We want to take you straight to
Washington, DC, where President Biden is about to sign the
bipartisan infrastructure bill into law. More than $1 trillion. Let's listen in. Okay, here we go. On November 15th, 2021, President
Biden signed the bipartisan infrastructure law, which included
America's largest investment in public transit ever. Between that and other federal
money from fiscal year 2022 through 2026, the US government is
expected to spend between 91 and $108 billion on local public
transit. I believe that that with the money
coming in from infrastructure, it's going to actually help us rebuild
American transit. With that much money at stake,
using it effectively will be key. After all, the impact is expected
to be enormous, from connecting people to jobs and economic
opportunities to reducing greenhouse gas emissions, city
congestion and accidents. Data also support the idea that
the prosperity of a major city like New York or Boston is closely tied
to the strength of its subway system. According to some
estimates, economic gains could equal about 10% of GDP. But building infrastructure in the
US and in this case subways is very expensive. In fact, it is the
sixth most expensive place to build rail transit in the world, and
even that is likely an understatement. So what is it that
makes building subway infrastructure so expensive in the
US and can anything be done about it? When you think about the complexity
of the system, what's going on above the street, what's going on
below the street, there's really nothing to compare it to in the
world. This is Carmen Bianco. He was the vice president of
subways at MTA New York City Transit from 2010 to 2013 before
becoming the president of the agency that year. He retired two years later. And then the interesting part about
New York is there are so many tunnels underground that were
built years past that, you know, you have to realize as you're
going through that there are other tunnels down there that you have
to avoid. So you're going above and below. And it's it's it's really that
modern Marvel kind of thing of engineering. It's it's just very
complex. But I look at our engineering team
up in New York and I just say, my goodness, how did you how do you
all figure this out? During Bianco's time, the Second
Avenue subway expansion, the most high profile New York City transit
project in decades, was in the works. While first proposed in the
1920s, it didn't materialize until the early 2000. The full project
is planned as a 16 station, 13.7km line running from Harlem all the
way to Hanover Square in the southern tip of Manhattan. To make it more manageable cost
wise, it was split into four phases. Phase one was completed
and opened in January 2017 and runs through the Upper East Side. Phase two is slated to run through
Harlem. The third and fourth phases will
cover Lower Manhattan. Phase one was by itself the
biggest expansion of the subway system in 50 years. The full project, Yeah, that's
expected to cost $16.8 billion or 2.6 billion per mile. That's almost three times more
than the cost of San Francisco's central subway and three times the
cost of the purple line in Los Angeles. The transit Costs project
at New York University compiled a database of 900 rapid rail
projects across nearly 60 countries and found the Second Avenue subway
to be the most expensive subway project in the world. There are some who argue that New
York's density makes this pricey subway a better value per person. The impact it has on a massive
population makes it worth it. You're looking at a population like
New York where you know you have 8 million people in the city. Imagine, imagine what a day in New
York would look like without the mass transit system. How would people be able to move
around the streets even with transit, even one a day when
you're moving 6 million people on the subway? It doesn't look any
different on top side. I mean, the number of cars on any
of the any of the avenues in Manhattan are still very complex,
still, you know, still congested. And so just imagine what would
happen if transit wasn't there. 560,000 riders are expected to be
served by the full four phase buildout. Phase one cost per rider
was $26,000. Almost a quarter of the Los
Angeles Metro's Purple line extension. It is also comparable
to the per rider cost for the planned $39 Billion Grand Paris
Express in France. Unfortunately, the cost to rider
ratio more than doubles for the $7.7 billion second phase of the
project through Harlem, which is also one of the most crowded
neighborhoods in the city and one that has long, desperately needed
better public transportation options. New York's public transit
system is mostly run by the Metropolitan Transit Authority, or
MTA. It's the largest such agency in
America. It serves a population of 15.3
million people across a 5000 square mile area. That includes New York
City, Long Island, southeastern New York and parts of Connecticut. Ridership accounts for 40% of all
public transit trips in the entire United States. We ran 8000 trains a day, 5500
busses on the road a day. And on our best days during my
tenure, we were actually hitting 6 million, hitting that that bogey
of 6 million customers on the on the subway. And in many, many
different days. More trips are taken on the MTA
subway system than on all of the other 14 top heavy rail systems in
the US combined. It is also likely the world's
largest system in terms of cost. Most of MTA's $54.8 billion
capital plan for 2022 2024 goes to subways, smaller shares go to
