000 annually on transportation costs (primarily auto related).  That is roughly a sixth of the average household budget and the second largest expenditure category after housing costs.  Poor households find ways to spend less, but it represents a disproportionately larger share of their household budget. [3]  For households struggling with housing, food and healthcare costs, adding the cost of owning a car can force difficult trade-offs.

Finally, many Americans drive a car for virtually every trip regardless of whether it makes sense or is something they enjoy.  Roughly 38 percent of all trips are in personal vehicles containing just the driver, [4] and I would bet that the majority of those trips did not involve heavy packages or the need for highway speeds.  In essence, we use a full sized automobile because it is the only transportation tool that we have – akin to using a sledge hammer even if we just want to hang a photograph on the wall.  Many of us don’t even like driving, we just do it because we have to.  According to a recent Gallop poll, 22 percent of US adults like driving either “not much” or “not at all”. [5]  And even those who like driving find themselves getting so angry at other drivers that we have had to create a new term – road rage – and the National Highway Traffic Safety Administration has started tracking the resulting fatalities.

Hard Choices

Despite the fact that every city has segments of the population for whom driving is not a good option, transit is facing some harsh realities.  First, not every one who avoids driving finds transit to be convenient or easy to use.  Second, the “non-driving” portion of the population will never be enough, in my opinion, to support anything more than a skeleton transit system.  And third, finding public support for capital expenditure and operating subsidies will become increasingly difficult if ridership levels continue to shrink.

In order to have a robust transit system that people perceive as being useful to the community, there must be a large number of riders who are not transit-dependent.  In other words, riders who do not have to take transit but who choose to do so because it is an attractive option.  In decades past (and to some extent today), this “choice” rider was often a white-collar worker commuting to their office job in the central business district, or service workers commuting to the same place to support the office workers.  Transit systems, as a result, were often built with that flow of workers in mind. 

As noted in Part 1, the dispersion of office development across most metro areas and the rise of hybrid work schedules has significantly reduced the number of downtown-oriented commuters.  This has put many transit systems into something of a death spiral.  They are built for a flow of workers that is dwindling and isn’t likely to return anytime soon (if ever).  As ridership shrinks, service reductions are put into place to reduce costs.  Service reductions make it less attractive to use transit particularly for those who have other options available, thus causing further ridership declines.  And on and on.

Perhaps it is time to adjust our mental model of who transit systems should be serving and our physical model of how transit systems should be designed.  I have some thoughts outlined below but I suspect that they will be difficult to implement politically.  As with many systems that are politically dependent, the pain of a revised approach would be immediately apparent while the benefit of those revisions will build slowly over time.  Consequently, I’m pessimistic about how many cities have the political will to change and to give the new system enough time to really succeed.

The Data Behind the Plan

In order to provide some justification for the plan I’m proposing, I am going to once again turn to the rich set of movement data contained in the Replica transportation model that I have mentioned in prior posts (www.ReplicaHQ.com).  In particular, I think attention needs to be given to trip length.  Traditional transit systems, particularly the subway or rail types of routes, are focused on relatively long trips as evidenced by a fixed cost per trip and stops that are often spaced miles apart.  The problem is that the larger a city grows, the more difficult it is to provide good service with the hub-and-spoke layout that traditional rail-based systems typically employ for those long commuter trips.  And since dependence on commuter trips to the central business district is part of the current problem, I don’t think it is the key to a new transit solution.

What most people don’t realize is that a large portion of the trips that are taken each day are relatively short.  In St Louis for example, more than a quarter of all trips (26.2 percent in the Fall of 2021) were less than 2 miles in length.  Over 44 percent were less than 4 miles in length.  And St Louis is not an exception in this regard.  In Chicago, the numbers are even more striking:  a third of all trips are less than 2 miles in length (33.3%) and over half are under 4 miles (52.5%). [6]  If the goal is to boost ridership, why not focus on short trips instead?

The answer to that question is that focusing on short trips is much harder than it sounds because it requires a reversal of many long-standing transit assumptions.  In particular, it means acknowledging that building more big-ticket subways and rail lines into the city center won’t make things better.  In addition, it would require that long range plans and day-to-day land use decisions be much more coordinated with transit plans.  In most cities, major land use decisions are made without any consideration of how they might affect (or be affected by) transit system plans.  Hours will be spent discussing the potential for roadway congestion but any other form of transportation is hardly ever considered.  This myopic focus on the car has warped urban development decisions, but it is so ingrained in our thought process that it seems totally normal.

Despite the difficulties, what I am going to refer to as “short-trip transit” may be the key to not only revitalizing transit systems but also bolstering the revitalization efforts of midwestern cities.  Many of the more successful cities have been focusing on mixed-use placemaking as a way to appeal to the younger generations that are crucial to economic growth.  Those placemaking efforts in the midwest, however, are often hampered by conflicts between the necessary density of development and the reluctance of both residents and developers to move away from a reliance on cars as the primary mode of transportation.  Short trip transit might be the bridge that allows a “car-lite” lifestyle centered on well designed places to finally take hold.

