Why I don’t like FRR as a metric

In my last post, I discussed a possible metric to judge transit agencies by: mobility per subsidy.  In that discussion, I mentioned how that metric relates to and encompasses many of the other traditional metrics used to judge transit systems and prices, like equity/fairness and ridership.

Here, I’ll compare it to one of the cost-effectiveness metrics mandated by the Capital Metro board: Fare recovery ratio.  FRR is the ratio of all costs collected as fares: Farebox revenue / Total costs.  Unlike ridership or equity, mobility per subsidy does not encompass FRR; in fact, it actively conflicts with it and seeks to replace it.  There’s a reason for that: mobility / subsidy is a measure of efficiency, or benefit per cost.  FRR is not a measure of costs or benefits, but is instead a measure of the incidence of costs.

This is frankly an insane thing to measure.  For example, suppose MetroBus had a $100M budget to run 20 bus lines and collected $10M in fares and $90M from tax revenues.  This would be an FRR of 10%.  Then, one day, they discovered that there were tremendous revenue opportunities in running buses with wrap coverings.  So much, in fact, that 5 new buslines could be added that would completely pay for themselves, at a cost of $25M and revenues of $25M.  Now, MetroBus would be running 25 buslines with a $125M budget, collecting $10M in fares, $25M in ads, and $90M in tax revenues.  By mobility metrics, this is an unequivocal win: 25 buslines for $90M is much better than 20 buslines for $90M.  But FRR was actually reduced from 10% to 8%.  By FRR logic, fares should be raised because running buses became more efficient!  You might say that this is an odd case, but it should at least give you pause when your metric argues for you to do the exact opposite of the right thing.

Under the mobility per subsdiy metric, fares should not always be zero.  Assessing fares can be useful for two major reasons:

1) demand management, such as preventing rides that are of negligible mobility usefulness, such as rides for the benefit of air condition or one-block rides from crowding out rides that have positive mobility usefulness, and

2) Raising revenue.  As long as the revenue raised doesn’t interfere with the service provided (say, by making enough of the potential users avoid using it), this helps either return money to the taxpayers or increase mobility-providing services.  Either way, it can improve the mobility per subsidy metric.

These are similar reasons for charging fees across municipal government.  The Austin Planning Department charges a fee for submitting permits.  This both prevents frivolous filings (demand management), and raises revenue.  But it would be frankly insane to measure the effectiveness of the planning department using FRR (permit revenue / operational costs).  Raising permit fees for the purpose of increasing the planning department’s FRR could do real damage to the city by incentivizing people to either skirt the permit process, or else discouraging people from building altogether.

Similarly, raising transit fares for the purpose of satisfying an FRR metric could do real damage to the city by encouraging either fare evasion or reducing mobility and transit efficiency across the city.  FRR is a metric that should simply be ignored.  This doesn’t mean that it isn’t the Board’s responsiblity to ensure that taxpayers get good value for their money–it simply means that FRR is a terribly way of measuring that.

Some further half-baked thoughts on fares and metrics.

Some further half-baked thoughts on fares and metrics.  My goal in writing this is not to break new ground, but rather to summarize many of the common-sense ideas I’ve heard others say.  I’m sure others who have studied transit have come up with better summaries.

The overarching metric I’m kicking around is mobility per subsidy.   This pushes the hard work back one level into defining mobility and subsidy, but I think mobility is a useful idea inside of which one can compare submetrics.

First, the denominator: Subsidy here means the total revenue the transit agency receives from taxes.  Why per subsidy and not per dollar?  Because, from this perspective, we are judging the transit agency based on how effective it is in working with tax dollars.  If a transit agency sells advertising and uses that revenue to improve the service, the marginal improvements it funds will probably not be as cost-effective as the first dollars spent, but it would be perverse to judge the transit agency as having provided worse mobility to the taxpayer because they found new revenue sources and put the money to use!

How does subsidy interplay with costs?  For the purpose of this analysis, I’m assuming that the transit agency cannot run a significant surplus or deficit over time, and therefore costs are equal to revenues.

