1

Transit for Livable Communities, 626 Selby Avenue, Saint Paul, MN 55104

Phone: 651-767-0298 E-mail: tlc@tlcminnesota.org Web site: www.tlcminnesota.org

Minnesota Transportation Finance Advisory Committee

Comments by Dave Van Hattum, Transit for Livable Communities

September 24, 2012

Thank you for this opportunity to provide input.

Transit for Livable Communities conducts research and advocacy to increase transportation

choices so that Minnesota is more economically competitive, more people have access to jobs and

opportunity, and to make best use of limited resources. We have more than 10,000 members in

the Twin Cities metro. We know that transit is critical for people to get to where need to go: jobs,

school, health care, volunteer activities and family connections.

Our work is focused on the Twin Cities metro, but we align with other organizations, such as those

you will hear from next--the Minnesota Public Transit Association and the Suburban Transit

Association.

This morning, I will cover three key points.

1) Our support for accelerating the build-out of the Twin Cities transit system,

including transitways and bus–in 15 not 30 years. Including how to fund it.

2) The New Normal in Travel

3) Key results of Bike Walk Twin Cities, a federal program that TLC administers

1) Economically Competitive Transit

As you have heard from Itasca Project, rapidly building out the Twin Cities transit system is a

smart investment for our region’s economy and for individual families. The ITASCA Project

Return on Investment (ROI) Study found significant direct economic benefits in the form of travel

time savings and reduced car operation costs—two to three dollars in return for each dollar

invested. But, there also are several indirect benefits:

2

Attracting jobs and talent to the region. The message from corporate site selectors is clear—

employers want to locate in vibrant regions where people have transit options.

Improved air quality. The Minnesota Chamber estimates the cost of our metro region failing

to meet federal air quality standards at $200 to $300 million per year.i Transit emits a fraction

of the pollution of driving alone and can help avoid these costs.ii

Reduced Parking Costs. We know top employers along the proposed Southwest light rail

transit (LRT) line do not want to build expensive new parking decks.

So, how would we fund increased investment in transit? We support a ¾ cent increase in the

metro area sales tax. As this CHART (see attached), shows, such an increase would bring us on par

with many peer regions that today have a full cent or more in local sales tax dedicated to transit.

The vast majority of these peers have a total sales tax rate that is, at least, a half cent greater than

the Twin Cities.

And we know, from recent polling and referenda around the country, that people support

increased taxes for clearly delineated transit projects.iii

The accelerated transit build out discussed at TFAC would NOT create a world-class system—

rather it is for an economically competitive and achievable transit system. If we were reaching for

world class, we would locate, at least some, rail lines underground to avoid competing for road

space with cars.

Dozens of cities around the globe have extensive subway systems including Melbourne, Hamburg,

and Nagoya, Japan, which are comparable to the Twin Cities in population.iv Cities to our north,

such as Calgary, Montreal and Vancouver invest substantially more in transit, and have several

times the transit ridership, on a per capita basis, as the Twin Cities.v

As you heard at the last meeting, it is essential to plan for a rapidly changing future or a New

Normal.

2) The New Normal for Travel

People are driving less (see attached CHART). In Minnesota, the total amount of driving has not

increased for six consecutive years even as the state’s population increased by more than

300,000.vi While the down economy has played a role, this trend preceded the economic downturn

and other forces are at work.vii

Other modes are seeing record demand. In the Twin Cities metropolitan area, transit ridership

is up 17% since 2005. Young people are far more likely than their elders to opt out of car

ownership.viii Increased telework, and Car-sharing and Bike-sharing enterprises, make car

ownership less of a necessity. How many of you know families that are choosing to live closer to

their worksite?

3

Between today and 2040, one third of the projected population growth of the Twin Cities will be

immigrants, and the share of seniors will nearly double from 11% to 21% (both groups will be

looking for increased alternatives to driving).ix It is imperative that we expand the reach of

convenient transit, which currently only reaches 25% of the metro region’s households.x

One element of our transportation investments you have not heard much about is bicycling and

walking.

