Sunday, January 31, 2010

Why Metro Detroit Needs a New MPO

First, how this was inspired. Detroit Declaration. Awesome. Now let’s build it.

In graduate school, I had the opportunity to participate in a group internship that attempted to find a statistical relationship between the structure of Metropolitan Planning Organizations (MPOs) and how they used federal transportation funds.

For those of you who need a quick background on MPOs and federal transportation funding:

MPOs are essentially regional government bodies that serve larger urban/suburban areas. They come in many structural forms, pretty much anywhere from a local government membership-based structure, to a transportation authority, to regional planning commissions, to elected regional governments. MPOs tend to focus on regional issues like transportation, planning and land use, environment, information-sharing, and economic development, but can actually do a variety of things depending on where you live.

MPOs have existed for decades but were really empowered through legislation in the late 80s and early 90s that gave them the ability to capture federal infrastructure funding more directly, rather than having funds filtered through state governments (what I recall is that because federal funds were filtered through state governments, many state governments overemphasized rural interests rather than urban interests, and urban and suburban areas were simply not getting their fair share of funds).

Alternative models or similar models would be combined city-county governments (Denver, Louisville).

SEMCOG (the Southeast Michigan Council of Governments) is Metro-Detroit’s MPO serving the 7 county “Metro Detroit” area including Wayne, Macomb, Oakland, St. Clair, Livingston, Monroe, and Washtenaw counties. (Reminder – SEMCOG has no wiki entry) SEMCOG is a membership based-MPO of local and county governments in the 7 county SEMCOG geographic area. Some local governments are members, and some are not (kinda like SMART (Suburban Mobility Authority for Regional Transportation), the suburban transit operator / authority for Detroit).

Now about federal transportation funding. States or MPOs or counties or local governments need to put down 20% (minimum) for road or transit projects and the federal government puts up 80% (funded by your income, fuel, and other taxes). Transit projects often require a bigger match, and there is definitely a bias towards funding existing transit systems rather than supporting larger capital investments in new systems (which is why there is a program called New Starts for transit, but the match and the criteria to quality is still high). There are lots of different federal transportation funding categories for different transportation purposes, which is an issue in of itself. (See Bipartisan Center Transportation Study).

In terms of federal transportation funding, SEMCOG combines the population of its member governments and receives a portion of federal transportation funds allocated to the State of Michigan. Other local governments who are not members of SEMCOG go after other state-filtered federal transportation funds.

Unfortunately, the State of Michigan is struggling financially. Property taxes are down as are other revenue sources including gas taxes because people are driving less. This hurts Michigan because it means it is harder for the State to match funds for federal transportation dollars, and if we miss out (like we have several times before), we either lose those funds or we have to compete for federal earmarks. This problem doesn’t help Metro Detroit build transit or roads or maintain what we already have. It doesn’t help that the federal government must also address declining transportation funds (from gas taxes) due to fuel economy improvements and people driving less, so states are competing for an even smaller pool of funds.

How this relates to SEMCOG, the region’s MPO.

SEMCOG has no taxing authority to raise money to come up with a federal match, which means it still depends on the State of Michigan to come up with a match for the entire state based upon Michigan’s population. SEMCOG is funded by membership dues only, which isn’t enough to come up with federal matching funds. SEMCOG it is not closely aligned with DDOT or SMART (the region’s transportation authorities) to invest in them anyway. So there is a clear disconnect between the region’s MPO and the region’s “regional” transportation authorities.

DDOT and SMART are funded by property taxes just as most things are in this region. Property taxes are down, so there isn’t money there either. And county and local governments are struggling financially as well, so it is tough to come up with venture funds for major road or transit projects when you are trying to provide other basic services at the county and local level.

Bottom line here: We have no money, and we don’t have any new revenue streams to make several major investments in our transportation system including a regional mass transit system, expansion of I-94 through Detroit (a project we’ve spent the money on for planning, but never built) or a border crossing. It’s unfortunate, and it shows how Metro Detroit has very little control over its destiny when it comes to making these things happen.

Home Rule and Tax Revenue

The primary mechanism to raise money for everything in Michigan including transportation and schools (not necessarily private or higher-education) is local property taxes levied on your house and property.

Home-rule is strong in Michigan, which means local governments are very strong compared to county governments and even the State government. Local governments in southeast Michigan have control over zoning and planning which means they control land use (this is different than other regions where land use could be controlled by the county, MPO, the state, or even the federal government.

