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(OPINION) Light Rail 'Nothing Short of a Money Pit'

Mound City Councilman and state Senate candidate David Osmek takes a look at light-rail funding.

(Editor’s note: David Osmek has served on the Mound City Council since 2001 and is running for a state Senate seat this year. He's also a critic of light-rail projects—such as the Southwest Light Rail Transit line that most local leaders support. In the interest of balance, Patch invited Osmek to submit a guest column detailing the reasons he’s critical of light rail.)

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Some politicians are more than happy to jump on the bandwagon for the next extension of light rail in Minnesota:  The SouthWest line.  But what are the true costs?  And can we actually afford it?

I have done some analysis of the costs, and have come to the conclusion that any way you look at it, building more light rail lines makes no sense.  Let’s take the Hiawatha line as an example.

Using the Met Council’s 2010 report 1, the cost of just a single ride on the Hiawatha light rail line is $2.46.  Riders pay only $0.99 of this cost, leaving almost 60% of the costs to be subsidized by the Public.  But this is NOT the true cost of an actual ride, as it does not include the 30-year amortized costs of bonding for the build-out of the line.  Adding those costs in at a 4% bond interest rate, a single ride actually costs $6.42, which means each ride is subsidized by 85%.  If a family of four rides the Hiawatha line to a Twins game, the public is paying a total of $43.36, while the riders are contributing $3.96.

Right now, we are paying over $15 million dollars each year to keep the Hiawatha line operating 1. Adding in the amortized costs of building the line, it’s over $56 million in taxpayer dollars each YEAR.  Yes, some of the costs were federally funded and other revenue streams are bearing some of the burden.  But with trillions of dollars of deficit spending, do we really want to add to the debt that generations will pay for decades to come?

Using the Met Council’s Hiawatha line as a model, let’s project out the costs of the Central corridor and SouthWest lines 2.  Assuming the same level revenue from ridership and operating costs, the Central Corridor will require over $17 million each year in operating subsidy with over $55 million a year for the amortized costs 2.  The new SouthWest line will require over $12 million in operating subsidy with over $72 million in amortized costs 2.  And don’t forget about NorthStar rail, which has an annual operating subsidy of over $13 million 3, with amortized costs of over $18 million 4.

Annual Operating Subsidy Annual Amortized Build-Out Cost Total Annual Cost Hiawatha $15,584,890 $41,348,521 $56,933,411 NorthStar $13,600,000 $18,505,632 $32,105,632 Central $17,025,875 $55,343,405 $72,369,280 SouthWest $12,316,767 $72,287,624 $84,604,391 $58,527,532 $187,485,182 $246,012,714

Once all four lines are in operation, the public will pay over $58 million EACH YEAR to just operate the lines.  The ACTUAL costs, with the amortized build-out costs is just short of quarter of a BILLION dollars EACH YEAR.

We can all argue about what impact light rail has had or will have on traffic congestion.  What we can NOT argue about is the simple fact that EACH YEAR, the taxpayers are on the hook for a quarter of a BILLION dollars. This is for a mode of transportation that, in my opinion, has a negligible effect on traffic congestion and is more economically served by existing bus service.  Even worse, we are taking money away from building or rebuilding critical highway infrastructure needs to operate this incredibly expensive mode of transportation.  Starving the rest of our transportation system in favor of a more expensive, less efficient, and totally inflexible light rail system is the epitome of politics trumping common sense.

Light rail proponents will promote the fact that light rail will create jobs.   But so will building lane miles and bridges.  MnDOT studies 5 have proven that roads have a Benefit/Cost ratio greater than 1, meaning that the econonic benefit of a project outweighs the actual cost of the improvement and will pay for itself over time.  Most road and bridge projects have ratios of 3 or 4, meaning $3 or $4 dollars of calculated value is returned for every dollar of costs.  The Hiawatha line was projected at 0.42 in 1999 6, meaning that for every dollar spent, we receive 42 cents in value.  Even before it was built, we KNEW the costs did not outweigh the benefits.

When you look at the costs, buidling more light rail lines is nothing short of a money pit, which will bankrupt our State and our Nation.  It is time to cut our losses and stop this madness.  Let’s focus our spending on projects that actually improve our transportation system and not leave our grandchildren with mountains of debt.  Let’s be Minnesota-smart, not Washington DC-stupid.