What is mobility?  Roughly, getting people where they want and need to go.  I choose this concept because it nicely encompasses some of the other concepts that people have bandied about for transit metrics.

For example, what’s the difference between ridership and mobility?  If ridership is measured as number of rides in a system, this is an imperfect measurement of mobility.  A system that connects linear points A, B, and C might have two buses that connect A to B and B to C .  Through-running a single bus from A to B to C will reduce the number of rides needed to get from A to C from 2 to 1, but increase mobility by making it possible to take one bus from A to C.   In this sense, number of trips is closer to mobility than number of rides, and fits our commonsense notion of what a better system should be.

But number of trips is an imperfect metric as well, as some trips aid mobility more than others.  Setting the fare of UT shuttle buses like the FA to zero has helped them become some of the highest-ridership buses in the entire Capital Metro system.  Many of these trips are vitally necessary: say, students going to class.  Some of them, though, aid mobility negligibly: say, students hopping the bus for a single block they could’ve walked because it was there and it was free.

However, distance traveled itself isn’t a good metric of mobility.  The student who takes a bus 2 miles to go to class could not feasibly walk to class every day any more so than the student who takes a bus 12 miles.  A bus trip of 2 miles therefore is providing as much mobility as a bus trip of 12 miles.

Mobility already encompasses some common sense notions of equity.  Some people are in greater need of transit services: people for whom it’s harder to substitute other transportation.  For example, people with mobility impairments preventing them from walking or driving, or people too poor to own a car.  However, there are notions of equity that are incompatible with mobility.  For example, some of those who need the most help and who use the transit system may be those who use buses as a cheap air-conditioned environment.  However, while these may be people in need, the transit system should not prioritize their needs, as the transit system is meant for providing transit, not any social service that is needed.  That allows city and county governments to compare spending additional funds on air conditioning for the needy to other priorities.

Finally, one note: mobility per subsidy is mainly a useful metric at the margin.  Spending more money overall on transit might reduce the overall efficiency of the spending, as the last bus unit added will probably add less mobility than the first.  However, it can be useful in determining which of many routes should be added or whether it’s worthwhile to raise fares and use the money raised to provide additional service.

Proposed Fare Changes

Capital Metro is currently going through an analysis of their proposed fare changes. These are the questions I intend to ask about the proposals at the Open Meeting on Wednesday:

1. What, if any, are the projected changes in costs associated with each of the proposals?

2. If there are no projected changes in cost, by what analysis do you consider it worthwhile to eliminate 117,000 MetroAccess rides to gain a negligible $9,000? If there are projected changes in cost, how do you expect the public to judge this proposal without providing the data?

3. Is the additional revenue and lost ridership for changing premium service to $1.50 measured against the current baseline or the baseline of a change to $1.25?

4. What would the revenue and ridership numbers be different if you had adjusted the MetroBus fares to $1.10 or $1.50? Presenting only the selected numbers gives us little room to judge the proposal by.

5. How will day passes work when transferring between premium and base service?

6. Will different fares between MetroBus and MetroRapid cause difficulty in advanced payment facilities, such as the promised smartphone app to prepay MetroRapid? If passengers opt to pay cash, will this slow MetroRapid down?

7. You dismiss collecting payment for parking as too difficult logistically, yet 100s of private operators consistently collect parking payments for much smaller lots than Capital Metro operates. If you don’t believe Capital Metro is capable of operating as well as them, did you consider outsourcing the job to one of them?

Open letter to Capital Metro, cont. (the Red Line post)

In response to my open letter (on Facebook), Erica of Capital Metro makes the case for MetroRail:

Regarding MetroRail, a lot of attention does go to it, you are right. Whether this is correct thinking or not, we could debate, but it feels to me like MetroRail has to succeed before the region will embrace any other high-capacity transit options. And there are lots of successes now to talk about. And the region’s needs for transit options are not diminishing.