It can be said that many local governments in Southeast Michigan often have a self-serving incentive to put more of their land into development (rather than keeping it rural or open space). When local governments change their zoning pattern from rural parcels to commercial or residential use, you collect more taxes on it, which supports a wealthier local government and expanded services to maintain new development and the population.

Unfortunately, because there are so many local governments in Metro Detroit, all competing for new economic investment, and because of abandonment of the city of Detroit, we have an abundance of underutilized land that has been put into commercial use for a declining population (that’s why you see abandoned strip malls in the suburbs as well). In other words, because there are so many local governments making decisions on how land, transportation, and infrastructure is being built in this region, there is less overall control over how much new development is really needed to support the population and the economy. Local governments are competing for your population and your business. There’s nothing wrong with local self-determination except…

The overall impact is an oversaturation of houses and office space in Metro Detroit, which acts to flatten out property values (more equalization) which is why it is cheaper to live here than in Manhattan where lack of space drives property values and buildings up. The net effect for Detroit is OVERALL less money in property taxes for governments to invest in things like transportation or even schools. And if there is less money at the local level, then why would a local mayor or council want to invest more local money in regional projects (like transit) where the property taxes actually leave the local jurisdiction and are invested somewhere else? Moreover, why would a homeowner or property who pays the taxes on their land, house, or building want to see more of their income leave their local jurisdiction to support projects and services that they may not utilize on a daily basis?

This is a fundamental challenge not only for Detroit, but it is part of the competitive nature of personal and government economics, and not just in terms of local or regional economies, but state and national economies as well. Yet it also gets to why property taxes are not always the best way to fund projects that are regional in nature (like transportation and transit). And local and county governments are limited (by law and because of political pressure) in their ability to raise revenue in other forms of taxes that would produce enough money to make expensive investments in transportation.

Bottom line

So we’ve established that revenue-sharing across local governments to invest in projects that are regional in nature is a problem for Metro Detroit. This begs the question of “are there flaws in how we are set up institutionally as governments in Metro Detroit when it comes to investing in regional projects, and does this institutional structure hurt our competitiveness as a region?”

And my conclusion is, yes. Government fragmentation in Metro Detroit hurts us overall as a region. Is it the root cause of our overall economic struggles? No, not necessarily. Clearly, the struggles of our region are as much rooted in race, culture, history, and geography. Yet I strongly believe our inability to investment in regional transportation assets today is rooted in Michigan law and how we are set up as a region to make decisions and raise money for regional projects and services.

Which is why I believe we need new regional governance structures including a new Metropolitan Planning Organization (MPO).

So what does SEMCOG do?

SEMCOG is required by the federal government to submit the region’s Transportation Improvement Plan (TIP), which is essentially a wish list of infrastructure projects submitted by local and county governments. SEMCOG must also come up with long-term regional transportation plans that take into account changes in demographics, where people live, and what major infrastructures will be needed in the future. SEMCOG also collects a plethora of information on land use and zoning, utilities, population statistics, and development information. They also host and sponsor a lot of informational programs for member governments including how to take advantage of different federal funding programs.

So what doesn’t SEMCOG do?

Well, we already established that SEMCOG doesn’t represent every local government in the 7 county area. So one local member government could lobby for a transportation project in their jurisdiction that could impact their neighboring government who is not a member. That’s not the best scenario for regional planning.

SEMCOG doesn’t have the ability to raise money for regional transportation projects although it does have some influence over these projects and is influenced by local and county governments in terms of what projects get implemented.

So what little influence and authority SEMCOG does have is driven by those local and county governments who are members and are very active members. Local governments weigh the cost of membership against the ability to go after transportation funds at the state level or raise them on their own. And since SEMCOG is accountable to its members, which are local governments, and is not necessarily to the entire southeast Michigan region, it’s influence over transportation is often driven by the individual demands of local governments and not necessarily “regional” interests.

What else is wrong with the way SEMCOG is structured?

SEMCOG may have too large a geographic scope covering 7 counties. In a given week, I will definitely visit two counties, and I probably visit a third county every other week, but it is only once a month or even less that I venture as far as Monroe County or Livingston County or beyond. So my immediate “region” is limited to 3 or 4 counties at most. I suspect a lot of people who live in Metro Detroit think of the “region” as the tri-county region made up of Wayne, Macomb, and Oakland counties (although land sprawl is constantly changing that dynamic).