commuter rail projects and busses. The rest goes to bridges and
tunnels, among other things. As late as May 2023, ridership
continued to sit well below pre-pandemic levels and all time
highs of the mid 20th century. From 1975 to 2019, just before the
pandemic. Ridership had increased by 76%. Though other American projects may
cost a lot less per mile than the Second Avenue subway, when
measured by the number of people served per dollar spent. They look quite expensive. The sound transit's Lynnwood Link
in the Greater Seattle, Washington area costs about $50,000 per
rider. Los Angeles Metro's Purple Line
extension Section one costs about $83,000 per rider. Researchers are worried high
construction costs will make voters skittish about supporting public
transit in all but the densest areas in America. As we see the cost per rider
numbers increase, it just makes individual projects look less
attractive. Even American projects cheaper than
New York's on a per mile basis are eye watering compared with transit
rail in Copenhagen and Paris and Madrid. The Transit Costs project
found the US is the sixth most expensive country to build a rail
system, though that stat is deceiving. The five countries
ahead of it have rail systems that are far more heavily dependent on
tunneling, which dramatically raises costs. A 2021 report from the Eno Center
for Transportation found the United States spends $1.3 billion per
mile on projects that are mostly tunneled like subways. New York does skew that average
considerably. Without it, the average drops to
$582 Million. Still, that is higher than Japan,
Germany, Mexico, Chile and several other countries, many of which are
developed economies with similar challenges such as high labor
costs and dense cities. According to that data, America is
not always the most expensive place to build. However, many at grade
or ground level projects in the US cost about as much as tunneled
projects in other countries. Even without New York City,
American rail projects aboveground are 48% more expensive than the
average and tunneled ones 57%. There are several reasons why us
subways cost so much. For one, the planning and funding
process is slow. If you look across America, there's
all kinds of worthy projects in different towns, different cities. New York, of course, being the
biggest, but. You know, you wind up in these
these arguments. If you live upstate in New York,
you don't want to be funding, you know, New York City projects. So you got all these competing
kind of arguments you've got. You know, lawyers get involved
and, you know, you've got to deal with all the. The court cases that
come out of wanting to start a project like Second Avenue. There are a lot of issues just
pulling together the needed funds in many other parts of the world. A federal entity will simply pay
for a project up front or guarantee money. In the case of a lot of
American projects, money tends to come in phases sporadically. Just take the example of the
latest announcement by Secretary of Transportation Pete Buttigieg. Phase two of the Second Avenue
subway was among them. The total grant $500 Million. The total cost of this phase is
about $7.7 billion. I think the local share is supposed
to be 3 to $4 billion, and it's not clear where that money's coming
from. And I think the federal
government, very understandably is is skeptical that the MTA is going
to be able to raise that money. And so it doesn't want to write
the big check until that's that's that's there. Now, you're reaching out to the
federal government for a match, right? You're you're reaching out
to the state for the basic funding. You're always in that mode. And that's why I say, you know,
you each 4 or 5 year period when you're going to have the capital
program, it's so important to make sure that you have the projects
that people really want and need. The United States also doesn't
build as much transit as other countries. When a major capital
project comes along, which is only about every 15 to 20 years, there
just isn't as much practice or institutional knowledge. In other parts of the world, in
parts of Western Asia and and in Europe, where they're routinely
building a lot of projects. They have people on staff, they
have the expertise. There's a familiarity that comes
with these with these projects that we seem to have to reinvent here
in the United States time and time again. Other other places in
Europe will just pull up standards and designs from other
metropolitan areas and plop them into their saving a whole lot of
time, saving a whole lot of money. But here in the United States, we
customize things, we customize stations, we customize trains, we
customize the interiors of trains. But a lot of the problems stem from
the construction process itself. There are always unforeseen issues
below ground. When you open up a street in New
York City, all of the infrastructure is below ground. It's, you know, so you know, all
the sewers and electrical venting system for different tunnels. It's all below ground. So all of
that needs to be moved in order for a project to even begin. Controlled explosions underground,
also known as blasting, are needed to dig out tunnels. Phase One's three stations used
two different escalator contractors, and each had a
different number of exits, elevators and other features. The ratio of station costs to
tunneling costs on the subway was far higher than on other projects
in Paris and Milan, a reason why projects are so overbuilt. Politics. When big projects do
come around, the political bodies with seats on transit agency
