Wednesday, April 18, 2012

Ohio River Bridges: Calculating jobs with calculating people.

So the bridges honchos released their new economic impact study and most of it's not surprising: a) a majority of the "positive" economic impact is delivered via the East End Bridge that we can we build without tolls and b) despite substantial, successful, and ongoing revitalization investments both public and private, the powers that be are perfectly willing to sacrifice large portions of the urban core in favor of continued sprawl in Clark and Floyd Counties. These are things we already knew. They jive completely with what critics of the project as currently conceived have said for a decade or more.

The big news, though, and the piece on which said honchos will undoubtedly hang their chutzpah is the calculation of employment benefits. To wit, the study says that building the entire project will lead to a 2.6% increase in employment in the five-county Louisville Metropolitan Planning Area (LMPA) if calculated through 2042. The LMPA consists of Clark, Floyd, Jefferson, Bullitt, and Oldham Counties.

To quote directly from the study, page 3:

Overall, from 2012 to 2042, the Project is expected to generate an average of 17,796 jobs per year and a cumulative total of $27.3 billion in personal income and $78.0 billion in economic output (in constant 2012 dollars) in the regional economy.

To be clear, that's not 18,000 additional, new jobs each year as in 18,000 + 18,000 + 18,000... but an aggregate total of sorts, meaning that the project is projected to create approximately 18,000 jobs at full force which will then be generally maintained throughout the study period. Both direct and indirect jobs are included in the total. Bridge building jobs (which may or may not be filled by locals) count. If someone opens a manufacturing facility near the new bridge, those jobs count. If someone builds a new residential unit to be close to the new manufacturing facility, those jobs count. And, if someone hires a server at a restaurant to help sell food to the new workers and residents, that server is in the mix, too. All told and as previously noted, the creation and annual maintenance of a study period average of roughly 18,0000 jobs equates to a 2.6% increase in overall LMPA employment.

While some of those calculations are themselves questionable, let's assume for a moment that they're true. As the Economic Development Research Group that conducted the study says, it's designed to be "consistent with the travel demand model on which it is based", namely the locally produced one used to justify the Ohio River Bridges Project to the federal government.

There's just one wee issue:

That same locally developed travel demand model assumed that employment in those five counties would, by 2030, increase much more than what's predicted in this economic impact study. And that's if we don't build any part of the Bridges Project at all.

Yes, you read that correctly. Per the socioeconomic data input into the modelling software to project eventual traffic levels and thus demand for bridges, jobs in the metro planning area were predicted to increase not by 2.6% as a result of multiple bridges but by 42% under a No-Action, non-building alternative.

Just as they did for the original 2003 Environmental Impact Statement (EIS, now referred to as FEIS since it was considered final at the time) that led to the oft discussed federal Record of Decision, locals had to produce updated regional traffic projections to satisfy federal guidelines for the Supplemental Draft Environmental Impact Statement (SDEIS) when the project was recently changed.

How do they do that? Our regional transportation authority, the Kentuckiana Regional Planning & Development Agency (KIPDA) and Louisville Metropolitan Planning Organization (MPO) use computer software to create a traffic demand model using socioeconomic forecast data. Not surprisingly, the results of such modelling efforts are highly dependent on the socioeconomic forecasts input into the system.

As explained in the Purpose and Need section of the SDEIS, Section 2, pp. 5-6:
KIPDA, which provides staff support for the Louisville MPO, prepares socioeconomic (population and employment) forecasts for the LMPA, which are incorporated into Louisville MPO’s travel demand computer model to estimate current and future travel demand within the area. Those regional travel demand conditions help to predict future travel conditions and the needs of the transportation systems; and, ultimately, to evaluate potential solutions to the identified transportation needs.

Since the 2003 FEIS was issued, a new travel demand model was developed for use in forecasting future travel conditions in the region to aid in determining the project’s purpose and need. The model was based on extensive data collection efforts, including traffic counts at nearly 1,400 locations, turning movement counts at 50 intersections, current transit data, an origin-destination survey, and the latest socioeconomic data provided by the Louisville MPO.

In order to justify building the project in its entirety, KIPDA (and the politicians who control KIPDA) needed those traffic demand numbers to be as high as possible. Setting aside the concept of induced demand for a moment, more traffic demand equates to more need for lanes and thus higher justification for construction. The more people and jobs you have, the more traffic, right?

But here's the kicker, again from the SDEIS, Section 2, pp. 5-6:
The initial socioeconomic input for the travel demand model was based on Louisville MPO’s latest socioeconomic forecast for the region in year 2030, which assumes two new bridges across the Ohio River in the LMPA. However, for the SDEIS No-Action Alternative, an alternate distribution of the socioeconomic forecast was developed for the project model that did not include the two new Ohio River bridges or the reconstruction of the Kennedy Interchange. (Chapter 5 provides a more detailed discussion of the methodology used to develop the two different distributions of population and employment.)