I think this rationale for supporting the Red Line explains why so much of the conversation is at cross-purposes.  The critics and the defenders are using different evaluation metrics.  Critics evaluate the Red Line as a transit project using ideas like fare recovery ratio, per-rider subsidy, frequency, etc.  Capital Metro on the other hand, sees the Red Line as a gamble on the future of transportation in the region.  By this line of thinking, MetroRail must succeed at any cost, and be judged not by FRR or subsidy, but by its ability to bring high-capacity transit to Austin.

I think this is pretty shaky ground to orient your organization around.  For one, I’m not sure that acerbic reviews like this one help the cause of public transportation generally.  I know that I personally have lost a lot of trust in Capital Metro through its aversion to judging the Red Line by any standard metrics.  But beyond the question of tactical effectiveness, this justification also has no real limits.  The costs and benefits are unquantifiable and therefore can justify anything.  I’m left with these questions:

  • What would have to happen for the Red Line to no longer be worth it?  Are there ridership levels low enough, fare subsidies high enough, to make the organization throw in the towel?  What are they?
  • If the Red Line were to fail to materialize into the line you want it to be, is there a Plan B for getting high-capacity lines into Austin?
  • At what point will Capital Metro start evaluating the Red Line using the same metrics it uses to evaluate other transit lines?  If  high-capacity transit is built, will the Red Line then be compared to other transit on standard efficiency grounds?  If a new line is voted down?  At what point can we expect the Red Line to play by the same rules as the rest of Capital Metro transit?

I am again left despairing that so much of the conversation revolves around the Red Line.  It seems apparent that Capital Metro has decided to make a substantial bet on MetroRail and I doubt there’s much riders can do to deter it at this point.  But for the 98% of Capital Metro’s riders and potential riders who rely on Capital Metro, but for whom MetroRail is an unuseful diversion of money and organizational energy, I hope that this isn’t a bet on which you simply keep doubling down forever.  And in the meantime, I hope that you can see to it to promote the rest of your operations with the same sort of zeal with which you promote the Red Line.

Open letter to Capital Metro

Originally posted on facebook:

Dear Capital Metro,

I am writing to you because I have grown increasingly frustrated with your communications.  I read the Capital Metro blog, I have “liked” Capital Metro on Facebook, I have participated actively in the Capital Metro icanmakeitbetter ideas website, and I have attended at least one webinar.  Capital Metro has made an enormous effort to engage with the public and I have responded.  However, the more I have responded, the worse I think of Capital Metro.  I know this is not what you intended or hoped for, but it is sadly true.  Here are my areas of concern:

  • Capital Metro talks disproportionately about one relatively small and marginal area of its operations.
  • Capital Metro’s writings have a distinct air of spin that makes me distrust them.
  • Capital Metro offers methods to ostensibly participate in decision-making, but no actual participation.
  • Capital Metro offers little information to help people make informed opinions.

Disproportionate Attention

Capital Metro has made an enormous organizational commitment to MetroRail.  It is understandable that this has been highlighted extensively, given that MetroRail is not only a new line, but an entirely new type of line.  Yet, in the grand scheme of what Capital Metro has to offer, the Red Line remains a small, marginal line.  By my understanding, MetroRail accounts for approximately 7% of Capital Metro’s budget, 2% of Capital Metro’s ridership, and an enormous percentage of official Capital Metro communication (hiring and budget announcements excluded).  Daily boardings are, by my count, about 1/9 of the flagship 1M/1L bus route.  Even if it achieves the full capacity allowed by physical limits, it will never carry as many people as the 1M/1L currently does.  It will always remain a relatively small piece of the public transportation puzzle.  I know that Cap Metro is proud of MetroRail, but the more I read Capital Metro focusing on it, the more I worry that it is distracting you from the much, much larger MetroBus system.

These fears are especially acute for me as MetroRail serves a very different, less transit-oriented type of customer than I am.  MetroRail runs a relatively low-frequency line through relatively low-density parts of the Capital Metro service area.  This is not the type of transportation that allows many people to live a transit-oriented life.  I do not own a car, and I have deliberately chosen to live and work in areas much better served by Capital Metro (south of West Campus and just west of downtown), where it’s quite possible to get around without a car.  And yet, when Capital Metro discusses transit-oriented development—ostensibly development aimed at people like me—it is in the context of MetroRail, a commuter-oriented transportation line!  The impression I get from Capital Metro communications is that Capital Metro is far more interested in service to the suburbs than service to the core.

