Denver’s 119-mile FasTracks rail transit project, approved by voters in 2004, will cost at least $1.4 billion more than voters were told, according to the project’s 2007 annual report. Moreover, a revenue shortfall means that Denver’s Regional Transit District’s (RTD) ability to sell bonds to pay for construction will fall $400 million short of expectations.
Although RTD blames rising steel prices for the overrun, in fact a large share of the additional cost is due to RTD’s own inane decisions. The original plan called for running Diesel-powered trains from downtown to the airport, but RTD decided to spend another $400 million electrifying the route. RTD also changed routes on the North Metro line, adding at least $100 million to its costs.
So how is RTD going to build it when it is $1.8 billion short? Its plans call for
- Getting a 50-percent increase in federal grants ($1.26 billion instead of $0.82 billion)
- Somehow getting $548 million out of “public-private partnerships”
- Paying $1.42 billion “as you go” instead of $985 million
- Getting an additional $240 million on federal Transportation Finance and Innovation Act (TFIA) and Certificates of Participation (COP) loans
These are all pretty speculative and for most RTD offers no clue as to why it thinks it can do these things if it won’t have enough revenue to repay more than $2.0 billion in bonds. RTD does make the claim that public-private partnerships can “save up to 30 percent” of the projected cost of a project.
But if public-private partnerships work so well, why is RTD only proposing to use them on two of the six major corridors in the rail plan? And how accurate is that 30 percent? The light-rail public-private partnerships that I know about — in Minneapolis and New Jersey — had 50 to 100 percent cost overruns. In New Jersey, at least, when costs rose above expectations, the contractor merely asked the state for more money and got it.
Public-private partnerships for transit are very different from those for highways. Highway PPPs involve a private company building a road, perhaps in a public right of way, then collecting tolls on the road for a set number of years, then turning the road over to the government. No tax dollars are involved.
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For transit, a public-private partnership is more like hiring a general contractor: the private company does its own (or contracts out) design and engineering work rather than have the transit agency hire separate contractors to do the design, engineering, and construction. Can anyone conceive that hiring a general contractor would reduce costs by 30 percent? I can’t.
Despite the higher costs and lower revenues, RTD claims it can finish all of the rail projects on time and perhaps even slightly ahead of schedule. Color me skeptical.
You can bet that, no matter how big the overruns, no matter how few people ride the rail lines, RTD will claim they are great successes. And Denver’s regional planners are already contemplating the next stages.
Orange lines are existing rail lines plus FasTracks lines. Green are 142 miles of additional radial routes. Blue are 107 miles of beltlines. Click for a larger picture.
According to the regional government’s 2035 transportation plan (15MB file), when FasTracks is done, they want to build another 142 miles of rail transit lines radiating from downtown Denver plus 107 miles of rail belt line around the region. Estimated cost in today’s dollars: a mere $7.4 billion.
Anyone who doesn’t like to pay high taxes for something they rarely use should not make plans to live in Denver.
Perhaps you could also post the cost per Denver inhabitant. That is, the total cost divided by the area’s population.
My speculative, back of the envelope, arithmetic would be something like this. Please revise if I’m wrong :
Cost 6 billion. Population in Denver metro 2.5 million. Potential riders? 1.5million? So cost per citizen $4000.
So cost for the average family of 4, is $16,000 per family. What is an optimistic figure on how many families will actually ride it? 1 in 5?
If so, then the cost is $80,000 per riding family.
Of course this, I imagine is just the initial capital cost. Then there will be a year to year operational costs to the public ie. ticket fare, budged deficits/subsidies.
Am I completely off base here?
There are all sorts of ways that they’re completely messing this up. The first Fastrack line they’re building they’re backing off of their promises left and right. They’re single-tracking part of the line, they’re building 3-car platforms instead of 4, they’re building the track to withstand 5 year storms instead fo the original 100 year storms, etc, etc, etc.
And who cares about ridership, RTD tell us how many revenue miles you’re getting out of your passengers!
Randal’s one-sided diatribe against rail today forgot to mention that in the Denver document on page 107, the “year of expenditure” costs for NEW ROAD CAPACITY and various related improvements is estimated to be around $55 billion, about $37,000 per new resident, or about $100,000 per new household.
New rail, e.g., FasTracks, is about $7 billion, plus about another $20 billion for operating the “base” bus & rail system and ongoing transit capital replacements, a figure that includes operations on the new rail and BRT lines.
To the automotive costs, one must add another $4-$6 billion inflated operating costs per year over the time frame, JUST for the additional vehicles the new residents would own, or somewhere between $110-$200 billion, in addition to the $55 billion capital expense.
Oh, yeah, who knows how many additional tens of billions of dollars in additional capital costs will be needed to construct PARKING for the additional 1,000,000+ personal vehicles new Denver area residents will own and drive! My educated guess is that this parking capital expense will exceed the cost for roads, and by a wide margin if the incremental cost for residential driveways and garages is also added to the tally.
