Faithful Antiplanner ally Craig sends this amusing article from the Portland Oregonian in 1988. Unfortunately, a subscription to NewBank is required to view the link, but the gist of the article is that Congress gave Portland’s TriMet transit agency $6.2 million to subsidize a development on the city’s light-rail line that would make the light rail “self-supporting.”
The plan was called “Project Break-Even,” and as then-city Commissioner (now U.S. Representative) Earl Blumenauer explained it, “what is contemplated here under Project Break-Even is targeted economic development where government money is used to kick things off, but most of the investment is from other sources.” In other words, although the term probably hadn’t been coined yet, they were subsidizing a transit-oriented development.
The subsidized development was supposedly going to add 5,000 new riders to the light-rail line during off-peak times (when the marginal cost to the transit agency of a new rider is nearly zero). By 1998, this was expected to provide enough revenue for the rail line to break even. This was based on the fact that the annual subsidy to the rail line was supposedly just $2.7 million, while 5,000 new daily riders would increase revenues by $2.8 million. (That works out to $1.50 per ride, but even by 2008, TriMet collected only $0.81 per light-rail trip. Maybe they were also counting additional rush-hour riders.)
Missed Dose : Kamagra is viagra 100mg usa to be utilized the women, the researches state that Kamagra might be advantageous in decreasing the female sexual dysfunction (FSD) for some women. The chief aim of this enzyme is known for its adverse effect over male penis and it is found in male gentile. india cialis It is a condition that affects males in which they experience ejaculation sooner than they desire. viagra no prescription mastercard In fact, for about 30% of males with erectile dysfunction, simple levitra for sale online behavioral measures such as smoking cessation, daily exercise, a balanced diet, enough sleep and reduced stress, have a significant impact on age-related illness; but so does preventative medicine. Let’s see how well that worked out. According to the 1988 transit database (unfortunately, not available on line), TriMet spent $7.8 million operating light rail in that year. The database at that time did not break out transit fares by mode, but if light-rail lost $2.7 million, fares must have been around $5.1 million.
By 1998, according to the historic time series in the National Transit Database (alternate file here), the cost of running Portland’s light rail had risen to $22.3 million. We still don’t have a break-out of fares, but we know that in 2003, by which time Portland had opened two new light-rail lines, fares were just $17.5 million. Since ridership increased 160 percent between 1998 and 2003, it is likely that 1998 fares were less than 40 percent of those of 2003, or about $7 million, so the line lost around $15 million in 1998. That’s hardly break-even.
By 2008, Portland had four light-rail lines and scores of subsidized transit-oriented developments such as Beaverton Round. In 2008, TriMet spent $84 million operating light rail, or more than 10 times as much as in 1988. Total light-rail mileage has tripled, from about 15 to 48 miles, but even after accounting for inflation that’s a huge increase in operating costs. Fares, meanwhile, increased to about $31 million, so the system as a whole lost more than $50 million.
How often have rail nuts told the public, “just give us the capital costs, and the rail lines will pay for their operating costs”? Let’s see: the DC subway, light rail, personal-rapid transit, transit-oriented developments, and–most recently–California high-speed rail. It never happens, yet people still fall for it. And those who make the argument, such as Earl Blumenauer, show no shame when their predictions don’t come close to coming true.
here is another link for Multnomah County Library members:
http://0-docs.newsbank.com.catalog.multcolib.org/openurl?ctx_ver=z39.88-2004&rft_id=info:sid/iw.newsbank.com:NewsBank:ORGB&rft_val_format=info:ofi/fmt:kev:mtx:ctx&rft_dat=0EB085042E9E4757&svc_dat=InfoWeb:aggregated5&req_dat=0D10F2CADB4B24C0
Here is the actual story so that we may criticize it:
PLAN COULD MAKE MAX SELF-SUPPORTING
Oregonian, The (Portland, OR) – Thursday, June 23, 1988
Author: FOSTER CHURCH – of the Oregonian Staff
Summary: An initial grant of $6.5 million has been set aside by a Senate panel
A Senate panel approved money Wednesday that could boost private development in downtown Gresham and make MAX the first rail transit system in the country to pay for itself.
