Horizon, Host: Ted Simons

May 18, 2009


Host: Ted Simons

Metro Light Rail

  |   Video
  • Executive Director of METRO Light Rail Rick Simonetta talks about plans for future rail extensions.
Guests:
  • Rick Simonetta - Executive Director, METRO Light Rail
Category: Government

View Transcript
Ted Simons:
In April metro light rail reached a milestone of more than 1 million riders in a single month. Now plans are taking shape to give them more miles to ride. By the time this program airs, the Mesa city council may have already voted on extending light rail Service further into the city. And as David Majure reports, several plans are on the table to expand light rail.

David Majure:
Metro light rail faced a huge test last week when every available car, about 47 of them, were put into Service to accommodate riders going to see President Obama speak at A.S.U. or traveling to the Diamondbacks game at chase field. On an average week Dennis Erickson rider-ship is about 37,000 boardings per day. Those riders will have more miles to travel in the coming years. Several expansion plans are on the table. Among them, the Northwest extension, which adds about 3.2 miles to the original 20-mile starter line. That plan extends the track north along 19th Avenue, with stations at Glendale, northern, and Dunlap avenues. And a park-and-ride lot at the end of the line. Construction on the Northwest extension is scheduled to start this summer with a completion date of 2012. There's also a plan to extend light rail deeper into central Mesa. This proposal adds track from the current end of the line near Dobson road, east along Main Street, to Mesa drive with a scheduled completion date of 2015. Meanwhile, the city of Mesa is considering going even farther east to Gilbert road.

Ted Simons:
Joining me now is metro light rail C.E.O. Rick Simonetta. Good to have you back. Thanks for joining us. These numbers sound pretty impressive. Are they meeting, exceeding expectations? How are they doing?

Rick Simonetta:
The expectation was that by the end of the year one we would be carrying 26,000 passengers on an average weekday. So here we are four months into the operation, and we have a month with over 37,000 riders. So we're about 40% above what is forecasted. And of course we continue to build every month.

Ted Simons:
April a biggie. How come?

Rick Simonetta:
April had 18 home games for the Diamondbacks, including the opener. And we've been carrying between 10 and 15% of the attendees to those games. So when you look at 18 games, we probably carried 20, 30, 40,000 people to those.

Ted Simons:
And we also had a Diamondbacks game the same evening that President Obama was in town at A.S.U. I know a lot of folks rode the light rail there. The system handle us OK?

Rick Simonetta:
We did fine, yes. The demand going to the stadium was early enough that the demand going to the Diamondbacks game had plenty of time that I think the game started at 6:40, most people were already seated at the stadium by 5:00.

Ted Simons:
Wow. Just in general here, and again, to reiterate, the busiest day, what's the busiest day?

Rick Simonetta:
I would say the busiest day was that day with the President Obama coming to town.

Ted Simons:
In general, in the course of the week, what is usually, routinely, the busiest day for passengers?

Rick Simonetta:
Usually Friday.

Ted Simons:
What time?

Rick Simonetta:
Well, the interesting thing about Friday is it's got ridership all day, and well into the evening. Downtown Phoenix and downtown Tempe have come alive on weekends. And so we're carrying lots of passengers. Usually if there are special events, this last Friday we had the N.R.A. convention in town. So Fridays are a good day for a combination of things. Special events as well as the basic commuter ridership.

Ted Simons:
Was that expected? It's always interesting, people expect certain things and once it's on the ground and once it's going, other things seem to happen. Just pretty much Fridays and the weekends are pretty strong?

Rick Simonetta:
There's not a great big differentiation between Friday and the rest of the weekdays. But weekends are a big surprise. We're probably 100% over the forecast for Sundays. And here again, that's because a lot of things are happening in downtown Phoenix, in downtown Tempe, and people just are out trying to discover what's along the alignment.

Ted Simons:
We mentioned that possible extensions down main street in Mesa and up 19th Avenue in Phoenix. Talk about those and what kind of timetables we're look at.