The 2030 regional forecasts indicate the changes that are expected to take place on an LMPA-widebasis. Population is now predicted to increase by 15% between 2007 and 2030, while employment is predicted to increase by 42% in the same period.*

* The population and employment distributions used to forecast the No-Action Alternative travel conditions are consistent with the No-Action Alternative transportation network, that is, no new bridges over the Ohio River and no modifications to the Kennedy Interchange.

Thus, we have what appears to be significant contradiction. KIPDA says planning area employment will increase by 42% by 2030 if we build nothing associated with ORBP. The Indiana-hired Economic Development Research Group says employment will increase by 2.6% if we build the whole thing quickly and assume completion in 2018.

Confused yet? It gets even better.

The Supplemental Environmental Impact Statement draft excerpt shared above suggests consulting Chapter 5 in its pages to better understand the socioeconomic data. Doing so, however, leads to this:

With text to accompany the graphic (Section 5, pg. 18):
As shown, construction of the LSIORB Project would result in a shift in permanent employment within the LMPA, and a decrease of 78 in total employment over the No-Action Alternative.

Yes, you read that correctly, too. Despite the ongoing, wild-eyed claims of project supporters that ORBP will lead to thousands and/or tens of thousands of jobs, the SDEIS quite literally states that building the whole thing will lead to 78 fewer total jobs than not building it all. At best, a small percentage of total five-county employment will shift from Kentucky to Indiana, mostly in Clark County.

Decades of toll revenues - over $12 million per year directly out-of-pocket as a starting point according to Dr. Paul Coomes, Ph.D. Economics and Dr. Eric Schansberg, Ph.D. Economics - will go largely toward a few years of temporary construction jobs and financier-charged interest or profit. Meanwhile, in terms of lasting economic opportunity, locals will be stuck with little more and perhaps less than what they would've otherwise had without the added expense.

7 comments:

Kate Caufield said...

Despite all the money spent on these 'studies', and all of the info submitted to the fed gov't, let's face it. There are no repercussions for that inevitable moment in fifteen years when everyone sees (or forgets, even) that it certainly didn't turn out the way it was laid out on paper. Who, exactly, are they trying to convince, and why can they not be held accountable when it fails?

G Coyle said...

WOW - I am confused. Can't wait to see how 1SI spins these wildly divergent "impacts".

Iamhoosier said...

Gina,
They won't have to spin them. Who is going to make it public enough that they have to answer? This blog is well read but not that well read. CJ is for the whole project. Tribune/News is now doing a little more but it is late in the project. Add in so much of the public that won't try to or can't understand all of this and they are home free.

Jeff Gillenwater said...

Even without delving into the fact that the SDEIS says building the bridges would lead to fewer jobs than not building them, this most recent jobs report is a mess.

They manage to affix a dollar amount to nearly everything - wages, goods and services, government revenue, etc. - but not tolls. They don't quantify toll amounts at all and there's simply now way they can reach the conclusions that they do without doing so.

As Coomes and Schansberg pointed out, annual toll amounts on commuting should equal somewhere around $12 million, roughly five times as much as the projected local government revenue boost. If the $2.5 million in government revenue is considered a significant impact, then surely $12 million in toll costs is, too.

But, Mark is right. Historically, a majority of our local media have not effectively asked questions or checked the veracity of various claims, even after being handed the information and documentation to do so. Without that vital journalistic component, creating and/or maintaining accountability is difficult.

Given the media's usual "just report what they say" approach, though, it creates an opportunity for concerned groups to include the questions and documentation in their public statements and hopefully in what's published.

Jeff Gillenwater said...

And I would add that, from an accountability perspective, what would be most helpful for the public, I think, is a recitation of the various claims made and who made them, followed by a review of what project documents actually say.

If that had occurred much sooner in the process than now, the public would have known that many of the jobs claims along the way, for instance, were bogus (or at least didn't match any documentable sources). That alone could have and still could change the nature of the debate and the credibility afforded various players in it.

This is hardly the first time bridges claims (sometimes from the same source) have contradicted each other and kept the public from a clearer understanding of what's actually been happening.

G Coyle said...

Well, we know 1SI has top accountants on their board, at least they should be able to reconcile all these divergent claims...

...but then I saw Gov Daniels endorse Romney today and I was reminded of the spineless political class Indiana produces. Why wait to endorse Romney now, it's utter meaninglessness?

The New Albanian said...

Agreed. Daniels increasingly must be viewed as less than the sum of his press releases.