The money — $6.5 million — was set aside by the Senate Appropriations Committee’s transportation subcommittee at the request of Sen. Mark O. Hatfield, R-Ore. It would be the first chunk of a possible $19.2 million grant sought by Tri-Met, which runs the Metropolitan Area Express light-rail system.
The initial grant, if it makes it through Congress, would pay for land acquisition and market studies for what Tri-Met calls Project Break-Even . The transit agency and potential developers of a 75-acre shopping center in Gresham would work in tandem to place a light-rail stop inside the shopping center.
The project also would incorporate a MAX station into a potential hotel site near the Oregon Convention Center, connecting the center with the Gresham shopping mall.
“I think the concept that is literally being pioneered here is exceedingly significant,” said Portland City Commissioner Earl Blumenauer, who is working with the Urban Mass Transportation Administration to study public-private partnerships for transit. “We are trying to make transit work under the new rules of less federal subsidy and higher cost recovery. And what is contemplated here under Project Break-Even is targeted economic development where government money is used to kick things off, but most of the investment is from other sources.”
Inspiration for the project comes from a study by the federal agency that showed that the transit-related development, with a shopping center at one end and a convention center and hotel at the other would add 5,000 new riders to the MAX system during off-peak ridership times.
Revenue also would be generated by leasing sites on the line for business development.
In all, the study showed that in 10 years, the development could yield additional yearly fare and lease revenues of $2.8 million, which would replace the current yearly tax subsidy for MAX of $2.7 million.
Tri-Met spokeswoman Pam Dunham said the potential shopping center site was west of Gresham City Hall.
Most of the site is owned by Winmar Co. of Seattle, the developer of Washington Square. The full $19.2 million federal investment, Dunham said, would stimulate $125 million in private development.
Blumenauer said the project would create a magnet for development at the unimproved end of the MAX line and also prompt development near the convention center, which in turn would benefit downtown Portland.
Blumenauer rejected suggestions that the project could draw business away from downtown Portland and thus meet resistance from business representatives there.
“Even though most is targeted at the other end of the line, I feel entirely comfortable with it,” he said. “We cannot afford to look at the regional rail system as pitting downtown Portland against Gresham. We need a regional transit system. And even though my responsibilities are in the city of Portland, I am convinced I am serving the citizens of Portland best if we have a regional transit system.”
The appropriation still must be approved by the full House and Senate and signed by the president. Dunham emphasized that the improvements in the MAX system would be done in tandem with the development of the shopping center and that each would drive the other.
We were first told that light rail would help reduce trips by autos on the east side of Portland by building Light Rail. We were also told it would be better to build the light rail to Gresham(the east side of Portland) and we would not need the Mt Hood freeway.
Somehow they sold the idea that the people heading to the east side of the state, would not need to go there, once the rail line was built and just go the Gresham.
Once the rail line was completed and the ridership was about half of the opening day projections, Tri Met and Portland City Commissioner Earl Blumenauer then tried to build a mall to generate new trips on the Max. Which seems a bit confusing if your trying to reduce (so called) unneeded trips by car, but create trips on Max by creating a new reason to ride it.
Tri Met and light rail should serve the transportation needs of the citizens, we should not be serving the needs of light rail.
Did they ever collect any lease revenue?
Fortunately for the taxpayers, it was never built. But they have spent a lot on urban renewal and TOD’s subsidies, loans and grants for other projects.
What’s more subsidized, TODs/dense development, or suburban sprawl?
This article is misleading, too. Craig says the project was never built, but reading what ROT wrote, it makes it seem as it was (as the entire post talks about subsequent transit numbers after 1988 in relation to it being built — which apparently isn’t the case).
Regarding the “transit paying its own operating costs” story, it’s rare, for sure, but Vancouver (BC)’s Skytrain light-rail system is an exceptional case that does break even on operating costs.
A student of transit would do well to figure out what Vancouver did right (or got lucky on) that few others on this continent have managed.
Skytrain is not light rail. It is a fully-automated fully-grade separated heavy rail system. Its ridership is not out of this world at about 10,000 riders per route mile, compared to about 8,500 riders per route mile on Los Angeles’ smaller system.
The difference seems to be that Skytrain fares are relatively high so riders pay to operate the system. In the United States, raising fares often becomes a civil rights issue.