Rick Simonetta:
Well, the report was correct. We are going to break ground we hope in June or July on the Northwest extension. That's a 3.2-mile extension, scheduled to open in 2012. Mesa is a three-mile extension from the end of line station now at main and Sycamore, through the heart of downtown Mesa to Mesa drive. And that extension is scheduled in 2015.

Ted Simons:
A lot of businesses will be affected on both ends, I would imagine, especially down there in Mesa, the heart of downtown. Did you learn what did you learn in the initial construction that can be used to maybe improve things for those businesses?

Rick Simonetta:
Well, the one thing that I think Mesa has going for it is that main street was rebuilt about 10 years ago. So there are really accurate documents on where the utilities are in the street. We didn't have that in some of the alignment that we did in the first 20 miles. And that's what causes surprises which always cause delays. We think we can really have a very smooth construction season, and minimize the impact on businesses, and get people riding the trains.

Ted Simons:
Does the economy affect construction of light rail? Once ground has broken is it pretty much a done deal, regardless of the economy?

Rick Simonetta:
Certainly. We usually do construction on a low-bid basis, and so the bidders have to sharpen their pencils at the time of the bidding, and that's probably the way we'll go in Mesa. But a final decision hasn't been made on the construction methodology just yet.

Ted Simons:
You mentioned weekends, lots of crowds, lots of riders. Later hours on weekends instituted. Why the change?

Rick Simonetta:
There's obviously been a demand for later Service, especially on Friday and Saturday nights. People have said to us, if I go downtown Phoenix or downtown Mesa, I've got to leave at 11:00. The bars stay open until 2:00. So just given the positive response we've seen so far, we've been working with the cities and trying to find the additional money to do extended Service. So starting in July, if the actions taken in the next couple days by Phoenix city council and by the metro board come to be what I think they're going to be, starting July 1 we'll be running later night Service on Friday and Saturday. Instead of having the last trip operate from 11:00 the last trip will operate from 2:00. So we'll have a three-hour extended service, and it will be every 20 minutes between 11:00 until 2:00. So there will be lots of options for people to use light rail as part of their weekend experience.

Ted Simons:
The cost for expanding those hours, and where the money comes from?

Rick Simonetta:
It's going to come from the three operating cities. Meaning Phoenix, Tempe, and Mesa. And it's about $300,000 a year to do that.

Ted Simons:
OK. And is this now -- correct me if I'm wrong -- this was a one-year test run?

Rick Simonetta:
We do want to do it as a test, just a demonstration to see what happens. But our suspicion is it's going to be very popular, and it's going to be the kind of thing that we'll never want to turn our back on.

Ted Simons:
Fare increase as well. Talk to us about that and the reasoning behind it.

Rick Simonetta:
The region hasn't had a fare increase since 1994. And given the tough economic times and the impact that the reduced sales tax receipts are having on our cities, because they are all pretty much dependent upon sales tax, they've really looked at ways to either reduce costs or increase revenues. And of course what a fare increase will do is increase revenues. So the buses in Phoenix and Tempe and Mesa, throughout the region as well as light rail, will see the dollar 25 base fare go up to $1.75. And like I said, it's been since 1994 when that $1.25 fare was established. And we look at the price of everything over those years, and a lot of things have doubled and tripled over that period of time.

Ted Simons:
Yet it's been less a year for light rail, and here comes a fare increase. Concerned you might lose some folks?

Rick Simonetta:
We didn't want that to happen, but the economic times really dictate what has to happen to all the transit in the region, and so we'll see what happens. I think light rail is becoming popular enough that while we might see a small downturn, hopefully it's only going to be small and hopefully only temporary. And people will understand as I just heard gas prices are starting to go up again. So the option of taking light rail or bus transit is still going to be a bargain no matter how you look at it.

Ted Simons:
I saw a study that perhaps suggested .04 of a percent after drop with the increase, but without the increase over time, it would be a little more. So it's hard to figure out, you have to basically dot increase and find out what's going on.

Rick Simonetta:
Those are those fare elasticity, of price, demand; all those things are sort of unknown. If we did fare increases every two years we'd probably have a better feel for how it will be received by the public.

Ted Simons:
How about accidents? We hear every once in a while someone has a fender bender with a train. There was a spectacular one early on. How is it looking in terms of numbers, and where are the problem spots?

