Mexico's New Interstate Train: Tren Maya

On a recent trip down to Riviera Maya, we decided to drive down to Bacalar to check out the Bacalar Lagoon, and it's 7 hues. On our drive we noticed something was being constructed next to the main road, and we figured it was a toll road because usually in Mexico multi-lane toll roads are built next to free all-access bumpy 2-lane roads. But we were wrong. Once we asked around we learned that they aren't building a toll road; they are building a train. However, it isn't just any train connecting one city to another city, this is Tren Maya, a mega infrastructure project with a big vision connecting the entire Yucatan Peninsula and with a familial name paying homage to the region's mighty ancestors, the Maya.

Tren Maya Aerial View October 2023

Tren Maya or also known as Mayan Train or Train Maya is a 1,525-kilometre (948 mi) railway in Mexico that will connect major cities in the Yucatan Peninsula's 5 states. It will have 7 sections with 34 stations across Tabasco, Chiapas, Campeche, Yucatán and Quintana Roo. Construction began for all 7 sections simultaneously in June of 2020 and it is slated to open in December 2023. It is anticipated to have about 8,000 daily riders and ticket fares will vary for locals and tourists. For example, a trip fare from Cancun to Playa del Carmen will cost locals around 50 pesos (US $2.75) and it will cost tourists around 1,000 pesos (US $55.40).

When I got home I started to do some more research on Tren Maya to get a better idea of the project, it's economic impact and costs. On the one hand I found that UN-Habitat, estimates Tren Maya will create 945,000 jobs for Mexico and potentially help bring over 1.1 million people out of poverty. On the other hand, I also learned that the project approval politics got tricky and pretty sticky around it's climate, archeological and equity implications, nonetheless it got approved.

From Tren Maya's Wiki page the crowd-sourced authors shared that the tactics used by President Miguel Lopez Obrador to get the project approved created lots of chatter amongst rivals, which wasn't surprising, but what was a head turner was the criticism that came from the Mexican Office of the United Nations High Commissioner for Human Rights. The UN's criticism was mostly focused on the approach used by Lopez Obrador to get the project started and who it excluded. Specifically, the UN raised concerns that the voting materials only focused on the positive aspects of the project and were not translated properly. They also didn't like that the identified voting locations excluded those with no means to travel to them and essentially left indigenous women without a vote.

Project approvals in any country are never easy for projects of this size and can get quite lengthy. However, it is important to note that while the approval process for this project compared to approval processes in countries like the US didn't take that long, it did take several years to get approved. Also, Tren Maya wasn't conceived overnight, it was something Lopez Obrador had been thinking about for a long time.

Knowing the price tag for mega projects of this magnitude can get up in the billions, I was curious about the price tag for Tren Maya. In 2018, the agency building the project Fonatur (National Fund for Tourism Development) said it would cost $150 billion pesos (US$8.3 billion in October 2023 dollars) to build. In 2022 they updated their construction cost projections to 200 billion pesos (US $11.1 billion). However, early on there was skepticism around the cost projections the government put out and in 2019 a local think tank, the Mexican Institute for Competitiveness, considered the Mexico City-Toluca train project costs to come up with their own construction projections of 480 billion pesos (US$26.6 billion), which was 2.4 times the amount of the 2022 projected costs.

As I kept searching for the project costs I just couldn't see how this project was only going to cost $11.1 billion with the extent of the project scope of work, the accelerated timeline, the people power working around the clock to get this project built that we saw on our drive to Bacalar, and the increasing costs of construction materials. The optimist in me thought that perhaps Lopez Obrador is trying to prove a point that projects don't have to cost so much if Mexican politicians don't take their lions-portioned political grafts, but the core project costs just weren't adding up so I decided to keep digging some more. While I didn't dig deep into the project financials because they are confidential, I did use my Spanish skills to find that the Mexican government had tripled it's project cost projections last month, and now expects to spend 515 .8 billion pesos (US $28.6 billion). That's a much more believable figure, and even though its way more than they expected to spend, it is still a pretty good price when you compare it to the $128 billion that California's high-speed rail project is projected to cost to build 800 miles.