On August 18th, 2010, ws said:
What’s more subsidized, TODs/dense development, or suburban sprawl?
———–
Portland and the state of Oregon just had to pay nearly $10 million to get Vestas to move down town
http://www.oregonlive.com/business/index.ssf/2010/08/oregon_portland_help_wind_turb.html
The Antiplanner wrote:
> Unfortunately, a subscription to NewBank is required to view
> the link, but the gist of the article is that Congress
> gave Portland’s TriMet transit agency $6.2 million to subsidize
> a development on the city’s light-rail line that would make
> the light rail “self-supporting.â€
This is old, old method of securing political support (and taxpayer dollars) for rail transit projects.
Here’s a variation on that theme. Way back in 1969, at about the time that ground was broken for the Washington’s Metrorail system, the Washington Post published some questions-and-answers about the costs to operate and fares to ride the system, including this:
Q: Metro says it can run the system without losing money or requiring an operating subsidy. How is this when the New York subway system, for example, is always in the red?
A: New York has a low-fare tradition (remember the old nickle fare!). Washington’s higher zone fares will produce more revenue per rider. Also, Metro trains will have only one man aboard, even for an eight-car train.
The Washington Post, December 9, 1969, Page C1 (available through the Post online archives for a fee).
“In the United States, raising fares often becomes a civil rights issue.”
We just ran into this in Austin. CapMetro tried to raise their very low rate by $0.25 to $0.50. I ride the bus and supported the rate hike, but was maybe the only one.
To me, one of the most important functions that transit serves is transportation access for persons with disabilities, the old, the young and the poor. Maybe a voucher/ability to pay pass could solve this problem.
“This is old, old method of securing political support (and taxpayer dollars) for rail transit projects.”
Except that before the Arab Oil Embargo in 1973 and the subsequent mega inflation which was grossly understated in real statistics, this was actually a realisitic expectation. The PATCO rail system in Philadelphia, which was the first new rail system like WMATA and BART actually did turn a profit from 1970 to 1972.
Even for WMATA with its opening after 1976 (and PATCO at the same time), it made something close to 70% of its operating costs from fares for many years, far higher than most other systems.
Still waiting to hear about an urban interstate that turns a profit.
That is interesting information about PATCO and WMATA. Did they cover their capital costs? Did they set aside sufficient funds for maintenance and replacement?
@Craig:
You’re right Vestas is being subsidized.
Intel in Washington Co also gets plenty of state and local subsidies. I suspect you don’t bring that up because it’s not in Portland?
http://www.goodjobsfirst.org/corporate_subsidy/intel.cfm
http://www.katu.com/home/video/11869111.html
Intel, among many other companies, are in “Enterprise Zones”, which in effect is just an urban renewal area for rural areas.
http://www.oregonlive.com/business/index.ssf/2010/05/northwest_tech_firms_gearing_u.html
“A new tax break deal — approved in 2005 — kicks in this year. It will exempt Intel from $579 million in property taxes over 15 years. Intel must invest at least $25 billion in Oregon to receive the full benefit.”
Facebook data center in Prineville:
http://www.bendbulletin.com/apps/pbcs.dll/article?AID=/20100122/NEWS0107/1220410/1001/NEWS01&nav_category=NEWS01
“Facebook officials told The Bulletin that the tax incentive offered to the company through an enterprise zone was a key reason it came to Central Oregon. By locating its new data center in the zone, Facebook will be excused from paying as much as $2.8 million a year in local taxes.”
This isn’t a Portland thing, and it’s not an Oregon thing, either. It’s a national thing where governments give free money out to subsidize growth.
WHy should transit systems paqy for themselves? What roads pay for themselves? Roads are some of the most costly public improvements once environmental and health costs are taken into account. Take East Somerville MA for instance. left a highway through their neighborhood without any on ramps serving the community. That section of highway is very often congested and therefore pollution spews out into the nieghborhood making it one of the worst communities in the country as far as respiratory diseases are concerned and the is no benefit to the community. These increased rates of respiratory diseases are costing taxpayers and people who have health insurance millions of dollars.
What are people so against about public transit. It is a safer and more convenient way to get around and although it is a bit larger of an initial investment in the beginning, it serves the community and investors along the route much better then a new highway. Look at almost any transit system where a new stop is added and watch the land values jump.