 

David Osmek

Mound City Councilman, 11 years (2001 to present)

www.davidosmek.com

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Footnotes

1 http://www.metrotransit.org/Data/Sites/1/media/lightrail/hlrtstats10.pdf

2 http://www.metrotransit.org/facts-about-trains-and-construction.aspx

3 http://www.metrocouncil.org/about/2011Budget/2011OperatingBudget.pdf

4 http://www.northstartrain.org/abt_ncr_glance.html

5 http://www.dot.state.mn.us/d7/projects/14northmankato/pdf/costbenefit.pdf

6 http://www.macalester.edu/~wests/econ231/HiawathaLRTCBAnalysis.pdf

Brad Koehn January 23, 2012 at 07:43 PM
David, You fail to provide a contrast for your opinion. How much does the public pay for the family of four to drive? We pay vastly higher sums for roads than we do for rails. BTW most people pay $3.00 to ride each way. Did that figure into your math? How much money should we spend to relieve congestion on roadways? It's widely accepted that you cannot build your way out of traffic congestion with more roads, so what's your alternative?
RTK January 23, 2012 at 10:51 PM
Mr. Osmek is spot on in his assessment on light rail. Light rail is just another form of social engineering that has no true value.
Matt Flory January 23, 2012 at 11:00 PM
In addition to the transit and transportation benefits that a SW LRT line will bring there are also likely retail and housing investments which will be leveraged as the project moves forward. Is it coincidence that Pizza Luce opened a Hopkins location on Blake road next to a furture LRT station? These public dollars are good public investments that will leverage private dollars. If you are going to run numbers, you should consider the total impact that this project will have on the local economy.
Matthew Kilanowski January 24, 2012 at 04:37 AM
Roads are also a form of social engineering. It all depends on what kind of social engineering you support.
Matthew Kilanowski January 24, 2012 at 05:53 AM
Mr. Osmek says in his closing that mass transit will bankrupt our state and nation, and yet he seems to think that pouring money into new roads won't. The current funding formula for new highways is set up so that the "DC-stupid" federal government pays for 90%, as opposed to only 50% for transit projects. How's that for adding to our deficit? And, as Mr. Koehn mentioned in his comment, just what is the cost to individual families to own and maintain a vehicle on top of the taxes they're paying for the roads? The Cost/Benefit ratio mentioned is a questionable concept at best. The "benefit" is that we attach a dollar amount to time on top of the cost of operating our vehicles. Of the $9,352,347 of benefit mentioned in the Mankato road project report he references, $8,303,033 of that is assuming people will magically make more money if they drive on a faster road. Their study also shows it will cost more to operate vehicles on the new road, which is real money lost. Also, the "inflexibility" that Mr. Osmek could be viewed as "stability" by others. Why do people build gas stations near freeway exits? They know cars will drive by and the freeway isn't going away. Why do businesses develop around light rail stations? They know people will walk by and the train isn't going away. The advantage the light rail station has is that you can fit more businesses in the same amount of space when you don't have to find space for all the customers to leave their cars.
Chris January 24, 2012 at 07:55 PM
The information presented to support this opinion piece seem rather selective. One study for Mankato, not the Minneapolis metro area, is presented. This study is not observing the results of a road-expansion, it is a proposal. What is the actual cost and gains of a road expansion, none could be found in the SW Metro? Second, the passenger fare vs. costs. It is stated, "Riders pay only $0.99 of this cost..". Checking here:http://www.metrotransit.org/fares.aspx, shows that only certain riders pay below $1.75 at any time. This research took me 5 minutes. If the argument against light rail starts to unravel with 5 minutes on Google, I do not think it is much of an argument. Can Mr. Osmek return to this subject with some better information? I understand that he does not like trains. However, we should design our infrastructure upon a careful review of the facts, not personal inclinations.
Isoroku5 January 25, 2012 at 12:27 AM
Osmek is right; we should continue using bus service as it's more economical. Oops, republicans just budget-killed six more routes in the time it took me to write this. I guess to be totally efficient bus service just shouldn't exist.
Matthew Kilanowski January 25, 2012 at 04:31 AM
I would have preferred to see a comparison between the SW LRT and the newly finished Highway 212. Or perhaps he could show the costs and benefits of the Hiawatha line versus the segment of Highway 55 that the light rail runs along. You're right, Mr. Osmek should have found more a appropriate example of a road project than a rural highway to compare an urban rail project to.
Mark D January 27, 2012 at 03:22 PM