Rick Simonetta:
We're still having motorists violate traffic signals, which is the reason we've had any accidents. There's still not been an accident that we could have avoided. But they're all minor, thank goodness. We've got to hope over time the motoring public will get the message. But a couple of the accidents have involved people coming to town with rental cars. So it's going to be difficult to communicate with them. We gist have to emphasize safety and make sure everyone does obey the traffic signals.

Ted Simons:
Are there areas where signage could improve for these folks who just got off the plane?

Rick Simonetta:
We are looking at ways to do that. We're trying to work with the rental organizations to make sure that there is some notice that there is light rail in the area. But we just got to get people's attention.

Ted Simons:
Are there areas you're especially concerned about, problem spots out there?

Rick Simonetta:
Right now we haven't seen a spot where we've had more than -- we've had two accidents in the same location, that's the maximum number of accidents in one single spot.

Ted Simons:
And where was that?

Rick Simonetta:
That was at third and Washington. In downtown Phoenix.

Ted Simons:
Similar reasons for the accidents?

Rick Simonetta:
People making a right turn with a red arrow that said don't make a right turn.

Ted Simons:
That will do it. Ads on light rail. Now, that's going to be a reality, correct?

Rick Simonetta:
Our board did approve advertising. We've got to find every source of revenue, because the sales tax is down. And we will be soliciting proposals for a company that will represent us and sell the advertising, and then we hope to start receiving revenue later in 2009.

Ted Simons:
What kind of advertising are we talking about? Inside the trains, wrapped around the trains?

Rick Simonetta:
It will probably be both. Certainly the wraps are very popular. We're also look at advertising at our station locations. So we'll have two or three different types of advertising, interior, exterior, at stations, which hopefully will generate a good bit of revenue.

Ted Simons:
You are leaving, correct, at year's end?

Rick Simonetta:
At the end of 2009 my employment agreement is up, and I've decided that the last chapter in my transit career needs to be in the private sector as a consultant. So between now and then I'll either establish my own consulting organization, or I'll join in an existing one.

Ted Simons:
Are you thinking -- would you have rather I guess the real question why was that written into the contract? Was that what you wanted to see happen after a year, go ahead and try something else? Or did you think maybe you'd stick around another couple years?

Rick Simonetta:
I thought about that, but last year when we extended the contract by one year, it was pretty clear that we only wanted to do it for a year. And quite honestly, I accomplished what I came here to accomplish. We built the system, we built it on time, on schedule, and within budget and right now it seems to be a huge success. So I feel very good about everything the organization has done, and time to move on to a new challenge. We've got about 30 seconds. What has surprised you most about light rail so far?

Ted Simons:
I think it's the acceptance by the broad community. There were lots and lots of naysayers. There still are, but I've had people come up to me after a Diamondbacks game when I've been working at one of the stations saying "I recognize you, you're the guy from light rail. I was against this thing forever, but it's the best thing we ever did." So I hope the community has turned that corner and we can see expansion of light rail from this point forward.

Ted Simons:
All right. Very good. Rick thanks for joining us.

Rick Simonetta:
You’re welcome, Ted.

Real Estate Update

  |   Video
  • Arizona Republic real estate reporter Catherine Reagor delivers the latest news and numbers related to the housing market.
Guests:
  • Catherine Reagor - Arizona Republic real estate reporter
Category: Mortgage Crisis

View Transcript
Ted Simons:
Hello, welcome to "Horizon." I'm Ted Simons. According to Arizona state University's department of realty studies, April's existing home sales in Maricopa County were up, while foreclosures had been declining in recent months. Here with more on that real estate scams and news about financial help available to people facing foreclosure is Catherine Reagor, real estate reporter for the "Arizona Republic." Good to see you again. Thanks for joining us. The real estate market has it hit bottom? Is it scraping bottom? Are we looking back -- what have you got?

Catherine Reagor:
That's what every Arizona homeowner wants to know. Some parts of the valley it hasn't bottom -- has hit bottom likely. Home sales are up in areas like Queen Creek, Buckeye, Avondale. They're double what they were a year ago and the highest they've been since the boom. So that's a good sign. Prices may not have stopped falling in all those markets, but they've definitely declined less, which is a good sign.

