Friday, April 21, 2006

Return on light rail

Evidently, the mayors of Minneapolis and St. Paul are asking for 840 million dollars to build 11 miles of light rail track to connect their fair cities. Let's take a look at the return, assuming that 12 hours per day, a train holding 200 people leaves one end every 15 minutes, each passenger paying a fare of $2.

Over a day, we have about 10,000 riders and revenues of $20,000. Over a year, we have revenues of approximately seven million dollars. In contrast, a reasonable return (5-10%) on 840 million dollars is 42 to 84 million dollars.

P/E ratio: 120, and we haven't even started to account for the cost of rolling stock, labor, and so on. If other light rail lines are any indications, day to day costs will exceed revenues. Ouch.

If you want to get a bad idea funded, you need only go to the government.

5 comments:

Joey said...

Agreed. It's very, very stupid. I could ALMOST support a subway system, or some other form of transportation. I wouldn't necessarily argue that we need some type of mass transit other than buses. But the light rail presents way, way too many problems. It crosses way too many intersections to be safe in the first place. And in the second place...well, I could go on with second and third and fourth places, but the bottom line is, well, you already said it. "If you want to get a bad idea funded, you need only go to the government."

Well put.

Makes me wonder what we're going to get out of these stadium deals. Whatever happened to these things being funded by the owners, like the St. Louis Cardinals' new Busch Stadium?

Mercy Now said...

Humn, I have tons of bad ideas. I guess I just need to hire a lobbyist to propel those bad ideas into reality and get rich off of taxpayer money, oh wait, I can't do that, I have morals. Yeah, FL has been contemplating about light rail twice and each time it failed to pass cuz studies show that it won't be feasible.

Bike Bubba said...

Here's an update; spent the weekend in St. Paul, and if they want to spend some money on transportation, I'd suggest that fixing 7th St. should be high on their list. The potholes were almost too much for my minivan.

Anonymous said...

Let me ask you this. How much ROI does that highway between St. Paul and Minneapolis get? ZERO! Light rail in other cities like Dallas has generated by itself over 3 billion dollars in development around the station. That's far over 100% ROI. Portland's streetcar was 56 million. It generated 2.3 billion in building investment by itself. Look at different metrics than farebox revenue and how many street crossings. How are you going to cure an addiction to oil with more cars?

Bike Bubba said...

Anonymous, the ROI is good with a road; the costs of building are approximately equal to revenues from gasoline, vehicle, and other road-related taxes and fees.

And Portland? Sorry, I've been there. The streetcars tore up the streets downtown and prevent other traffic from getting there, making it a marginally safe ghost town. The former residents now live on the north side of the Columbia.

And yes, it "generated" 2.3 billion dollars worth of work--work spend building the tracks and tearing apart infrastructure that took decades to build. Sorry, I don't consider that to be economically or environmentally sound.