46. More Rail Transit Disasters

When Congress created the transit capital improvement grants or New Starts fund in 1991, it required that each proposed project be “justified based on a comprehensive review of its mobility improvements, environmental benefits, cost effectiveness, and operating efficiencies.” Initially, the Federal Transit Administration measured “cost effectiveness” in dollars per new rider: the annual operating cost of the project plus the amortized capital cost divided by the projected number of annual new riders.

While a useful measure, the FTA made no effort to enforce it. While transit agencies calculated that bus projects (such as bus-rapid transit) typically cost about $5 per new rider and rail projects typically cost $20 to $100 per new rider, the agencies routinely selected the rail projects even though they clearly weren’t cost effective.

In 2003, U.S. representative from Oregon, Earl Blumenauer, convinced Congress to carve out a portion of New Starts for what he called Small Starts: smaller transit projects that would only cost a couple of hundred million dollars. He specifically expected that the money would be used for streetcars.

However, in 2005 Secretary of Transportation Mary Peters issued a rule that, at least with respect to streetcars, the cost-effectiveness requirement would be enforced. Specifically, the FTA would fund no streetcar grants using Small Starts money unless the grantee could prove that streetcars were more cost-effective than buses. Since everyone knew that they weren’t, that meant no money for streetcars.

Peters also issued a new cost-effectiveness rule for New Starts. The FTA now measured cost effectiveness in terms of dollars per hour of people’s time saved by a project. This was supposed to include both the time of transit riders and auto drivers. If a project reduced congestion while it provided faster transit than previously existed, then both transit riders and auto drivers saved time.

Unfortunately, rather than compare the cost effectiveness of rail projects with buses, Peters decided that projects would be cost effective so long as they cost less than $24 per hour of time saved by the project. A bus project might cost $1 while a rail project might cost $23.99, but both were considered cost effective under the rule and the transit agency could pick either one.

While the rule was weak, it still provided a limit beyond which the FTA would not fund. Immediately, a number of projects were off the table. Congress passed a law specifically exempting four projects from this ruling: BART to San Jose, the San Francisco Central Artery, Portland’s Westside Express commuter rail, and the DC Metrorail line to Dulles Airport. Peters had specifically concluded that the rail line to Dulles made no sense, and bus-rapid transit would work better, but Virginia’s Congressional delegation convinced President Bush to overrule her.

Beyond those four projects, several others were rendered unfundable by the new rule. One was a proposed commuter-rail line in Charlotte. Charlotte’s transit agency tried to convince cities that would be service by the line to pay for it using strictly local funds. I was asked by the city council of the town of Cornelius to review the project, and I found that Charlotte’s light-rail line was much less successful than the transit agency had claimed. In fact, the agency had submitted one set of ridership numbers to the Federal Transit Administration but presented a much higher set of numbers to Charlette media. When called on it, agency officials said that the FTA had strict reporting requirements that they didn’t agree with. In any case, the commuter-rail line was never funded.

Another project that was rendered unfundable by the new rule was a light-rail line between Minneapolis and St. Paul. The calculation of cost per hour was just over the $24 threshold, so the transit agency simply reduced its cost projections, recalculated, and got it funded. Of course, the actual construction cost was way over the new projections. They ended up spending more than a billion dollars for a light-rail line that proved to be slower than the buses it replaced, so an honest calculation of cost per hour saved would have been infinite.

A third project that was cast out by Peters’ rule was the Maryland Purple Line, a light-rail line in the suburbs of Washington, DC. The project was thought to be dead, but Maryland hired a new consultant to recalculate ridership projections and the new projected numbers were high enough to bring the cost per hour down below $24. In fact, they were higher than the number of riders carried by any light-rail line in the country.

Not only that, but in calculating cost per hour saved, the new numbers counted only the hours that would supposedly be saved by transit riders. The traffic analysis showed that light rail would drastically increase congestion and add millions of hours of annual delay to auto users, but this was ignored in the calculations.