Ted Simons:
Declining enough for first-time home buyers? Are renters -- can you now pay less in mortgage than in rent?

Catherine Reagor:
Yes. In some areas and those areas we just talked about -- queen creek -- kind of the edge areas, the communities if you drive until you qualify is what home builders do in those areas. They're the most affordable neighborhoods. They had the highest foreclosure rates, but they're rebounding and the foreclosure home prices -- there are homes for under $100,000. There are even new homes for under $100,000. And the average rent on is that with current low mortgage rates are less than $800.

Ted Simons:
So are we seeing a reawakening in those areas?

Catherine Reagor:
A lot of investors have purchased in those areas, so we're watching that to see if it is a reawakening, but definitely more activity, fewer foreclosures, more first-time home buyers.

Ted Simons:
So fewer for-sale signs as well?

Catherine Reagor:
Yes, and we're hearing bidding wars because they're such great prices. Investors, to buy a four-bedroom house, built two, three years ago, for $90,000 when it originally sold for $300,000 or more, great investment.

Ted Simons:
I want to talk about the investors, because that had a lot to do with what got us in trouble in the first place. It is the same scenario here, or how does it differ?

Catherine Reagor:
Investors became a very scary word. Some people differentiate between investors and speculators. We are seeing a lot of investors, particularly for the foreclosure properties. But the differences this time, they can't get the financing. Before where they could put 5% down and really didn't have a lot of in the house. Now most investors are paying cash. So are investors going to walk away from $100,000? Probably not. It's different away from walking away from a $5,000 -- plus, in the past, investors walked away because the homes were under water, worth less than when they purchased them for. What are the chances prices are going to drop that more? Really, what we're hearing, not a lot, particularly these areas on the edge.

Ted Simons:
You're saying bidding wars are happening. Are they between owner occupied folks and speculators, slash, investors?

Catherine Reagor:
Yes. Definitely. First-time home buyers have so many -- there are so many incentives to help them purchase. But investors have just jumped into the market, and in many cases they have the cash, they'd rather put money in real estate than the stock market now. In the past, lenders have taken the investor offers first in many cases, because it's cash. It closes quicker there. Are fewer contingencies. It's easier. So -- and as more investors come in and it's catching the attention of national investors, we're getting more, and there are fewer foreclosure homes out there. Supply demand.

Ted Simons:
What about supply demand when it comes to mid price and luxury homes? It doesn't sound like it's quite as pretty a picture.

Catherine Reagor:
The downturn in the high-end valley housing and other parts of the country really lag. But now those markets are feeling it. Paradise Valley has a supply of homes for sale that would take by the current market standards based on basic sales, seven years for them all to sell. And prices are dropping. We're still seeing million dollar home sales, the difference is, those are homes that would have sold for $3-4 million a couple years ago. So definitely seeing there tougher financing there, not covered by the Fannie Mae and Freddie Mac, tougher to refinance and some of those folks with those homes, the higher-end homes that have these mortgages that are going to adjust up, they're not the conventional mortgages, and towards the end of the year we could see rates on those loans jump and we could see foreclosures in those markets rise.

Ted Simons:
I want to get to the idea of some lenders holding back, maybe -- back to these mid price and the higher range homes, you said seven years for the whole stock in Paradise Valley. What about one home? Someone watching right now, they've got a home in Scottsdale, Paradise Valley, nicer parts of other areas of town, and they're up to a million and more. How long should they expect to wait?

Catherine Reagor:
For it to sell?

Ted Simons:
Yes.

Catherine Reagor:
Really depends on the area. That's with the valley we're such a neighborhood by neighborhood have grown so large. North Scottsdale, homes are selling. But there are parts of north Scottsdale where homes $3 million homes are going into foreclosure, and selling for a million. So it just really depends. In Paradise Valley it's how you price it. And if you're priced to sell and you drop your price, it would probably sell. But it's taking nine, 10, 1112 months for the higher-end homes to sell.

Ted Simons:
So many homeowners are saddled with these jumbo loans. They're getting hammered?

