Charlie Zelle graduated from Yale’s School of Management in 1983 and headed to Wall Street. He left a job at Merrill Lynch in 1986 to return to his family’s bus business, Jefferson Lines, then in distress. He thought his stay in Minnesota might be short, but it turned out to be permanent. He engineered a turnaround/reorganization of the bus company (including a stint in bankruptcy) and became involved in the civic and cultural life of the region via a robust slate of board work.
In late 2012, Gov. Mark Dayton tapped Zelle to become the state’s transportation commissioner, hoping his private sector background could bring fresh ideas and even bipartisan consensus to what had become a contentious sector of state politics, even with the I-35W bridge collapse still fresh in some minds. Instead, four years of partisan gridlock have ensued. We spoke to Commissioner Zelle, 61, in late March, midway through the legislative session, as the various constituencies began to stake out positions on this year’s transportation agenda.
What did Gov. Dayton hope your background could bring to this role?
Charlie Zelle: My sense of it was he wanted a fresh outlook. He’s a populist, which means he’s very concerned about how all Minnesotans are affected by government. MnDOT affects everybody. It has a great tradition, but needed to do a better job becoming more transparent and connecting with all our citizens. So I think the governor liked the idea of a business approach, someone who gets along with folks on a bipartisan basis, but who has a backbone of basic business principles. His approach was “Treat this like your business.” He knows this isn’t about reform and revolution, but bringing better practices to government.
Well, such as benchmarking. That was something I’m very used to. A bus company is asset-intensive, deals with a multiplicity of constituencies, and is a multifaceted business.
What has been the most challenging aspect of bringing private sector thinking to the public sector?
Everything takes longer. [There’s] lots of review. There’s lots more public engagement because it’s the public’s money. They are our shareholders. But running a bus company, I don’t have to pass a law to raise prices. If this was a business, we would have flexibility to determine the appropriate charge for road use.
Has MnDOT used benchmarking to more efficiently deploy its capital?
MnDOT uses performance measures that we’ve developed to track the condition and quality of the system and to plan for capital investments. We track events such as number of crashes, percentage of our pavement that is poor or hours of congestion. We set goals to ensure that we stay below those measures, and invest to achieve those goals. The federal government also requires us to follow performance measures to ensure that the states invest in projects that will push the entire federal system toward national goals. Those measures are in areas such as pavement and bridge conditions, freight performance, safety, planning, asset management and transit management.
President Trump is interested in infrastructure and using public/private partnerships (PPP) to reduce the taxpayer cost. Minnesota has a lot of decaying infrastructure in remote places where real estate development or user fees would not generate much of anything. Do you have a sense of PPP’s role here?
We’re really looking at it. When there’s that revenue, there’s the opportunity to engage the private sector. But PPPs don’t create money. It’s just a transfer of risk, a way to drive efficiency, maybe to capitalize revenue streams. Even in the best case, they may be 15 to 20 percent of the solution.
We are partnering with the private sector already via alternative contracting, when we use design-build or where, like on the Iron Range with Highway 53, we reached out to the contractor, Kiewit, to help us solve [geologic] complications and we’ll get a much more efficient project at lower cost as a result. That is a public/private.
Ports are an opportunity, such as in Duluth. Maybe airports. Transit presents some opportunity, capturing the value of stations.
New York’s new Second Avenue Subway cost more than $1 billion a mile to build and took a decade to go three miles. It’s said the U.S. spends more and takes longer to build large infrastructure projects than any country, and the federal oversight process is often blamed. Minnesota relies on federal funding for many of its projects. Is the involvement onerous?
I’m not entirely sold on that thesis. Many of those federal protections are ones local constituencies really care about, whether environmental or land use. I’m not so sure we can be China, [which lacks rigorous] environmental review, eminent domain protections.
You mentioned the proposed private sector high-speed rail link to Rochester. I was struck, as I always am, by the ferocity of the NIMBY reaction to that. Conservatives have been waiting for someone to come along and build transportation links with private capital, and one is proposed and [then] a bunch of conservative legislators initiate government roadblocks. It seems like the one philosophy everyone can coalesce around is “not in my backyard.”
I wasn’t in favor of stopping that effort while they were fact-finding. I was struck by the opposition. The reluctance to even try to investigate new ideas comes from an inherent distrust of large projects. [For example,] the [CAPX2020] power line [project] on Highway 52 really did disrupt many farmers’ lives.
It just seems like in the current era if you tried to build I-94 from St. Cloud to Moorhead, you would not get it built.
Look, I-94 between Minneapolis and St. Paul is 50 years old and falling apart. When we reconstruct it, are we going to replace exactly what’s there? The world is changing. We would not go back and build it where we built it to begin with. New design ideas and technology offer us new possibility. But we need to engage the users earlier, before the opposition develops. We’re trying to move away from this patriarchal approach where an engineer shows up and lectures—we come to you, we don’t expect you to come to us. . . . It [actually] saves money and time in the long run.
Transportation has become such a lightning rod. Everyone has to go somewhere every day, yet our leaders fight over capitalizing it like it is a truly contentions topic, whereas outside the political and chattering classes, it really isn’t. What’s happened?