After getting a better idea of how much the project will cost I looked into the project financing details. It turns out the government turned to tourism tax revenue to help the deal pencil out. And while it's hard to confirm, I'm pretty certain tourism taxes will be paying for a good chunk of the project if not all it. It's a smart and logical move considering the popularity of Cancun, Playa del Carmen, and Tulum among tourists and the many tourism tax line items I saw on my hotel bill. The cash is specifically coming from the 3 government backed banking institutions that together financed the deal: National Bank of Public Works and Services (Banobras), the Nacional Financiera (Nafin) bank and the Foreign Commerce Bank (Bancomext). Interestingly, while the project is being built by Fonatur, it will be managed and operated by the military.

To see this project being built in it's entirety all at the same time on our drive to Bacalar was pretty mind blowing. California's high-speed rail is being built in small segments over many more years. Only 422 miles of the high-speed rail project's 500-mile Phase 1 from San Francisco to Los Angeles/Anaheim has received environmental clearance, with only 119 miles in active construction.

After learning about Tren Maya's journey I hope Lopez Obrador, his team and his successors are able to identify ways to mitigate the main environmental, archeological and equity concerns to help improve Tren Maya's legacy for the Yucatan Peninsula and Mexico as a whole.

#todossomostrenmaya

#trenmaya

Another California Housing Quandary: the Coast, is it Safe to Build or Not?

A potential new housing law authored by the Chair of the Senate Housing Committee, Senator Weiner, is making its way through the halls in Sacramento. The bill at play is SB 423 Land use: streamlined housing approval: multifamily housing developments and it aims to make it easier (and cheaper) to build housing in California by simplifying and accelerating housing permits in areas that are underperforming in their state housing targets.

San Clemente, CA

SB 423 is leaving no stone unturned to help tackle California's housing affordability issues. It even includes development timesaving efforts to bypass approval from the Coastal Commission for future multifamily projects like condominiums and apartments in beach communities. Adding an interesting angle to the housing solutions discourse.

It all sounds fine and dandy until we consider the viability and safety concerns of building along some coastal areas, or how this law will dilute coastal environmental protections and set a precedent to weaken the Coastal Commission's ability to protect and enhance California's coast and ocean for future generations. For years, rising sea levels have been a hot topic and so has the structural integrity of many coastal bluffs. Recently there have been several issues with bluffs near the Amtrak train tracks in Del Mar and San Clemente causing train service to pause that should not be ignored even with the urgency to build more housing equity across the state.

A recent CalMatters article: My house or my beach? How California’s housing crisis could weaken its coastal protections, does a good job of summarizing key concerns from all sides: housing advocates, environmental activists, coastal advocates, pro-housing legislators and the Coastal Commission. I see all points of view, and it's quite a quandary.

In my opinion part of the solution needs to provide more transparency and certainty for cities, developers and residents alike by giving California cities a deadline (in the near future) to complete a Local Coastal Plan (LCP) that includes a housing feasibility analysis. There are 126 coastal area segments and only 73% have an LCP on file with the Coastal Commission. The incentive for cities and counties to do an LCP is a good one. Once they have an LCP, the Coastal Commission's permitting authority over most new development is transferred back to that city or county and will shorten project review times.

Across California various factors have contributed to high housing prices, it's not simply a supply issue. For instance, home prices in San Diego County have skyrocketed not just because of lack of homes for sale, but also because of increased competition and speculation. Often many San Diegan's are competing with very wealthy foreigners, private investment companies or flippers looking to make profit. Also, during the pandemic many tech companies in Silicon Valley started to let employees live anywhere in California and many of them chose to leave their once sought-after homes in San Francisco for San Diego because they were fed up with paying high prices for small spaces in neighborhoods that had started to lose their sparkle. These Silicon Valley tech workers moved to San Diego and drove housing costs even higher than pre-covid prices. In fact, San Diego now tops San Francisco as the most expensive city to live in the country, and before the pandemic rents in San Diego were 28% lower than in San Francisco.

Even while prices are beginning to level out, first-time home buyers throughout California are still struggling to buy their first home. It's a mystery how average people in California can buy a house. If you’re wondering “how do I know if I can afford a median priced house in California” you’re not alone, I’m curious as well. After a quick problem solving introspection, I decided to follow the general rule of thumb that says housing costs should stay below 30% of your income after putting 20% down, along with the median California home sale price this May of $836,110. I plugged the numbers into the calculator, and it turns out you need to make around $215,650 per year to buy a house in California. That’s a hard pill to swallow, $215,650 is 2.5 times higher than the $84,097 median household income.

