Phil Washington Championed Public-Private Partnerships in Denver. Will it Work in L.A.?


Andy Keatts | August 20, 2015Metro’s new transit chief faces the daunting task of building 100 miles of transit. Lucky for Angelinos, he’s done it before.

Two men standing in front of the Metropolitan Transportation Authority

Metro’s new transit chief faces the daunting task of building 100 miles of transit. Lucky for Angelinos, he’s done it before.

He certainly has the experience.

In fact, it’s hard to imagine a better fit for the new head of the Los Angeles transit department than the guy who just left that post in Denver.

Just after shepherding a major transit overhaul there, Phil Washington, the new CEO of L.A. Metro, faces the daunting task of continuing construction of more than 100 miles of new rail service throughout the region, funded with the help of a multi-billion dollar voter-approved sales tax hike.

Now, he’ll face the critical choice of whether he’ll try to supplement that plan by asking voters for even more funding in 2016 to push the transit network further.

It’s déjà vu for Washington, who was in a similar spot when he took the reigns of Denver’s transit agency in 2009. He was named that agency’s general manager shortly after voters approved a tax hike intended to fund more than 100 miles in new rail lines in the Denver area.

The similarities led L.A. Mayor Eric Garcetti to recruit Washington for the gig. Now that he’s on the job, he faces a slew of major transportation needs facing the region simultaneously, said Denny Zane, executive director of transit advocacy group Move LA.

“He’s walking into four or five things, all of which represent a major opportunity, but every one of those major opportunities is fraught with the risk that it won’t be realized—especially if one of those risks involves a two-thirds vote,” Zane said, referring for the threshold of voters needed to approve a tax hike in California.

To Raise or Not to Raise

Perhaps Washington’s biggest decision in Denver was when he opted against asking voters to increase taxes a second time to fund the region’s plan to expand its rail network.

Before the program known as FasTracks delivered on its ambition – several lines are slated to open in 2016 – the recession cratered its projected revenues to the point that there wasn’t enough money to fund all components of the expansion.

The area’s transit agency, the Regional Transportation District (RTD), considered going back to voters in 2010 and again in 2012 to get more funding. Both times, Washington and the agency’s board decided against it.

“Those were wise decisions,” said Andrew Goetz, professor of urban planning at the University of Denver. “They would have gone down. He deserves a lot of credit for keeping RTD focused on what it needed and to deliver most of FasTracks in trying circumstances.”

The agency instead decided to get as much done with the money it had, in part by bringing the private sector into the program and striking big-time partnerships.

Knowing it would lose at the polls if it requested any extra funding, the Denver transit agency partnered with the private sector to close funding gaps in exchange for giving them lucrative operating contracts.

“His motto was, build as much as we can as quickly as we can,” said Kathleen Osher, executive director of Transit Alliance, a Denver-based advocacy group. “It was an incredible time to usher in the next era.”

Los Angeles Taxes

He’s already grappling with a similar decision in Los Angeles.

In May, a Metro poll found 70 percent of respondents were open to supporting another half-cent sales tax hike that would bring in another $120 billion for rail and transportation projects in the L.A. area.

Zane believes it’s likely the tax increase will appear on the 2016 ballot. Unless something changes, Washington’s big task will be structuring a program that can win.

The challenge, Zane said, is deciding how long the tax can last – which also dictates how much money it generates, and therefore how expansive the project can be. The bigger the program, the easier it is to offer desirable projects to each part of L.A. County to ensure their support. But if it’s too big, the agency could face a backlash from tax critics.

“You can’t get to two-thirds without a strong vote in every part of the county, and you can’t do that unless every part of the county sees strong investment,” Zane said. “All of that is in the throes of dialogue, making sure no one out there is going to screw you.”

It’ll be hard for Washington to get around the need for increased revenue to support the system, said Martin Wachs, professor emeritus of urban planning at UCLA.