Spin

I am not the first to make this type of distinction between the commuter-oriented MetroRail and the core bus lines.  While many people are very enthusiastic about the arrival of rail to Austin, many of the most informed and transit-oriented people in the city have not been.  When I attended the annual meeting of the Bus Riders’ Union, the only organized grouping of Capital Metro customers I know of, the Red Line was universally blasted as a waste of money.  There’s a community of transportation and urban issues bloggers and blog-commenters in Austin that have made detailed, data-oriented critiques of the Red Line.  Reading Capital Metro communications, though, makes it sound as if Capital Metro is completely unaware that MetroRail has ever been criticsed.  Certainly, no substantive plans to ameliorate the highlighted problems have been offered.

Instead, modest achievements—and even sometimes failures—are trumpeted as major successes.  In one post I found myself resenting quite a bit, the Capital Metro blog breathlessly announced that MetroRail transported 2,800 passengers in a day.  [http://capmetroblog.com/2011/11/29/metrorail-motivation/]  To people unfamiliar with transportation, this may sound like a large number, but it is approximately 8% of the daily ridership of Houston’s MetroRAIL or 20% of the ridership of the #1 bus.  (Correct me if I’m wrong; there are not similar breathless posts about #1 bus ridership.)  However, even at that relatively tiny number of riders, MetroRail failed to scale, being forced to scramble buses for stranded passengers.  And the buses beat the train to the destination!  To somebody who is used to riding the normally efficient and effective bus, the facts read as a catalog of failures, not as the amazing achievement the blog tone implies.  I want to know what Capital Metro is going to do to fix the problem of an expensive train line failing to scale to even 20% of the ridership of a bus line and failing to outperform buses scrambled to the scene.

I know that the point of providing the Capital Metro blog is to perform public relations on behalf of Capital Metro.  But there is no reason it needs to be so relentlessly cheery.  You can have an honest discussion about real problems with service and what you are attempting to do to improve on them.  In the tech industry, for example, providers of essential services often write long posts honestly discussing their own failures.  (See, for example, http://aws.amazon.com/message/65648/)  I believe that adopting a similar, honest tone to your blog, not just discussing what you see as Capital Metro’s greatest successes, but also discussing what areas are poorest served, what parts of your service are breaking the budget, etc., would be well-received.  Instead, I get the feeling from the tone of the posts in the Capital Metro blog that no matter what happens, it will be spun as a success.  So why should I trust anything Capital Metro has to say?

Participation

I have participated in Capital Metro’s ideas website.  I have added three ideas of my own and participated in many other discussions.  No Capital Metro employee has responded to any of my ideas, except to mark it as “acknowledged,” whatever that means.  Very, very few ideas have been marked as accepted on the whole site, and of those that have been, most have merely been ideas Capital Metro had already implemented or planned on implementing independently.  Even fewer ideas have been explicitly rejected.  Instead, they languish uncommented on and to all appearances unread.

The core of a participation system is a pipeline whereby ideas can reach engineers and decision-makers who can give feedback on them.  This can be done on any number of platforms, from email to Facebook to websites to suggestion cards to face-to-face meetings.  The platform itself is only a tool for facilitating the user-to-decision-maker communication.  What it feels like Cap Metro has done instead is to work very hard on the platform but not at all on the core communication.  This is worse than nothing.  I do not want you to request my input if it will go unread or uncommented on.  It’s a waste of my time.  What I suggest you do is either dedicate resources to responding to these ideas or shut down the platform for soliciting them.  Maybe you can only respond to the top 5 ideas per month; that’s fine.  But don’t solicit feedback and then ignore it.  It’s insulting.

