More Good Money After Bad in New Mexico

New Mexico’s Rail Runner has lost 38 percent of its riders since 2012 and is on course to making it 40 percent in 2019. Rio Metro, which operates the trains, is scrambling to find the $55 million it needs to install positive train control, as required by federal law, but remains $20 million short.

Abandoned station on the Rail Runner line. Click image for Wikipedia article. Photo by John Phelan.

A new report published by the state legislative finance committee offers a proposal in response to these problems: transit-oriented development. Although the report reveals that many of the communities along the rail line have zoned land for transit-oriented development, none has come about except in Santa Fe, and even there the development is minimal and required tens of millions of dollars in public subsidies.

New Mexico is going through the same process that took place in Portland and other cities that built obsolete rail transit systems. First, they zoned land for development along the rail lines, expecting people would be so eager to live near the train that developers would happily build high-density housing with no parking. Then, when no development took place, they start subsidizing it. So we have subsidized trains meant to generated development that has to be subsidized to get people who might ride the trains.

The Rail Runner carried an average of 2,825 riders per weekday in 2017. The state report estimates that the train has “about 1,200 regular commuters,” which would account for 2,400 of those trips, and the rest are people who “take the train for leisure and tourism, school, and other business and personal appointments.” With average fares of about $2.50 and average costs of about $35 per trip, the rail line costs about $15,000 a year per daily commuter, not counting capital costs.

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The Rail Runner was first proposed in 2003 by then-Governor Bill Richardson, who like so many other politicians was attracted to passenger trains without understanding their true cost. He managed to put off most of the cost until after he expected to leave office by borrowing nearly $500 million under a loan that would have a $220 million balloon payment in 2025/2026. The state has since refinanced that but will still have a balloon payment of about $80 million.

Among his other blunders, Richardson thought that spending nearly a million dollars on a train station near the University of New Mexico stadium would allow people to take the train to football games and other events. After three events in which hardly anyone used the train, Rio Metro stopped using the station, which sits abandoned.

Richardson had presidential aspirations, but his political career ended under a cloud. Apparently, a company called CDR gave Richardson’s political action committee $100,000 in exchange for handling New Mexico’s bonds, including those for the Rail Runner. The feds decided not to prosecute, but the pay-to-play scandal effectively ended his political career.

The legislative finance committee report was written by a team of more than a dozen people, at least four of whom have PhDs in something or other and one of whom signs his name “esquire.” All that intelligence and yet the report failed to even consider the least-expensive option, which would be to shut down the train, sell the equipment and any associated real estate, and use the proceeds to pay off as much of the loan as possible. The 1,200 daily commuters who now ride the train could take a bus instead at little or no cost to taxpayers, and the bus would be as fast or faster than the train. The state would end up eating much of the loan, but it would save the $26 million in annual operating losses, the cost of positive train control, and millions more in maintenance costs. That sounds like the closest possible thing to a win-win solution.