A New Mental Framework

The prominence of short trips, even in sprawling midwestern cities, seems to validate a relatively new line of thought in urban planning circles known as the 15-minute city.  The idea, popularized by Carlos Moreno of Pantheon Sorbonne University in Paris, is that city residents should live near enough to essential services that they can reach most of the places they need to go with a 15-minute walk or bike ride.  This puts a focus on access (how many useful places can I reach in a given period of time) rather than on mobility (how far can I travel in a given period of time).  The concept is often shown diagrammatically as a city full of 15-minute circles.

Unfortunately, this planning concept fits the compact form of European cities much better than the sprawling form of American ones.  Particularly in the midwest, most cities have precious few 15-minute neighborhoods.  Rather than reject the concept entirely, however, perhaps it simply needs some modification.  To begin with, a more realistic goal would probably be to have a dozen or so 15-minute neighborhoods in each city rather than a city full of 15-minute neighborhoods.  While most Americans think nothing of driving 15 or 20 minutes to the nearest Home Depot to buy a new faucet or light switch – and quite frankly have no desire to walk 15 minutes for any reason – a fair percentage might prefer shopping at a neighborhood hardware store that is a 10-minute walk or 5-minute scooter ride away.  They, along with the “non-driving” residents, should have at least a handful of residential options that fit their lifestyle preferences.  If that 15-minute lifestyle catches on, then developers and city planners are sure to replicate it in other locations.

Second, there is no reason to exclude transit from the 15-minute neighborhood, particularly if it is focused on short trips.  This adjustment, however, changes the shape of the 15-minute neighborhood from a circle to more of an oval with the long axis parallel to the transit route.  A five-minute walk and 10-minute transit ride might now get me closer to four or five miles rather than a one-mile walk or three-mile bike ride.  Using transit to expand the size of the 15-minute neighborhood expands the number of useful places that can be easily reached, but it does come with several important caveats:

Frequent.  Transit service has to be frequent, particularly during the day and early evening.  Every 10 minutes would be great, every 15 minutes would be tolerable.  The current headway standard in many midwestern cities of 30 to 60 minutes is absolutely not workable.  In addition, a smartphone app with real-time locations and ETAs to the stop nearest the user is mandatory.

Free.  Rides should be free, or at the very least dirt cheap.  If you want to encourage short rides of half a mile or even two miles, charging a fare is a major disincentive.  Mobile payment technology is improving to the point where you might be able to charge riders a virtually frictionless fare using their smartphone, but free is ideal.  The goal is to have people hop on and hop off whenever it is convenient without having to buy a ticket or think about how much it will cost.

Predetermined stops.  Stops should be at predetermined locations and they should be every two or three blocks.  Frequent stops slow things down, but remember the focus is on access to the places along the route not on maximizing the distance that is covered.  Short-trip transit is in some ways a faster form of walking rather than a long-distance transportation mode.  Simple shelters with minimal signage will be fine, everything else will be on the smartphone app.

Dense routes.  Routes should be along dense, mixed-use, pedestrian-oriented corridors and should be relatively short (maybe 3 to 8 miles) so that they are easily understood and remembered.  Subways, light rail, and even traditional bus routes often zigzag across the community with a length of 15 or 20 miles.  Consequently, only frequent users understand where they are going and how to use them effectively.  That is not what short-trip transit is about.

This final point about “dense routes” deserves a bit more explanation.  Density is needed because the goal is to have many people be within reach of many useful places without the need to travel a great distance.  A pedestrian orientation is needed because the assumption is that many trips in a “car-lite” environment will involve walking for either all or part of the trip.  Finally, a mixed-use corridor is crucial because it turns out that the variety of trip purposes for short trips is just as diverse as for longer trips.  This is illustrated by Replica data for Chicago in the chart below. [7]

Facing the Hard Choices

The first part of this series started with the words “transit is in trouble.”  Most transit systems are desperately trying to hang onto what they have and are probably not even thinking about adding some new type of service.  But desperate times call for desperate measures, so maybe a solution that seems out in left field is just what is needed.  Below are four steps that I think cities (working jointly with transit agencies) need to take.

Add residential density to target corridors.  Most cities have numerous commercial corridors, but the focus for short-trip transit should be on those that have a strong mix of residential, retail, services and employment opportunities.  In my experience, the piece that is most likely to be under-represented is residential.  Short-trip transit needs to be driven by residents doing day-to-day activities, so the more residents the better.  Cities need to encourage property owners and developers to increase both residential density and the diversity of unit configurations and price points.

Innovate.  To change the attitude that transit is for “other people,” new transit initiatives need to stress innovations aimed primarily at the younger generations.  Using autonomous bus technology would be awesome (and it is not as far away as you might think), but even color schemes, bus stop designs, music and social media branding could be re-imagined.

