Link Light Rail Boarding Costs; Update: Sound Transit’s numbers
February 6th, 2008 by Republican By DefaultAs I was reading a post on ErikEmery.com (The math on the Link) something didn’t seem to add up. As I thought about it I noticed a few things that didn’t seem to be included in Erik’s math. The post was the result of the discussion (comments) in a thread on Exit133.com (No More Tacoma-to-SeaTac Light Rail)
Things like:
- Inflation
- Amortizing construction costs decreases over time
- Cost of adding capacity
- Increasing cost of maintaining aging equipment
So, I decided to run the numbers and see what happens. I created a spreadsheet that looked at the first two issues, but since I didn’t have information on the last two issues available I left them off. It should be noted that the latter two issues will increase the per boarding cost, not decrease it.
What did I find? To sum it up, in 25 years the operating costs will increase from $3.7 million to $8.3 million per year because of inflation. Using an increase of boardings of 3% per year (taken from Sound Transit’s Quarterly Performance Report to the CEO) from 840,000 to about 1.7 million per year.
The net result is a cost of $7.28 per boarding averaged over the first 25 years (2004-2028). Again, that doesn’t include the cost of increasing capacity. However, aging may not come into play in a significant way in that time.
Here’s a PDF file (Link Cost Projections) that shows the numbers. Feel free to e-mail me or comment on any inaccuracies you might find.
It’s hard to predict whether the 3% per year increase in ridership will increase or decrease. It might increase if the downtown area sees a boom (which we’ve been waiting for since…), there is a large increase in gas prices or the actual linking to a regional light rail system finally happens (plans for that were recently abandoned by Sound Transit). However, it could be less than a 3% increase if fares are charged (currently it’s free), downtown doesn’t grow, capacity isn’t increased in the system as needed (a genuine possibility if voter approval is required), or Tacoma’s transit sees the same increase in criminal activity that Portland’s MAX has seen.
Update: I did some further digging and found the numbers from Sound Transit. These numbers include the depreciation and amortization which is to say that it includes the cost of construction.
Their numbers (Q3 2007 Year-to-date, which is Jan. 1, 2007 thru Sept. 30, 2007):
Net Subsidy from Fully Allocated Operations: $2,340,645
Depreciation and Amortization (construction): $2,129,916
Net Subsidy (cost to taxpayers): $4,470,561
Ridership: (boardings): 683,662
Cost per boarding subsidized by taxpayers: $6.53 [corrected see note]
So, it seems that they used roughly the same allocation of construction costs that I did. In case you’re wondering, the Ridership information linked to above ( listed a cost per boarding of $3.43. The footnote indicates that this calculation doesn’t include the amortization of construction costs or the depreciation of equipment. Personally, I believe this to be somewhat misleading.
Note: Original number presented here, $7.63/boarding was calcuated using costs going all the way back to ground-breaking and boardings from for all years through Q3-2007. I adjusted the number here to reflect Q3-2007 YTD calculations.
Update: 2007 numbers (PDF) are available:
Net Subsidy from Fully Allocated Operations: $ 3,193,652
Depreciation and Amortization (construction): $ 2,865,576
Net Subsidy (cost to taxpayers): $ 6,059,228
Ridership: (boardings): 919,013
Cost per boarding subsidized by taxpayers for 2007: $ 6.59
I’ll adjust the total figure when I have the time. At the moment it looks like it may have gone up slightly from $7.63.
February 6th, 2008 at 7:16 pm
On another note, both of ours are slightly wrong because the 3.7 million operating cost was for this current year. I didn’t take into account that previous years would have likely been lower (probably by a number close to your inflation projection, just in reverse).
That said, $7.28 per boarding over the first 25 years seems like a good number. I guessed around $5.00.
Regarding the last two figures:
Replacing aging equipment should be taken care of in the annual budget through depreciation (in theory).
Second, obviously increasing capacity would dramatically increase the cost and spike the cost/boarding. Sending the Link down 6th and to TCC would certainly do that, although of course capacity would be dramatically higher too. Also if the Link expanded that far, it would be restructured to have a fare associated with it that would drive up annual costs but also annual revenue. So much to think about!
Thanks for the numbers.
February 7th, 2008 at 12:46 am
I have one fundamental problem here, which is with your determination of inflation.
(It should be noted that 1) I am a liberal, 2) I initially posted my dream ideas without fiscal considerations in comments on Erik B’s blog, and 3) I acknowledged that the posts from 5views had far more research into genuine problems than I had in my own blog)
Inflation is not a steady thing. We can average it, but it’s never grown in a linear fashion. To treat it as a linear process is, frankly, idiotic. You can’t look at the current economy and tell me that it will carry on in one way or the other. It will proceed towards inflation or not depending upon the government elected (and I don’t care if you’re D or R… there are some Rs that will speed up inflation and some Ds that will slow it down). The point is that we can’t predict that. I do think that a lot of your numbers add up to an extension of the rail being, at least potentially, fiscally irresponsible. But I don’t think you have the genuine wherewithall to accurately factor in what inflation will really be like.