Sacramento Streetcar Scam

Another day; another city getting scammed by the streetcar mafia. In this case, it is Sacramento, a city that has built 37 miles of light-rail lines and seen transit’s share of commuting fall from 4.1 percent in 1980, before light rail, to 3.2 percent in 2010.

In 2006, Sacramento’s metropolitan transportation plan admitted that, despite past plans focusing on “luring drivers out of their autos,” the share of transit riders was decreasing; and despite building no new roads and seeing huge increases in congestion, the amount of auto driving had doubled since 1980 (see page 3). So naturally, the plan recommended more of the same.

Apparently, that still didn’t work, because now they want to try something new. Since light rail wasn’t fixing any problems, they want to build 18 miles of streetcar lines costing $816 million, or $45 million a mile. The plan calls for a $125-$135 million “starter line” of 2.55 miles that will also share 0.75 miles of rails with light rail, reducing the light-rail line’s capacity to move people, which isn’t an issue because so few people ride the light rail.

Of course, the justification for building the line is the billions of dollars of new economic development that will supposedly result. “Over the past decade since the Portland Streetcar line was opened in 2001, more than $3.5 billion in private investment has occurred along this route.”

In fact, at least 10 percent of it was a state university, so was hardly private. As for the private part, as the Antiplanner has previously noted, almost all such “private investment” was publicly subsidized. Moreover, on the parts of the streetcar route that had no subsidies, there was almost no new development.

Here’s a map of the streetcar route showing the portion of the Pearl District that was within two blocks of the streetcar. This area received more than $200 million in tax-increment financing and other subsidies.

Here’s the same map highlighting the portion of the streetcar route in Northwest Portland that was outside of any urban renewal district. This area received no subsidies.
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According to Portland’s report on the streetcar and economic development, the area in the Pearl District saw $1.3 billion in private investment in more than 50 developments averaging about $27 million per development. By comparison, the second area saw a mere $17 million in seven developments (at least one of which has since gone bankrupt), an average of just $2.5 million per project. So: was it the streetcar or the TIF and other subsidies that generated the development?

When the Antiplanner pointed this out in a Cato Institute report, the head of Portland’s streetcar program, Rick Gustafson, responded to “lies and misleading statements by Cato Institute” by saying, “Streetcar is not the sole cause of economic development. The best approach is a comprehensive set of strategies.” In other words, the Antiplanner was absolutely correct that streetcars alone won’t lead to economic development.

If economic development is the goal (and, arguably, it shouldn’t be a goal of government), then the best approach is the most cost-effective set of strategies. How does the streetcar rate on a cost-effectiveness scale?

This question never gets asked in reports such as the Sacramento streetcar plan. Instead, the plans all imply that Portland did nothing but build a streetcar and got economic development. It is these reports that are full of lies and misleading statements.

The problem is especially acute in California, which repealed the law giving cities the authority to use tax-increment financing to subsidize development. Since the streetcar alone isn’t going to stimulate development, how will Sacramento fund the “comprehensive set of strategies” that Gustafson alludes to?

One answer comes from Arizona, the only other state that doesn’t allow tax-increment financing. Mesa is subsidizing housing along a light-rail line using federal tax credits. Those tax credits could be used anywhere, but Mesa is concentrating them on the light-rail line, after which it will no doubt say, “Look! We built a light-rail line and got all this new housing.”

As I’ve said before, streetcars are an urban intelligence test. They are slow. Oregonian reporter Joseph Rose decided to test the “urban myth” that Portland’s streetcar is slower than walking and discovered, “It’s no myth. You can walk faster than the streetcar to your destination.”

Streetcars are low-capacity transit, capable of moving only a few thousand people per hour. Buses can move far more people because buses can safely travel a minute or so apart while streetcars must be spaced at least three minutes apart. Streetcars actually increase urban congestion because they occupy a lane of traffic, stop frequently, and take few if any cars off the road.

Most important, streetcars are expensive. Not only is their capital cost high, they cost twice as much to operate as buses and impose high long-run maintenance costs as well–costs that never get considered in any streetcar analysis. The Sacramento plan says, for example, that it will cost $4 million per year to operate and maintain the streetcar, but says nothing about replacing worn-out tracks, wires, vehicles, and other infrastructure after 25 or so years.

Anyone who think that it is worth spending more than $100 million on a 7-mph clunker of a streetcar line fails the intelligence test. Of course, someone will make a lot of money building the line, so they will no doubt lobby for it. Unfortunately, a lot of other people will get sucked into the plan by a combination of nostalgia and misleading claims about economic development. The losers will be taxpayers and travelers.