3) Bike Walk Twin Cities

In 2005, Congress funded four pilot projects around the country to find out whether improved

bicycling and walking infrastructure would lead to quantifiable shifts from car trips to bicycling or

walking. The unequivocal answer is YES!

In Minneapolis and 14 adjoining communities, bicycling is up 52% and walking up 18% since

2007.xi And every indication is that the trend will continue given high gas prices, the need to

reduce health care costs, and increased community investment in bike trails and walkable city

centers.

The Minneapolis pilot focused on adding on-street facilities, which are very cost effective use of

transportation dollars—and increasingly can be included as part of regular rebuilds. Through

extensive data collection, we learned that 35% of the trips crossing the Franklin Avenue Bridge

are made on foot or bike.xii Had all these trips been by car, expensive bridge or road expansions

would, almost certainly, have been needed.

Minneapolis plans to have 7% of commuters arriving by bike by 2014, which is critical as the

capacity to expand roads anywhere in the city is very limited.xiii More broadly, we know there is

keen interest in providing better bicycle and walking access to transit, and in filling gaps in the

regional bicycle network.

Some brief stories illustrate the impact of Bike Walk Twin Cities. Joe began bike commuting to his

job. He lost weight, performed better at work and saved thousands of dollars per year that his

family has re-routed to their kids’ college education. A bike library participant applied for a job

that wasn’t on a bus route and that required ‘reliable transportation,’ she told them yes, I have

reliable transportation.

Conclusion

Household expenditures on transportation are considerably less in metro areas that invest in

transit and encourage more compact development. In Portland, OR, for example, these savings are

estimated to exceed $1 billion per year.xiv

The market for housing in walkable communities and close to transit is hugely under supplied. A

survey by the Met Council estimates that the market for transit is three times the current number

4

of riders.xv And a national survey found that a large majority of Millennials (the largest home

buying demographic) want to live in walkable urban settings.xvi

The investment priorities and new revenue tools that the TFAC advances can and should

encourage expanded transit options and more sensible land use. A transportation investment plan

that reduces the need for car travel can keep billions of dollars each year in the metro economy--

while improving the quality of life and providing more equitable access to opportunity.

i Aulich, Ted, and Kenneth Neusen. 1999. Estimated Economic Impact of Twin Cities Ozone Nonattainment. Grand Forks, N.D.; University of North Dakota Energy and Environmental Research Center. ii Conserving Energy and Preserving the Environment: The Role of Public Transit, pg. 2 Robert Shapiro, Kevin Hassett and

Frank Arnold, July 2002, for the American Public Transit Association. iii Jason Jordan, Center for Transportation Excellence, presentation on Transit Ballot Webinar: A Comprehensive Debrief of

Atlanta’s Recent Referendum, September 25th

, 2012. iv Transit Maps of the World, Mark Overden, 2007.

iv. American Public Transit Association, 2011 Public Transportation Fact Book. http://apta.com/Pages/default.aspx vi MnDOT, VMT Trends in Minnesota: 1992-2010, pg 2, October 2011 vii

The Road Less Travelled, An Analysis of Vehicle Miles Traveled Trends in the U.S., Robert Puentes and Adie Tomer,

Brookings Institution, 2008. http://www.brookings.edu/~/media/Research/Files/Reports/2008/12/16%20transportation%20tomer%20puentes/vehicle_miles_traveled_report.PDF viii 17% increase in ridership figure arrived at based on calculation from Metropolitan Council PowerPoint presentation

(slide #47) to Minnesota Transportation Funding Advisory Committee (June, 2012), Carmakers Next Problem: Generation Y,

Allison Linn, 11/4/2010, NBCnews.com, http://www.msnbc.msn.com/id/39970363/ns/business-autos/t/carmakers-next-

problem-generation-y/#.T57c-ByCjap ix Libby Starling, Metropolitan Council, 2040 Regional Forecasts and Thrive MSP 2040 presentation to Transportation

Advisory Board, August 15, 2012 x Transportation Performance in the Twin Cities Region, Providing a More Complete and Understandable Picture, pg 17,