I reviewed the Purple Line for the Maryland Public Policy Institute, pointing to the obscure appendix to the environmental impact statement that found that building the line would increase traffic delays by 36,000 hours a day, or 8 million hours a year. Based on this alone, the project shouldn’t have been funded. But by this time the Obama administration had taken over and wanted to fund any rail project that it could. Somehow, proponents persuaded Maryland’s supposedly fiscally conservative Republican governor, Larry Hogan, into going along with it.

In 2014, I was contacted by a newspaper in Panama City, Panama, asking me to review a transit project there. It was already too late to stop the project but they thought that an incisive review might help prevent its expansion. The project was an elevated railway, which the FTA would call heavy rail because it was entirely grade separated from streets. But the trains operating on the line would be only four cars long, carrying no more people than light rail. Thus, the project had the high costs of heavy rail and the low ridership capacities of light rail. I called this “high-cost, low-capacity transit,” which doesn’t exactly have a ring to it.

The United States has several high-cost, low-capacity transit lines under construction. One is Seattle’s light-rail system, which is about 98 percent grade separated, thus requiring high costs, but because of the 2 percent where it is not grade separated, capacities are low. Puget Sound Transit is spending more than $300 million a mile, which is well above the average for light rail.

An even more extreme example of high-cost, low-capacity transit is being built in Honolulu. It uses the same technology as the Panama City project: an elevated rail line with short stations and short trains capable of carrying no more people than a light-rail train. The 20-mile project was originally projected to cost less than $150 million per mile, but costs so far have risen to $450 million a mile and will almost certainly rise higher before the city finds enough money to finish it. It is probably the most expensive transit project per capita anywhere in the world, costing $10,000 for each Honolulu resident. I wrote several op-eds and other articles against the project but local opponents were unable to stop it.

When Obama entered office, he appointed a fiscally liberal Republican, Ray LaHood, to be his secretary of transportation. LaHood immediately set out to repeal the Peters rule, but in an example of the glacial pace of federal action, it took him several years to do it. In the meantime, he used economic stimulus funds, which weren’t covered by the rule, to fund streetcar projects in Atlanta, Cincinnati, Tucson, DC, and other cities. Most of these have proven to be failures.

Surprisingly, not everyone in the Obama administration proved to be a die-hard supporter of rail transit. As head of the FTA, Obama appointed Peter Rogoff, who had been chief of staff for the Democratic side of the Senate Appropriations Committee. After spending his first year visiting transit agencies across the country, Rogoff gave a remarkable speech in Boston.

He noted that at many of his meetings the transit agencies first complained about how their infrastructure was deteriorating. “But then we get to the second part of the meeting,” he said. “The consultants start to get excited and the glossy brochures come out. And the next thing you know, the general manager wants to talk about their new plans for expansion — the spanking new rail service to communities not yet served.” Which led him to want to ask, “if you can’t afford to operate the system you have, why does it make sense for us to partner in your expansion?”

Rogoff admitted that he wasn’t an economist, but he knew one thing about economics: “Paint is cheap, and rail systems are extremely expensive.” If you take a bus and paint it a special color, he continued, “you can call it a special bus,” and doing so “can entice even diehard rail riders onto a bus.” While rails made sense in some places, he admitted, “bus-rapid transit is a fine fit for a lot more communities than are seriously considering it.”

The information Rogoff learned about deteriorating transit infrastructure led him to have his agency do an analysis that initially found a $77 billion backlog in transit maintenance, a number that has since increased to more than $100 billion. Unfortunately, other than giving a few speeches, which I gleefully quoted whenever I could, Rogoff’s opinions didn’t otherwise translate into action as he continued to fund ridiculous rail transit projects all over the country.

Moreover, shortly before the end of the Obama administration, Sound Transit hired Rogoff, increasing his pay from $180,000 a year to $300,000 a year, to promote light-rail in the Seattle area. I doubt the words “paint is cheaper than trains” have passed his lips since then.

