The Streetcar Fantasy

COST Commentary: This is another excellent paper by Randal O’Toole regarding the ineffectiveness of rail transit systems. While it is directed to a proposed streetcar in San Antonio, the article’s major points are applicable to most rail transit systems, specifically in cities similar to San Antonio or Austin. Austin’s proposed Urban Rail is a prime example of rail systems which have experienced major failings to perform as projected. Austin defines Urban Rail as a cross between light rail and a streetcar. Urban rail is much more expensive that a streetcar and almost as slow as a streetcar’s average of 8 mph.

Many cities which were early implementers of new rail transit systems (light rail, streetcar and urban rail), starting in the early 1980’s, have proven their ineffectiveness in addressing today’s transportation needs. These cities have also shown that rail transit’s high costs reduced the availability of limited transportation funds to support transit and roadway projects which can improve citizens’ overall mobility.

Most of the cities which were early implementers of new rail transit are in serious transportation and transit financial difficulty and many are projecting major transit cut-backs and increased fares. The systems have cost more and produced less revenue than projected. Many rail systems are deteriorating, reaching their operating life replacement time and have no identified source of funding. The cities, states and federal government do not have funding to support the many tens of billions of dollars needed for replacement. Meanwhile, most cities, states and the federal government are woefully deficient in upgrading roadway capacities to meet the demands of growing populations who overwhelmingly choose private vehicle transportation as the only reasonable way to meet their daily needs.

Prior, comprehensive streetcar reports by Randal O’Toole can be found: 1) on this site at: Austin, don’t ignore warning: The Great Streetcar Conspiracy.” and 2) The Streetcar Scam can be found on CATO’s site.

This report is a Policy Brief of The Heartland Institute

by Randal O’Toole*, November 2012

The Executive Summary and the Conclusion of this comprehensive, 24 page brief are below and the full brief can be found on The Heartland Institute web site.

*Randal O’Toole is a senior fellow of the Cato Institute. For a more complete bio, see page 25 of the full report.

Executive Summary

Plans to build streetcar lines in San Antonio are based on several critical fallacies, including claims that streetcars are superior to buses in their ability to attract riders and that streetcars promote economic development. In fact, streetcars are slower, less flexible, less capable of moving large numbers of people, and far more expensive than buses. The biggest argument for streetcars is that they promote economic development. This is mainly based on the experience in Portland, where officials claim a streetcar generated billions of dollars of economic development. In fact, that development was attracted by roughly a billion dollars worth of tax breaks, tax-increment financing, and other local subsidies to developers.

In Northwest Portland, the streetcar serves two neighborhoods of roughly equal size, in one of which developers received hundreds of millions of dollars of subsidies while the other received none other than the streetcar. According to the city’s own tally, the first neighborhood received more than 75 times as much investment as the second. Clearly, it was the subsidies, not the streetcar, that attracted the new development. City officials who think a streetcar alone will generate new development have been misled.

What streetcars do is impose huge costs on taxpayers. Cities with streetcar lines spend three to four times as much to operate a streetcar one mile as they spend on buses. Far from moving large numbers of people, most streetcars actually carry fewer people, on average, than the average buses in those cities, and the cost of moving one person one mile is two to seven times greater by streetcar than by bus.

Though streetcar advocates like to call streetcars “high-capacity transit,” they are actually one of the lowest-capacity forms of transit available. So-called modern streetcars can move only about 2,000 people per hour, most of them standing. By comparison, standard 40-foot buses can move well over 6,000 people per hour through city streets, all of them comfortably seated. Double-decker buses are now available that can double this throughput without occupying any more street space.

Claims that streetcars have some kind of a “rail advantage” that attracts travelers who won’t ride a bus are purely hypothetical. If there are people so snobbish that they will ride public transit vehicles only if those vehicles are on rails, taxpayers shouldn’t be asked to subsidize them.

As a practical matter, transit ridership is more sensitive to frequency, speed, and convenience than to whether tires are made of rubber or steel, and buses can operate faster, more frequently, and to more destinations than streetcars. So it is no wonder that, of seven cities with streetcars in the United States, the only two where streetcars attract more riders per vehicle mile than buses can do so only because they offer most or all streetcar rides for free to the riders.

Ridership projections for San Antonio streetcars assume the line would attract the average number of riders per mile carried by streetcars in the seven other American cities that have them. But the projections also assume streetcar fares would cover 15 percent of operating costs. The projections ignored the fact that most of the streetcar lines that attract large numbers of riders charge no fares, and that farebox revenues cover only 8 percent of the costs of operating the seven existing streetcar lines.

Streetcars don’t even have the virtue of saving energy or reducing air pollution. The average streetcar line today uses twice as much energy to move someone one passenger mile as the average car. In places such as Texas, where a major portion of the electricity used to power streetcars comes from burning fossil fuels, the streetcars end up causing more pollution per passenger mile than cars.

Streetcars are an obsolete technology that does not belong in modern cities. They do not promote mobility; they do not promote economic development; they do not protect the environment. The only thing they do that buses can’t do better is cost lots of money. San Antonio should reject the idea of building a streetcar line.
Full Report


Streetcar advocates who think new streetcar lines will be anything other than a subsidy to contractors and a few property owners (who will also benefit from other TIF subsidies) are fooling themselves. Slow speeds, limited numbers of seats, and inflexibility make streetcars inferior to buses in every respect except in their ability to consume large amounts of taxpayer money.

Local government officials who believe that streetcars alone will revitalize blighted parts of their urban areas have been deceived. Cities with a billion dollars or so to burn could spend $100 million on a streetcar line, support it with $900 million in other subsidies to developers, and still fail to get the success of Portland’s Pearl District if the area is not already supported by a variety of attractive restaurants and shops.

Streetcars are a long-obsolete technology. Cities that wish to revitalize neighborhoods would do better to invest in modern transportation, including repairing their streets, installing the latest traffic signal coordination systems, and improving safety for all travelers, than to build eight-mile-per-hour rail lines in the hope of attracting a few professionals to move into downtown residences.

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