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Light rail costs too much, does too little

$82 Million Per Mile Is Cost Effective?

Mar 5


Last week, the Twin Cities’ Metropolitan Council approved a new light-rail line between downtown Minneapolis and downtown St. Paul. As approved, the 11-mile line will cost $909 million, or more than $82 million per mile.

Socialist light-railism in Minneapolis.

The Met Council’s original proposal, which was projected to cost $990 million, was rejected two years ago by the Federal Transit Administration. Under cost-effectiveness criteria that the FTA established in 2005, any project that cost $24 or more “per hour of transportation system user benefits” would be ineligible for federal funding. The $990 million Central Corridor line was projected to cost $26.05 per hour; cutting the cost to $909 million would improve this to a mere $23.80 per hour.

After the FTA wrote this rule in 2005, Congress specifically exempted four projects from it: Portland’s west side commuter-rail line, San Jose BART, a San Francisco light-rail tunnel, and the extension of the Washington Metrorail system to Dulles Airport. But Minnesota’s congressional delegation either lacked the pull or the imagination to exempt the Central Corridor project from the rule, possibly because they didn’t know until the next year that the project would not meet the cost-effectiveness threshold.

Instead, the Met Council fixed the project by putting it on the surface instead of through a tunnel under the University of Minnesota east bank campus; removing a station or two; and terminating the line in front of St. Paul’s Union Depot instead of behind it, where the rest of the railroad tracks are located. However, the Met Council left open the possibility that it would reinstate some of the features it cut if and when the money became available.

A crowded light-rail car on the Hiawatha line.

Flickr photo by bikepunk.

No doubt the council is counting on more money becoming available after the project gets initial federal approval. Minneapolis’ original Hiawatha light-rail line was supposed to cost less than $500 million. Its final cost was more than $700 million. This was not a cost overrun, officials said. Instead, the local Congressional delegation just found more money and, since they had it, they spent it.

Such alterations to get below the $24 threshold are the predictable result of the FTA’s cost-effectiveness index. When the index was first announced, it was a breakthrough to have any firm criteria at all applied to rail transit. But setting a $24 threshold was not the best way to provide such criteria.

I can think of two rules that would have been better. First, the FTA could have required metropolitan planning organizations (MPOs) to apply a standard cost-effectiveness analysis to all potential transit projects in their regions. The FTA would then fund only those projects that were most cost effective. The danger is that MPOs would not include viable alternatives that are more cost effective than the expensive rail projects they wanted to build.

Even better, the FTA could have said it would apply its own standard cost-effectiveness analysis to rank all proposed transit projects from all cities in the country. Then it would fund all of the highest-ranked projects until it ran out of money.

This system would have completely changed the incentives facing MPOs and transit agencies. Today, they try to come up with the most expensive projects possible (up to the $24 threshold) so they can get “their share” of federal pork. Under this new rule, the cities and regions that develop the most cost-effective projects are the ones that would get the most funding.

As it is, if your city came up with four $227 million projects that have cost-effectiveness indices of $5.95 per hour, those projects would produce four times the benefits of the $909 million Central Corridor project at $23,80 per hour. Yet the FTA has no more reason to fund those projects than Central Corridor boondoggle. And that’s not cost effective.


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Reprinted from The Antiplanner