Catherine Reagor:
Yeah. It's tough to refinance, there's no market for that, and there are some private investors stepping up doing some of those loans, but they can't refinance, and that could be a next step the federal government looks at with the housing plan, because those higher end loans adjust up, they're worried about foreclosure, they may have to expand. But they're going to have to get the lower market.

Ted Simons:
You mentioned federal plans and federal ideas. Are people being assisted here? I know a lot of folks couldn't even qualify.

Catherine Reagor:
It's -- there are two parts of the federal housing plan. One is to help do loan modifications for people facing foreclosure. The deal is, there you still have to have is a job or income. If your spouse lose as job and you're working, you're supposed to be able to qualify, you're supposed to be able to be able to go to makinghomesaffordable.GOV, there are a lot of stipulations. But those call for the lender making it -- getting the loan payment down to 31% of a homeowner's income. They're starting to work. We're seeing lenders work on cutting interest payments and principle to get that payment down. For people who have a job and can make that lower payment. But it's been slow. It's a complicated process, and not all lenders are signed up, but the Federal plan, they're pushing it.

Ted Simons:
Not all lenders are signed up and not all lenders, it seems like they're waiting. They don't know what to do. They want to see what's happening. Doesn't that suggest we could see a flood of foreclosures?

Catherine Reagor:
It is a concern. We've seen foreclosures drop the past few months, which is great. We've seen cancellation of foreclosures. Lenders have extended the moratorium on foreclosures until mid June based -- the federal government has pushed them to do that. But these foreclosures -- preforeclosures have climbed. So if that moratorium goes away the loan modifications don't work and we see the flood of foreclosures coming, it's going to hurt the market again. But it's going to hurt lenders too. The last time that happened, that's what pushed prices down. They can't reset home, they're losing more.

Ted Simons:
There's so many aspects of this and so many ways people could or could not qualify, and so much money coming in from various areas. A lot of real estate scams going on?

Catherine Reagor:
Unfortunately now this loan modification has become this household term. And it's -- something to help people keep their home. And now firms are popping up everywhere you see the stick signs next to the freeway, call us, we'll modify your loan. And the thing is our housing counselors backed by H.U.D. and paid by the federal government, where you can get free help. Call the Arizona foreclosure hotline, go to Arizona housing department web sites, get a list, go to H.U.D., you can get a list of the Arizona attorney general's website, of these H.U.D.-backed housing counselors who will give you free help. Sometimes people -- there are other people offering help for a fee. They're very good at it. They're former loan brokers, they are attorneys, they are accountants, real estate agents. But really -- President Obama warned this, the scams are getting so bad, don't pay before you get the help. Just -- the attorney general said last week that scams on loan modifications are up 30% in Arizona.

Ted Simons:
All right. Bottom line, home sales are up, home prices are leveling off, and we're heading into a time of the year when folks like to go out and look and maybe even buy something.

Catherine Reagor:
This is the season. And after the strong sales in the past few months, pending sales are at the same level. So we should see hopefully in the next few months that sales remain high. This will help prices and hopefully some areas by June might even see these queen creek and these various areas farther out might see an up-tick in prices.

Ted Simons:
Is Phoenix such a unique market that most models don't apply? Or can you say because we were so hot and we crashed so hard, we might be the first to show signs of life?

Catherine Reagor:
It's interesting. You could, because it's interesting, Las Vegas climbed very high and crashed, and Florida. But what's different is, our growth, even though we have job losses, our growth, we continue to attract people, and our housing affordability and our economy is more diversified. And Florida had more speculative -- so there are housing analysts saying that. If we get back to the affordable prices, that's helped us. That's been our calling card.

Ted Simons:
Last point here, the wild card is the economy and jobs, and furloughs, and all this kind of business. You put all that in there, and folks will still be lowering the prices of those homes.

Catherine Reagor:
Jobs are the lagging indicator, housing is the leading indicator. So we'll see. But how low can prices go in some of those areas? If we're seeing a tick up now --

Ted Simons:
It’s good to have you on with some relatively encouraging news this time. Last couple times you've been on it's been doom and gloom.

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