It’s been an extraordinary experience being here in Denver. It has exceeded all of my hopes in terms of a transit agency and building a system. There are times when I think about the private-sector potential, but the progress that we’ve made here, building a whole rapid transit system and doing what we’ve done, has been the most rewarding experience of my life, professionally. I have no regrets whatsoever. Is there a particular part of your experience that’s the most rewarding?
There’s so many here. We’ve built four rail lines on time and within budget, and every one of those was an extraordinary sense of accomplishment. We’ve built our mall shuttles from the ground up. They’re hybrid-electric shuttles that are now six or seven years old and running perfectly, which was a very difficult program to deliver, but we did. Then, of course, going to the ballot and passing the FasTracks initiative, which allows us to build 119 miles of rail over a 12-year span. Building a whole rail system is just extraordinary as well. Also, we bought Denver Union Station and 19.5 acres around it. It was very controversial, but we convinced the board to do that, and now we have the intermodal hub for an entire regional transportation network. We’ve also contracted with a master developer to build about 1.4 million square feet of mixed-use development on that site. To watch all of these visionary thoughts basically coalesce is extraordinarily rewarding. So, I can’t really pick one, there’s been a whole string of great events here. Costs of construction materials have risen dramatically over the past few years. How has that affected the FasTracks program, or is it too early to say?
Well, it’s already impacted us. When we went to the ballot in 2004, we estimated that FasTracks was going to cost $4.7 billion for a 12-year construction program. That number is now in the neighborhood of $6.2 billion, based on increased cost of materials primarily. So we’re having to look at value engineering to see if we can’t economize on original design wherever we can, but we’re also looking at these public-private partnerships as a way to recast the way we design, build, finance, operate and maintain these lines. We’re optimistic that we’re still going to deliver the project within the scope and the schedule, but we’re going to have to use different techniques right now, which have been necessitated by these increased costs of materials. Sounds similar to what they’re doing in Charlotte — in terms of scaling back some of the design elements of the project. Or are you talking about different types of cost-cutting measures?
In some cases we had originally planned for grade separations, where the train would go either over or under a street. Now we’re going at-grade for cost economy. We had one section where we planned double track and now we’re going to go for single track, because the ridership demand is such that we believe we can handle it with single track, and we’re saving a lot of money by going to single track. It’s those kinds of changes that we’re looking at. They wouldn’t substantially impact the general scope of the project. The board has basically adopted a policy that we will not shorten any lines and we will not subtract any stations. So what we try to do, within that, is to value engineer wherever we can, to bring costs more in line with the financial reality that our material costs have gone up since we went to the ballot. Can you talk about the public-private partnerships that you’re considering for some of FasTracks’ commuter rail corridors?
Yes, we’re candidates right now to be one of FTA’s Penta-P — Public Private Partnership Pilot Program — participants, and we’re going to be floating requests for proposals for four new rail lines. We’re going to ask for proposals that would go everywhere from a design, build, finance, operate and maintain, to any variation on that theme. We’re embracing the thought of private-sector investment because the literature we’ve looked at so far and the experiences from other properties would indicate that there is great cost savings to be derived from these partnerships. Of course, we can’t commit to that until we actually see those proposals come in, but the board has adopted it, we have submitted an application to FTA and we have engaged a team to help us with our request for proposals for these PPPs. How does FasTracks address the expected growth in the Denver area over the next 20 or so years? Were the lines designed in coordination with areas of expected growth?
They definitely were. We did not recreate the wheel here. We went to the Denver Regional Council of Governments and drafted our transit expansion program along the corridors they identified for growth over the next 30 to 50 years. So we didn’t try to develop new patterns; we followed what the planners told us was going to happen. As it turns out, a number of existing rail lines — primarily freight and coal lines — track those development corridors pretty closely, so we’re negotiating right now with our two major railroads, Union Pacific and Burlington Northern, to buy rights-of-way adjacent to these freight and coal lines. I believe that here in Denver we are incredibly well positioned to not only accommodate growth, but to help shape growth. Unlike a lot of older, larger cities, we’re not trying to overlay our system on already well-developed areas. We believe we are going to have an enormous impact on influencing where growth happens. Are you having any difficulties getting funding from the FTA for elements of the FasTracks program?
We’re on the cusp of another full funding grant agreement on our west corridor. We expect to submit that application in December of this year. That’s moving along well, and we have every indication that we are going to meet the cost-effectiveness index. We have other corridors as part of Penta-P. We’ll be looking at funding agreements as well, but those are a little bit further down the road. So, in terms of the assumptions we built in, we are tracking with those quite nicely right now with FTA. They’ve been a very good partner for us. Sustainability is a hot topic now. What have you been doing to sort of ride that momentum? Is it something that’s implicit in your program?
It’s more than that. It’s more explicit at this point. We’ve actually adopted a very comprehensive sustainability policy for the district here. We plug into it everything that we do, in terms of alternative fuels, cleaner-burning buses, hybrid buses. I’ve mentioned the mall shuttles, which are hybrid. All of the buildings that we build at this point are sustainable. We’re trying to get LEED certification on all of the buildings. It literally has imbedded itself as a crucial building block for everything we do here. So, sustainability is a big issue, and it’s getting larger as we move along. But I would say that, fortuitously, both the board and the staff fully embrace sustainable growth and development within the agency. In fact, one of your board members, David Ruchman, approached me a year and a half ago about the need to start developing more coverage in the magazine on sustainability because he believed it was going to be a strong initiative.
