Lessons to be learned from Green Line Ext.

Notions about value capture need to be broadened

THE CONTRACTOR BIDS on the Green Line Extension have come in below the upside limit established by the MBTA Fiscal and Management Control Board, including the restoration of several key features such as the community path, which had been temporarily set aside to ensure a margin of safety to get the Green Line Extension launched. The contract has been signed, and the project is finally about to begin full construction. Congratulations to the control board, and to everyone who contributed to this success.

It is worth pausing and reviewing the “tough love” approach that the Baker administration applied to the Green Line Extension to see what worked, and might be applicable elsewhere, and what did not work, and would not be sensible to apply elsewhere.

The context: the Patrick administration had left in place a “finalized” project, including a commitment from the federal government to provide almost a billion dollars. The final engineering and construction was to be implemented by a complex new bidding process recently approved by the federal agency involving a less competitive “partnership” approach to working with consultants and contractors.  However, the bids came in several hundreds of millions of dollars higher than had been predicted.

The Baker administration then drew a hard line that the project would not go forward at that price, and insisted on reformatting the project. They stripped away many of the features that might be nice but are not essential, threw out the new complicated bidding process, fired all of the consultants who had failed to predict the cost explosion, and removed all in-house managers who had been involved.

The administration recruited John Dalton, a highly respected expert who had performed extremely well on transit construction projects in Chicago and elsewhere. Dalton recruited new engineering consultants who had not been involved in the failed approach. He insisted on focusing on constructability analysis, recognizing the difficulty of building new infrastructure in dangerous narrow rail corridors where trains continue to operate.

He overrode bureaucratic “business-as-usual” practices with the T.  For example, the Green Line Extension stations had been designed as rapid transit stations with elaborate elevator and circulation systems, ignoring the fact that the trains coming in from Somerville would continue to operate in much simpler, less expensive stations in Brookline and Newton. Those stations have no elevators and are much less expensive to build and operate. He ignored the usual process of breaking up contracts to spread the work around to many contractors, and insisted on a contract structure to minimize cost. These moves worked well, and offer positive lessons for future projects

The Massachusetts Department of Transportation also insisted that the cities of Cambridge and Somerville, and nearby developers who would benefit from the project, would need to contribute. These new policies provided contingency funds to cover cost escalation on a project managed by MassDot and caused by two decades of procrastination by MassDot.

This new approach posed a dilemma to Somerville elected officials who had fought for the long-delayed project for over a decade. They had committed enormous political, financial, real estate, and land use planning resources to maximize the value of the Green Line Extension for economic development.

The state’s position was audacious. It risked losing nearly a billion dollars in federal funds. It stripped out features that were very important to the complex coalition of supporters of the project.  It changed the rules of the game – late in the fourth quarter – by imposing new financing obligations on municipalities long challenged by Proposition 21/2. New pressures were also placed on developers who had invested years in complex projects such as North Point, disrupting expectations of developer contributions to fund affordable housing and potentially undermining the financial viability of developments that had been worked on for over a decade.

There was also a strong argument that the state was ignoring environmental law and regulations that require the state to complete the Green Line as a condition of the Big Dig, and could be sued for failing to deliver the extension.

Two ordinarily combative politicians, Somerville Mayor Joseph Curtatone and US Rep. Michael Capuano, instead took the long view and chose to cooperate with the new governor’s approach. They reasoned that there would be no community path or transit-oriented development if there were no Green Line Extension, so they had to put first priority on securing the extension. They convinced the advocates, developers, community activists, and other elected officials to negotiate the most favorable terms that they could, but work with the new administration. They calculated that this difficult road had a better chance of success than going to court.

Their gamble has now paid off.  The low competitive bid received by the Fiscal and Management Control Board means that the entire project will go forward and that there is no need for the exactions from municipalities, nor deferring of the Route 16 funding.

But is the pay-to-play approach replicable in other cases where there are no mayors and developers caught in a position of having invested time and money, with no other choice but to cooperate.

What would happen, for instance, if Massachusetts told Amazon that if the company chooses a Massachusetts site for its second headquarters it will have to accept changed rules requiring contributions to the transportation improvements required for the project’s success?

The rhetorical question answers itself.  Amazon has many options, and would go elsewhere.

Equally important, the pay-to-play model distorts the priorities and services provided by the public sector, which should be driven by public policy and need, not the availability of a nearby developer with deep pockets.