What are the alternatives to the way SEMCOG is structured?

As I said above, combined city-county governments are another model being used in cities like Louisville and Denver (and I think Indianapolis). If the combined population of the city-county government is high enough, it could easily serve many of the functions of the region’s MPO (like raising revenue for multi-jurisdictional projects), which can reduce the need for a strong MPO. These cities are somewhat more homogenous in nature and don’t have the long history of our region. A combined city-county government structure in Detroit would be a huge political challenge because of Michigan’s long history of home-rule and political differences. And if the cities of a certain county in this region did rally behind this kind of model, it’s unclear if such a structure would be enough to address issues that are multi-county in nature.

Another model is Portland, OR. Portland’s MPO, known as “Metro” is the only regionally elected MPO in the United States. The MPO has an elected president (council president) who is elected region-wide, and six council members, which are elected by district (districts are based on population and geography). Portland’s MPO does a number of things including controlling land use (planning and zoning), parks, and transportation including overseeing the operation of the region’s transit system. They also engage in sustainability issues related to energy use and the environment. You can learn more about “Metro” through Wikipedia.

As I said earlier, there are tons of different structures to MPOs across the country. Some are strong and some are weak based on the level of directly accountability to the people and services that they provide. With the case of Portland, you can see the potential for greater accountability to the region’s interest through the direct election of leaders at a regional level. The other big advantage of Portland’s MPO is the multitude of functions it performs from transportation to operation of a major convention center (think Cobo) to controlling green space. The clear advantage for Portland is that regional planning brings about certain efficiencies in how land is developed, and there is definitely a biased toward density, transit-oriented development, accessibility, and connecting green spaces. This also helps to explain why real estate can be very expensive in Portland because when you create scarcity and density, you raise property values (and in turn tax collections).

How do these examples apply to Detroit?

Now is the goal to make Metro Detroit an expensive place to live by creating density through an MPO that has the authority and scope of Portland’s MPO? No, not necessarily. Would some local and county government leaders here in Metro Detroit like to see property values rise so that they can have more money to invest in services for their citizens or give a tax break to their citizens? You betcha.

My point is to establish a connection between a strong regional government structure with strong authority over transportation and land use and investment in regional assets. Regional economic integration is another benefit. Quality of life is generally high in Portland, and building vacancy rates are likely lower, and when you create density, it can be cheaper in the long run to maintain infrastructure like transit, roads, sewers, etc because there are fewer miles of it is to maintain. It’s something for Metro Detroit to consider as we look to roll back sprawl and adjust to a declining population.

What a new MPO in Metro Detroit might look like.

This is where the issue of new MPO gets politically sensitive, so even if I propose something, it needs buy-in at all levels of government in Michigan. Keep in mind that even if I propose something, it isn’t necessarily the best or only way to achieve regional outcomes. SEMCOG and entities like the Michigan Suburbs Alliance and countless other interlocal entities achieve regional results on a daily basis. Again, the question we must ask ourselves is if the current structure serves to address the region’s issues or accelerate the development of the regional assets?

In my opinion, a possible scenario would be to have the ability to elect leaders on a level greater than the local or county level and charge this new entity (or entities) with addressing issues of regional significance. To take a step further, this regional body would need a source of revenue, other than property taxes, to invest in regional assets. Counties and local governments would continue to exercise control over the majority of government services within their jurisdiction, but this new entity would be charged with issues that remain unaddressed due to the structural nature of our region’s governance.

This newly elected body would serve an executive function while current elected officials would serve on a larger, more legislative body. This would maintain a strong degree of influence by county and local government over regional decisions.

Many existing authorities (transit, transportation, water, sewers, bridge, etc.) would fall under the umbrella of this new MPO, but the boards and operations of these authorities would remain in tact. Authorities would continue to operate in a very public-private model (to avoid too big of government control), but the MPO’s new revenue stream would supplement the existing revenue streams of these authorities in the case of a large capital investment (transit line, border crossing, port terminal, etc.)

The MPO would have several committees dedicated to different regional issues, and these committees would be mostly filled with local and county elected or appointed leaders, but members of the business and nonprofit community (the Detroit Regional Chamber, the Michigan Suburbs Alliance, Detroit Renaissance, utilities, etc), could also play a role in decision-making. Committees might include transit, land use, information, arts, transportation, economic development, etc. Committees would serve to recommend action and investments by the MPO.