There are a few things the Honorable City Council member David Osmick left out of his Cost Annalist. As an example we could look to the City of St Paul and research our selves instead of relying on our local media for true Annalist. Generations of Ma & Pop business are being forced to close and them that chose to stay are getting Government subsidies to keep the doors open. This is costing you (a State and Federal Tax Payer) millions of dollars. For you 99%ers, this is also opening the door for huge Corporations that can absorb the increased Property Taxes and Fees that are needed to support Rail. We also looked at the long term impact on our 13,000+ strong Skilled Construction workers in this State, and found that dedicated funding for Roads and Bridges are being shifted over to transit as we can clearly see in Governer Daytons bonding bill that only dedicates 30 million for Roads and Bridges out of a 700+ million dollar bonding bill. This will increase Un-Employment among Construction workers in the near future. We also must take in to account the "Un-Elected" body of Government that is in charge of Light Rail, the Met-Council. The Met-Council has the Power to Tax and Regulate with out Public opinion or Recourse as People that pay attention to the Mets actions have found. The Met just pasted a 2% Tax increase on you to help shoreup sewer & water funding on the Central Corridor that Federal/State/County & City fell short on. Rail @ Cost of $2152.20 an Inch, I Vote ROADS!
Linda February 03, 2012 at 08:07 PM
The comment about the “costs” not being adequately calculated is true. If I don't have to own a car or I don’t have to log a lot of miles then my own personal costs go down (i.e. insurance, gas, repairs, parking etc). But MN transit planners miss the mark. For example the line between downtown Minneapolis & downtown Saint Paul is very poorly planned & executed. The whole point of having a "dedicated line of mass transit" is that it shouldn't compete with other automotive traffic (The majority of the time). But instead of having the line on a non-car used route they built it down University. Different transit types (Buses, Light Rail, Subways etc) should be used for different purposes, buses are great for the multiple drop off/pick up aspects of mass-transit & should be used to funnel individuals to other forms of transit. Light rail should have significantly fewer stops than a bus route & should be able to travel at much faster speeds than buses. The University route has way too many stops & has to compete with automotive traffic & traffic lights the entire way. It will also stop almost as frequently as a bus would. In my opinion the line between the two downtowns should have had a maximum of 6 stops total: 2 stops in each of the city centers & then maybe 1 stop elsewhere ( U of M). Each station you add, adds costs to the initial project & ongoing expense, it extends transit time, & if you build in the middle of a traditional roadway there’s even more costs.
Mark Lindberg April 26, 2012 at 05:43 PM
Light rail costs significantly more per user than roads. Furthermore, the use of light rail does not significantly decrease the cost of building or maintaining roads, so just because taxpayers spend billions on a light rail line does not mean we do not need to spend money on roads in that area. If light rail is a worthy investment then riders will pay the actual cost ($6.42 per ride according to this article) instead of relying on the vast majority of taxpayers that will never use the line to pay for it.
Mark Lindberg April 26, 2012 at 05:56 PM
Keep in mind that everyone users roads, very few people use light rail. It makes more sense to spend state money on something everyone uses, not on something that a very small percentage of people use. As for alternative solutions for congestion: live closer to where you work, work from home, work hours that have more favorable traffic conditions, and/or get some good audiobooks. If you don’t like those move outstate. All cities, even those with light rail, have congestion.
Jake Spike April 15, 2013 at 06:35 PM
Keep in mind the United States had a complete rail system set up by 1945 that interconnected MOST SMALL TOWNS, let a lone big cities.. over the years the use of rail has been lobbied out of the public sector by private organizations looking to profit off of the purchase and re purchase of vehicles. Lets take a large look at this issue, are not car companies releasing a new "model" every year for their buyers to ugprade to? Does this not seem a bit wasteful to anyone else? Isnt there only one "model" of car? a... CAR? Its time to awaken to the potential that lies in the ease and safety of rail transport. . The economy would boost so much because people without vehicles in rural small towns could easily connect to a major rail to get to the city. . as they WERE able to 60 some years ago. Now MOST railways are strictly for corporate transport of goods rather than the service of human transport. Imagine being 16 in a town of 2,000 people in rural wisconsin, and within an hour and a half could be in the twin cities? Imagine the amount of drunk driving accidents that could be reduced if the rails ran late for the bar crowd? Granted they would need security on them but I would rather have drunk people in a rail car contained and safe then on the roads! Lots to digest I know.. heres to intelligent social design

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