boards often want to tack on streetscape improvements, parks or
other neighborhood beautification. These agencies often have to know
how to bargain with local governments who have jurisdiction
over the areas where they want to build. And the transit agencies
often don't have much leverage in negotiations. So what that means is that cities
will say, Oh, well, if you want a permit to, you know, do
construction in our city, you need to like give us all these things. We need to repave our streets. You need to use these types of
pipes. You need to, you know, build us a
park and so on and so forth. And, you know, in New York, we had
that problem with the Second Avenue subway, phase one. And the MTA can't forcefully push
back on the mayor and say, you know, pound dirt like we need the
permit from you in order to, like legally do this. So then we're
going to have to like, you know, pay the bribe, essentially. Politics also slows down planning
processes. Seattle's public transit projects
like the $12 Million to $15 Million West Seattle and Ballard Link
extensions allow for a lot of meddling by local officials over
things like where tracks and stations are located. The transit board, feeling heat
from constituents, often delays the planning process to allow for
alternatives to be explored. But the longer the project is
delayed, the higher the cost simply because of inflation. Labor costs are also higher, but
not necessarily because of higher pay. Sweden is a high wage
country, yet its overall labor costs are lower projects in the
Northeast. Us employ many more workers, many
with jobs that don't always seem essential. There are more blue
collar workers and more white collar ones 40 to 60% more. In the case of a project in
Boston. Most sectors in the economy has
increasing increasing productivity over time. Construction is flat or
actually slightly falling. And we go back all the way to 1960
and up until today, that's that's actually 60 plus years we have
data for and we can see that efficiency is not increasing in
the construction sector. That's a real problem. And anything where you cannot or
do not increase the efficiency, it's going to be expensive. Another big piece of it is that in
America and in New York, there's a big overtime culture, right? So collecting overtime on your
pay. Whereas in other parts of the
world there are caps on how much overtime you can work. And there's
also an effort to sort of normalize that stuff. So it's sort of like,
okay, you can't just collect, you know, 80 hours of overtime in a
week or whatever it is. It's like you can only do you can
only work a total of 45 hours, let's say, I think is the cap in
France. The relationships between agencies
and contractors are often adversarial and secretive, and
agencies often have trouble managing contractors. A lack of competition among
contractors and privatized risk all inflate bid prices. A lot of the rest of the cost
comes down to soft costs, which include things like design,
insurance, construction management planning and all other expenses. In a lot of places, these costs
can range from 5 to 10% of the total. For the Second Avenue
subway, they were 21%. Transit can be extremely valuable
for a city's economy in New York. 85% of the people who travel into
the business district below 61st Street take some form of public
transportation. Highways and roads can't match
transit in terms of efficient use of space. You can fit many more
people in a subway car than on a highway in separate vehicles. It's also much worse for the
environment. Transit projects are inherently
more complex than highway projects. There are trains, tracks,
signaling and communication systems, stations and so on. Opting for standard designs
reduces complexity, which then reduces costs. You don't have to make something
from scratch every time you can work off a basic model. But if you go to other countries,
you see. Stations are much more austere in
a lot of cases right there. They're really utilitarian. And these are just places to get
somebody from from one place to another and serve the system
pretty well. Here we tend to make them a little
bit bigger, a little bit more grand. Even the more mundane ones. Standardizing designs and practices
also reduces micromanagement and political meddling simply because
there are fewer decisions to make. Researchers like Goldwin say more
of the work ought to be brought in-house, and those agencies need
to be empowered to do their jobs. We would say we still need the
consultants. We just need a little bit less of
them and we need leadership at agencies that sort of is on top of
the project rather than being guided by the consultants. Regulations, often well intentioned
or understandable, can become onerous or further drive up costs. For example, a lot of areas
prohibit construction during certain hours. In some cases this
is because equipment makes noise, but sometimes noise can be
mitigated. The beeping sound a truck makes
when it backs up can be silenced in favor of a flagger on hand to warn
traffic or pedestrians. Labor costs can be cut by tackling
America's overstaffing problem and over time, culture. We're not advocating for cutting
anyone's wages. Maybe be mindful about overtime. Try to spread it out more
equitably. And then the other side of it,
right? Like don't just like throw bodies on jobs that it's not
adding or making things more productive. Finding a way out of the chaotic
process of planning and securing funding is crucial. Every moment wasted is more money
lost.