Randal is quite a cherry-picker of only the information that suits his biases. In a peer-reviewed environment, this sort of “analysis” would be summarily rejected.
Oops, I goofed!
The total actually is about $24 billions for “constrained” transit including fast tracks debt service. But of course, I’m not counting the interest charges for commercial and residential parking, let alone the mortgage interest on all those new residences that have the developer and local government road costs built into the price of houses.
Ettinger,
technically 80,000 would be correct per person if there was a low ridership of 3 percent (75,000 people at a cost of 6 billion). But if it was say ten percent population ridership then it would be 24,000 and etc, etc. But this in itselft is a rediculously incorrect way to measure the cost of the single project to residents. You would need to amortize the cost over the years of the transit investment’s life, so if there is say a five percent transit ridership and a 40 year life, then the cost would be 1200 per rider or $4800 for a family of four per year. Then you include operating costs and maintenance costs. Try that estimation out with whatever the actual denver figures are and you may come up with a more accurate figure, although I am sure my example probably has its flaws as well. My main point being that any cost benefit analysis (even a very rough one) should include the life cycle of a project.
Interesting numbers.
I cannot see how you got 24 billions. But in any case, the document talks about a 27 year total expenditure for roads. These roads are used by virtually all 2.5million area residents so the road cost of 24 billions would work out to $355 per year per resident.
This seems ballpark consistent with other data about road costs eg. there is a lot of data about the California Department of Transportation which has an annual budget of 14 billion, that is, around $450 per California resident.
I did include the life of the project and assumed a 20% ridership (1 in 5 out of 1.5million potential riders). 6 bil / 1.5 mil * 20% * (4 people per family) and came up with $80,000 per riding family.
I just immagined for a moment government employees going door to door and asking:
“Hello, would you like to sign up for a payroll deduction of $80,000 so that your family will ride the rail ….â€Â
Of course they could ask:
“Hello, if you, who are one of the 1 in 5 families who will ride the rail, sign up for a $16,000 payroll deduction we will force the other 80% of non riders to also pay the same amount and you can ride the rail…â€Â
Apparently they asked something along the lines:
“Hello, if you pay us just, say, $4000, plus a mere $50 for Washington lobbying costs, we will force every citizen in the nation to pay a simple $20 fee and then in 5 years your family will ride the rail here in Denver….â€Â
And a majority signed.
I dont see how your numbers annualized the costs. Your figures should be lower, especially since you included such a high rate of riders (your first estimate was actually 60 percent wasnt it).
Yes, I did not annualize the transit costs because they represent up front capital expenditures, just to bring the rail into existence. Whenther you spend the money all at once or over several years, you cannot ride the train until the money is spent to build the rail.
So no matter how you slice it, you have to spend 6 billion to build something that, very optimistically 300,000 people will ride => cost $20,000 per prider, $80,000 for family of 4.
In my first estimate, I assumed 20% ridership (1 in 5 people) out of the estimated 1.5 million riders. Yes, I assumed that of the 2.5 million Denver metro area 1 mil would still be so far away from transit that they could not be considered even potential riders. That leaves 1.5 mil potential riders.
Yes, I assumed that of the 2.5 million Denver metro area 1 mil would still be so far away from transit that they could not be considered even potential riders. That leaves 1.5 mil potential riders.
Shucky darns. All those parking decks built for folks so far away from transit: for nothing.
And the HMID: in your first year, Congress should change the law and allow you to deduct the entire mortgage price of your home – after all, you cannot move in your flat screen TV until all the money is spent to build the house. But to the bonds: they obviously have to be paid back in the first year, according to E’s…erm…compelling argumentation. After all, no one in Murrica annualizes costs. That would just be silly.
DS
msetty said:
“Randal is quite a cherry-picker of only the information that suits his biases. In a peer-reviewed environment, this sort of “analysis†would be summarily rejected.”
Yeah. Heaven forbid we discuss how highway construction often comes in over budget and does little to relieve congestion or make our lives any better. I think the A.P’s parents use to show him pictures of trains while they beat him. I can’t think of any other reason he would so vehemently oppose rail planning and at the same time seem to be a proponent of road planning.
I guess, sorry, I messed up. Borrowed money doesn’t count.
bennet wrote:
“Yeah. Heaven forbid we discuss how highway construction often comes in over budget and does little to relieve congestion or make our lives any better. I think the A.P’s parents use to show him pictures of trains while they beat him. I can’t think of any other reason he would so vehemently oppose rail planning and at the same time seem to be a proponent of road planning.”
Hey even the name of this site “Anti-Planner” is condescending, in that even highways are planned them selves.
Rail belt line? This may hit a new all-time low.