Without a doubt, California cities on the coast and inland areas need to think creatively to build more housing for current residents at various price points. We also need to think about more than just building more homes to solve the housing affordability crisis in the Golden State. We need more creative buying or renting incentives as well, if not more people will get priced out by others willing and able to push prices up even higher. Until it gets easier, cheaper, and faster to build more homes in California here are two other ideas to consider:

1. During the pandemic employee retention bonuses became a thing for essential workers and many loyal workers around the globe that didn't jump ship to another job paying more, and maybe California needs to consider homebuying incentives for middle and low income first-time home buyers that have lived in the same county for X amount of years. This bonus can be a flat number or a sliding scale number that rewards the longer someone has lived in a local area with a higher incentive.

2. Currently a combination of 10 states and cities in Alaska, Vermont, West Virginia, Arkansas, Oklahoma, Kansas, Iowa, Alabama, and Ohio are also paying people to move to their states. Many of these state resident attraction incentive campaigns are targeting Californians to move to their states or cities, and perhaps California should double-down with resident retention incentives as well. These retention incentives can consider various factors like income, occupation, industry, etc.
   

To save the California Dream and ensure it stays alive and kickin’ for generations to come we need to continue to think outside the box to increase housing affordability for more Californians.

Eliminating Parking Requirements is Not the End of Parking

Many places are eliminating parking requirements to help make it easier and cheaper to build more housing and reduce their carbon footprint. Interestingly, some see these attempts as the beginning of the end for the future of parking, but that’s not the case at all. It is simply an opportunity for a more demand-based parking approach that also helps to improve housing affordability and promotes more sustainable urban development.

The high cost of housing is a real issue in California and it can't be solved without increasing the supply of new housing. However, building housing in California is not cheap. In fact, Donald Shoup, the dean of parking studies at UCLA and the author of The High Cost of Free Parking, recently told Slate: “The way you really get affordable housing is to get rid of parking requirements. That reduces the price of housing for everybody, not just low-income residents.” We agree with Shoup, outdated and onerous parking requirements make it more expensive to build new housing. Parking policies need to be updated to account for how increased public transportation access and transit-oriented development helps offset future parking demand.

If you're wondering how parking makes building housing more expensive, here's the short of it: parking costs a pretty penny to build, especially when it involves underground parking or building a parking structure. One underground parking spot can cost between $50,000 to $60,000 to build, not to mention the opportunity cost of using the space to build parking spaces instead of more housing units.

The California state legislature along with some cities across the Golden State have started to eliminate parking requirements to help reduce the cost of building more housing. The cities of San Francisco, San Diego, Emeryville, Berkeley, Alameda, Sacramento and Culver City have also eliminated parking requirements to help bring down the cost of new construction. Below is a timeline of the updated parking requirements policy progress in California:

This year on January 1st thanks to AB2097 (Friedman, D-Glendale) the state of California now "prohibits minimum parking requirements for new housing, commercial and other developments located near transit to reduce vehicle emissions and promote denser, more affordable housing closer to people's destinations." With the passage of AB2097, California became the first state to broadly eliminate parking zoning requirements to promote more transit-oriented development; ironically, California was also the first state to implement minimum parking requirements in the 1920s.

The idea of removing parking requirements is to incentivize builders to use the saved money and space to build more housing. However, some are taking the "no minimum parking" requirements to mean no more parking will be built, and it's creating some strong opposition even among groups that agree reducing the cost of building new housing is essential to making a dent in the housing affordability crisis. Removing parking requirements for new housing does not eliminate parking demand. It simply means developers will have to study real-time market conditions to identify the needed parking spots for new housing developments; this is by no means the end of parking.

In a state that was primarily built around the automobile and neglected to upkeep or build more complimentary public transportation, it is no surprise that some are taking the elimination of minimum parking requirements as a personal attack on their way of life. Since I've moved back to San Diego from New York City 10 years ago, I have observed the gradual progression to increase density in an effort to tackle affordability and sustainability challenges in the Golden State. Yet, as much as everyone wants more housing and to protect the environment, taller buildings with less parking is not how many locals think of their beloved California and it is taking time for some to warm up to the idea of less urban sprawl and slightly taller buildings. The key thing to remember is that parking is not going away. Minimum parking requirements will simply no longer be an obstacle to build more housing.