Rail lines a lousy deal for L.A. County

By Peter Gordon, James E. Moore II and Thomas A. Rubin
Article Last Updated: 08/14/2008 11:17:49 PM PDT

The Los Angeles County MTA board has proposed a half-percent sales tax increase for this November’s ballot to pay for a “subway to the sea,” various light-rail extensions and highway improvements.

Cynics might say that we’ve seen this movie before – twice: once in 1980 and again in 1990. The agency raises huge sums by promising improved mobility, reduced congestion and cleaner air but then dedicates a substantial share of the money to expensive, nonproductive rail projects.

There were no happy endings the last two times; nor will there be a third around.

Most Angelenos never use public transit but wish everyone else would. This was the sentiment behind passage of the last two half-percent sales-tax hikes to support L.A. county transit. In 1980, we were promised 11 new rail transit lines that would dramatically boost transit use and ease roadway congestion. Neither has happened.

Transit in L.A. hit a high-water mark in 1985. The 1980 half-percent sales tax was used to reduce bus fares, and ridership shot up to 497 million annual boardings from a low of 354 million in 1982. But bus fares were raised in 1985 to bank money for rail. Since then, we have kicked many more people off the buses than new rail has served.

Between 1985 and 2007, the county’s population grew by 21 percent, mostly the low-income immigrants who define transit’s natural market.

Had we just maintained 1985 transit ridership levels, we would have served 1.6 billion more transit users over this 22-year period. Had we been fortunate enough to have transit use grow at the same rate as the county’s population, we would have served 3.3 billion more transit riders.

The plan that was supposed to increase transit use did just the opposite, in spades, and at very high cost. We added 71 miles of rail transit (Blue, Gold, Green, Purple and Red lines), at a capital cost of $10.7 billion plus an annual operating cost of $220 million in 2007 dollars.

(Rubin’s expansion of this paragraph: “Adjusted to FY07 dollars, the initial capital cost of what is now known as the Red and Purple Lines, the 15.9-mile heavy rail subway, was $6.8 billion. For the Blue, Pasadena Gold, Green, Red, and Purple combined, the total is $10.7 billion in FY07 dollars ($7.1 billion in year-of-expenditure dollars). Take the $10.7 billion and apply the FTA 30-year discount factor at 7% — 8.1% — and you get $870 million annualized capital cost. To this, add $220 million in operating costs and then subtract $49 million in fare and other operating revenues, and you get $1,041 million in annualized subsidy. If you add in the Orange Line BRT, the MTA annualized subsidy for all guideway transit is $1,107 million – to carry 85 million boardings.

For non-guideway bus, the annualized total subsidy is $737 million – for 381 million boardings.”)

Cost comment: Buses have 4.5 times as many boardings as rail but the total bus system is subsidized only 2/3 as much as rail. Therefore, rail subsidies of $13 per boarding are 25 times bus subsidies of $0.52 per boarding.

Ridership has never met expectations. Of the 495 million transit boardings in 2007, only 81 million involved rail.

This works out to an awful benefit-cost bottom line.

Annualizing the capital costs and adding them to operating costs, we get a yearly cost more than $1 billion in 2007 dollars, but rail transit revenues were just more than $50 million.

Some of the rail users left their cars at home (the rationale for the whole program). Accounting for these trips and applying average trip lengths and externality benefits of 9 cents per mile (a value that economists use to measure automobile congestion, pollution and accident costs) gives us $14 million more in annual benefits, reducing the net annual loss to $976 million.

Rail advocates can quibble with our assumptions, but no matter what reasonable substitutes boosters plug into their own spreadsheets, there is no way the Los Angeles rail system can ever be cost-effective. Adding new rail lines is going to make a bad deal even worse, and paying for more rail with regressive sales taxes ensures that the poor will carry the largest share of this burden.

In a modern metropolitan area with high rates of nonwork travel, using transit is expensive in terms of what counts most – people’s time. This is why few will use it, though they hope (and advocate) that everyone else will.

Peter Gordon is professor of policy, planning, and development at the University of Southern California. James E. Moore II is chairman of the Epstein Department of Industrial & Systems Engineering at USC. Thomas A. Rubin is a transit consultant based in Oakland.

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