Everyone has their price, and Mary Peters was no exception, as I found out in Phoenix in 2015. Phoenix voters had rejected light rail a couple of times, but eventually opponents got tired and the transit agency, Valley Metro, was able to get a measure passed. Bus ridership had been growing rapidly before the city’s first light-rail line opened, but after it opened ridership began dropping. Valley Metro nonetheless claimed that the growth in ridership was all due to light rail.

The agency also claimed that light rail had stimulated billions of dollars worth of economic developments, a claim that local skeptics asked me to verify. My report went through the agency’s list and found that many if not most of the developments that were supposedly stimulated by light rail had never been built. The region had a construction boom before the 2008 financial crisis and all sorts of projects were planned but never completed. Many of the developers went bankrupt and developments that Valley Metro pictured in its four-color brochures were architectural drawings while the sites themselves remain vacant to this day.

I went to Phoenix to participate in several debates over a new ballot measure Valley Metro wanted to expand its rail system. In a debate before the Arizona Republic editorial board, I faced Mary Peters herself, who after the Bush Administration went to work for HDR, the same consulting firm that hired Portland city commissioner Charlie Hales to promote streetcars.

In her presentation to the editorial board, Peters claimed that light rail was “scalable” because if ridership grew they could increase the length of trains to up to eight cars. I interrupted her, pointing out that light-rail trains can’t be any longer than a city block or they would obstruct traffic every time they stopped. She said, “I didn’t interrupt you when you were talking,” and I responded (but not out loud) that I wasn’t lying when I was talking. My respect for her fell to zero. Unfortunately, the measure passed.

Valley Metro is still claiming that light rail has generated billions of dollars of developments even after removing the projects that never got built. In a follow-up study, I showed that the developments supposedly stimulated by light rail included gas stations, 70,000 parking spaces, subsidized affordable housing projects, and various university and government buildings that clearly would have been built without the light rail.

It doesn’t take much scrutiny to realize that everything that supporters say about light rail is a lie, which is why I began calling it “lie rail” in presentations in Austin, St. Petersburg, and Virginia Beach, where I was able to help opponents defeat light-rail plans. One example of a lie came from the Twin Cities Metropolitan Council, which wanted to build a light-rail line to Eden Prairie, which is quite possibly the wealthiest suburb in the region.

Sensitive to concerns that it was catering to the rich, the council ostentatiously announced that it was adopting a “regional transit equity” plan that would make sure that transit served the poor as well as the rich. Specifically, the plan called for building light-rail into wealthy suburbs while at the same time building 75 bus shelters in poor minority neighborhoods.

Not everyone was convinced that the plan was a good one. A Minneapolis city councilor who opposed the Eden Prairie rail project said that, according to the plan, “equity means maybe we might build some heated bus stops in north Minneapolis sometime in the future that we can’t promise or guarantee and we won’t tell you where they’ll be.” He voted against the light-rail plan but the Metropolitan Council wants to go ahead with it anyway.

The Trump administration has thrown a monkey wrench into the Eden Prairie light-rail plan and rail transit plans all across the United States. When Trump entered office, he based his budget proposals on plans written by the Heritage Foundation. Through the American Dream Coalition, I’ve been working closely with all of the national and state think tanks that work on transportation issues, and so Heritage took its transit budget proposals from me, specifically my proposal to abolish the New Starts program.

Starting with Trump’s first proposed budget, the Department of Transportation’s policy has been to continue to fund projects that already have signed “full-funding grant agreements,” but to sign no more such agreements. While it has caved into political pressure to sign a couple of such agreements, they have been far fewer in Trump’s first three years than the Obama administration signed each year.

Nevertheless, New Starts is still on the books in the federal surface transportation law that expires this year. Due to its reluctance to make decisions in election years, Congress will probably pass a short-term continuation of the law this year and then pass a six-year extension, which may or may not include New Starts, in 2021. If Trump is re-elected and fiscally conservative Republicans have enough seats in Congress, it will probably not renew New Starts. If Democrats get enough power, it probably will renew it. While I’m not in love with all of Trump’s policies, he turns out to be the only hope for getting rid of this wasteful program for the next six years.