Information

Similarly, whenever Capital Metro makes changes to its service, it provides a data-less batch of justifications for these choices, and then solicits input.  The #5 route was cut back on weekends and the #1 expanded, and we were offered the explanation that this was driven by ridership levels.  Was this a good choice?  If I use the #5, probably not; if I use the #1, probably.  That is as good as feedback can possibly be with the information provided.  When you solicit feedback without providing information, the best thing you could possibly do is ignore it, because why would you want to listen to uninformed opinions?  Either provide enough numbers to justify your decision quantitatively or cease looking for input on these decisions.

In general, I find that the most quantitative, numbers-oriented analyses of Capital Metro service comes not from Capital Metro, but from bloggers, such as Chris Bradford and Mike Dahmus.  There’s no reason this should be!  You have the numbers while the bloggers are often merely doing their best to recreate or estimate.  You can make public the reasoning that went into these decisions in perfect detail.  If this isn’t something you want to do, then you should stop presenting the service changes as open for discussion.  Without the numbers that went into your decision, the discussion is a waste of everybody’s time.

Conclusion

I love Capital Metro.  My whole way of life depends on it.  It gives me freedom similar to how many 16-year-olds feel about their cars.  This is why I want to participate in the ongoing discussion about Capital Metro services.  And that is why I have been so excited that Capital Metro has made such a commitment to participate in social media and so many communications platforms.  But somewhere along the way, your strategy has gone wrong.  You have invited participation on a million platforms, but actually participating leaves me feeling unheard and hollow.  You offer many cheery blog posts, but little solid information.  I feel far more estranged from your organization than I was to start with.  That is the bad news.  The good news is that means you have a lot of room to improve.  I sincerely hope you do, and am more than willing to work with you if you wish to work with me.

Yours,

Dan Keshet

Affordable Housing, Abundant Housing

Some more thought about the affordable housing conference.
It seems to me there are two affordable housing problems, related but distinct.  First, the problem that some people can’t afford the basic costs of rent in Austin.  An apartment has costs: taxes, construction, maintenance, land, etc.  These add up to a breakeven rent that’s higher than some people can afford to pay.  Reducing those costs (e.g. finding cheaper ways to maintain a house) can make the breakeven rent more affordable, but there will always be some people who can’t pay, even without any landlord making a profit.
Second, there’s the abundance problem: when there are more people who want to live here than there is housing, they bid up the rents.  Rent no longer reflects costs, but demand.
The only ways to address the affordability problem are redistributive.  The city doesn’t assess taxes on apartments run by nonprofits (raising taxes slightly on everybody else), who pass the savings on to renters.  Or the city mandates developers lower prices on certain apartments, redistributing potential profits from the developer to the renter.  But trying to fix scarcity problems by redistribution is like trying to fit a carpet too big for a room one corner at atime.  The more market weight you give to the needy just pushes demand up on other units, driving more marginally-able-to-pay residents into unable-to-pay status.  The only way to deal with the scarcity problem is to get more units built.
Austin has major scarcity/abundance issues.  Sky-high downtown rents reflect demand and scarcity, not just construction costs or tax costs.  At the housing + transit conference, I saw a lot of people using the language of redistributive solutions: Tax-incremented financing, density bonus, finding federal and foundation matching funds, etc.  But the only person talking scarcity and abundance was the developer, not the politicians or staffers.

I’m blogging!

After years of getting progressively more interested in local politics and policy wonkery, I’m making the plunge into joining the conversation.  The goal of the blog is partially to get my ideas out there, but even more so, to put ideas into the crucible of feedback that helps me refine them and understand the context of the city I live in.

Compared to the national and international politics which I spent most of my time on in my 20s, I’ve found local politics to be much harder to break into.  There are fewer sources of both news and analysis of what goes on in local politics, and not many people make a concerted effort to involve new people in policy-making.  Decisions are often hashed out over the course of months and months of back-and-forth and to be in the loop, you often need to attend meetings in person, rather than reading about what happened in the media.  Fortunately, since the internet has really come into its own as a discussion of local issues, it’s getting easier and easier to learn about local politics online; I hope to both benefit from and contribute to this trend.

I’m planning on a very soft launch; perhaps I’ll tell a few friends or my facebook friends, but probably only really publicize after I get some true posts up here.