Local governments would continue to control things that they always have like schools, local parks, fire and police, local roads, and things that should continue to be determined at the local level.

Local governments would be encouraged to work together as sub-regions (i.e. Downriver Communities, Southern Oakland County communities, Western Wayne County, Greater Ann Arbor, etc.) to address issues that span across local boundaries in their areas (like joint planning commissions and interlocal development corporations). They too would play a role in this new MPO structure and help define the regional assets needed by their communities.

And sublocal organizations like neighborhood nonprofits, downtown development authorities, and other economic development corporations would also have some role within this larger structure.

The revenue stream and revenue-sharing issues are tricky and very political in nature. One possible solution is a multi-county sales tax that would be distributed into local projects, interlocal projects, countywide projects, and multi-county projects. The structure of this tax would have to ensure that those governments (and citizens) from where the sales tax is generated get a fair share back of what they put in, while also leaving a certain portion of funds for projects of regional significance. The benefit of a sales tax is that in a given week, I may spend money in several cities and counties, and use regional resources (like roads) to access those goods and services I’m consuming. So if those taxes are then put back into a pool of funds to invest in regional assets, I am less tied to exactly where those taxes are spent (whereas I would rather see my property taxes be spent closer to my property). Another way of looking at the local option sales tax is that it taxes more of what you spend rather than what you own (like your house) which you already paid for. Local governments will continue to exercise jurisdiction over local property tax levels and spending.

Transparency is key to any new regional government structure.

Bottom line: The new MPO would be inclusive of all the organizations that currently exist in Metro Detroit, but it would go a step further in addressing and raising revenue for projects and services of regional significance.

How would one create such a structure?

Obtain buy-in by existing elected officials and the public, change Michigan law (likely rewrite the constitution), finalize the internal decision-making structure of the MPO, hold a referendum to create a new MPO, and hold several referendums to create a new stream of revenue and identify spending priorities.

What can be done now?

In the short term, Michigan’s legislators need to find a way to come up with money to obtain federal matching funds for transportation. We cannot continue to lose out on money that we deserve and we put into the federal system. Michigan’s legislators also need to continue to promote and support existing laws that support regional cooperation and create additional incentives for local governments and counties to invest in projects that cross jurisdictional boundaries. This is essentially what we did when they formed the Aerotropolis Development Corporation – use existing statute to bring our local governments together.

State legislators are also considering the creation of a unified transit authority and alternative funding mechanisms for transportation including using tax-increment financing (property taxes). They need to get these bills adopted, but they should not pass anything without fully understanding our fundamental institutional shortcomings, and they should not ignore the larger goal of enhancing regional cooperation in other areas besides transit and transportation. They need to address the law as it is currently written, and ask themselves if the law needs to be changed or rewritten altogether.

THIS IS JUST A PROPOSAL. I DON’T MAKE THE LAW AND I’M NOT AN ELECTED OFFICIAL!

There are lots of holes in this proposal and lots of details to be filled in, but it is something for folks to consider. I just put this out there because it’s my opinion, and not necessarily the opinion of any particular elected official or leader. This proposal is NOT designed to make anyone wrong for how things are. It is simply an effort to put an alternative idea on the table for people to consider.

Why?

In a larger, interdependent urban-suburban society, doesn’t it make sense to develop a structure that is self-serving to the region’s interest, not just a collection of local interests? Haven’t we already proven to ourselves that our political isolation and the economic status quo has gotten us into a bit of and economic bind where we can’t raise money for regional projects?

The point of this blog entry is, as much as the problems of this region are rooted in history, race and culture, the status quo is also very much the product of a lack of regional institutionalization and decision-making. Now I know that the barriers to change are enormous, but I have a lot of pride and faith in the awesome minds of this region, of all races, of all educational backgrounds, who care about this region and want things to change. We have a lot of advocacy groups, business groups, nonprofits, local governments, but we all want the same thing. There is a place in a properly functioning MPO for every interest group in this region, but we must find a way to sit at the same table and do more than talk about what we want. We need to build it, together.

If you made it this far, thank you for reading. I welcome feedback and criticism from everyone who took the time to read this long entry (geoffyoungmi at gmail.com).

We’re all in this together….

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