A bit of history

The proposal to extend the Green line north from Lechmere goes back to at least the 1970s. Planners  recognized  the asymmetry of a service that reaches Route 128 at Riverside in Newton, but ended just beyond the edge of the downtown in Lechmere, and proposed to extend the line to Somerville and Medford. However, there were major threats to the idea.  The old elevated Green Line structure in North station was aging, noisy, and a blight on the landscape, and major real estate interests and the city of Boston were advocating tearing down the structure and turning back all service at North Station, abandoning the Science Park and Lechmere stations.

In the early 1980s, Jim O’Leary, then general manager of the T, persuaded the Legislature to give the T control of a city parking lot behind Boston Garden that constrained commuter rail operations to five-car trains. The legislation authorized the T to build an underground garage with space to expand the commuter rail platforms to full nine-car length at the ground level, and to require the Boston Garden owners to build a replacement arena on the air rights, supported by foundations in the garage.

At the third level down in the underground garage, the T would build the replacement subway to connect the Green line from North Station underground to Science Park station, so that the old elevated could be removed without destroying the Green Line to Science Park and Lechmere, enabling the long-range plan to extend to Somerville and Medford.

The engineering and construction team at the T (led by the legendary Frank Keville, who had built both the Red Line extension from Harvard Square to Alewife and the relocated Orange Line subway) did such an excellent job that the public barely noticed.

The 10-year investment plans of the late 1980s (formally called the MBTA Program for Mass Transportation) included the Green Line Extension to Somerville and Medford, the connection of the Blue Line to the Red Line at Charles Street station, and the replacement of the aging Orange Line vehicles.

These transit expansion plans were then incorporated into the environmental approval process of the Big Dig, to ensure that the project’s expanded automobile capacity did not lead straight back to gridlock.

The plans were paid for. The gasoline tax was increased by 11 cents per gallon to cover the financing of the local match for the Big Dig, a $400 million per year road program skewed towards western Massachusetts, and the transit commitments. Environmental advocates, including the Conservation Law Foundation and US Sen. Paul Tsongas, were delighted with the continued emphasis on multi-modal transportation and transit investment.  They and others lobbied successfully to have these investments required in the Department of Environmental Protection permits for the Big Dig in 1991, and the state’s Clean Air Act compliance plan of 1993.

But while the MassDot officials agreed in writing to the DEP and EPA regulations of 1991 and 1993, they did nothing to advance the environmental processing and engineering work of the required Green Line Extension, the Blue to Red Line connection, or the Orange Line fleet replacement.  Inertia and inaction slowly strangled these initiatives, while construction costs constantly escalated.  (The worsening condition of the Orange Line vehicles has led to the service reduction and overcrowding on the Orange Line today.)

In the late 1990s, the Conservation Law Foundation realized that MassDot was not honoring the Transit commitments, and took legal action.  Through the Attorney General, CLF secured a series of administrative consent orders that MassDot would belatedly get moving on compliance. When MassDot continued to not perform (and DEP did nothing to enforce their regulations), CLF and the city of Somerville went to court and secured an agreement to finally get moving on the Green Line Extension, and the Blue to Red extension environmental process and engineering.

During the Patrick Administration, there was progress, which was stalled by bureaucratic intransigence within the T.  Transportation Secretary James Aloisi intervened with the “we-always-do-it-this-way” crowd at the MBTA to resolve two major obstacles to the advancement of the Green Line Extension.

The “business as usual ” in-house MBTA project managers were insisting on locating a maintenance facility near Washington Street, on some of the most prime land Somerville wanted for transit oriented development. The MBTA staff was also insisting that the commitment did not include reaching Route 16, but only to Tufts University.

Aloisi negotiated with Somerville a different, more acceptable location for the maintenance facility, deeper in an industrial area. He negotiated an agreement to amend the project to reach Route 16, as a more logical terminus than the College Avenue Station.

A decision to stop the Green Line extension at College Avenue instead of Route 16 is shortsighted; a little bit like extending the Red Line only to Davis Square would have been.   The connectivity and accessibility benefits of the extension are much higher at Route 16, where many more households benefit from being within a 30-minute commute to the high-job concentrations in Kendall Square and downtown.

Had Aloisi’s negotiations carried the day, we would be riding on the Green Line Extension today, and the project would have cost hundreds of millions less.

Aloisi, however, was forced out, because he had annoyed key legislators by launching a campaign to have a gasoline tax increase pay for needed infrastructure.  The business-as-usual crowd at the T treated the relocated maintenance facility as if it were a major environmental issue, adding two years of needless delay to the project, and returned to stonewalling on the merits of the terminus being at Route 16.