Borealis:
“That is interesting information about PATCO and WMATA. Did they cover their capital costs? Did they set aside sufficient funds for maintenance and replacement?”
I found more precise numbers for PATCO. The deficit in 1969, before the line ran to Philadelphia, was $2,329,693. In 1970, it was $147,000 and in 1971 is was only $6,773 on revenue of $4.75M. Operating profits were made from 1972 to 1974, but are not specificed in my source, Vigrass’ “The Lindenwold High Speed Line”. The operating ratio remained around 90% the rest of the 1970’s and was 75-80% in the 1980’s.
Primary cost inflators were electrical energy and security costs to combat crime as the police force went from 17 at the outset to 35 by the 1980’s.
Vigrass says annual fixed charges were $6,122,000 for amortization of $94M in construction related debt and depreciation. Its unlikely that the operating profits would have covered much of that.
burnthesuburbs said
What are people so against about public transit. It is a safer and more convenient way to get around and although it is a bit larger of an initial investment in the beginning, it serves the community and investors along the route much better then a new highway. Look at almost any transit system where a new stop is added and watch the land values jump.
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Transit rarely goes to where I need to be,
when I need to be there,
carrying the things or people I want to be with me when I get there.
Autos provide fast door to door service on demand exactly when I need the service with no waiting. And I can play my radio and adjust my heat or air to my comfort level. Plus I don’t have to transfer or stand along the street waiting for the next train or bus that can take 2 or 3 hours for a 30 minute trip by car.
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Ws
Another subsidy for Downtown.
You would think the billions we spent on tax breaks, subsidies and grants to developers would be enough. We can also add the billions spent on the Tram, light rail, bus malls and streetcars. We can also add that nearly all of downtown is a urban renewal area, but that is not enough so we have this story.
In the Oregonian today
down town is using tax money from Portland city hall and parking meters to try to bring customers to downtown Portland.
This should be the responsibly of the business community , using their money not the taxpayers
see
Downtown Portland drivers fuel marketing campaign to get more people downtown
—-cut–
Travel Portland, which aims to attract out-of-state visitors, receives about $2.8 million a year from a city lodging tax and $3 million from the Metropolitan Exposition-Recreation Commission to market the Oregon Convention Center.
—cut—
the nearly 1million dollar budget for the Downtown Marketing Initiative is fully funded by the city.
http://www.oregonlive.com/portland/index.ssf/2010/08/downtown_portland_drivers_fuel.html
Still waiting to hear about an urban interstate that turns a profit.
Maybe you haven’t heard of this one.
Electric car battery maker ReVolt moves HQs to Portland
The Portland Tribune, Aug 27, 2010,
Norwegian battery maker ReVolt Technology LLC is moving its North American headquarters to Northeast Airport Way in Portland after the city and state provided about $6.8 million in loans and tax credits for the international business.
http://tinyurl.com/28lplur
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@19’s argument would be devastating if true.
It is not de facto Interstate, but considered so only by the dint of bureaucratic inertia or incompetence.
DS
PDC votes to increase Killingsworth Station loan
BY: Daniel Savickas
–CUT—–
That increases the PDC’s total investment in the project to $11 million.
http://tinyurl.com/24lsolz
burnthesuburbs said:
WHy should transit systems paqy for themselves? What roads pay for themselves? Roads are some of the most costly public improvements once environmental and health costs are taken into account. Take East Somerville MA for instance. left a highway through their neighborhood without any on ramps serving the community. That section of highway is very often congested and therefore pollution spews out into the nieghborhood making it one of the worst communities in the country as far as respiratory diseases are concerned and the is no benefit to the community. These increased rates of respiratory diseases are costing taxpayers and people who have health insurance millions of dollars.
What are people so against about public transit. It is a safer and more convenient way to get around and although it is a bit larger of an initial investment in the beginning, it serves the community and investors along the route much better then a new highway. Look at almost any transit system where a new stop is added and watch the land values jump.
THWM: There’s a need for both roads & rails.
Just remember that most of what Mr.O’Toole writes is hypocritical political bullshit, though that is exactly what Koch Oil pays him to produce.