The biggest source of transportation funding, gas tax revenues, are falling in part due to increased fuel efficiency in cars, and there’s little appetite to increase those rates. The state’s legislature has taken up the issue in a special session this week.

“The key issue, without question, is increasing revenue,” Wachs said.

Bringing in the Private Sector

Washington’s Denver legacy may well be his work with private companies to make sure big projects got done.

The most notable of those is the “Eagle P3” project, which includes 34 miles of rail on three different lines that connect the network to Denver’s airport.

The agency partnered with a group of private companies calling itself Denver Transit Partners to strike a long-term contract during which the RTD would pay the private group design, build, finance, operate and maintain the three lines. Over a span of 29 years, RTD will make monthly payments to the partners totaling $7.1 billion for their services.

“I don’t think there’s anything been done of that scale and type in the U.S.,” Goetz said. “It’s being closely watched, and so far reports are good: it’s going to be opened on time and should be under budget. Phil was GM when those contracts were negotiated and put forward.”

The agency similarly redeveloped Denver’s downtown Union Station with the help of a private group calling itself the Union Station Alliance. That group took over the facility with a 60-year lease and renovated the historic station, building a 130-room hotel and 22,000 square feet of retail space.

“His difference was his ability to go out to the private sector and understand the elements they needed to be successful,” Osher said.

Making it Work in California

L.A. Metro declined to make Washington available for this article. But in a recent speech, he made no bones about his belief in the power of public-private partnerships.

“They have capital,” he said in a speech. “I believe that the private sector is willing to invest in transportation infrastructure – with a reasonable return, of course. We want to do public private partnerships. Those P3s accelerate projects years ahead of what we normally could do with traditional funding mechanisms. I believe the second leg of that stool is strong.”

But P3 critics like Wachs are bearish on their outlook and question whether they’re really as helpful as some of their supporters say they are. Wachs believes successfully expanding L.A.’s transit system will come down to public funding and public agencies, he said.

“There is a mythology that the private sector will come forward and resolve problems,” he said. “The truth is, the private sector isn’t going to invest heavily in sectors of infrastructure when there’s no source of profit. In fact, using public revenue to fund private projects remains more likely than private investment taking the risk for public ventures."

Zane, for his part, thinks there are partnership opportunities in L.A. He specifically pointed to a plan to extend the transit network through the Sepulveda Pass, which would connect the city’s west side to the San Fernando Valley.

But Wachs warned against getting too wedded to the idea of private sector involvement. In the end, he said, paying for transportation means increasing public revenue.

A Major Need

One thing is for sure: failing to expand the transit network isn’t a real option. For large metro areas in California, there’s little choice but to expand transit networks.

That’s largely because of two landmark pieces of legislation that set aggressive greenhouse gas emission targets in coming decades. And since the state was early to the punch in action against power plants and other large green house gas emitters, it has few other levers to pull but transportation and the densification to reach its goal, Wachs said.

Meanwhile, major lawsuits involving other California transit agencies are signaling that they won’t be able to skirt those rules.

It all means Washington will have little choice but to continue Metro’s aggressive push to increase the scale of the region’s transit network.

“Metro needs to lead, and it means we need a measure that’s heavily rail and pedestrian focused, and not heavily invested in highways,” Zane said. “We’ve got to call operations and engineers and say ‘sorry, we can’t do that interchange you wanted.’”

And that’s another potential risk that Washington would have to navigate.

Just this week, the L.A. Times published an Op-Ed from a local businessman titled “Mr. Mayor, L.A. is not Stockholm” that argued the city has gone too far in its efforts to promote bike lanes and “road diets” that remove lanes from roadways.

It comes a week after the L.A. City Council approved a new mobility plan calling for those road diets as well as a pedestrian-first mindset.

Wachs warned of the mushrooming political battle between those pushing Los Angeles in a new direction and the increasingly vocal backlash against it.

“What concerns me is the contention between them,” Wachs said. “We should see a single integrated strategy. I think that his leadership will be tested in that direction as well.”

Andrew Keatts


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