Aloisi’s successors worked hard to complete the processing of the Green Line Extension, but the momentum had been broken, and it was nearly the end of the Patrick administration before the federal grant was announced, and the project was poised to proceed based on the new process encouraged by the federal agency, which included many consultants with ambiguously defined roles, and a contractor in a no-bid, cost-plus noncompetitive position. Fortunately, the Patrick administration also secured the approval to seek bids for replacement of the Orange Line vehicles that were to have been replaced in 1995, as well as the Red Line vehicles. These vehicles, now being manufactured, in combination with a modern signal system, should result in much more reliable service on the Red and Orange Lines, at better frequency, producing at least a doubling of capacity when they are complete.

The path forward, physically and financially

The Green Line extension will expand the commuter shed of a rapidly growing economy, with firms needing access to more workers, and those workers needing housing within a reasonable commuting distance.

However, for GLX to maximize its benefits, several related steps are essential:

First, the removal of the aging and blighted McGrath Highway viaduct will allow the new capacity on the Green Line to substitute for those vehicle trips.  This will also enable transit-oriented development adjacent to the Washington Street station.

Second, a constructability analysis of the desired Route 16 terminus for the Green Line Extension is essential to an accurate evaluation of the most cost-effective approach, given the difficulty of construction in an active right of way.

Third, the cities of Somerville and Medford will need to work very effectively to expand affordable housing.  Those cities will need all the assistance developers can provide for that purpose, without competition from MassDot seeking developer and municipal exactions.

Fourth, a Green Line Extension link to the Grand Junction rail shuttle service could enable direct connectivity to job centers in Kendall Square, Allston, and points west.

Fifth, as everyone knows, we need a new fleet of Green Line vehicles.  By the time the Green Line Extension is open to service, the current Green Line fleet of vehicles will be utterly unreliable.  This could mean lower capacity even with the extension in place. The MBTA fiscal control board ought to replicate their Red Line strategy.  A modern fleet of uniform vehicles, with modernized power and signal systems, would dramatically increase capacity and reliability.

Long lead times for fleet procurement mean this process needs to begin now.  It also makes sense to see if any of the eccentric features of the Green Line (like the turning radius at Boylston Street Station) can  be corrected; these historic features have left the Green Line isolated and on the wrong side of the leverage equation in purchasing new vehicles in a world market.  The maintenance facility that was the occasion of delay needs to be designed for the new vehicles, not the existing fleet.

This effort could transform America’s oldest subway into its most modern and efficient.

The other elephant in the room is revenue.

The financial base of the MBTA needs to be renewed. The amendments made to the MBTA statute in 2000 have been understood to be a failure since at least 2004, when it became clear that the revenue projections from the sales tax had been significantly overestimated.  The shortsighted elimination of the statutory municipality beneficiary assessment based on ridership has also created inequities that caused anger statewide, while the inadequate revenue stream worsened maintenance and service problems.

Broad-based support for true reform of the revenue base will have to include significant contribution by primary beneficiaries, including municipalities.

However, the amount of financial contribution that can be “captured” from the small subset of beneficiaries close to new T stations, who happen to be vulnerable to pressure to contribute is only a very small fraction of the actual beneficiaries of public transportation.

Because the transportation system is inter-connected, and because it involves enduring capital investments, true beneficiaries of the MBTA include institutions and people physically distant from the service lines, and some yet to be created.

Other major beneficiaries have been here seemingly forever; the Red Sox probably have more T riders show up and fork over money to them than any other business or institution.  The narrow value capture approach that focuses on extorting revenue from the new developments lets the existing beneficiaries off the hook, and is inherently inequitable.

Development of the necessary funding base will require equitably assessing all significant beneficiaries in a clear and fair way. Narrow value capture yields far too little, and generates both competition with affordable housing needs and political hostility.

Meet the Author

Frederick Salvucci

Senior Lecturer, Center for Transportation and Logistics at MIT
The MBTA’s Fiscal and Management Control Board has made some real progress introducing discipline and accountability to a complex organization. This can enable real economic growth, and real improvements in the commuting experience of millions. The focus on constructability will continue to be central as the T takes on the task of achieving a state of good repair. We ought to take the right lessons away from this experience, and build on them.

Frederick Salvucci is a senior lecturer at the Center for Transportation and Logistics at MIT.