David went to a sustainability conference — I believe it was two and a half years ago in New York City — and really made the pitch for stronger sustainability momentum. And we ran with that. We’d already been doing some, but we accelerated it. So he’s really been a strong supporter, and we’ve made a lot of progress. It’s become a very critical centerpiece of our planning and development here at RTD. RTD increased its fares last November. Has there been any dip in ridership since then?
I don’t think it’s because of fare increase, but we’ve had increases in ridership since that time. What moderates the fare increase is the cost of gasoline, and every time we see a big jump, which we’re in now, it’s relatively sustained. We’ve seen about a 4.5% to 5% increase in ridership that we’ve maintained over time. It sounds like if you need to implement a fare hike, now’s a good time to do it.
I would say so, and I think it’s almost necessitated because no transit property can really incur the increased costs we’re getting for our labor contract and for diesel fuel. You’ve got to increase the cost of your product. It’s a necessity. What do you think of free transit service, which has been floated by the mayor of San Francisco?
I would never want to do that. That’s shortsighted. I think that you have to go back to the time when public transit was a private, for-profit operation and that’s not too long ago in our history, probably in the early 1970s. Now we’ve become public, and here we have a revenue recovery ratio of about 20%, farebox revenue versus operating costs. I think that when you don’t charge fares, people devalue your product. There’s an expectation on the public that you try to be as cost-effective as you can and I think there’s a strong feeling that those who use this product or service ought to pay a portion of its cost. Making it free creates a lot of other problems as well, like people riding the trains all the time for a place to be in air conditioning or heat without paying a fare. I think we offer a valuable product and it is worth a fare, and we should absolutely charge a fare. You have a highly diversified bus program, with about 50% publicly operated and 50% privately operated. I know some of this is mandated by the state, but do you feel that the mix of public and private is the most efficient way for your program to run?
I do. Right now, 54% of our rubber tire service is contracted, and that is fixed-route, fixed-schedule and door-to-door service for the disabled. About 45% of the fixed-route, fixed-schedule service is contracted, and the remainder is door-to-door. It’s an excellent model in that it gives us a private-sector cost barometer against which we can measure our internal performance. It also gives us room to negotiate with the union at contract time because we have a private-sector counterpart. So we can compare those costs, and also we don’t run the risk of a strike paralyzing the whole system. We actually had a strike about a year ago and the privates continued to operate. So we were able to deploy them to the most transit-dependent routes, and we were able to weather that storm. It only went on for a week. We ended up negotiating for the same cost that the union rejected a week earlier, and they came back to work. So I think from the straight-up cost savings from contracting to the leverage it gives us in bargaining, and the fact that we always have a private-sector perspective on where our costs are, makes it a very, very good operating model. Do you think it would work for other agencies? At most other places it might be more like 90% public, or do you think it’s a case-by-case basis?
I think it would work anyway because the competitive principles are universal. I think that the politics in different areas are very different. That’s the biggest impediment. I know that by talking to my peers, many would have a hard time getting their boards to endorse any contracting because unions oppose it so strongly. We’ve been able to get it with a state mandate here, and that’s why we got to where we are. But I think as a business model, it’s absolutely applicable and it would be very, very good medicine for every property I can envision throughout the country right now. Has there been a mentor who’s been particularly important to your career success?
I use a management-by-objective strategy here, and I’ve done it everywhere I’ve worked. We basically establish a mission and then goals, objectives and performance measures. I subscribe to the theory that you can’t manage what you can’t measure. I use that on everything, from all of our bus attributes and on-time performance to distance between breakdowns. We put in schedules for all of our major projects, and we publish our performance reports quarterly. I had a college professor who taught me how to do management by objectives when it was a very foreign concept to me, but it’s been an incredible tool that we utilize here and embrace. I can’t tell you how many transit agencies have asked me to share my performance measures with them so they can replicate them. Of the management tools I learned in college, that was probably the best. I learned it from a gentleman from the University of Connecticut named Albert Ilg. He was a grad school teacher, but also the city manager of Windsor, Conn. I’ve implemented his lesson everywhere I’ve gone. What has been your greatest challenge during your transit career?
I’ve had tough experiences, and you have to learn to weather the political storms in this business. It’s very visible, and there’s a lot of politics involved, and you have to learn to understand and master that process. I did have a crisis in one job where I had a boss who didn’t support the direction that I thought we needed to go. I ended up falling out and having to leave that job. At the time, it was probably the most challenging move I ever made. In the end, it was probably the best move I ever made. And, in the end, history proved me right, because my career ended up flourishing and that person’s did not. So that was a very good move for me, but I stood by my principles and what I believed to be right and that served me well over time. What achievement at RTD are you most proud of? Earlier, you mentioned a lot of them. Is there one particular thing?
Yes. I’m going to sum it up by saying that when I got here, which was 12 years ago, Denver was not known as a transit-supported area, or an extraordinary transit property. We’ve been able to transform this to gain the public’s confidence, to win a region-wide election with a 58% plurality to build a regional transportation system. We did that by earning the public’s trust, delivering on our promises and building a confidence in the agency that has led to our success. I think that’s probably my proudest achievement here in Denver, is to get to that point. How much longer do you plan to stay?
I just agreed to a three-and-a-half-year contract extension with my district. So I’ll be here through the end of 2010. Beyond that, I don’t know. FasTracks has nine and a half years to be completed, and we have birthed this baby. It would be difficult to let it go for adoption.