Tuesday, June 5, 2012

Light Rail = $

Warren Meyer at Coyote Blog gives a brief financial analysis of the expansion of the light rail system in metro Phoenix:

Valley Metro is set to break ground today on the first light-rail expansion, a 3.1-mile stretch into downtown Mesa that city leaders hope will bring a sorely needed economic boost.
The $200 million extension is expected to attract thousands more East Valley riders daily and potentially nurture new development along the line.
If we assume “thousands” means two thousand, then this means the metro area is spending $100,000 per new daily rider for this expansion, not including the additional operating subsidies that will be required to run the trains.  Given that none of these people will likely be able to give up their car, since the route goes so few places, why should they get a $100,000 subsidy?
How about we charge them what it costs?  The payment on a 30-year 5% bond is around $13,000,000 a year.  So if there are 2,000 additional round trip riders boarding or debarking at these new stations each day, that is 1.46 million trips.  So the tickets should be $8.90 per trip plus the cost of actually running the train.  We’ll round it to $10, though the cost is probably higher.  If people really think this train is so great, they should be more than willing to pay the $10 a trip it costs for the expansion.
No, they are not?  What this means is that people think this is a really go idea as long as someone else pays.
PS-  If these seem unreasonably high, or simply an artifact of looking at this expansion on a stand-alone basis, think again.  For the original system, the capital cost was $75,000 per round trip rider and the public subsidy in 2010 was $32.73 per trip.  In other words, on the main system, riders would have to pay $32.73 a trip more to be actually covering the cost of the service they are receiving.  So if anything, these incremental numbers for the expansion are probably optimistic.
PPS – I am sure transit authorities would argue that the public did support paying for other people’s transit by approving the sales tax increase for this purpose a few years ago.  But the train piece was packaged in with a bunch of highway improvements in the same proposition that people really did want.  It would never have passed on its own.  Transit official may disagree, but the proof is in their actions – they have never allowed the public to vote on the transit piece alone.

We're seeing the same thing in other localities, Minneapolis-St.Paul, for instance.  You must read a British paper to be updated on the even more grotesque situation in California. 

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