In 2008 when Gov. Pawlenty was overridden on transit funding, we seemed to have come to a consensus, with the help of the business community. But then the legislators that crossed that line paid a big price within their party. And it became a warning.
If we’re in a recession, we can’t raise the gas tax. If we’re in a surplus we can’t raise the gas tax. . . . I find it curious that there’s 19 states and the District of Columbia that raised the gas tax in the past two years, many with Republican governors and legislatures, but here in Minnesota it’s impossible because no one can supposedly pay a gas tax. County commissioners all over the state, many of them Republicans, all want us to get something done. A [higher] gas tax doesn’t faze many of them.
The governor has signaled he’s ready for a compromise, but it has to be fiscally sustainable. It’s about funding that lasts a decade or more.
They said the I-35 bridge collapse would galvanize action. They said once we get the business community behind transportation funding, it would get done. There’s this sense of inevitability, but it never gets done.
It’s become part of the larger debate about how you raise revenue.
Supposedly Greater Minnesota is aflame with anger over rail transit investments/subsidies in the Twin Cities. Do you hear that as you travel the state?
It’s a political talking point. Like the Senate Office Building. But look who’s occupying the Senate office building now. We travel around the state to Willmar, the Iron Range, Marshall—nobody comes to us saying “Oh, what a problem that light rail is. County commissioners and mayors say, “What a great idea. I don’t like congestion when I come to the metro any more than anyone else does.” And when you start polling citizens, they don’t really care about it; it’s a manufactured issue.
So what’s the practical impact of the talking point?
Every county has transit and will need it more over the next 10 years; nonetheless, the metro has special needs given the population growth and need to stay competitive. In the future, less frequently traveled roads (mostly rural) will be in worse condition since federal guidelines favor funding for main arteries.
Fair enough. It does seem now, though, that the transit planning and funding process in the metro region has become messy, inefficient, weighed down by too many agencies and units of government. Is there a rethinking of process that needs to take place?
No question the Counties Transit Improvement Board (CTIB) was formed as a political expediency to create transit funding at the county level. And maybe out of political expediency it will be disbanded. We’ve become Balkanized. It’s all one purpose. It’s one region, one transportation system. Most of the transit systems use our highways.
Should the Legislature get out of transit funding? The DFL frittered away government control in the 2011 and 2012 sessions. Now there’s partisan gridlock. Does the state really have a productive role, given its inability to act?
Well, transit exists in every county of Minnesota. I think there’s an opportunity with CTIB restructuring for a lot of the larger projects to be funded through local option sales taxes. They are used in Denver, Atlanta, Seattle. I think the state doesn’t have a huge role, though bigger in Greater Minnesota, but it should be there.
How would you assess the overall condition of the state’s road and bridge infrastructure, and is there any data you use to base that assessment on?
The current condition of roads and bridges is in pretty good shape on average, but the shortage of future funding cannot meet the preservation needs as the bridges and roads age. Nothing new can be added without sacrificing pavement and bridge integrity.
Do trucks pay their share of road wear and tear in Minnesota?
Freight is increasing at a rate in excess of personal vehicle miles. This is going to be an increasing burden on our system. There are studies that indicate they don’t pay their fair share, other [studies] that do, but is that ever going to change? I think we have a fair system, but it’s not enough to capitalize the system.
Bakken oil train activity is vastly diminished, and with the progress on the Keystone and Dakota Access pipelines it appears that oil by rail will never again have the prominence it did during the governor’s first term. Yet the governor is proposing a significant investment in rail safety to protect people from oil trains. Why?
Although the Bakken crude-unit trains will be [fewer], there are many other products, including ethanol, chlorine, etc., that will require diligent safety oversight.
We have a lot of rail infrastructure in the state that’s 100-plus years old. Much of it is operated by small “short-line” railroads that inherited decrepit infrastructure from large railroads and find themselves unable to bring it into good repair. Freight service to large business and small-town grain elevators is in jeopardy all over the state. Should the state provide aid to this part of the transportation network?
We proposed expanding the state loan program to freight rail to include the option of grants. The governor has offered a couple million dollars. It’s kind of a placeholder. The governor is interested in the role freight rail plays in economic development. I would love to see the fund be even larger, but we need to at least have the possibility of grants. Our prosperity in rural Minnesota is better than in rural Washington because we have great transportation access and we don’t want to lose that.
A priority of yours has been making MnDOT more transparent. How have you implemented this and how do you measure your success?
We provide the public with a great deal of information. We work hard to simplify some of the complexity by using plain language in what we write and communicate. And we have a system in place to track public questions and ensure they are answered in a timely fashion.
We are reaching out to the public regarding projects, processes and policies to find out what the public wants and needs. We take the feedback we gather and use it as part of deciding how we will work and what we will do in the future. Our public outreach effort for our Minnesota State Highway Investment Plan is a great example of how we reached out, gathered input and applied it to the plan. And we are striving to do reach out, develop relationships and gather input years instead of months or weeks ahead of a project. It is important that we become known as an organization that listens and acts on or responds to what it hears. It’s what the public deserves and should expect. And it is the right thing to do.
Adam Platt is TCB’s executive editor.
This article is reprinted in partnership with Twin Cities Business.