Commit to the long haul.  People’s assumptions and habits regarding housing, transportation and lifestyle options don’t change overnight, so any new transit initiative needs to be given at least 10 years to prove itself.  Funding commitments need to be firm enough that property owners along the corridor are willing to invest millions of dollars in new projects or major upgrades.

Narrow the focus of transit service.  Many transit routes will remain unchanged because the “sunk costs” are too high, but the emphasis should shift toward a high level of service to a small area rather than a low level of service to a large area.  Bus routes that run at 10 or 20 percent of capacity should be dropped even if it means that outlying suburban areas have no service at all.  People who want transit service should move to where transit service is available, not insist that empty buses be routed to their neighborhood.  Connections between transit routes should also be emphasized.  Short-trip transit should connect with longer-haul routes whenever possible.  In fact, the eventual result might be a handful of long-haul, subway/rail types of routes that connect a myriad of mixed use districts and corridors served by short-trip transit lines.

But Will It Actually Work?

Maybe.  When it comes to predicting transit and lifestyle changes, there are no guarantees.  Recent efforts to implement something like I’ve described have met with mixed results.  In places like Kansas City (KC Streetcar) and Cincinnati (The Connector Streetcar), results have generally been positive with ridership levels bouncing back from pandemic lows faster than most transit systems.  But in other locations like Charlotte (CityLynx Gold Line) and St Louis (Delmar Loop Trolley), the results have been disappointing.

The Kansas City example is probably closest to the ideal that I have described.  The initial 2.2-mile line has been successful enough that it is now being expanded to roughly 6 miles in length.  Ridership has rebounded to approximately 75 percent of pre-pandemic levels and is growing.  Local funding comes primarily from a Transportation Development District that assesses properties within roughly a third of a mile of the streetcar route so that riders pay no fare.  The streetcar line has helped attract hundreds of millions of dollars of new construction activity taking place within the TDD boundary.  Most importantly, the land uses along the route are widely varied and the city has shown a willingness to increase densities where appropriate.

The potential payoff has multiple aspects.  The most obvious, of course, is the ability to choose an urban lifestyle that is focused on the places in a neighborhood, not on the streets, highways and parking lots that a car-oriented lifestyle demands.  That place-oriented lifestyle is going to be increasingly in demand, even in the midwest.  Second, the popularity of this combination of invigorating urbanism and multi-modal transportation is spawning redevelopment investments on a substantial scale.  At a time when much of the real estate industry is struggling, this niche is booming and it is fueled by both large, established developers as well as numerous small entrepreneurs.  Third, the best and the brightest of the younger generations are going to gravitate to cities where these types of places exist.  If cities want to compete in the new tech-enabled economy, this very well might be the price of admission.

Finally, if this type of development catches on, cities would benefit in numerous ways.  The increased density would produce more tax revenue per square mile without a proportional increase in infrastructure maintenance costs, which would improve municipal finances.  The reduction of trips by car would allow parking lots to be converted to more productive uses, improve air quality, and reduce accident related injuries and fatalities.  Finally, I’m not so naive as to think that cars would go away, but it might move the pendulum back toward an urban form more focused on people and the places that people like to be.  Again, my focus is on giving people choices.  No one would have to sell their large-lot, single-family home or their prized SUV, but I think a significant number of people would willingly opt for a slice of urban life where cars are optional and the landscape is not dominated by 6-lane streets and vast parking lots.

Notes:

1. Bureau of Transportation Statistics; “Travel Patterns of American Adults with Disabilities”; January 2022; https://www.bts.gov/travel-patterns-with-disabilities

2. National Aging and Disability Transportation Center; “New National Poll: Inability to Drive, Lack of Transportation Options Are Major Concerns for Older Adults, People with Disabilities, and Caregivers”; December 2018; https://www.prnewswire.com/news-releases/new-national-poll-inability-to-drive-lack-of-transportation-options-are-major-concerns-for-older-adults-people-with-disabilities-and-caregivers-300761774.html

3. Bureau of Transportation Statistics; “Household Spending on Transportation: Average Household Spending”; 2021; https://data.bts.gov/stories/s/Transportation-Economic-Trends-Transportation-Spen/ida7-k95k/

4. Bureau of Transportation Statistics; “Daily Passenger Travel”; December 2011; https://www.bts.gov/archive/publications/highlights_of_the_2001_national_household_travel_survey/section_02#:~:text=About%2038%20percent%20of%20all%20trips%20were%20personal,personal%20vehicle%20trips%20with%20more%20than%20one%20occupant.

5. Megan Brenan; “83% of US Adults Drive Frequently; Fewer Enjoy It a Lot”; Gallop; July 2018; https://news.gallup.com/poll/236813/adults-drive-frequently-fewer-enjoy-lot.aspx

6. Replica “Places” data model for the St Louis and Chicago metro areas in the Fall of 2021; statistics are for all trips excluding pass-through trips; www.ReplicaHQ.com.

7. Replica “Places” data model for the Chicago metro area in the Fall of 2021; statistics are for all trips excluding pass-through trips, where “short trips” are less than 4 miles in length; www.ReplicaHQ.com.