Transit for Livable Communities, MCEA And STPP, August 1, 2008 xi Bike Walk Twin Cities, administered by Transit for Livable Communities, bicycle and walk count data

xii Ibid

xiii City of Minneapolis, http://kstp.com/news/stories/S2647766.shtml?cat=1

xiv Portland’s Green Dividend, A White Paper from CEO’s for Cities by Joe Cortright, July 2007,

http://www.ceosforcities.org/files/PGD%20FINAL.pdf xv

2007 Metro Residents Survey, Met Council, February 2008 xvi

Urban Land Institute, 2011, http://urbanland.uli.org/Articles/2011/June/KirkEcho

Most Regions use Sales Tax to Support Transit

Transit for Livable Communities

A non-profit organization, TLC works to transform Minnesota’s transportation system to strengthen community, improve health and opportunity for all people, foster a sound economy, and protect our natural resources.

626 Selby Avenue

Saint Paul, MN 55104

651-767-0298

tlc@tlcminnesota.org

www.tlcminnesota.org

www.facebook.com/tlcminnesota

@tlcminnesota

August 2012

A dedicated regional sales tax is the most common funding

mechanism among metro regions similar to the Twin Cities.

POLICY BRIEF

Major Cities Sales Tax Total Tax To Transit

San Francisco

8.5%

Atlanta

8%

Boston

6.25%

Cleveland

7.75%

Dallas

8.25%

Denver

7.62%

Houston

8.25%

Seattle

9.5%

San Jose

8.375%

Saint Louis

8.5%

Salt Lake City

6.85%

Phoenix

9.3%

San Diego 7.75%

Mpls - Saint Paul

7.75%

An analysis of tax rates indicates that

the Minneapolis-Saint Paul region

uses this revenue source at a much

lower rate than the majority of peer

regions. Most of our peer cities have

levied 3 to 4 times the rate applied in

the Twin Cities.

The 0.25% sales tax rate in the Twin

Cities raises nearly $100 million

annually, and is used to fund the

expansion and operation of the metro

area transitways (i.e. light rail, com-

muter rail, bus rapid transit). In order

to continue these programs and

improve the Twin Cities’ regular and

commuter bus system, additional tax

revenue will be needed.

The Minneapolis-Saint Paul region has

a number of revenue sources for

transit. The largest source is the

statewide motor vehicle sales tax

(MVST), whose extreme volatility is

demonstrated in the transit budget

shortfalls of the past several years.

Transit funding is also provided

through state general fund appropria-

tions, a small amount of regional and

county property taxes, and fares.

Most Regions use Sales Tax to Support Transit

August 2012

POLICY BRIEF

While a dedicated municipal or county sales tax is the most common funding mechanism

among metro regions, there is no single formula for funding transit. An analysis of revenue

sources for the major U.S. metropolitan regions most similar to the Twin Cities indicates

that a wide variety of sources are used to fund transit. One of the primary revenues sources

is fares paid by riders. Infrastructure and operations also are supported by a variety of oth-

er revenue sources, collected on the local, state and federal levels.

Atlanta

Baltimore

Boston

Cleveland

Dallas

Denver

Detroit

Houston

Minneapolis—Saint Paul

Phoenix

Pittsburgh

Portland, OR

Saint Louis

Salt Lake City

San Diego

San Francisco

San Jose

Seattle

Washington, DC

Rid

er

Fa

res

Ad

ve

rtis

ing

&

Mis

c. R

ev

en

ue

Lo

cal

Sale

s T

ax

Sta

te S

ale

s T

ax

Mo

tor

Ve

hic

le

Sa

les

Ta

x (

Sta

te)

Pa

yro

ll T

ax

Pa

rkin

g T

ax

Co

un

ty

Sta

te

Fe

de

ral

Most Regions use Sales Tax to Support Transit, page 2

Sources of funding in peer regions

Tota

l Veh

icle

s M

iles

Trav

elle

d (

VM

T)

Sou

rce

: Mn

DO

T, V

MT

Tren

ds

in M

inn

eso

ta: 1

99

2-2

01

0, p

g 2

, Oct

ob

er 2

01

1

Tran

sit

for

Liva

ble

Co

mm

un

itie

s P

rese

nta

tio

n t

o T

FAC

: 9/2

4/1

2